Related Topics: Reports & Indices, World Economic Forum
- India was ranked 68th in the annual Global Competitiveness Index compiled by Geneva-based World Economic Forum (WEF).
- This is the fourth version of the Global Competitiveness Index (GCI 4.0) and was introduced in 2018.
What is Global Competitiveness Index (GCI)?
- GCI, which was launched in 1979, maps the competitiveness landscape of 141 economies through 103 indicators organised into 12 pillars.
- It provides a compass for thriving in the new economy where innovation becomes the key factor of competitiveness.
- The basic notion behind the GCI is to map the factors that determine the Total Factor Productivity (TFP) in a country.
- The TFP is essentially the efficiency with which different factors of production such as land, labour and capital are put to use to create the final product.
- It is believed that it is the TFP in an economy that determines the long-term economic growth of a country.
Factors & Categories
- The GCI 4.0 tracks data and/or responses on 12 factors divided into 4 broad categories.
- The first category is the “Enabling Environment”, which includes factors such as the state of infrastructure, institutions, the macroeconomic stability of the country and its ability to adopt new technology.
- The second category is “Human Capital” and includes health and level of skills in the economy.
- The third category is the state of “Markets” such as those for labour, product, financial and the overall market size.
- The fourth category is “Innovation Ecosystem” which includes business dynamism and innovation capability.
Ranking of Countries
- A country’s performance on the overall GCI results as well as each of its components is reported as a ‘progress score’ on a 0-to-100
- A score of 100 represents the ‘frontier’, an ideal state where an issue ceases to be a constraint to productivity growth.
- Singapore has become the world’s most competitive economy in 2019, pushing the US to the second place.
- Hong Kong SAR is ranked 3rd, Netherlands is 4th and Switzerland is ranked 5th.
Performance of India
- India has moved down 10 places to rank 68th in the 2019 Index.
- The slippage this year is not just because India’s score in the Global Competitiveness Index fell, but also because several other close competitors surged ahead.
- India is among the worst-performing BRICS nations along with Brazil (71st rank).
- India ranks high in terms of macroeconomic stability and market size, while its financial sector is relatively deep and stable despite the high delinquency rate, which contributes to weakening the soundness of its banking system.
- India is ranked high at 15th place in terms of corporate governance, while it is ranked second globally for shareholder governance.
- In terms of the market size, India is ranked third, while it has got the same rank for renewable energy regulation.
- Healthy life expectancy, where India has been ranked 109th out of total the 141 countries surveyed for the index, is one of the shortest outside Africa and significantly below the South Asian average.
- With a ratio of female workers to male workers of 26, India has been ranked very low at 128th place.
- India is also ranked low at 118th in terms of meritocracy and incentivisation and at 107th place for skills.
- In the overall ranking, India is followed by some of its neighbours including Sri Lanka at 84th place, Bangladesh at 105th, Nepal at 108th and Pakistan at 110th place.
Key Findings of the Report
- The study highlighted that the global economy is unprepared for a major slowdown.
- The report shows that those countries which integrate an emphasis on infrastructure, skills, research and development into their economic policies and support those left behind are more successful compared to those that focus only on traditional factors of growth.
- The report showed that several economies with strong innovation capability like Korea, Japan and France, or increasing capability, like China, India and Brazil, must improve their talent base and the functioning of their labour markets.
- The presence of many competitive countries in Asia-Pacific makes this region the most competitive in the world, followed closely by Europe and North America.
- 10 years on from the global financial crisis, the global economy remains locked in a cycle of low or flat productivity growth despite the injection of more than USD 10 trillion by central banks.
[Source: The Hindu, Indian Express]