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April 23, 2017

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US' economic competitiveness slips again

The American economy slipped yet again to a lower ranking in 2016 as a result of a combination of regulatory burdens, large public debt and business taxes according to a watchdog survey of global economic freedoms. The annual Heritage Index of Economic Freedom saw the U.S. economy slip to No. 17 worldwide among 186 comparator countries.

This has been America's lowest ranking yet in a complex survey of countries in which rates issues such as rule of law, regulatory efficiency, open markets and government size. For the first time the U.S. economy no longer ranks among the world's top 15.

The USA stands just behind Lithuania and ahead of Denmark and Sweden in economic competitiveness rankings. This is expected to change soon.

The Heritage report states, "Large budget deficits and a high level of public debt" have contributed to the continuing decline in America's economic freedom. "The anemic economic recovery since the great recession has been characterized by a lack of labor market dynamism and depressed levels of investment."

The ongoing undertow of the recession as well as lackluster economic growth were a key factor in the election of President Donald Trump who has promised to cut the maze of regulations, high business taxes and offer incentives for American business investments.

As a case in point, U.S. public debt stands at a dangerous 106 percent of GDP, double that of Mexico.

Dynamic Dozen

So, who's prospering? Hong Kong, Singapore and New Zealand are the world's top performing free economies. And they are followed by Switzerland, Australia, Estonia, Canada, United Arab Emirates and Ireland. Chile, Taiwan and the United Kingdom round out the dynamic dozen.

It's highly ironic that the former British Crown Colony of Hong Kong, now a Special Autonomous Region of the People's Republic of China, shines as a global entrepreneurial beacon. As the Report states: "The high quality legal framework, which provides effective protection of property rights and strong support for the rule of law, continues to be a cornerstone of strength for this dynamic city." Equally, "there is little tolerance for corruption."

New Zealand is another success story, ranking third. "New Zealand is a parliamentary democracy and one of the Asia-Pacific region's most prosperous countries. After 10 years of Labor Party-dominated governments, the center-right National Party, led by Prime Minister John Key, returned to power in November 2008," the Report states. "Far-reaching deregulation and privatization in the 1980s and 1990s largely liberated the economy," the survey adds.

Having met Prime Minister Key, it's obvious that both his personal dynamism and entrepreneurial vision turned the economy around from what was a lackluster Labor party morass to a booming entrepreneurial success story.

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