Here at the World Competitiveness Center, we were not disappointed when, in November last year, Donald Trump announced that Elon Musk and biotech multi-millionaire Vivek Ramaswamy would be the co-heads of a new Department of Government Efficiency (DOGE).
To paraphrase Trump and Musk’s combined words at the time, DOGE would focus on a complete financial and performance audit of the entire federal government to eliminate wasteful spending and ensure taxpayers’ money was spent “in a good way.” Various US agencies, government programs, and regulations would be earmarked for cuts, with Trump dubbing Musk his new “Secretary of Cost-Cutting” in a bid to lower US debt.
With activities ranging from shutting down government agencies and defunding programs to carrying out mass layoffs, Musk initially said he hoped to save as much as $2tn a year – a figure he later halved. The cost-cutting didn’t reach anywhere near that level before Musk exited the role. The department isn’t going anywhere until, at the earliest, July 2026.
We’ve long advocated that an efficient government makes fertile ground for the private sector, and therefore boosts economic competitiveness, which we often use as a byword term for national prosperity and therefore quality of life.
The 2025 World Competitiveness Ranking (Ranking) cemented this idea. Central to our report and white paper From Government Policy to Business Acumen: Strategizing for Competitiveness in a Fragmented World was how policymakers and business leaders today need to view government efficiency not as a governance ideal, but as a practical requirement for sustaining economic resilience and investment appeal.
Government Efficiency is one of the defined factors – an umbrella for grouping some of the 262 survey and statistical data points – in our yearly Ranking. It measures the extent to which governmental policies are conducive to competitiveness and is one of four factors that constitute the methodology we use to measure 69 global economies, with economic performance, business efficiency, and infrastructure being the others.
The WCR’s Government Efficiency factor is made up of five sub-factors: Public Finance, which assesses the sustainability of the government debt and budget, Tax Policy, which measures taxation levels on individuals and businesses, Institutional Framework, which accounts for state and central bank efficiency, Business Legislation, which determines how trade, competition, and labor regulations support the competitiveness of the private sector, and the Societal Framework, which encompasses a set of indicators evaluating fairness of the judicial system, income, and gender equality.
Other economies scrutinize our data at the government level.
Government efficiency for Musk always seemed to be purely about making the government lean. The US ranked 25th in government efficiency in 2023, 34th in 2024, and 33rd in 2025. In the five sub-factors, the biggest drop between 2024 and 2025 was in Business Legislation (20th to 32nd).
Republican Senator Joni Ernst’s public letter to Musk and Ramaswamy in November last year, which outlined ways Musk could potentially cut trillions in federal spending from the budget, made for entertaining reading.
Proposals to change the composition of nickels and reduce spending of the federal budget left over at the end of the fiscal year – such as that spent on lobster tail and crab (to the tune of $4.6m) and on games and toys ($2.1m) – remain etched in my mind.
Then there was the idea of pulling the plug on funding for the National Science Foundation, accused of wasting money on surveys asking questions like “Does recycling make men seem less manly?” (The conclusion, by the way, was yes.)
I’ve entertained thoughts of sending them all a copy of our 2025 World Competitiveness Yearbook – where they could, if they were so inclined, find 21 pages on US competitiveness, 76 data points of which are entirely devoted to government efficiency.
Other economies scrutinize our data at the government level. Earlier this week in Abu Dhabi, the UAE’s Vice President and Prime Minister HH Sheikh Mohammed bin Rashid Al Maktoum chaired a Cabinet meeting where the UAE’s performance in the 2025 IMD World Competitiveness Ranking was reviewed, according to Emirates News Agency-WAM
“The UAE ranked fifth globally, alongside the world’s leading countries in economic competitiveness, government efficiency, legislative strength, and business environment excellence. Fourteen years ago, we established a competitiveness center, uniting the efforts of key national entities. These efforts have elevated the UAE’s ranking from 28th globally in 2009 to being among the top five globally in competitiveness,” he said.
“Even if it were possible to keep cutting the billions Trump wants to, an efficient government doesn’t just slash if it wants to maintain its efficiency over the long term.”
US debt is high and needs lowering. According to the IMF World Economic Outlook, in 2024 US debt was 120.79% – a figure that hasn’t, incidentally, budged in Q1 2025. The OECD recommends debt should stay under 80%. Admittedly, that’s a very rough estimate and entirely dependent on how the debt is used, the interest rate, and other factors. If the debt is a consequence of wise investment and the interest isn’t burdensome, it’s not necessarily a problem. However, a large existing debt can stop an economy from being able to react quickly to economic shocks.
This high debt level placed the US 63rd out of the 69 economies we measure for this data point – the full list can be found in the WCC Yearbook. The table is headed by Kuwait (3.01%), with Japan bringing up the rear (236.7%). A snapshot of Europe shows Luxembourg at 9th (25.98), Germany at 41st (63.89), and France at 62nd (113.03).
