For the first time in ten years, the World Economic Forum ranked the United States as the world’s most competitive economy. The country’s top rating can largely be attributed to tax and regulatory reforms, especially at the federal level.
The World Economic Forum’s Global Competitiveness Report utilizes tens of factors that examine business productivity, efficiency, and opportunity. The United States scored 85.6 out of 100 points and beat out other strong economies such as Singapore, Germany, and Switzerland.
The report highlights the country’s many strengths, including its “vibrant entrepreneurial culture” and its “depth, breadth and relative stability.” The report concludes, “All these factors contribute to the country’s vibrant innovation ecosystem, making it a ‘super innovator’.”
United States Chamber of Commerce Chief Economist J.D. Foster explains in further detail why the economy is at its most competitive level in the past decade:
“What’s made the difference recently is two things. The first is President Trump’s regulatory reforms, which eliminated a lot of uncertainty about what was coming to regulations; there was a fear factor, if you will. After this uncertainty was removed, businesses responded almost immediately. Consumer confidence rose and business investments grew at a stronger pace.”
Regulatory reforms have allowed many technology companies to expand research and investment in myriad industries. In fact, companies like TuSimple and AXISCADES have chosen to create and develop facilities in Arizona largely because of the state’s favorable regulatory climate. Miles notes, “We are very fortunate that the natural incubator of the US economy is working well and we’re creating these companies that are succeeding in the country.”
In addition to regulatory reform, Foster notes that the federal tax reforms played an instrumental role in stimulating the economy. “You also have the tax reform, which obviously adds onto the regulatory reform,” he continues. “Businesses are able to invest more into their companies, which helps them grow at a faster rate. You put those two together, and you’re going to get a more productive economy.”
While some critics of the tax reform argue that it increases the budget deficit, many experts note that the stimulation of the economy will soon reverse this. Foster asserts, “There is truth to both perspectives. In the very short run, there are provisions of the tax reform bill that reduced tax incomes this year. However, this increased growth of the economy will lead to an offset of the entire cost of the bill.”
The U.S. has the ability to maintain this rating next year, but it will need to maintain these tax and regulatory policies that fostered the economic revival.