By Professor Klaus Schwab, Professor Michael E. Porter, Professor Jeffrey D. Sachs

PREFACE

This year’s Global Competitiveness Report appears at a time of exceptional uncertainty. Global economic activity has slowed substantially, stock markets have shown consider- able volatility, and the world’s major currencies have experienced significant fluctuations. In Europe, where the final steps toward monetary unification are about to be taken, output has declined considerably below the region’s production potential. In Japan, there are serious concerns of a prolonged recession, and in several countries throughout the rest of Asia industrial production has shrunk markedly. Other emerging market economies have been subject to financial turmoil that reminds us of the severe crises in 1997 and 1998.

The greatest uncertainty, however, concerns the United States, whose economy has essentially come to a standstill in the second quarter of 2001.In the highly integrated world economy, the United States remains critical for global economic growth.Yet evidence will emerge only gradually regarding how the horrific tragedies of September 11 will affect this economy that was already experiencing a slowdown. In order to restore confidence, the US Federal Reserve, in concert with other central banks, has continued to lower interest rates while the federal government has developed a package for fiscal stimulus. It is extremely difficult to predict how fast a turnaround can be achieved, but the United States’ underlying fundamentals will play the most important role in influencing its return to a sustained growth path. As this Report confirms, the United States’ fundamentals remain highly competitive.

To be sure, as the global economy experiences this period of economic and political uncertainty, much is at stake. Calls for more protectionism have become louder. Commitments to international efforts urgently required to fight killer diseases as well as global climate change could be undermined. And, more generally, the recent backlash against globalization could gain increased momentum. There can be little doubt that these measures would hurt developing countries most.

Coping with the enormous challenges currently facing the global economy requires pursuing a prudent and proactive macroeconomic policy stance. More importantly, it requires strengthening the cross-border networks that promote private investment, entrepreneurship, and social progress around the world. In this endeavor, the Global Competitiveness Report remains an invaluable tool by identifying existing impediments to economic growth and thus helping in the design of policy measures to remove such obstacles as a precondition for advancing human well- being across the globe.

This year we have added not fewer than 17 countries to our analysis, reflecting the rising integration of develop- ing countries into the global economy and ensuring that the Global Competitiveness Report remains the most comprehensive knowledge source for policymakers, the business community, and other key stakeholders.These new entrants are regionally diversified, with one economy from Africa (Nigeria), two from Asia (Bangladesh and Sri Lanka), five from central and eastern Europe (Estonia, Latvia, Lithuania, Romania, and Slovenia), and nine from the Western Hemisphere (Dominican Republic, Guatemala, Honduras, Jamaica, Nicaragua, Panama, Paraguay,Trinidad and Tobago, and Uruguay). As regards the latter, I would like to thank the Inter-American Development Bank for their excellent cooperation.

In the future, we will certainly continue to expand the list of countries covered by the Global Competitiveness Report. Although this Report remains our flagship publication, we plan to publish supplementary reports on specific regions, including one forthcoming study on Latin America and another on the transition economies in central and eastern Europe and the former Soviet Union.

We remain indebted to Professor Michael E Porter, director of the Institute for Strategy and Competitiveness at the Harvard Business School, and Professor Jeffrey D Sachs, Director of the Center for International Development at Harvard University, for their partnership and for acting as co-directors of the Global Competitiveness Report.We would also like to thank John W McArthur of the Center for International Development for managing this project on the Harvard side and for applying the rigorous standards to the data and analyses that ensure the ongoing excellence of the Report. Furthermore, heading the Global Competitiveness Program at the World Economic Forum, Dr Peter Cornelius has remained in charge of executing the Survey, coordinating the Report, and providing its intellectual driving force. Finally, we extend very special thanks to KPMG, our partner in this Report, for their financial support in this important venture.

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http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.476.4940&rep=rep1&type=pdf