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16th June 2022 (6 Topics)

World Competitiveness Index

Context

With a six-position jump from 43rd to 37th rank on the annual World Competitiveness Index (WCI), India has witnessed the sharpest rise among the Asian economies.

About

  • Issued by: It is compiled by the Institute for Management Development (IMD).
    • WCI was first published in 1989 by the institute.
    • It provides extensive coverage of 63 economies.
  • Factors taken into consideration: It measures the prosperity and competitiveness of countries by examining four factors:
    • Economic performance
    • Government efficiency
    • Business efficiency
    • Infrastructure
  • Top Global performers in the Index:
    • Denmark has moved to the top of the list.
    • Switzerland slipped from the top ranking to the second position.
    • Singapore regained the third spot from fifth last time.
    • Others in the top 10 include Sweden at the fourth position, followed by Hong Kong SAR (5th), the Netherlands (6th), Taiwan (7th), Finland (8th), Norway (9th) and the USA (10th).
  • Top among the Asian countries:
    • The top-performing Asian economies are Singapore (3rd), Hong Kong (5th), Taiwan (7th), China (17th) and Australia (19th).
    • China also improved its business efficiency, more specifically productivity, and increased its real GDP growth rate compared to the last year.

About Institute for Management Development (IMD)

  • It is a think-tank, in Switzerland and Singapore.
  • IMD World Competitiveness Centre ranks 63 economies.
  • It assesses the extent to which a country promotes the prosperity of its people by measuring economic well-being via hard data and survey responses from executives.

India’s Performance

As 2022 witnessed significant improvement in the competitiveness of the Indian economy due to the improvements in following categories;

  • Gains in economic performance from 37th to 28th.
  • Growth in Domestic economy rise from 30th to 9th
  • The labour market (a key sub-factor in the business efficiency parameter), moved up from 15th to 6th
  • Management practices and business attitudes and values also made major leaps.
  • India appears to have restored the trust of the business community. Its re-regulation of a number of sectors, including drones, space and geo-spatial mapping, also likely played a role in the country's stellar performance in the 2022.
  • India is also a driving force in the global movement to fight climate change and its pledge of net-zero by 2070 at the COP26 summit.

Significance

  • The top five attractive factors of India's economy for business are - a skilled workforce, cost competitiveness, dynamism of the economy, high educational level and open and positive attitudes.

Challenges for India

  • The challenges that India faces includes;
    • 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.
  • The IMD also found that inflationary pressures are affecting the competitiveness of national economies along with COVID-19, and the invasion of Ukraine by Russia.

Impacts on Global order

  • The three most important trends found to be impacting businesses in 2022 are:
    • Inflationary pressures (50%),
    • Geopolitical conflicts (49%),
    • Supply chain bottlenecks (48%) and
    • COVID being the fourth (43%).
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