The U.S.overtaken by Sweden and Singapore in the World Economic Forum's competitiveness survey for 2010-11.

The U.S. has slipped to fourth position in global competitiveness this year from the second place it held last year, according to a report by the World Economic Forum (WEF).

Switzerland retains the top position with its excellent capacity for innovation and a very sophisticated business culture, says the Global Competitiveness Report 2010-2011, published on Thursday. Sweden and Singapore have overtaken the US to occupy second and third positions respectively.

The US ranking slipped to second last year with Switzerland making it to the top in global competitiveness.

“While many structural features that make its economy extremely productive, a number of escalating weaknesses have lowered the US ranking over the past two years,” the report said.

“In addition to the macroeconomic imbalances that have been building up over time, there has been a weakening of the United States’ public and private institutions, as well as lingering concerns about the state of its financial markets,” it added.

The report has found deepening weaknesses in certain areas in the US compared with last year.

While quality of institutional environment continues to decline, public's trust in politicians has dwindled.

The business community is concerned about the government’s ability to maintain arms-length relationships with the private sector. It feels that the government is spending its resources relatively wastefully, the report said.

Further, the report points to rising concerns over the functioning of private institutions with a noticeable decline in assessment of auditing and reporting standards including corporate ethics.

Macroeconomic instability in the US is the greatest area of weakness, said the report.

“Prior to the crisis, the United States had been building up large macroeconomic imbalances, with repeated fiscal deficits leading to burgeoning levels of public indebtedness; this has been exacerbated by significant stimulus spending,” the report points out.

In this scenario, the country needs a clear exit strategy to strengthen its competitiveness in future, the report states.

In Eurozone countries, Germany moves up to fifth place from seventh in 2009 while the UK has climbed one position to 12th after witnessing a continuous fall in ranking in recent years.

Among the BRIC economies, China continues to improve its competitiveness with its ranking moving up from 29th to 27th while Brazil (58th), India (51st) and Russia (63rd) have retained their positions.

“While emerging economies have, for the most part, bounced back to healthy growth, advanced economies face continuing difficulties such as persisting unemployment, weak demand, and spiraling debt, while still struggling with reforms in the financial and labor markets, among other challenges,” the report said.

The report measures the competitiveness of 139 countries taking into account various performance parameters like macroeconomic environment, health and primary education, goods and labour market efficiency, financial market development, technological readiness, business sophistication, innovation etc.

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