| India moves up a step, but does poorly on many basics |
| BS Reporter / New Delhi September 9, 2009, 0:56 IST |
India has moved up one position to 49th in the The Global Competitiveness Report 2009-2010 (GCR Report), released today by the World Economic Forum ahead of its annual meeting, to be held this year in Dalian, China.
The improvement, coming in a year when the world battled the worst recession in recent history, could enthuse policy-makers, but the report highlights the yawning gap between those who benefited from reforms and those who could not do so.
For instance, India’s GDP has grown 6.6 percent per year on average since 1991, when many economic reforms began in earnest. Yet, its GDP per capita remains just above $1,000—a third and a tenth, respectively, of those in China and Russia.
A similar gap can also be seen between rural India and its thriving economic and technological hubs, notes the GCR report. Take another example. India hosts some of the best universities in the world, and a number of Indian corporate giants have become major global players or even leaders in their fields. Yet, 42 percent of the population lives on less than $1.25 a day (in purchasing power parity), more than twice China’s equivalent number of people.
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Mirroring this dichotomy, India’s competitive performance continues to exhibit a rather reversed development pattern. It ranks an outstanding 28th in the most complex areas, measured by the business sophistication and innovation sub-index, ahead of several advanced economies. The country also boasts fairly well functioning institutions (54th), bustling financial markets (16th), and a sound banking sector (25th), supported by a vast domestic market (4th largest in PPP terms).
On the other hand, the country underperforms on some of the basic determinants of competitiveness, namely health and primary education (101st), macroeconomic stability (96th)—though improving—and infrastructure (76th), the GCR report said.
| GET, SET... Global Competitiveness Index: How India fared this year... | ||
| Rank (Out of 133) | Score (1-7) | |
| GCI 2008-09 (out of 134) | 50 | 4.3 |
| GCI 2007-08 (out of 131) | 48 | 4.3 |
| Basic requirements | 79 | 4.2 |
| 1st pillar: Institutions | 54 | 4.2 |
| 2nd pillar: Infrastructure | 76 | 3.5 |
| 3rd pillar: Macroeconomic stability | 96 | 4.2 |
| 4th pillar: Health and primary education | 101 | 4.8 |
| Efficiency enhancers | 35 | 4.5 |
| 5th pillar: Higher education and training | 66 | 4.0 |
| 6th pillar: Goods market efficiency | 48 | 4.4 |
| 7th pillar: Labour market efficiency | 83 | 4.2 |
| 8th pillar: Financial market sophistication | 16 | 5.1 |
| 9th pillar: Technological readiness | 83 | 3.3 |
| 10th pillar: Market size | 4 | 6.1 |
| Innovation and sophistication factors | 28 | 4.2 |
| 11th pillar: Business sophistication | 27 | 4.8 |
| 12th pillar: Innovation | 30 | 3.7 |
Similarly, penetration rates for mobile telephony (116th), the internet (104th), personal computers (96th) remain among the lowest in the world, while inefficiencies in the labour market (83rd) prevent an optimal allocation of human capital.
Improvements in these areas would place India on a stronger growth trajectory. Switzerland topped this year’s ranking, while the US fell one place to the second position with the weakening in its financial markets and macroeconomic stability.
Singapore, Sweden and Denmark were the other countries in the top five, while China also moved up one position, to 30th.
The Global Competitiveness Report’s competitiveness ranking is based on the Global Competitiveness Index (GCI), developed for the World Economic Forum by professor Sala-i-Martin and introduced in 2004. The GCI is based on 12 pillars of competitiveness, providing a comprehensive picture of the competitiveness landscape in countries around the world at all stages of development.
| WHO STANDS WHERE The Global Competitiveness Index 2009–10 rankings and 2008–2009 comparisons © 2009 World Economic Forum | |||
| Country/Economy | GCI 2009–10 | GCI 2008–09 Rank* | |
| Rank | Score | ||
| Switzerland | 1 | 5.60 | 2 |
| United States | 2 | 5.59 | 1 |
| Singapore | 3 | 5.55 | 5 |
| Sweden | 4 | 5.51 | 4 |
| Denmark | 5 | 5.46 | 3 |
| Finland | 6 | 5.43 | 6 |
| Germany | 7 | 5.37 | 7 |
| Japan | 8 | 5.37 | 9 |
| Canada | 9 | 5.33 | 10 |
| Netherlands | 10 | 5.32 | 8 |
| Hong Kong SAR | 11 | 5.22 | 11 |
| Taiwan, China | 12 | 5.20 | 17 |
| United Kingdom | 13 | 5.19 | |