Business
India on the Global Competitiveness Report
The World Economic Forum has released its 2006-07 rankings for global competitiveness. The rankings are based on weighted scores in 9 areas: Institutions, Infrastructure, Macroeconomy, Health & Primary Education, Higher Education, Market Efficiency, Technological Readiness, Business Sophistication, and Innovation.
The big surprise seems to be that the United States has moved from number 1 to 6. As reported by BusinessWeek:
While the U.S. excelled in such business categories as market efficiency and innovation, its score in the World Economic Forum’s annual ranking was dragged down by government-related measures. Out of 125 countries, the U.S. was 40th in health care and primary education and a lowly 69th in macroeconomy, reflecting its large budget and trade deficits. In macroeconomy, the U.S. scored lower than such nations as Vietnam, Venezuela, Uganda, the Philippines, Peru, and Nigeria. (Ouch.)
And where is India? India ranks 43rd - two slots higher than the previous year (see top 50). Fourty three may not seem anything to write home about, but it still puts us between Italy and Kuwait and 11 points higher than China. The Forum had this to say:
India ranked 43rd overall with excellent scores in capacity for innovation and sophistication of firm operations. Firm use of technology and rates of technology transfer are high, although penetration rates of the latest technologies are still quite low by international standards, reflecting India’s low levels of per capita income and high incidence of poverty. Despite these encouraging results, insufficient health services and education as well as a poorly developed infrastructure are limiting a more equitable distribution of the benefits of India’s high growth rates. Moreover, successive Indian governments have proven remarkably ineffective in reducing the public sector deficit, one of the highest in the world.
And BusinessWeek compares India and China, thus:
India earned high scores for innovation and sophistication of business operations, but rated poorly on infrastructure and public-sector deficit. The forum said China’s performance was “highly uneven.” It gave the nation high marks for macroeconomic management but poor ones for its weak banking system and public institutions such as courts.
For India, the results are a mixed bag. A comparison with Italy - one of the lowest ranked OECD countries - isn’t exactly a compliment after all. Clearly, it is lack of public policy and social investments - in health, education, and infrastructure - that are holding India back. In that, we seem to share the American fate, and may do well to take a closer look at the European and Scandinavian economic models.
Discussion
3 comments for “India on the Global Competitiveness Report”
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Hmm…interesting….India’s ranking 43! Well Dweep, honestly, how far do you think these rankings can be accepted?
Alex,
IMHO these rankings are as good as any in understanding both the strengths and weaknesses of a country’s business environment. Of course, some may argue about the weightage given to the different categories. I, however, do not find our overall ranking highly objectionable.
India is ranked the same as the lowest of the developed economies (Italy, Greece), below many Eastern European and Baltic states that have liberalized quickly and have strong public infrastructure, and amongst the highest in the developing world (save for Malaysia, and the Emirates). That’s about where I’d put us. Of course, competitiveness cannot be equated with ‘attractiveness’ as a potential market, where the 1bn population would work in our favor.
Do you have objections?
I am unaware of the competitiveness of other nations, but from what you said, i believe it is acceptable.