India slips a notch in Global Competitiveness Index : WEF
According to the World Economic Forum’s (WEF) annual Global Competitiveness Index, India’s rank is down by a single position at 40th among 137 economies for the 2017-18 report, down from 39th position in 2016-17.
Switzerland remains the world’s most competitive economy, followed by the United States and Singapore. With Switzerland, the Netherlands and Germany stable on first, fourth and fifth spots, respectively, the only changes in the top five positions apply to the United States and Singapore, which swap second and third positions.
The GCI combines 114 indicators that capture concepts that matter for productivity and long-term prosperity. These indicators are grouped into 12 pillars : institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labor market efficiency, financial market development, technological readiness, market size, business sophistication, and innovation. These pillars are in turn organized into three subindexes : basic requirements, efficiency enhancers, and innovation and sophistication factors.
Analysis of the Global Competitiveness Index (GCI) points to three main challenges and lessons that are relevant for economic progress, public-private collaboration, and policy action:
Ø First, 10 years after the crisis, the financial sector remains vulnerable- GCI indicators of bank soundness have not recovered to pre-crisis levels, new sources of vulnerability have emerged such as increasing private debt in emerging economies and the growth of non-regulated capital markets and governments have less bandwidth than they did 10 years ago to cope with another crisis. That is, ten years on from the global financial crisis, economies still remain at risk from further shock and are ill-prepared for the next wave of innovation and automation.
Ø Second, more countries are able to innovate, but they must do more to spread the benefits– Major emerging markets such as China, India, and Indonesia are becoming centers for innovation, catching up with advanced economies. However, they would benefit from accelerating progress in increasing the readiness of their people and firms to adopt new technology, which is necessary to widely spread innovation’s potential economic and societal benefits.
Ø Third, both labor market flexibility and worker protection are needed to ensure shared prosperity in the Fourth Industrial Revolution (4IR) era- As globalization and rapid technological progress continue to test the ability of labor markets to reallocate workers between tasks and occupations, the GCI shows three parallel trends. First, measures of labor market flexibility are converging between advanced and emerging economies; second, more openness and economic integration has been accompanied by increased labor market flexibility; and third, greater labor market flexibility can coexist with protecting workers’ rights and reducing inequality. Together, these issues underscore the overall challenge for both advanced and emerging economies to reallocate factors of production to be flexible and responsive to technological trends while protecting people’s well-being during adjustment periods. Also, a decade of data illustrates the importance of balancing flexibility with protection in labour markets and why big hoped-for gains in productivity from innovation have remained elusive.
For India (40th), the score improves across most pillars of competitiveness, particularly infrastructure (66th, up by two positions), higher education and training (75th, up by six positions), and technological readiness (107th, up by three positions), reflecting recent public investments in these areas. Performance also improved in Information and Communication Technology indicators, particularly Internet bandwidth per user, mobile phone and broadband subscriptions, and Internet access in schools. The quality of institutions has increased further, especially in terms of efficiency of public spending (20th), but the private sector still considers corruption to be the most problematic factor for doing business in India.