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Competitiveness Index 2019 by World Economic Forum

Competitiveness Index 2019 by World Economic Forum

Tag:GS 3 || Economy || Structure of the Indian Economy || Other Indices & Reports

Why in news?

  • The Global Competitiveness Index was recently released by the World Economic Forum (WEF).

What is GCI?

  • The Global Competitiveness Index (GCI) was Launched in 1979.
  • Using 103 metrics grouped into 12 components, it maps the competitiveness of 141 economies.
  • The 141 GCI-mapped countries represent 99 percent of the world’s GDP this year.
  • The index for 2019 is the fourth version of the Global Competitiveness Index (GCI 4.0).
  • GCI 4.0 records information and/or answers on 12 variables in four broad categories.
    • Enabling Environment: It covers factors such as infrastructure status, organizations, macroeconomic stability and the willingness to adopt new technologies.
    • Human Capital is the second category, which covers medical/health and economic skills.
    • The third is the state of “Markets” such as those for labour, product, financial and the overall market size.
    • “Innovation Ecosystem” is the last classification, which includes market dynamism and potential for innovation.

Highlights of GCI 4.0

  • Singapore: In 2019, Singapore became the most competitive economy in the world, pushing the United States to second place.
  • Hong Kong SAR ranks 3rd, 4th in the Netherlands and 5th in the Swiss.
  • Among BRICS: China is ranked 28th among the BRICS (the highest).
  • Asia Pacific: The presence in Asia-Pacific of many innovative countries makes this area the world’s most competitive.
  • Europe and North America are closely following this competitiveness index.
  • Vietnam (67th) registered the highest improvement across the globe.
  • Performance of India
    • In the overall ranking, India’s rank is 68 and is followed by some of its neighbors including Sri Lanka at 84th, Bangladesh at 105th, Nepal at 108th and Pakistan at 110th.
    • Worst performer- India and Brazil: Together with Brazil, it is among the worst-performing BRICS nations (ranked at 71 this year even lower than India).
  • Improved Ranks: Number of similarly placed economies has improved over the past year, including Colombia, South Africa, and Turkey, thus overtaking India.
  • Global economy: The study underlined the unpreparedness of the global economy for a major slowdown.

What are the factors behind India’s performance?

  • Improvement by several other economies
    • The fall in India’s position is largely due to a number of other economies ‘ improvements.
  • Decline in score
    • Interestingly, there is relatively little decline in India’s competitiveness ranking.
    • The overall score for India in 2019 (61.4) fell by just 0.7 compared to its 2018 score.

Positive performance of India

  • Macroeconomic stability and market size: In terms of macroeconomic stability and market size, India ranks high.
  • Corporate governance: In terms of corporate governance, it is also ranked
  • Shareholder governance: India is the world’s second-largest shareholder governance state.
  • Energy: India is ranked third in terms of market size, while it is ranked the same in terms of renewable energy regulation.
  • Innovation
    • In terms of innovation, India has performed well.
    • It is well ahead of most emerging economies and ahead of many advanced economies in this regard.

 Concerns and way ahead for India

  • Information Communications and technology and poor health conditions: There is limited ICT adoption, poor health conditions, and low healthy life expectancy.
  • Healthy life expectancy
    • In a healthy life expectancy, India ranked 109th out of 141 countries.
    • It was far below the South Asian median and one of the shortest outside of Africa.
  • Trade openness: The competitiveness of India’s consumer market is hampered by a lack of open trade.
  • Labour market
    • Failure to protect workers ‘ interests
    • Active labour market policies are inadequately
    • Critically low female participation in the labour force.
  • India ranked very low in the 128th position with a ratio of 0.26 female workers to male workers.
  • India is also ranked 118th in terms of meritocracy and opportunity,
  • India has been ranked 107th in terms of skills.

Way forward

  • India now needs to expand its skill base, while its product market efficiency is undermined by a lack of trade openness and the labor market is characterized by a lack of protection for workers ‘ rights, insufficiently developed active labor market policies and critically low female participation.

Mains model question

  • The slippage this year, however, is not just because India’s score in the Global Competitiveness Index fell, albeit marginally, but also because several other close competitors surged ahead. Explain?