Germany's sophisticated and productive businesses have propelled the country up the world's economic ranks. While teh US budget deficit pulls the superpower further down the pecking order.
Germany has been praised for its infrastructure
Germany has moved up the economic league tables to become the fifth most economically competitive country in the world and the highest-ranked eurozone country, according to a yearly study by the World Economic Forum. Europe's most populous nation moved up two places since last year, when it was ranked seventh worldwide.
"Amid concerns about the outlook for the global economy, policymakers must not lose sight of long-term competitiveness fundamentals amid short-term challenges," said Xavier Sala-i-Martin, co-author of the report and an economics professor at New York's Columbia University.
Germany forged ahead in the rankings this year because the country's economy as a whole improved in comparison with other large economies. It was praised for its infrastructure and sophisticated and productive businesses but was given low marks for its inflexible labor market.
Germany's sophisticated industry stimulated economic competitiveness
USA falls to fourth
Germany comes in just behind the USA, which this year dropped two places to fourth place. The United States was knocked off its top spot last year by Switzerland, which remained in first place this year, closely followed by Sweden and Singapore.
Although the United States is a clear leader in productivity, innovation and competitiveness, the world's largest economy has shown growing weaknesses in recent years, the World Economic Forum said.
Sala-i-Martin said there were two areas of concern in the US: "The institutional environment both public and private has deteriorated and secondly the reaction of the government to the economic crisis in the form of a huge stimulus package with huge debt and deficits has lowered its rank."
Switzerland is in the lead due to its sophisticated business culture and innovation, characterized by its high level of scientific research organizations, high spending on research and development and a large number of patents, said the World Economic Forum.
The ranking system takes into account 12 categories. These include the stability of institutions, infrastructure, health systems, education systems, market efficiency and technological development. When compiling the list, the World Economic Forum uses publicly available information, and they survey over 13,000 leading personalities in the business world.
Author: Natalia Dannenberg (dpa, AFP, AP)
Editor: Nancy Isenson