Global Competitiveness Report 2020

Latest Update – The Global Competitiveness Report Special Edition 2020 is published by the World Economic Forum (WEF). The Global Competitiveness Rankings have been paused in the wake of the COVID-19 pandemic and challenges brought by it to the countries.

The most recent global competitiveness ranking was released in 2019 in the Global Competitiveness Index 4.0. This article will provide you with key findings of the WEF’S Global Competitiveness Report 2020 and 2019. Also, get all the relevant details about the report along with GCI 4.0 in this article for the IAS Exam preparation.

Key Findings of the Global Competitiveness Report 2020

The 2020 Global Competitiveness Report 2020 talks about:

1. Reviving and transforming the enabling environment
2. Reviving and transforming human capital
3. Reviving and transforming markets
4. Reviving and transforming the innovation ecosystem
5. Assessing readiness for economic transformation
6. Assessing disruption and resilience through business sentiment

The trends (since global financial crisis 2008) and the impact of the COVID-19 crisis, as mentioned in the Global Competitiveness Report 2020 are:

1. The institutions suffer from weaker checks and balances and lack transparency resulting in consistent corrosion.
2. The universal presence of ICT access is still a question. The pandemic has made it difficult to reach the universalization of ICT access in developing economies on one side whereas deepened the digitalization in advanced economies on the other.
3. The debts have increased to unprecedented levels due to emergency and stimulus measures.
4. The labour markets have been disrupted by technology. Also, markets lack digital skills.
5. Health services, infrastructure and talent have lagged behind two dominant demographic trends: the increasing population in the developing world and ageing populations in the developed world.
6. Since the financial crisis, there has been a fall in trade openness and international movement of people.

How economies can revive?

1. Government should improve its long-term thinking capacity to deal with public services delivery.
2. Infrastructure along with other utilities require updation.
3. The closure of the digital divide should be prioritized both across countries.
4. The support system should be built to aid low-income and emerging economies.
5. The market policies should be revisited and modified so as to bring the required changes in the skilling processes.
6. The healthcare infrastructure should be made capable of handling the COVID-19 pandemic without ignoring future healthcare needs.
7. Access and including in financial markets should be expanded.
8. Lay the foundations for better balancing the international movement of goods and people with local prosperity and strategic local resilience in supply chains.
9. Markets of tomorrow – The investment in R&D, supply chain, venture capital would help in the creation of new firms.

What should be the priorities for the economies in the next 3-5 years?

1. Strong governance – The central institutions should embed a strong governance system and long-term vision.
2. ICT Access – Broadening the ICT access through infrastructure updates.
3. Energy transition to broaden access to electricity.
4. Progressive Taxation – Economies need a shift to progressive taxation to allow transformation in the long-run.
5. The new skills needed in the future markets should be gauged and accordingly skilling and upskilling should be brought.
6. The labour laws across countries should be brought in alignment with the need of the workforce.
7. Inclusivity in Financial System – Long-term investments should be given focus by directing financial resources towards them.
8. The markets aiming at public-private partnerships should be aimed at. Market access should be in focus in the fourth industrial revolution.
9. Incentivize firms to embrace diversity, equity and inclusion to enhance creativity.

Global Competitiveness Report 2020 and India

1. India is one of the large economies witnessing downward trends in the adequacy of skill sets of all graduates in recent years.
2. India trails behind nations w.r.t the numbers of tertiary education systems that deliver the need of the employers. USA and Ethiopia also saw a decline.
3. India is one of the developing and emerging economies that found it harder to hire foreign labour that it was in 2008. The other countries on similar lines are:
   • Austria
   • Switzerland
   • Denmark
   • Italy
   • Iceland
   • Singapore,
   • The United Kingdom
   • Sweden
   • South Africa
   • Botswana
   • Columbia
   • Peru
4. Tech hubs in India like Mumbai and Bengaluru put India on the list of those emerging economies that have strengthened entrepreneurial culture over the decade.
5. India’s scores on the 0-100 scale against the following economic priorities are:
   • Ensure public institutions embed strong governance principles and a longterm vision and build trust by serving their citizens – 49.4
   • Upgrade infrastructure to accelerate the energy transition and broaden access to electricity and ICT – 72.6
   • Shift to more progressive taxation, rethinking how corporations, wealth and labour are taxed, nationally and in an international cooperative framework – 55.8
   • Update education curricula and expand investment in the skills needed for jobs and “markets of tomorrow” – 43.5
   • Rethink labour laws and social protection for the new economy and the new needs of the workforce – 44.4

Get other important international organizations’ reports below:

What is the Global Competitiveness Index (GCI 4.0)?

