Why in news?

India has witnessed the sharpest rise among the Asian economies, with a six-position jump from 43rd to 37th rank on the annual World Competitiveness Index compiled by the Institute for Management Development, largely due to gains in economic performance.

Highlights

• Denmark has moved to the top of the 63-nation list from the third position last year, while Switzerland slipped from the top ranking to the second position and Singapore regained the third spot from fifth.
• 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).
• Meanwhile, the top-performing Asian economies are Singapore (3rd), Hong Kong (5th), Taiwan (7th), China (17th) and Australia (19th).
• Meanwhile, China slipped one spot this year, reversing its strong upward trend of recent years, signalling a poor economic recovery exacerbated by its zero-COVID strategy.
• China improved its business efficiency, more specifically productivity, and increased its real GDP growth rate compared to the last year.
• Going forward, China needs to restructure the economy from manufacturing to high-value services and from investment to consumption. It also needs to build a unified national market to enhance long-term economic prosperity, and it will only achieve its socio-economic development goals by using a macroeconomic policy mix
• The IMD World Competitiveness Ranking (WCR) found that inflationary pressures are affecting the competitiveness of national economies along with COVID-19, and the invasion of Ukraine by Russia.
• The three most important trends found to be impacting businesses in 2022 are inflationary pressures (50%), geopolitical conflicts (49%) and supply chain bottlenecks (48%) with COVID being the fourth (43%).

India in the index

• After a stable but stagnant five years, 2022 witnessed significant improvement in the competitiveness of the Indian economy, this is largely due to gains in economic performance (from 37th to 28th).
• The domestic economy has experienced a stratospheric rise from 30th to 9th position in a year.
• The labour market, a key sub-factor in the business efficiency parameter, moved up from 15th to 6th, while management practices and business attitudes and values also made major leaps.
• India is also a driving force in the global movement to fight climate change and Mr. Modi’s pledge of net-zero by 2070 at the COP26 summit in November 2021, sits in harmony with its strength in environment-related technologies in the ranking.
• 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.

The challenges faced by India

• 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.

About the index

• IMD business school in Switzerland and Singapore released the 2022 World Competitiveness Ranking. Its think-tank, IMD World Competitiveness Center, ranks 63 economies and 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.