Thailand falls in WEF study

Responsibility for the decline is placed largely on what the report sees as a weakening of government institutions, policy-making transparency and public-sector efficiency.

However, the report said that with a ranking of 34, the Kingdom derives certain competitive strengths from its market size, as well as from the efficiency of its labour market (ranked 13th). The country's infrastructure is also very good, particularly its roads and air transport.

"But Thailand lags in technological readiness (66th), with low penetration rates for Internet use, broadband and mobile telephones in particular. The health of Thailand's work force is another area of concern (ranked 76th), with high rates of HIV, tuberculosis and malaria (ranked 108th, 96th and 93rd, respectively)," it said.

Some aspects of the financial market also require attention, especially concerns about the soundness of the banking sector. Given the political turmoil experienced over the past year, it is notable that the decline in the overall ranking this year can be traced in part to a weakening assessment of government institutions, with increasing concerns about the transparency of policy-making and public-sector efficiency more generally.

In the overall ranking, the United States tops the list despite its financial crisis. The report contributed the highest ranking to many structural features that make the US economy extremely productive and place it on a strong footing to ride out business-cycle shifts and economic shocks.

Thus, despite rising concerns about the soundness of the banking sector and other macroeconomic weaknesses, that country's many other strengths continue to make it a very productive environment. The US is ranked first for innovation, and its markets support this innovative activity through their efficient allocation of resources to their most effective use.

However, large macroeconomic imbalances over recent years, with repeated fiscal deficits leading to burgeoning levels of public indebtedness, indicate the US is not preparing financially for its future liabilities and is on the road to making interest payments that will increasingly restrict its fiscal policy freedom going into the future.