World Competitiveness Yearbook (WCY) 2021

Context:

India maintained its 43rd rank on the World Competitiveness Index 2021, compiled by the Institute for Management Development (IMD).

Relevance:

GS-III: Indian Economy (Growth and Development of Indian Economy, Inclusive Growth)

Dimensions of the Article:

1. World Competitiveness Yearbook (WCY)
2. Highlights of World Competitiveness Index 2021
3. How the countries performed in World Competitiveness Index 2021?
4. India’s Performance World Competitiveness Index 2021

World Competitiveness Yearbook (WCY)

• The World Competitiveness Index is a comprehensive annual report and worldwide reference point on the competitiveness of countries.
• WCY was first published in 1989 and is compiled by the Institute for Management Development (IMD).
• It provides extensive coverage of 64 economies.
• It measures the prosperity and competitiveness of countries by examining four factors (334 competitiveness criteria):
  1. Economic performance
  2. Government efficiency
  3. Business efficiency
  4. Infrastructure

Highlights of World Competitiveness Index 2021

• The report notes that qualities such as investment in innovation, digitalisation, welfare benefits and leadership, resulting in social cohesion have helped countries better weather the crisis and thus ranked higher in competitiveness.
• The top-performing economies are characterised by varying degrees of investment in innovation, supportive public policy and diversified economic activities.
• The report stated that strength in these areas prior to the pandemic allowed these economies to address the economic implications of the crisis more effectively.
• Further, it said that the competitive economies succeeded in transitioning to a remote work routine while also allowing remote learning. It added that addressing unemployment has been fundamental.
• The report also pointed out that the countries that ensured the effectiveness of key public spending, such as public finance, tax policy and business legislation, are seen as essential policies to relieve the pressure on the economies hit by COVID-19.

How the countries performed in World Competitiveness Index 2021?

• Switzerland topped the 2021 rankings, followed by Sweden at 2nd place.
• While Denmark moved one spot down to the 3rd rank, the Netherlands retained its 4th place and Singapore slipped to the 5th place from its top ranking in 2020.
• The Top-performing Asian economies were:
  1. Singapore (5th)
  2. Hong Kong (7th)
  3. Taiwan (8th)
  4. China (16th)
• BRICS Nations Ranking:
  1. China (16th)
  2. India (43rd)
  3. Russia (45th
  4. Brazil (57th)
  5. South Africa (62nd)

• The qualities such as investment in innovation, digitalisation, welfare benefits, diversified economic activities, supportive public policy and leadership, resulting in social cohesion have helped countries better manage the crisis and thus ranking higher in competitiveness.
• Competitive economies succeeded in transitioning to a remote work routine while also allowing remote learning.
• The effectiveness of key public spending, such as public finance, tax policy and business legislation, are seen to relieve the pressure on the economies hit by the Covid-19.

India’s Performance World Competitiveness Index 2021

India’s overall ranking in World Competitiveness Index 

India’s performance based on these four factors in past 5 years

• According to IMD, India has maintained its position for the past three years but in 2021, it showed significant improvements in government efficiency and this can be a result of relatively stable public finances despite difficulties brought by the pandemic.
• It can also be a result of the positive feedbacks registered among Indian business executives with respect to the support and subsidies provided by the government to the private companies.
• Among the four indices used, India’s ranking in government efficiency increased to 46 from 50 a year ago, while its ranking in other parameters such as economic performance (37th), business efficiency (32th) and infrastructure (49) remained the same.
• Improvements in Government Efficiency was seen mostly due to relatively stable public finances. Despite difficulties brought by the pandemic, in 2020, the government deficit stayed at 7%. The Government also provided support and subsidies to the private companies.
• India’s strengths lie in investments in telecoms (1st), mobile telephone costs (1st), ICT services exports (3rd), remuneration in services professions (4th) and terms of trade index (5th).
• India’s performance is the worst in sub-indices such as broadband subscribers (64th), exposure to particulate pollution (64th), human development index (64th), GDP per capita (63rd) and foreign currency reserves per capita (62nd) among others.

-Source: Economic Times