Tuesday, January 5, 2010

What is the United States' key competitive advantage?

Three things come to mind: ability to organize, efficient infrastructure, and immigration.

After traveling to more than 50 countries, I believe the US continues to shine in these 3 areas. Americans seem to have an innate ability and willingness to work together and cooperate to create very complex and highly efficient systems (i.e., corporations, networks, markets, etc.). This ability is embedded in society, in the education system, and in the people. Many other countries are still struggling with the "survival of the fittest" syndrome - where personal gains are to be pursued first and foremost regardless of the cost (e.g., corruption, exploitation, violence, etc.).

Another key advantage is the US' infrastructure (i.e., roads, telecom, government, laws, banking, employment, etc.) which is one of the most efficient in the world at all levels. Because of its ability to organize, the US has developed strong infrastructures that are resilient and built to last. As a result, very few countries have the ability to approve a mortgage in less than 3 minutes, or create a new company in less than 5, or dynamically adapt your workforce up or down to meet market demands, or quickly secure growth capital for a business that has shown a good track record, or design and operate airports that can process 10-12 landings and take-offs every minute, etc.

Finally, the energy, hunger, work ethic, ambition and creativity that newly arrived immigrants bring to the table are unquestionable. The US has built an immigration system that allows a steady and constant influx of new immigrant talent (e.g., the university system at the top levels and illegal immigration at the lowest levels). Interestingly, most millionaires (as measured by having at least one million dollars in liquid assets) are either immigrants or first generation immigrants. This influx of talent and energy is a vital component that keeps the US at the forefront of innovation, efficiency, and financial success.

(It is interesting that countries like Singapore are also beginning to realize the value of immigration as an economic engine. They are now allowing and relying on an influx of Chinese immigrants to keep the economy growing after their own population has begun to slow down to enjoy the fruits of the previous generations' efforts in getting this island nation to have one of the highest per capita incomes in the world.)

So, are we losing our competitive edge? Not yet.

The one thing that we need to realize is that the landscape is changing. We are no longer the sole and powerful economic "black hole" that everybody else orbits around. There are now 3 equally powerful, and potentially independent, centers of gravity - the EU, Southeast Asia, and the US. The game is definitely changing.

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