India loses competitive edge due to poor health, infra

Slips to 51st position in the global business competitiveness index.

Even as emerging markets in Asia showed impressive gains in global business competitiveness in 2010, India slipped two notches to the 51st position over the previous year due to poor health, education and infrastructure facilities.

The ranks, based on the Global Competitiveness Report 2010 released by the World Economic Forum (WEF), continued to have the developed economies of Switzerland, Sweden, Singapore, the US and Germany in the top five.
 

RANK LIST
TOP 5	Rank 2009	Rank 2010	Change
Switzerland	1	1	0
Sweden	4	2	2
Singapore	3	3	0
US	2	4	-2
Germany	7	5	2
BRIC
Brazil	56	58	-2
Russia	63	63	0
India	49	51	-2
China	29	27	2
Other Asian economies
Sri Lanka	79	62	17
Indonesia	54	44	10
Vietnam	75	59	16

Among the BRIC nations — Brazil, Russia, India and China — only China improved its position in global competitiveness, while the rest lost out in comparison to other nations.

Up two positions to the 27th rank, China reinforced its position within the top 30 for a consecutive year, with improvements in market conditions, stability in macroeconomic conditions and better assessments of financial markets. The ranks are calculated by taking 110 indicators to gauge competitiveness in 11 categories for 139 countries.

Russia retained its 63rd rank, while Brazil lost two notches to stand at 58th.

Even as India fell two positions, its growth prospects remained robust, in the range of 5.5-10 per cent in 2010, with the growth holding up well over the next few years. It also saw improvements in the size of its market and even complex areas which included financial markets, business sophistication and innovation. However, the country failed to impress in the “basic drivers” category, with poor show in health and education facilities, high rates of communicable diseases and high infant mortality rate.

Higher education and poor roads, ports and electricity supply also weighed on Indian business competitiveness. The report also noted glitches like persistent budget deficits, high public debt and high inflation in the macroeconomic conditions of the country.

Among the developed economies, European nations showed improved performances, while the US continued to slip for a consecutive year. The US topped the chart in 2008 but fell to the second position last year due to weak financial conditions and infrastructure constraints. This year, it slipped another two notches, as financial conditions and labour markets continue to suffer.

“Policy makers are struggling with ways of managing the present economic challenges, while preparing their economies to perform well in a future economic landscape characterised by uncertainty and shifting balances...it is more important than ever for countries to put into place the fundamentals underpinning economic growth and development,” said Klaus Schwab, founder and executive chairman of WEF.

Switzerland topped the ranks, backed by robust capacity for innovation and “a very sophisticated business culture” while European countries like Germany, Poland and France improved their ranks, with increased focus on infrastructure and social development sectors.

Mongolia, ranked 99th in the latest report, was the highest gainer climbing 18 positions, followed by Sri Lanka, which gained 17 positions to be 62nd. Other significant improvements were in the case of Indonesia (44th), Vietnam (59th) and Tunisia (32nd).

Nigeria and Pakistan were the two biggest losers. While Nigeria dropped to 127th position from 99th last year, Pakistan was down 22 notches to 123rd.

Among the debt-laden PIGS countries — Portugal, Italy, Greece and Spain — only Italy managed to hold on to its 48th rank, while the other three saw a decline in competitiveness. Portugal dropped three places to close the year at 46. Similarly, Spain fell to 42nd position from last year’s 33rd, while Greece was down 12 notches at 83.