The Global Competitiveness Index measures countries’ national competitiveness that determines their productivity. In 2019, India’s rank in Global Competitiveness Index 4.0 is 68.

The World Economic Forum in 2018 introduced the Global Competitiveness Index (GCI) 4.0 which is an economic compass to measure the countries’ productivity across 12 pillars and 103 indicators. The index is annually published by WEF to gauge on the opportunities and the challenges that are created within and between economies, in the era of fourth industrial revolution and polarization.

A few salient points about GCI 4.0 2019

1. 141 countries have been ranked in the global competitiveness index 2019.
2. Singapore topped the index while Chad was at the bottom.
3. The countries are ranked in the GCI with the determinants of long-term growth.
4. The score is given between 0 and 100. (More the score, better the rank.)
5. 12 pillars are covered under four frameworks of the global competitiveness report:
   • Enabling environment
   • Human capital
   • Markets
   • Innovation ecosystem

What does the global competitiveness report measure?

The WEF’s global competitiveness report evaluates countries’ productivity and competitiveness in relation to 103 indicators spread across 12 pillars. These pillars are evaluated to score nations in the global competitiveness index:

1. Institutions
2. Infrastructure
3. ICT Adoption
4. Macroeconomic Stability
5. Health
6. Skills
7. Product Market
8. Labour Market
9. Financial System
10. Market Size
11. Business Dynamism
12. Innovation Capability

Key Findings of Global Competitiveness Report 2019

The list below presents the global findings of the report:

1. Lease Developing Countries (LDCs) have missed the UN’s Sustainable Development Goal 8’s target of 7% growth since 2015.
   1. United Nations
   2. Sustainable Development Goals
2. The rate of extreme poverty reduction is decreasing.
3. Increase in hunger with 826 million people affected by it. (784 million people were hunger-stricken in 2015.)
4. Average Total factor productivity (TFP) annual growth rate was 1 percent for advanced economies and 2.8 percent for emerging and developing economies.
   1. TFP is the ratio of aggregate outputs to the aggregate inputs and is considered as the primary contributor to the GDP growth rate.
5. 41 economies have shown a decline in competitiveness which includes five countries (US, Japan, UK, Canada, and Germany) of G7.
6. Need for improvement in innovation technologies as the report mentions only four countries out of 141 that score above 80 on the innovation capability pillar.
7. The most improved country in South Asia is Sri Lanka.
8. The country with the highest improvement across the globe is Vietnam.

Global Competitiveness Report and India’s Performance

India’s rank fell from 58 to 68 in Global Competitiveness ranking 2019. The reason mentioned for this fall is the “faster improvement of various countries which previously ranked lower.” India scored 61.4 in the Global Competitiveness Report 2019.

1. BRICS Performance – China stood as the best performer among BRICS countries.
   1. Brazil – 71
   2. Russia – 43
   3. India – 68
   4. China – 28
   5. South Africa – 60
2. South Asia Performance – India ranked at the top in the South Asia region followed by Sri Lanka. A few South Asian countries’ rankings are mentioned below:
   1. Sri Lanka – 84
   2. Bangladesh – 105
   3. Nepal – 108
   4. Pakistan – 110
3. India ranks at 25 among 141 countries in technological governance that shows how fast is the legal framework adapting to the digital business models in the economies.
4. Out of 12 pillars, India ranks beyond 100 in 5 pillars and in top 50 in 4 pillars
5. India’s best performance on some of the important pillars of the global competitiveness report are mentioned below:
   • On macroeconomic stability pillar – 43
   • On market size pillar – 3
   • On financial sector pillar – 40
   • On Banking System pillar – 89
   • On Innovation pillar – 35
6. India’s poor performance in other pillars of global competitiveness report 2019 is mentioned below:
   • ICT Adoption pillar – 120
   • Governance – 59
   • Electricity – 103
   • Health Life expectancy – 109
   • Skill Base – 107
   • Product market efficiency – 101
   • Trade Openness – 131
   • Women Participation – 128

Rankings of Major Economic Groups in Global Competitiveness Report 2019

The Global competitiveness rankings are mentioned below in comparison to their 2018 rankings:

Read more about G7 at the linked article.

Read more about ASEAN in the linked article.

Global Competitiveness Report 2020 & Global Competitiveness Index 2020 – UPSC Notes:-Download PDF Here