Measuring American competitiveness
Business confidence
America’s image has taken a beating. With the failure of a number of American banks, the subprime mortgage crisis, rising unemployment, and a spate of recent bankruptcies among marquee companies, confidence in the American economy is waning. A new survey has confirmed these image problems. In fact, 60 percent of US business executives feel that the country has lost economic competitiveness over the past five years.1
According to 73 percent of US executives responding, access to capital is one of the most significant areas in which US companies have lost economic competitive ground. Three years ago, only 8 percent felt that was so. In addition, 71 percent of respondents say the quality of US capital markets has suffered. Not surprisingly, this massive loss of confidence stems from the ongoing credit crisis and current recession. In addition, 38 percent of those surveyed say US companies have lost ground with regard to business ethics and corporate governance.
Despite the perceived setbacks in maintaining America’s business edge, most executives surveyed this year do not expect to experience a long-term negative impact on their own companies. Thirty-nine percent expect very little negative impact over the next five years, and 37 percent anticipate that they will experience only some. This result is a big change from the last (2006) survey, where 60 percent of respondents foresaw some negative effects due to falloffs in human resources and intellectual property competitiveness. Why the more optimistic outlook despite the current recession? It’s possible that when surveyed, executives were optimistic that the recession would be a short-term problem and that the economy would bounce back within the next five years.
Overall, US businesses still feel they operate at an advantage over global competitors, but this survey points to warning signs—such as loss of confidence in capital markets—that foreshadow strain. Such strain can worsen if the wrong policies are in place moving forward.
Where the US has lost its competitive edge
Percent of executives surveyed who feel the US has lost competitiveness in the following areas
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2006
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2009
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| Worker healthcare and pension costs |
65
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75
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|
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| Access to capital |
8
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73
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| Quality of US capital markets |
NA
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71
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|
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| Alternate energy sources |
38
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39
|
|
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| Business ethics and corporate governance |
13
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38
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| Costs to customers and end users |
30
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37
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|
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| Government policies that are pro-business |
NA
|
35
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Source: PwC, Management Barometer: American competitiveness, 2009
1PwC, Management Barometer: American competitiveness, February 2009.
