Global Competitiveness Index - India’s Performance
iasparliament
October 12, 2019
Why in news?
The Global Competitiveness Index was recently released by the World Economic Forum (WEF).
What is the GCI?
The Global Competitiveness Index (GCI) was launched in 1979.
It maps the competitiveness landscape of 141 economies through 103 indicators organised into 12 pillars.
The 141 countries mapped by this year’s GCI account for 99% of the world’s GDP.
The 2019 index is the fourth version of the global competitiveness index; hence referred to as GCI 4.0.
The GCI 4.0 tracks data and/or responses on 12 factors divided into 4 broad categories.
The first category is the “Enabling Environment.”
This includes factors such as the state of infrastructure, institutions, macroeconomic stability and the ability to adopt new technology.
The second category is “Human Capital” and includes health and level of skills in the economy.
The third is the state of “Markets” such as those for labour, product, financial and the overall market size.
The last category is “Innovation Ecosystem” which includes business dynamism and innovation capability.
What are the highlights of GCI 4.0?
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 4th and Switzerland 5th.
China is ranked 28th (the highest ranked among the BRICS).
The presence of many competitive countries in Asia-Pacific makes this region the most competitive in the world.
This is followed closely by Europe and North America.
India has moved down 10 places to rank 68th among 141 countries on the global competitiveness index.
It is among the worst-performing BRICS nations along with Brazil (ranked even lower than India at 71st this year).
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.
A number of similarly-placed economies including Colombia, South Africa and Turkey improved over the past year and hence have overtaken India.
The study highlighted that the global economy is unprepared for a major slowdown.
What are the factors behind India’s performance?
The drop in India’s position is largely due to improvements witnessed by several other economies.
Notably, the decline in India’s competitiveness score is relatively small.
India’s 2019 overall score (61.4) fell by merely 0.7 when compared to its 2018 score.
Positives - India ranks high in terms of macroeconomic stability and market size.
It is also ranked high at 15th place in terms of corporate governance.
India 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.
India has also performed well in terms of innovation.
In this, it is well ahead of most emerging economies and on par with many advanced economies.
Shortcomings - There is limited ICT (information, communications and technology) adoption, poor health conditions and low healthy life expectancy.
India has been ranked 109th out of total 141 countries in the healthy life expectancy.
It was one of the shortest outside Africa and significantly below the South Asian average.
India’s product market efficiency is undermined by a lack of trade openness.
The labour market is characterised by -
a lack of worker rights' protections
insufficiently developed active labour market policies
critically low participation of women
With a ratio of female workers to male workers of 0.26, 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.
