The World Competitiveness Index 2022

Recently, the annual World Competitiveness Index was released by the Institute for Management Development (IMD).

• 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.
• IMD is a Swiss foundation, based in Switzerland, dedicated to the development of international business executives at each stage of their careers.
• The IMD World Competitiveness Yearbook (WCY), first published in 1989, is a comprehensive annual report and worldwide reference point on the competitiveness of countries.

Key Highlights of the Report

• Top Global Performers:
• Europe: Denmark has moved to the top of the 63-nation list from the third position last year, while Switzerland slipped from the top ranking to the second position and Singapore regained the third spot from fifth.
• Asia: The top-performing Asian economies are Singapore (3th), Hong Kong (5th), Taiwan (7th), China (17th) and Australia (19th).
• Others: Both Russia and Ukraine were not assessed in this year’s edition due to the limited reliability of data collected.
• India’s Performance: Performance on four Parameters:
  • Economic performance: It has improved from 37th in 2021 to 28th in 2022.
  • Government efficiency: It has improved from 46th in 2021 to 45th in 2022.
  • Business efficiency: It saw a huge improvement from 32nd rank in 2021 to 23rd in 2022.
  • Infrastructure: It on the other hand, saw no change at
    
    
    

How are rankings computed?

• The essential building block for the rankings is the standardized value for all the criteria (i.e., STD value).
• The first step is to compute the STD value for each criterion using the data available for all the economies.
• Then they rank the economies based on the criteria that are used in the aggregation: a combination of hard and survey data.

Reasons for India’s Good Performance

• Major improvements in the context of retrospective taxes in 2021
• Re-regulation of a number of sectors, including drones, space and geo-spatial mapping.
• Significant improvement in the competitiveness of the Indian economy
• India as a driving force in the global movement to fight climate change and India’s pledge of net-zero by 2070 at the COP26 summit also sits in harmony with its strength in environment-related technologies in the ranking.

What are the recent steps taken by India to increase its Competitiveness?

• Towards Increasing Manufacturing Capacity: India has made appreciable efforts to ensure resilience in manufacturing capacity such as via Atmanirbhar Bharat and Make in India initiatives which are aimed at domestic supply chains and heavy investment in manufacturing hubs.
• The government has introduced the Production-Linked Incentive (PLI) Scheme in various sectors for enhancing India’s manufacturing capabilities and exports.
• Technological Advancement: To facilitate technological advancement for increasing competitiveness, India’s Department of Telecom (DoT) has constituted six task forces on 6G technology.
• The Ministry of External Affairs, through its New, Emerging And Strategic Technologies (NEST) division is also ensuring India’s active participation in international forums on technology governance.
• It acts as the nodal division within the ministry for issues pertaining to new and emerging technologies and assists in collaboration with foreign partners in the field of technology.

India’s strength

• The top five attractive factors of India's economy for business are –
  • A skilled workforce
  • Cost competitiveness
  • dynamism of the economy
  • high educational level
  • Open and positive attitudes

Weaknesses

• The challenges that India faces include;
  • Managing trade disruptions and energy security
  • Maintaining high GDP growth post the pandemic
  • Skill development and employment generation
  • Asset monetisation and resource mobilisation for infrastructure development

Way forward

• A nation that ensures balance between economic and social progress can enhance its productivity, followed by creating competitiveness and thus, prosperity.
  • Therefore, it is necessary to create an environment which not only pushes the businesses to compete successfully in local as well as international markets but ensures that the average citizen’s standard of living also improves.
• Governments need to provide an environment characterized by efficient infrastructures, institutions and policies that encourage sustainable value creation by the enterprises.

An economy’s competitiveness cannot be reduced only to GDP and productivity because enterprises also have to cope with political, social and cultural dimensions. Governments therefore need to provide an environment characterized by efficient infrastructures, institutions and policies that encourage sustainable value creation by the enterprises.