FBlog

The economy of the world is changing at a speed that would have been impossible to imagine just fours years ago. During the last decade we have seen the rise of financial power rise over manufacturing and entered into a situation in which the sum of all financial derivatives is 13 times greater than the World’s GDP. Then came the big bang. Industrial companies and banks were evaluated more for their financial performance than for their tangible assets with money circulating faster and faster, interconnecting economies like never before. Information moved even faster, capable of changing the perceptions of individual Country Brands within incredibly short timeframes.
The “real economy” has become weaker and it has been considered good practice for a company to outsource key processes such as production and logistics, maintaining only limited business functions in the home country. The world now depends on China for production of a huge percentage of manufactured goods. The countries that seem resistant to worldwide recession are those with strong primary resources or capable of maintaining part of their production within their physical boundaries (South East Asia, Latin America and parts of Eastern Europe).

We have seen crisis, recession and a huge rise of unemployment across the USA and Europe. The worldwide banking system has entered into the worst crisis of recent times and governments across the traditional developed world seem unable to react. The immediate move was to avoid disaster and to save the banking system from collapse. The second step has seen huge investments into supporting jobless families, creating a huge rise in public debt and dramatic consequences; the near collapse of European stability and growth plan’ and USA credit status downgraded for the first time in history. Western governments look to China to buy this public debt, the very same country to whom production and employment has been lost. Doubts are growing over national sovereignty as is the discomfort related to such dependence on one nation. The implications of such significant shifts in economic power in terms of perception, reputation and ability to maintain the current economical model are continue to unfold.

Many European Country Brands seem more fragile than ever before. However, from a symbolic point of view, the country considered to be at the center of this dramatic change is the USA.

Weakened effectiveness, stability and predictability of American policymaking and political institutions at a time of ongoing fiscal and economic challenges all manifested in a second year of consecutive decline in the US overall CBI results for 2011, moving from #1 in 2009 to #4 in 2010 and #6 this year. The ‘fall’ of Brand USA provokes a serious reflection. Although the USA scores high on many dimensions, both the lack of confidence domestically and disappointment externally means that US leaders must consider the impact for business, political influence and public policy. Entering an election year, the campaigns for both political parties may focus more internally as domestic economics dictate the agenda. The more isolationist the US becomes and the more imbalanced imports and exports, the more the Country’s Brand will suffer.

While less Americans are traveling abroad, more foreigners are traveling to the USA. Perception of Brand USA’s Tourism improved by 6 places this year and is now the #4 country brand for Tourism overall. This dimension is the USA’s strongest, with an impressive gain in Value for Money, which is up 17 places, potentially due to the overall weakening US dollar. Similarly, the USA continues to attract the world’s best and brightest students, yet seems unable to retain them as citizens or immigrants. The greatest challenge is for the USA to leverage its open approach to education and speech with an entrepreneurial culture to ‘kick start’ economic job creation and growth. There is no doubt that the USA remains a powerful Country Brand, yet economic uncertainty and a blurred political agenda and vision during an election year may prevent a consistent or positive score rebound in our index.