 GOING GREAT GUNS
The country gets a pat on the back from the World Economic Forum for doing well in innovation and sophistication, as well as in adoption of technologies from abroad
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For those who talk about China peeling away from India in the race for economic growth, here’s news. India is the only country in the Bric (Brazil, Russia, India, China) group that has improved its score in the World Economic Forum’s 2006-07 global competitiveness rankings. The Global Competitiveness Index (GCI) says the country has moved from 45 last year to 43 in the survey that covers 125 economies. While Russia and Brazil are down nine notches to rank 66 and 62 respectively, China slipped six ranks to 54. Switzerland has replaced the US at the top of the chart. While Switzerland is the most competitive economy, Finland, Sweden, Denmark and Singapore follow in that order.
India’s rank of 43 demonstrates remarkably high scores in capacity for innovation and sophistication of firm operations, the WEF says. While the use of technology and the rates of technology transfer are high, the penetration rates of latest technologies are still quite low by international standards, it said. Weaknesses in the coverage of educational opportunities and poor-quality infrastructure limit more equitable distribution of the benefits of India’s high growth rates, says the report.
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MIXED BAG: While Indian goods, labour and financial markets are making gains in efficiency, the penetration rates of latest technologies are still quite low by international standards |
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China, which ranks high as far as macro-economic stability is concerned, does not fare well when it comes to technology penetration. It also has to make progress on improving its institutional environment in areas like government regulation and protection o intellectual property rights.
In fact, comparing the two Asian economies, the report questions the current perception that China should serve as a model for India. It argues that by focusing on improving governance and fostering private sector development, India created a better base for future growth than the Chinese investment-led approach.
The report attributes the gain to India doing well in indicators related to innovation and sophistication of firm operations, as well as in the adoption of technologies from abroad. “The quality of the business environment in India has improved tangibly in recent years. Goods, labour and financial markets are making gains in efficiency and it is particularly encouraging to see substantial improvements in the quality of public institutions and the underlying institutional climate in such areas as property rights, the operation of the judicial system and other indicators which capture essential aspects of building a sound investment climate,” said Augusto Lopez-Claros, chief economist and head of the World Economic Forum’s Global Competitiveness Network.
However, the report points to a number of weaknesses that impedes the country’s progress in becoming most competitive economy globally “High budget deficit, one of the highest in the world, along with the lack of appropriate infrastructure and shortcomings in health services and education are impeding the country’s growth as a competitive business player,’’ says the report.
Switzerland, Finland and Sweden are the world’s most competitive economies according to the report. Denmark, Singapore, the US, Japan, Germany, the Netherlands and the United Kingdom complete the top ten list, but the US shows the most pronounced drop, falling from first to sixth. The rankings are drawn from a combination of publicly available hard data and the results of the Executive Opinion Survey, a comprehensive annual survey conducted by the World Economic Forum, together with its network of Partner Institutes (leading research institutes and business organisations) in the countries covered by the report.
This year over 11,000 business leaders were polled in a record 125 economies worldwide. The survey questionnaire is designed to capture a broad range of factors affecting an economy’s business climate that are critical determinants of sustained economic growth.
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November 2006
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