America’s Other 30%

On that front, too, America has been falling behind. According to the World Economic Forum’s , the US slipped to fifth place in 2011-2012, from fourth place the previous year, continuing a general downward trend evident since 2005.

The erosion is traceable to several factors, including deficiencies in primary and secondary education as well as poor macroeconomic management. But the US also has disturbingly low rankings in the quality of its infrastructure (#24), technology availability and absorption (#18), and the sophistication and breadth of its supply-chain production processes (#14).

Improvement on all counts is vital for America’s competitive revival. But meeting the challenge will require vigorous growth from America’s other 30% – especially private capital spending. With the American consumer likely to remain on ice, the same 30% must also continue to shoulder the burden of a sluggish economic recovery.

None of this can occur in a vacuum. The investment required for competitive revival and sustained recovery cannot be funded without a long-overdue improvement in US saving. In an era of outsize government deficits and subpar household saving, that may be America’s toughest challenge of all.

Stephen S. Roach, a member of the faculty at Yale University, was Chairman of Morgan Stanley Asia and is the author of The Next Asia.

Copyright: Project Syndicate, 2012.

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