World Competitiveness Index

The annual World Competitiveness Index is released by the Institute of Management Development (IMD). India is on 37th as per World Competitiveness Yearbook (WCY).

Highlights of the WCI Index 2022

• Among all the Asian Economies, India has witnessed the sharpest rise with the six-position jump from 43rd to 37th rank. This is mainly due to gains in the economic performance.
• Denmark has toped the 2022 ranking featuring 63-nations list from the third position last year. It is followed by Switzerland (2nd) slipped from the top ranking in last year and Singapore regained the third spot from fifth.

The World Competitiveness Index is a comprehensive annual assessment that serves as a global benchmark for country competitiveness.
Global Indices and India’s Rankings represent the country’s performance on indicators that range from social to economic factors along with political indicators as well. To know about Global Indices & India’s Ranking, visit the linked article.

What is World Competitiveness Index?

• WCY is maintained by the Institute for Management Development (IMD) and was first published in 1989.
• The IMD looked into the effects of COVID-19 upon economies all around the world in 2021.
• It covers 64 different economies in detail.
• The IMD World Competitiveness Yearbook (WCY) is a comprehensive annual report and global reference point on country competitiveness.
• Based on a comprehensive study, it provides benchmarks as well as patterns, and also statistics, and survey data.

Role of IMD

• It examines and assesses countries based on how effectively manage their competencies in order to create long-term value. Because businesses must deal with political, social, and cultural factors, an economy’s competitiveness cannot be limited to GDP and productivity alone.
• Governments must thus create an environment defined by efficient infrastructures, institutions, and policies that promote firms to create long-term value. Governments must thus create an environment defined by efficient infrastructures, institutions, and policies that promote firms to create long-term value.

The IMD World Competitiveness Rankings underscore a long-term pattern that has been noted in previous editions: the top-ranked countries each have their own way to become competitive.

Elements: It examines four components (334 competitiveness criteria) to assess a country’s prosperity and competitiveness:

1. performance of the economy
2. Efficiency in government
3. Efficiency in the workplace
4. Infrastructure

As new theories, research, and data become available, as well as even as the global economy evolves, the standards are amended and updated frequently.

Few countries with top ranking:

• Europe- In the international competitiveness rankings, Denmark (1st), Switzerland (2nd), Sweden (4th), Netherlands (6th), Finland (8th), Norway (9th) and USA (10th).
• Asia: Singapore (3rd), Hong Kong (5th), Taiwan (7th), China (17th) and Australia (19th) are the top-performing Asian economies. Singapore ranked first in the World Competitiveness Index for 2021.
• Others: The United Arab Emirates has fell down to 12th position from 9th in 2021 and the United States is in the same places as last year i.e. 10th.

Also, refer to the following links:

India’s Ranking In World Competitiveness Index 2022

India has come up on 37th rank in 2022 from 43rd in 2021 in the World Competitive Index.

In comparison to the other BRICS countries: India came in second (43rd) among the BRICS countries, after China (17th), and was trailed by, Brazil (59th), and South Africa (60th).

Note – Both Russia and Ukraine were not assessed in this year’s edition due to the limited reliability of data collected.

Performance-based on four criteria: India’s government efficiency score improved by just 1 point. It is 45th from 46th a year ago, although its rankings in other aspects like economic performance witnessed drastic improvement to 28th from 37th in 2021, corporate efficiency has also touched a new mark of 23rd rank which was 32nd last year, and infrastructure (49th) stayed unchanged.

Government Efficiency Improvements: Mostly owing to reasonably stable governmental finances. Despite the challenges posed by the epidemic, the government deficit in 2021 remained at 7%. Private businesses were also given assistance and subsidies by the government.

India’s Strengths: India’s strengths are telecom investments (1st), R&D productivity by publication (2nd), Graduates in Sciences (6th), IT & media stock market capitalization (12th), World robots distribution (12th).

