Uri Dadush writes that the United States still has three major assets that keep it ahead of other countries, but needs to actively respond to current economic and political trends to keep those advantages.
The New Year has brought a spring to the step of the White House staff. The US economy is still struggling with high unemployment, but it is improving after its Summer lull. And in the midst of primaries Republicans are at each other's throats, having gotten themselves into terrible trouble over tax cut extensions which Americans broadly support.
Obama's reelection chances are improving, but a massive financial crisis originating in Europe may hit the United States in 2012, and only the brave would call the outcome of the next election. What I do know is that big reforms are unlikely in an election year and the next Administration will inherit unprecedented economic challenges. Whether or not it prevails will affect prosperity and security across the world.
A balance sheet of the American economy today includes three huge assets and an equal number of liabilities. The assets are well known but sometimes forgotten. First, the United States remains by far the world's largest economy, three times bigger than China and is - among the G20 - the most competitive, flexible, and productive. Despite its size and complexity, the US economy systematically ranks in the top 5 of the World Economic Forum's Competitiveness Index, and the World Bank's Doing Business Index. Exports are a very incomplete measure of America's economic might, as its multinational companies sell far more through their foreign subsidiaries than from their home base and many make the bulk of their profits overseas.