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| Get the basics right | | India must invest in infrastructure and address concerns over delivery of public goods |
| Business Standard / New Delhi Sep 13, 2009, 00:21 IST |
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The Global Competitiveness Report of the World Economic Forum has become a ready reckoner for policymakers to know where their country stands and what measures are needed to improve matters. Over 100 tables measuring various attributes are grouped under 12 ‘pillars’ on which a country’s competitiveness edifice rests. The scores coming under the pillars make up the global competitiveness index and help determine the rank of a country. The report uses both hard data available from multilateral agency sources and the findings of the Forum’s own global executive opinion survey. The latest report for 2009-10 has assimilated 13,000 responses from high-level executives in 133 countries.
In the report, India improves its rank by one to reach 49. In terms of per capita GDP, it comes under the lowest — factor-driven — of the three categories into which countries have been divided, the other two being efficiency-driven and innovation-driven. But intriguingly, it scores very well on many of the attributes common to efficiency and innovation-driven countries. It scores well in five of the seven attributes that make up the innovation pillar — capacity for innovation, quality of scientific research institutions, company spending on R&D, university-industry collaboration in R&D and availability of scientists and engineers. In the last category, it is a global leader — ranked fourth. The country also scores very well for the business sophistication pillar, positive in eight out of nine attributes. There is no problem with local supplies, which stretch across the value chain and marketing. It is the same story with attributes of financial market sophistication.
The advantage is partially eroded when it comes to technology, scoring positively in four out of eight attributes. The latest technology is available, firms can absorb it, FDI is bringing in technology and the legal framework for a vibrant information, communications and technology sector is in place. But the country falls behind when it comes to personal computers, internet and broadband users. The same marginally positive balance is present in the higher education and training pillar.
The balance remains positive in labour market efficiency, with pay and productivity doing well but hiring and firing practices lagging behind. The balance turns marginally negative when it comes to goods and market efficiency. The total tax rate, trade and tariff barriers, customs procedures, the hassles of starting a business and agricultural policy costs score a big negative.
Things start getting worse when it comes to macroeconomic stability, institutions and infrastructure. On institutions, everything relating to government delivery is negative, the redeeming features being judicial independence, the legal framework and minority shareholder protection.
In infrastructure — telephones, electricity, roads and ports — it fares poorly. But the worst performance is around the pillar of health and primary education, the score being negative for all the 11 attributes. Overall, India has some great advantages, including a huge market, which should help during later stages of economic development. But it has to first get the basics right: invest in social and physical infrastructure and address the concerns over delivery of public goods. This is not new but the value of the report lies in the details used to draw the picture.
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