By Elton Gomes
India has been ranked as the 58th most competitive economy on the World Economic Forum’s global competitiveness index for 2018. The index saw India climb five spots from its rank in 2017. India also recorded the largest gain among G20 economies, the report said.
The index was topped by the US, while Singapore and Germany came in second and third spots, respectively.
US tops the list for first time in a decade
Out of 140 economies assessed, the US topped the index for the first time in a decade. The US received a competitiveness score of 85.6 out of 100, with its strengths including business dynamism, labour market, and the financial system.
The report however noted that the US economy was being restricted due to its weakening social fabric, worsening security, lack of IT adoption, and corruption. The report also noted that the US lagged behind most advanced economies in terms of health, as the country’s life expectancy was three years below the average of advanced economies.
Singapore, in the second spot closely followed the US, maintained its competitiveness due to policies that promoted openness, which is a key driver for its economic success. Germany, in third place, scored highly on its macroeconomic stability but was held back due to slow adoption of IT.
Other countries in the top 10 include Switzerland (4th), Japan (5th), Netherlands (6th), Hong Kong (7th), United Kingdom (8th), Sweden (9th), and Denmark (10th).
India, China catching up with high-income economies
The index saw China occupy the 28th spot. As per the report, the top performers in the “upper and lower-middle-income brackets”, such as China and India, are catching up with or even outperforming the average among high-income economies.
“China, is already more advanced when it comes to investing in research and development sub-pillar than the average high-income economy, while India is not far behind and let down only by its less-efficient bureaucracy for business creation and insolvency,” the report said, as per a PTI report.
Among the BRICS economies, China topped the list with a score of 72.6. China has ranked ahead of the Russian Federation (65.6, 43rd), India (62.0, 58th), South Africa (60.8, 67th), and Brazil (59.5, 72nd).
India’s advantages and disadvantages
The report said that India’s greatest competitive advantages include its market size, innovation, and business dynamism. However, India needs to improve in areas such as its labour market (particularly concerning workers rights), product market, and skills.
India, however, managed to remain “South Asia’s main driving force”. The report mentioned that India leads the region in all areas of competitiveness save for health, education, and skills. Sri Lanka has the highest healthy life expectancy (67.8 years) and the workforce with the highest amount of schooling (9.8 years).
“These two countries (India and Sri Lanka) are also the ones that can rely on the most efficient infrastructure system. India has invested more heavily on transport infrastructure and services, while Sri Lanka has the most modern utility infrastructure,” the report said, as per a PTI report.
Shedding light on India’s disadvantages, the report said, While Indian companies can access the third largest market in the world, the country would benefit from increased trade openness to drive productivity growth, Quartz reported. The report further said that India will need to invest more in order to spur innovation “beyond hubs of excellence and diffuse economic growth more broadly.
The report also noted that India has a dismal student-teacher ratio in schools (35.2), and an insolvency recovery rate of 26.4 cents for every dollar. Additionally, India’s imports constitute 23% of its GDP.
Elton Gomes is a staff writer at Qrius