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Executives Express a Gloomy Outlook for US Competitiveness

Perhaps based on their own financial analysis, or maybe just in response to news reports of economic performance, executives are not confident in U.S.

Perhaps based on their own financial analysis, or maybe just in response to news reports of economic performance, executives are not confident in U.S. competitiveness, according to a recent survey by Harvard Business School. Researchers asked business leaders worldwide about their feelings and foresight on the role of American business in the global economy.

The survey is part of Harvard Business School’s U.S. Competitiveness Project, which aims to understand and improve the U.S.’ ability to compete in the global economy. The study took answers from 10,000 alumni, many of whom are in senior leadership positions and hold titles like chief executive, president, chairperson, founder and owner at companies around the world.

Seventy-one percent of these executives expect U.S. competitiveness to decline in three years. The survey defined competitiveness in terms of the ability to compete on a global economic scale and in terms of being able to offer workers high wages and benefits. Only 16 percent of respondents were optimistic about both the U.S.’ outlook in both capacities.

Executives seem to have a more pessimistic outlook for hiring workers than for market success. According to the professors who conducted the survey, this is attributed to the fact that when firms are under pressure, they can cut costs by eliminating jobs and outsourcing abroad. Workers however, don’t have as many options.

Pinpointing the 'Negative Nancies'
The survey’s finding showed that with experience came pessimism. Respondents who had reached decision-making years and were between the ages of 40 and 59 were most likely to expect a decline in U.S. competitiveness. Meanwhile, respondents in the U.S. were also more likely than their international peers to foresee a decline in American economic abilities. While executives in the U.S. whose companies face foreign competition understand the country’s global standing, survey respondents abroad were more optimistic because they had a better idea of the challenges in competitiveness that foreign companies face.

Why the long face?
Harvard professors focused on six macroeconomic and 11 microeconomic factors that affect competitivity. On the bright side, the executives found that the economic environment for U.S. businesses is currently pretty strong.

"It's not that the sky is falling," Jan Rivkin, a Harvard professor overseeing the project, told The Wall Street Journal,  "We've got great strengths, but the strengths are weighed down by weaknesses that are getting worse."

Respondents have a lot of confidence in American higher education and some microeconomic factors. However, based on financial analysis or their own observations, many believe that current weaknesses will lead to the deterioration of U.S. competitiveness. The prime suspects include America’s tax codes, K-12 education, legal framework, regulations and workforce skills.

“In the eyes of survey respondents, government ofשּׁĀcials in America are not doing their part to lay the groundwork for U.S. competitiveness,” the survey states. Many executives believe that foreign emerging economies have done a better job establishing strong macroeconomic institutions, therefore posing a future threat to U.S. business capabilities. The other impediment to competitiveness that respondents pointed out was the U.S.’s immigration policies. They believe both the American economy and business would benefit from a higher influx of highly skilled individuals.

What do you foresee for U.S. competitiveness? Are emerging markets the biggest threat to American businesses?