The Competitiveness Of Nations
still impressively) from the 36th to the 29th. In stark contrast, India retains its previous rank of 45, indicating the long way that it has to go both in terms of the quantitativeness criteria and also the perceptions of business executives.
The usefulness of the global competitiveness report was initially doubted by some because the rank that several of the most powerful economies secured in it gave little clue to either their real life clout or ability to swing deals. There will now be less criticism on this score because of the improvements in the ranks of Britain, the Netherlands and Indonesia. To quantify the difference between perception and the competitiveness score, this years survey sought business respondents subjective judgment about the most competitive economies. The results are broadly similar but in some individual cases very divergent. The US comes out first in this, followed by Japan, though in the overall index, Japan comes 14th. The report also includes a market growth index in which the ability of an economy to grow is seen in the context of its size and potential. On this scale, the three top places are secured by the US, China and India, in that order, followed by Japan. Singapore and Hong Kong, on the other hand, occupy far
lower places, at number 29 and 24, respectively.
The reports works on the premise that the competitiveness of an economy indicates its ability to achieve high per capita GDP growth in the medium term and finds that there is a strong correlation between competitiveness measured by this index and actual growth recorded in the past. The index combines elements like openness, government, finance, infrastructure, technology, management, labour and institutions. The new features that have been added in this report are the impact of environmental regulations on growth and the special role of information technology in promoting growth. It finds that environmental regulations are no major constraint to growth. The report also notes the widespread concern over growing inequality but promises to come back to the topic next year as it finds no answer to what governments can do which is not market restricting.