U.S. Widens Its Competitiveness Lead, Study Says : Economies: Singapore stays at No. 2, World Competitiveness Report finds. Once top-rated Japan slips to No. 4 from No. 3.

BRUSSELS — The United States and Singapore have widened their lead as the world’s most competitive economies, while Japan continues to slip, according to a respected annual economic report to be published today.

The 15th World Competitiveness Report relegates Japan--No. 1 throughout the second half of the 1980s and early 1990s--to No. 4 this year from No. 3 last year and describes it as a nation “struggling with itself.”

The report is jointly published by the Geneva-based World Economic Forum and the International Institute for Management Development in Lausanne, Switzerland. This is the second consecutive year for the huge American economy and that of the tiny Asian city-state to be ranked No. 1 and 2, and the gap is widening, the report says.

In an interview, Stephane Garelli, the report’s director, said Japan’s slide was prompted as much by an unfolding crisis in social values as by economic factors such as a strong currency.

“Japan is going through the same social crisis, the same questioning of values today that Western Europe and the U.S. did in 1968,” he said. “Ten years ago, the principal values in Japan were loyalty, tenacity and hard work, while in Europe they were freedom, justice and leisure. You go to Japan today and you’re hearing Japanese say the same things Europeans said a decade ago.

He predicted that other fast-developing Asian nations such as Singapore, Taiwan and South Korea are certain to face similar shifts of public values in another decade. “Every economically developed society moves through this,” he said. “You can’t stop it; all you can do is manage it.”

The competitiveness report has become a prominent, valued survey of international comparisons since it was first published in 1980. The 800-page 1995 edition rates national competitiveness according to a complex formula involving 378 different criteria in eight major categories, ranging from a country’s government and public attitudes toward business to its management quality and its technological base.

Forty-eight nations are included this year, including, for the first time, Russia, which is rated last, behind Venezuela.

Although some have argued that attempts to compare nations as diverse as Singapore, Jordan, the United States and Russia are by definition imprecise, the document is both widely read and influential.

“Its value is that it’s an independent, neutral source with no ties to any government,” said Keith Richardson, executive director of the Brussels-based European Round Table of Industrialists. “It provides insights.”

The United States scores highest in four of the eight areas: domestic economic strength, internationalization, management and technology. Its lowest ranking, 10th, is in the category entitled “People,” which includes an evaluation of labor skills and attitudes. “There are some serious weaknesses in American education, especially at the secondary school level, that hamper competitiveness,” Garelli said.

He explained the apparent contradiction between America’s peak rating and its chronic trade deficit by noting that strong international investment by U.S. companies--a criterion used to measure competitiveness--tends to generate imports that work against the country’s trade balance.

Among its other main findings, the report notes:

* Signs of a growing economic divergence between the stronger and weaker members of the 15-nation European Union, despite efforts to bring them closer together. Such a development only adds to growing doubt about the EU’s ability to meet its ambitious goal of a monetary union by the end of the century. “The Northern European countries are doing rather well . . . [while] the Southern European countries continue to struggle,” the report says.

* Indications that competitiveness is still developing slowly in the former Communist nations of Central and Eastern Europe. The Czech Republic was rated highest among these countries but was listed No. 38 globally, trailing countries such as Peru, Portugal and China. Poland and Hungary--the only other two Central European nations rated--came behind Jordan, Turkey and Mexico. “These economies are still in transition,” Garelli said. “It hasn’t clicked for them yet, but it will come. They are bets for the medium term.”

* Evidence of stabilization in competitive ability among Latin American countries, including Chile, Argentina, Peru, Colombia and Brazil. Poor results were recorded by Venezuela and Mexico. Mexico fell from No. 8 in 1993 to No. 26 in 1994 and was No. 44 in the survey released today.

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We’re No. 1 (Again)

The United States remains the world’s most competitive economy for a second straight year. Scores show the relative differences in competitiveness in 1995, with the number 100 assigned to the leader. Here are the Top 15, according the World Competitiveness Report:

United States: 100

Singapore: 95.3

Hong Kong: 84.7

Japan: 81.1

Switzerland: 80.7

Germany: 79.3

Netherlands: 75.5

New Zealand: 75.2

Denmark: 74.8

Norway: 74.4

Taiwan: 72.1

Canada: 71.8

Austria: 70.9

Australia: 70.5

Sweden: 70.0

Source: World Economic Forum and International Institute for Management Development