World Economic Forum's report on Global competetiveness

World Economic Forum (WEF) has released the Global Competitiveness Report for the year 2016-17.

India’s performance:

• India has risen rapidly among all countries in the global competitive stakes by climbing 16 notches to the 39th position during the past year.


• This marks the biggest scale of improvement in competitiveness among all countries and is the second year in a row India has gone up 16 ranks in the WEF index.
• India’s competitiveness has improved, particularly in goods market efficiency, business sophistication and innovation, while lower oil prices and improved monetary and fiscal policies have made the economy not only stable, but also the fastest growing among G20 countries.
• The report suggests that improvements in institutions and infrastructure have increased overall competitiveness along with recent reforms such as opening the economy to foreign investors and increasing transparency in the financial system.

Challenges ahead:

According to the report, huge challenges lie ahead on India’s path to prosperity.

• Despite significant improvements in infrastructure and social indicators such as health and education over the past decade, India lags other nations in various parameters.
• India’s tax regulations, corruption, tax rates and poor public health are the most problematic factors for doing business.
• The labour market rigidities and the presence of large, public enterprises especially in the utilities and financial sector make the economy less efficient. The labour market is segmented between workers protected by rigid regulations and centralised wage determination, especially in the manufacturing sector, and millions of unprotected and informal workers.
• Lack of infrastructure and ICT use (where India is ranked 120th in the world) remain bottlenecks. Besides, progress in recent years has been slow and further investment is necessary to connect rural areas and ensure they equally benefit from and contribute to India’s development.
• The country’s biggest relative weakness today is in technological readiness, where initiatives such as Digital India could lead to significant improvements.
• The efficiency of the goods market in India has also deteriorated over the past decade, and the WEF reckons this would change once the GST regime is implemented.

Performance of other countries:

• Globally, Switzerland has retained its top position as the world’s most competitive economy for seventh year in a row and is followed by Singapore, the US, Germany and the Netherlands in the top-five.
• These are followed by Japan, Hong Kong, Finland, Sweden and the UK in the top ten.
•  Among emerging economies, South Africa is ranked higher and it has re-entered the top 50, progressing seven places to 49th.
• Elsewhere, macro economic instability and loss of trust in public institutions has dragged down Turkey (51st), as well as Brazil (75th), which posted one of the largest falls.
• China, holding steady at 28, remains by far the most competitive among large emerging economies, although its lack of progress moving up the ranking shows the challenges it faces in transitioning its economy.