Global Competitiveness Index 4.0: WEF

Context:

  • The World Economic Forum (WEF) has released the 2019 edition of the Global Competitiveness Report which features the Global Competitiveness Index 4.0 (GCI 4.0).

How India has Fared?

Global Competitiveness Index 4.0

  • The World Economic Forum introduced the new Global Competitiveness Index 4.0 in 2018. GCI 4.0 provides a detailed map of the factors and attributes that drive productivity, growth and human development in the era of the Fourth Industrial Revolution.
    • The GCI 4.0 covers 141 economies, which account for 99% of the world’s GDP.
  • The GCI 4.0 of 2019 reveal that, on average, most economies continue to be far from the competitiveness “frontier”—the aggregate ideal across all factors of competitiveness.
    • A country’s performance on the overall GCI is reported as a ‘progress score’ on a 0-to-100 scale, where 100 represents the ‘frontier’, an ideal state where an issue ceases to be a constraint to productivity growth.
  • This edition of the report focuses on building shared prosperity (addressing inequality) and managing the transition to a sustainable economy (addressing environmental issues) along with competitiveness and growth.
  • The report is based on 12 set of factors (pillars) that determine productivity. These are: Institutions; Infrastructure; ICT adoption; Macroeconomic stability; Health; Skills; Product market; Labour market; Financial system; Market size; Business dynamism; and Innovation capability.
  • The index has been an annual edition since 1979.

Key Findings of the Index:

  • India has moved down 10 places to the rank of 68th compared to the 58th rank of 2018 primarily because of faster improvements of several countries previously ranked lower.
  • Positives for India:
    • India ranks high on macroeconomic stability (90, 43rd) and market size (93.7, 3rd),
    • India performs well when it comes to innovation (50.9, 35th), well ahead of most emerging economies and on par with several advanced economies.
    • Its financial sector (69.5, 40th) is relatively deep and stable.
  • Challenges for India:
    • India ranks beyond 100th on five pillars and features in the top 50 of just four pillars.
    • Major shortcomings in some of the basic enablers of competitiveness, like ICT adoption is limited (31.1, 120th) but has improved sharply (+8 since the 2017 edition).
    • Health conditions remain poor, as reflected in low healthy life expectancy (59.4 years, 109th), which is one of the shortest outside Africa and significantly below the South Asian average.
    • Weak banking system (60.4, 89th).
    • India must also grow its skills base (50.5, 107th).
    • Product market efficiency (50.4, 101st) is undermined by a lack of trade openness (43.9, 131st).
    • The labour market is characterized by a lack of worker rights’ protections, insufficiently developed active labour market policies and critically low participation of women (ratio of female workers to male workers of 0.26, 128th)
  • In South Asia, Sri Lanka is the most improved country in the region at 84th, Bangladesh (105th), Nepal (108th) and Pakistan (110th).
  • China (28th) is the best performer among the BRICS countries.
    • The Russian Federation ranks 43rd, South Africa is 60th, India is 68th and Brazil is ranked 71st.
  • Singapore has become the world’s most competitive economy in 2019, pushing the US to second place.
    • Hong Kong Special Administrative Region (SAR) is ranked 3rd, the Netherlands is 4th and Switzerland is ranked 5th in the index.
  • Vietnam (67th) registered the highest improvement across the globe.

Source: ET