India’s Key attractiveness factor are as follows:

• Skilled workforce
• Cost competitiveness
• Dynamism of the economy
• High educational level
• Open and positive attitudes

Economies performance in 2022 showed improvement in the following from last year (2021). Top 5 of 15 are mentioned below –

• Real GDP Growth: 9.2 from -8.0
• Real GDP growth per capita:  8.08 from -8.93
• Gross fixed capital formation: real growth – 14.95 from 5.44
• Unemployment rate – gender ratio: 0.71 from 2.14
• Internet users: 476 from 297

India’s Weaknesses: In sub-indices such as Scientific and technical employment (61), Enforcing contracts (63) under regulatory framework, wireless broadband and internet users (63rd and 64th) respectively, particle pollution exposure (64th), India’s performance is the worst.

India’s performance in 2022 declined in the following from last year (2021). Top 5 of 15 are mentioned below –

• Current account balance: -1.57 from 1.04
• Tourism Receipts: 0.26 from 1.04
• Government budget surplus/deficit (%): -9.81 from -7.24
• Higher education achievement: 19.5 from 26.3
• Exchange rate stability: 0.082 from 0.066

Challenges faced by India – 

• Managing Trade disruptions and Energy security.
• Maintaining high GDP growth post COVID.
• Skill development and employment generation.
• Strategic disinvestment and asset monetization.
• Resource mobilization for infrastructure development.

India’s Recent Competitiveness Measures

• To improve India’s manufacturing capabilities and exports, the government has implemented the Production-Linked Incentive (PLI) Scheme in numerous industries.
• India is also a driving force in the global movement to fight climate change and Mr. Modi’s pledge of net-zero by 2070 at the COP26 summit in November 2021, sits in harmony with its strength in environment-related technologies in the ranking.
• India’s Department of Telecom has constituted six task forces on 6G technology. t facilitate technological advancement for increasing competitiveness.
• India’s active participation in international forums on technology governance is ensured by the Ministry of External Affairs, through its New, Emerging And Strategic Technologies (NEST) division. This assists in collaboration with foreign partners in the field of technology and acts as the nodal division within the ministry for issues pertaining to new and emerging technologies.
• The Increasing manufacturing capacity through Atmanirbhar Bharat and Make in India initiatives which are aimed at domestic supply chains and heavy investment in manufacturing hubs.
• The ‘Atmanirbhar Bharat Abhiyan (or Self-Reliant India Mission)’ has five pillars.
  • Economy,
  • Infrastructure,
  • System,
  • Vibrant Demography
  • and Demand

India’s Ranking In WCI Index 2021

In comparison to the other BRICS countries: India came in second (43rd) among the BRICS countries, after China (16th), and was trailed be Russia (45th), Brazil (57th), and South Africa (58th) (62nd).
Performance-based on four criteria: India’s government efficiency score improved to 46 from 50 a year ago, although its rankings in other aspects like economic performance (37th), corporate efficiency (32nd), and infrastructure (49th) stayed unchanged.

Government Efficiency Improvements: Mostly owing to reasonably stable governmental finances. Despite the challenges posed by the epidemic, the government deficit in 2020 remained at 7%. Private businesses were also given assistance and subsidies by the government.
India’s Strengths: India’s strengths are telecom investments (1st), smartphone costs (1st), Information services exports (3rd), remuneration for service professions (4th), and terms of trade index (4th) (5th).
India’s Weaknesses: In sub-indices such as broadband users (64th), particle pollution exposure (64th), human development index (64th), Gdp growth (63rd), as well as foreign currency reserves per capita (62nd), India’s performance is the worst.

Top Performer Qualities

Investment in innovation, digitization, welfare benefits, varied economic activity, supporting public policy and leadership, all of which result in social cohesion, have all aided countries in better managing the crisis and so ranking higher in competition.

Unemployment was addressed: Competitive economies were able to move to a remote work pattern while also allowing for remote learning.

Public Spending: The efficacy of important social funding, including public finance, tax policy, and business regulation, is considered as easing the strain on the Covid-19-affected economies.

Steps to improve the Index

• According to Michael Porter, a country that achieves a balance between economic growth advancement can boost productivity, which leads to increased competitiveness and thus wealth.
• As a result, it is critical to building an environment that not only encourages enterprises to successfully compete in local and worldwide markets but also ensures that the standard of living of the average citizen increases.
• Governments must provide an environment with efficient infrastructures, institutions, and rules that promote firms to create long-term value.

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