Third World Goliaths Warned Against Protectionism

The Global Competitiveness Report 1997 has termed India and three other countries, which account for a staggering 45 per cent of the worlds population, as the Goliath developing countries but has warned of deep challenges that lie ahead in integrating themselves to the world market system.

The report said reforms in China, Indonesia and Brazil besides India, if weighted by the populations in those countries, will merit to be the most important global economic phenomenon anywhere in the world. But the report added all the four countries maintain trade barriers which affect their own competitiveness but also provoke the displeasure of trading partners.

The barriers remain especially high in Brazil, China and India. In all four, tax evasion is rampant and corruption is deemed to be a serious concern..

Important political challenges lie ahead in these countries, threatening the timing and continuity of future economic reforms.

The report pointed out that Brazil has shown a notable rise in the competitiveness ranking, from the 48th to the 42nd place. But among emerging markets, Indonesia had the best showing, catapulting itself to the 15 rank in the competitiveness index from the 30th.

China also gained strong scores in improved competitiveness, moving up from the 36th place to the 29th.But the populous countries rank high on the market growth index (MGI), which combines the growth prospects and the economic size of each country to assess that countrys importance in the total growth of the 53 countries in the competitiveness index.

The MGI tells how the total world economic growth is distributed among countries.

Singapore and Luxembourg, thus, show up lower on the MGI than they do on the competitiveness index.

The top ranked country on the MGI is the US followed by China, India, Japan and Indonesia.

According to the reports FDI outlook index, the top 10 economies that have the best potential to attract FDI are the US, China, Japan, Indonesia, the UK, India, Germany, Canada, France and Mexico. The FDI index lays importance to the central role of market size and its expected growth in driving FDI inflows.

The report said countries like Japan and Germany would have larger volumes of FDI had their economies being bigger.