So, is it “efficient” to make cuts to government spending? Not quite. For us at the WCC, efficiency means being able to spend less to achieve the same – or even greater – outputs. It may, equally, be a case of spending just the same but achieving higher outputs (through some other variable). What it isn’t is reducing costs and achieving less – these are “non-efficiency savings.”
Even if it were possible to keep cutting the billions Trump wants to, an efficient government doesn’t just slash if it wants to maintain its efficiency over the long term. It also manages the potentially conflicting needs of its various stakeholders: private enterprises and industries, individuals, and groups of citizens. In sum: it tried to avoid fragmentation.
Ways to do this include: setting a strong, clear institutional framework that follows the rule of law; providing a cohesive series of regulations that allow business to thrive; and providing the checks and balances required by the various stakeholders to ensure that the required services are catered for (education, infrastructure, healthcare etc.) whether that’s through state intervention or private enterprise.
Our 2025 WCR results cement this idea in stone: we found that fragmentation – political, social, and economic – is on the rise globally, and, due also to the added impact of multiple external shocks, effective governance is becoming a defining advantage in an uncertain global environment.
While regional disparities persist, there is fresh momentum emerging in less traditionally competitive areas (notably Western Asia, Africa, and South America), with the data reflecting the growing importance of government efficiency as a foundation for resilience.
If a government manages the needs of its various stakeholders, this can feed competitiveness to the extent that both the public and private sectors can translate this “productive efficiency” into human development.
The United Nations Human Development Index (HDI) is a measure of economies’ achievements in key dimensions of human development, including a long and healthy life, being knowledgeable, and having a decent standard of living. The US ranked 17th in our 2025 assessment of this.
Productivity – and consequently competitiveness – has not increased much anywhere since 2008 despite technology and automation, as I explore in my book The Right Place.
There are two major explanations for why technology is not boosting productivity. The first is that we are just not properly measuring its impact. The second is that economic revolutions tend to be rather slow-burning – technological change may be happening, but it could be decades before the full benefits are felt.
The inability to increase productivity has, in Western economies, caused a reduction in real wages, which is a root cause of protectionism, another leitmotif in our 2025 WCR report.
Given their preferences and managerial expertise, businesspeople in office tend to adopt policies favorable to the business community and, in turn, improve government efficiency.
They have also been found to increase spending on roads and transport, while leaving health and education budgets largely untouched. By prioritizing economic over social infrastructure, they deliver immediate benefits to firms but risk holding back the long-term development of human capital. Ultimately, they focus on making government work for business, rather than like a business.
At its core, though, I do believe entrepreneurial input can benefit government. Yes, Robert McNamara – the Ford executive turned Pentagon chief during the Vietnam War – was a famous tragic failure in this. (Interestingly, and not unlike Musk with X (formerly Twitter), Henry Ford also acquired a media outlet: the Dearborn Independent, a small hometown newspaper he used to spread antisemitic conspiracies.)
Musk has a hand in many industries. The consequences of the political influence he therefore wields could, in theory, lead to positive outcomes – such as easing regulation for businesses. After all, firms would not succeed in one country and fail in another if the initiatives that governments took were not fundamental.
The trope of a business star who enters government and fixes the whole circus is compelling. Actual examples of it are, sadly, scarce. However, what if more states focused on enabling entrepreneurship rather than acting like entrepreneurs themselves?
Estonia, since the country’s independence from the Soviet Union in 1991, has focused almost exclusively on entrepreneurship to develop what has been described as the most digital state in the world. Central to this has been the “I am an entrepreneur” program that aimed to promote entrepreneurship education in schools across the country. Estonia ranked 33rd in the 2025 WCR.
But it’s Europe’s core values that help maintain its distinct position on the global stage.
Tax burdens and public debt are flaws shared by Europe and the US. Some would argue that reform in Europe won’t happen unless the US sets an example. To others, the structural forces against the taming of the US government still seem unbeatable; two of the largest items of federal spending are healthcare and social security, and people are living longer.
I disagree that Europe should be looking to the US for inspiration. Mario Draghi, in his report on the EU’s competitiveness, acknowledges that the EU is lagging behind the US in productivity growth – with real disposable income growing nearly twice as fast in the US. However, he also stresses that European competitiveness isn’t just about output. He defends the European model of prosperity, which includes critical elements like income equality, sustainability, and social protection.
But it’s Europe’s core values that help maintain its distinct position on the global stage.
Draghi highlights such strengths, such as sustainability and diversity, and argues that these competitive advantages should be harnessed further. His analysis of Europe’s strengths and weaknesses is precise and, in my view, spot on.
I would love to slam a copy of the Yearbook down on Trump’s desk, walk him through the complex, multi-faceted nature of government efficiency, and say, “This is what I believe” – and help make America competitive again.
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