EXPLAINED : India Slips 10 Places On WEF's Global Competitiveness Index || What Does It Mean? Should We Even Care?
The Global Competitiveness Index is a report made by the WEF which calculates the competitiveness landscape of 141 economies through 103 indicators organised into 12 pillars. Singapore has now become the world's most competitive economy in 2019, pushing the US to the second place. Hong Kong has also shown improvements and now comes at third place. A lot of developing countries and poor countries have seen improvements in their rankings even though the world is suffering from a global recession.
Sadly, India's position has slipped 10 places and now we stand at 68th position out of 141 countries. This article will explain everything you need to know about WEF, it's Global Competitive Index and why India is performing so poorly.
What is WEF and its Global Competitive Index?
WEF stands for World Economic Forum. It was founded in 1971. Based in Cologny-Geneva, Switzerland, it is a not-for-profit organisation which aims to improve the state of the world by engaging business, political, academic, and other leaders of society to shape global, regional, and industry agendas.
World Economic Forum has been releasing its Global Competitiveness Report since 1979. The report measures competitiveness of countries' economies. Basically, the report "assesses the ability of countries to provide high levels of prosperity to their citizens". This in turn depends on how productively a country uses its available resources.
Since 2004, the Global Competitiveness Index integrates the macroeconomic and the microeconomic aspects of competitiveness into a single index. The report ranks countries based on the model developed by Xavier Sala-i-Martin and Elsa V. Artadi. Before that, the macroeconomic ranks were based on Jeffrey Sachs's Growth Development Index and the microeconomic ranks were based on Michael Porter's Business Competitiveness Index.
This Global Competitiveness Report is prepared by analysing a country over the following 12 factors. These factors are called '12 Pillars of Competitiveness'
- Institutions
- Appropriate infrastructure
- Stable macroeconomic framework
- Good health and primary education
- Higher education, training and skill development
- Efficient goods markets
- Efficient labour markets
- Developed financial markets
- Ability to harness existing technology
- Market size—both domestic and international
- Production of new and different goods using the most sophisticated production processes
- Innovation
You can download WEF's Official Global Competitiveness Report by clicking here.
India's Position
With 62 points out of 100, India stood at 58th place in 2018. This year, with 61.4 points, India's rank has slipped 10 places and now India stands at 68th position. India's score fell in 8 out of 12 parameters and India ranks below 100 out of 141 on 5 of those parameters.
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| Image Source - WEF |
The following table shows India's performance over various parameters.
Observations/conclusions from the table
- Rise in Market size means that potential buyers/consumers in India are increasing.
- Rise in Macroeconomic Stability means that Indian Economy its vulnerability to the impact of external shocks. This can increase the potential for sustained growth.
- Fall in financial markets might have happened due to the instability in stock markets nowadays.
- Fall in infrastructure shows that Indian government is not serious about the basic physical systems of a business or nation like transportation, communication, sewage, water, electric systems, etc.
- Rise in healthcare shows the success of Pradhan Mantri Jan Arogya Yojna (Ayushman Bharat Yojna) but a rank of 110 out of 141 shows that there is a lot that still needs to be done.
- Fall in business dynamism and innovations shows a lower share of economic activity at new businesses, which could mean a drop in innovative activity and productivity growth.
- Fall in institutions means that India's public institutions have become weaker.
- Fall in labour markets signals that employment opportunities are decreasing. Firms are not willing to hire workers.
- Loss in goods markets means that there is less demand of various products. Fall in demand of automobile products is a good example.
- Rise in ICT adoption shows the success of Digital India Mission but a rank of 120 out of 141 shows that there is a lot of scope for improvement.
If you have any doubts over the integrity of facts and data provided in this article, please refer to Page No. 278 - Page No. 291 of the Official Report by clicking here.
Is this report even important?
According to mediabiasfactcheck.com, World Economic Forum is one of the least biased source of information. If you read the whole 600+ page report, you will understand that WEF produces very high quality and in-depth reports based on facts and no emotion loaded words are used.
The annual Global Competitiveness Report is used by many countries and international organisations all over the world as a standard used for comparison for a country's policy makers to get a basic idea as to in which direction a particular country is moving.
India is no different than any other country when it comes to the applicability of this report. Indian policy makers should take this report seriously and take some serious steps towards improving India's ranking.
Also, Prime Minister Narendra Modi spoke at this very same forum in 2018. This explains that the present government understands the importance of this forum. You can watch the full speech here
Whom should we blame?
According to WEF,
"India, in 68th position, loses ground in the rankings despite a relatively stable score mostly due to faster improvements of several countries previously ranked lower."
This means that India's rankings have fallen down because other developing nations have progressed faster than India. This does not mean that Indian government has nothing to do with this issue. Whenever any question related to economic slowdown is asked to the government, it replies that a global economic recession is going on and all the countries in the world are facing an economic slowdown. If this statement was true, then how come other countries' rankings have improved? Iran is the only country out of 141 countries whose position also fell by 10 points. This implies that the economic slowdown in India is worse than other developing countries and India is not able to catch up with them.
In short, it is not 100% Indian government's fault but in my opinion, the recent economic policies of India especially after demonetisation and GST have a lot to do with India's current economic crisis.
Also, I don't think it is wise to 'blame' anyone for this. I agree that mistakes were made by the government and things could have been better if those mistakes were not made, but playing blame games is not going to help. Playing blame games is just a never ending process which gives no outcome. We should focus on fixing our economy instead.
The government should stop wasting time in blaming Nehru for everything and start taking things seriously. We need some serious economic reforms if we are targeting 5 trillion dollar economy by 2024.
What is your opinion on this matter? Please let us know in the comments!
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Hi, I am Pranjay Varshney. I am pursuing my B.Sc. (Hons) in Electronic Science from University of Delhi. My dream is to join the Indian Army as an officer and I am very passionate about it. I like to write articles about Indian Armed Forces and various political and economic affairs. I spend my free time doing gymnastics, listening to music or watching movies.
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