Both countries topped the new split annual rankings of national business and economic efficiency despite restructuring affecting their traditional strengths, the information technology and finance industries, according to the report. IMD's ranking has been split into two for the first time, separating economies with more than 20 million inhabitants from smaller countries.

The competitiveness ranking of large economies places the United States ahead of Australia, Canada, Malaysia, Germany and Taiwan respectively. Finland, Singapore, Denmark, Hong Kong, Switzerland and Luxembourg head the list of 29 smaller economies.

Australia, Malaysia, Singapore and Hong Kong improved their efficiency over the past year, but the SARS (severe acute respiratory syndrome) outbreak was expected to have "dire consequences" for Asian competitiveness in next year's ranking, IMD warned.

The United States maintained its top slot thanks to interest-rate cuts and consumer spending. But the report also warned that the U.S. current account deficit, its expected budget deficit and the Bush administration's tax cuts could increase foreign debt and lead to a further weakening of the dollar in 2003.

"As a consequence, it will be harder for developing nations to raise capital because the U.S. economy would drain most of the world's financial resources," said Stephane Garelli, competitiveness director for IMD.

Major European economies are battling with deficits, over-regulation and government reform, with Germany (No. 5), Britain (No. 7) and France (No. 8) afflicted by structural problems weighing on their competitiveness, IMD said.

"Some fresh air could come from the next wave of EU member-states which show solid economic growth," Garelli said.

Eight regions have also been integrated into the rankings, which assess various criteria for business efficiency, government efficiency and regulation, infrastructure and economic performance. The Sao Paulo state, No. 13 of the large economies, is rated as more competitive than its home country Brazil (No. 21), and the Zhejiang province of China, No. 14, ranks just below China (No. 12).

IMD said that only four of the 59 countries and regions in its annual ranking of business and economic efficiency saw their GDPs shrink in 2003.

"The good news is that the world economy is not in recession,” Garelli said. “The bad news is that no one realizes it."

DaimlerChrysler Scraps Ontario Plant

After months of analysis, DaimlerChrysler has decided not to build a proposed new manufacturing facility in Windsor, Ontario, because of business viability issues.

The greenfield concept study was initially linked to contract negotiations last year with the Canadian Auto Workers (CAW). The labor agreement reached with the CAW was the first step for the proposed project. A Chrysler Group project team was put in place to begin exploring the business viability with potential suppliers and governments.

But the business environment has significantly changed since last October, said Dieter Zetsche, president and CEO of the Chrysler Group.

“The state of the automotive market has created a formidable hurdle, especially for a small, entry-level vehicles such as the one we were considering,” he said. “Additionally, competitive pricing, ongoing incentives and increasing overcapacity in North America led us to conclude that this is not the time to add new capacity.”