Within Asia, Singapore has topped the charts with a global 13th place on the list that ranks 63 countries in developing, attracting and retaining talent.
China is ranked lower at 39th "because of its difficulties in attracting foreign skilled workers paired with a level of public expenditure in education that is below the average of other advanced economies".
Regarding India, the renowned business school said its position has declined from 55th in 2017 to 53rd this year.
"One one hand, the country performs above the average in terms of the quality of its talent pool (Readiness factor, 30th position). On the other, the quality of its educational system and the lack of investments in public education heavily penalise the talent potential of the country (Investment and Development factor, 63rd)," it said.
The rankings are based on three factors: Investment and Development, Appeal, and Readiness. These factors include indicators that capture the resources invested in developing local talent, the extent to which a country attracts and retains talent, and the quality of skills available in the talent pool.
The IMD said it used "hard data and responses to the IMD Executive Opinion Survey" to produce the ranking. This annual survey compiles input from over 6,000 executives based in 63 different economies, it added.
"Economies placed in the top-10 of the ranking generally share high levels of investments in public education and a high quality of life, which allow them both to develop local human capital and to attract highly-skilled professionals from abroad.
"South East Asian economies, on average, perform well in tapping into the international talent pool, but they tend to lag behind in terms of public investments for the development of home grown talent," Arturo Bris, Director of the IMD World Competitiveness Center, IMD Business School, said.