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09/06/94

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Stanford to host summit of industry, government, academic leaders

STANFORD -- The United States may have lost the World Cup, but it's back on top in international economics competition, says a Swiss-based organization that will convene a summit of world industry, government and academic leaders on the Stanford University campus Sept. 18 to 20.

The annual Industry Summit of the World Economic Forum, hosted last year in Boston by Harvard and the Massachusetts Institute of Technology, will bring to campus several hundred high-level executives from corporations in 16 different industrial sectors as well as government officials and scholars from many countries for a series of off-the-back-of-envelope discussions. Attendance is limited to forum members and their invited guests.

A wide range of sessions will cover such topics as new trends in information technologies and organizations, changes in retail financial services and derivative financial instruments for minimizing investment risk, the impact of retail consolidation in the textile industry, new approaches to construction and transportation systems, energy and power production trends, and the likely future structures of the automotive, materials and health industries. The University of California-Berkeley and the California Institute of Technology are co-hosts with Stanford, although all sessions are scheduled at Stanford.

The World Economic Forum is a Geneva-based nonprofit organization for business, government and academic leaders who want to interact on issues of mutual or global interest. The forum's annual report card on how well countries are doing in economic competitiveness is issued jointly with the International Institute for Management Development of Lausanne, Switzerland. The 1994 World Competitiveness Report, released today, ranks 42 nations based on analysis of 381 economic, political and social criteria, as well as a 129-item questionnaire sent to 16,500 business executives worldwide. China and Russia are evaluated but not yet ranked because of problems with available statistics.

The United States ranks number one in overall economic competitiveness this year, ahead of Singapore in second place. Japan, an eight-year leader, slid to third place, the competitiveness scorers said. The United States has fluctuated in recent years between fifth and second.

Stanford economists and industrial experts, including faculty members from the schools of business, engineering, and humanities and sciences, will participate in the forum. At least one, Stanford international economist Paul Krugman, doesn't mind saying that he's "on a mission" to get the forum's members, as well as many other important leaders and the general public, to stop talking about the "economic competitiveness" of nations.

Krugman, a liberal Democrat, recently chastised President Clinton and other world political and business leaders for suggesting that countries such as the United States and Japan are in a contest resembling the competition between Pepsi and Coca-Cola.

"The growing obsession in most advanced nations with international competitiveness should be seen," he wrote in a recent issue of the journal Foreign Affairs, "not as a well-founded concern, but as a view held in the face of overwhelming contrary evidence. . . . Thinking in terms of competitiveness leads, directly and indirectly, to bad economic policies on a wide range of issues, domestic and foreign, whether it be health care or trade."

For critics like Krugman, The World Competitiveness Report appears to be assessing nations' future economic performance rather than their competitiveness with each other, he said, and "it seems oddly uninformed about what we know about the sources of economic growth" such as saving rates and quality of education and the efficiency of such economic inputs. Krugman also objects to calling economic performance competitiveness because "competitiveness seems to imply that one country does well at the expense of other countries or that only a few countries can do that, which is certainly not true." [For more of Krugman's views on competitiveness, see page XX.]

The subject of industrial competition, rather than national competition, will dominate much of the Industry Summit on campus, the agenda for the World Economic Forum suggests. But the forum's own competitiveness study - particularly its emphasis on a resurgence in the U.S. economy - is certain to be a centerpiece of discussion as well.

"After almost a decade of self-doubt," the forum's 1994 report said, "the U.S. is clearly back at the top of the world's most competitive nations." The report's authors attribute this primarily to "domestic economic strength" as well as a "strong performance in terms of entrepreneurship, internationalization and financial vitality."

On the negative side, the scorers found that the volatility of the dollar could threaten U.S. recovery. "In addition, such stubborn problems as poor secondary school education and work attitudes need to be dealt with if the country is to avoid long-term decline," the report said.

Japan's showing in 1994 is related to its worst recession in decades. In the survey of business executives, which accounts for one- third of the data used in the overall rating system, the scorers said that Japan's own business executives "demoted" their country from fourth place last year to 17th this year. The scorers blamed "growing mistrust in the political system" for the poor rating that Japan's government received.

The opinion survey is included in the ranking because the executives' "insider knowledge" can "reveal trends that often take years to show up" in more formal economic statistics kept by nations and international organizations, the report's publishers say. The rankings are intended as "a tool for strategic decision-making for business and government."

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