The World Economic Rankings by the Davos Forum are out again in the form of its Global Competitiveness Report, and Taiwan has fallen. Don’t worry, we’re still ahead of New Zealand, Ireland, Austria, and Korea. I’d be curious to see how many savvy Taiwanese businessmen rate their nation ahead of those four. Here’s the top 25; you be the judge….

Switzerland 1
Finland 2
Sweden 3
Denmark 4
Singapore 5
United States 6
Japan 7
Germany 8
Netherlands 9
United Kingdom 10
Hong Kong SAR 11
Norway 12
Taiwan 13
Iceland 14
Israel 15
Canada 16
Austria 17
France 18
Australia 19
Belgium 20
Ireland 21
Luxembourg 22
New Zealand 23
Korea, Rep. 24
Estonia 25

China weighed in at 54, plunging six places. The US also fell, thanks to our President, who empties our coffers while filling our coffins. Why is Taiwan so high?

“Taiwan continues to operate at a high level of efficiency but it has dropped below last year’s “top-ten” status. It is an innovation powerhouse, with levels of patents registration per capita exceeded only by the United States and Japan (see the case study on the development of the ICT sector in Taiwan in the 2006 Global Information Technology Report). It continues to excel in terms of indicators of higher education and training (ranked 7th overall), but, like Korea, its overall rank is weighed down by weaknesses in the institutional infrastructure, as captured by the GCI’s first pillar.”

You can see the problem — the report counts patent registrations per capita, which naturally benefits a patent powerhouse like Taiwan, with lots of patents but a small population. A better measure would be patents per total dollar of R&D funding, or patents per capita of scientific personnel. The report also places too much emphasis on the quantity of education and not enough on its quality.

I can’t find a good list of foreign direct investment (FDI) flows, which might be a good crude measure of competitiveness — a country with a competitive economy attracts investment. Just look at Intel, Ireland’s largest industrial employer, whereas in Taiwan it is merely the equivalent of a medium-sized company.