India has moved up one place to rank 43rd most competitive economy in the world on the back of its robust economic growth, a large labour force and its huge market size, while Singapore has toppled the US to grab the top position, a global study showed.
Singapore has moved up to the top, from the third position last year, while the US has slipped to the third place in the 2019 edition of the IMD World Competitiveness Rankings. Hong Kong SAR has held onto its second place, helped by a benign tax and business policy environment and access to business finance.
Economists regard competitiveness as vital for the long-term health of a country's economy as it empowers businesses to achieve sustainable growth, generates jobs and, ultimately, enhance the welfare of citizens.
The IMD World Competitiveness Rankings, established in 1989, incorporate 235 indicators from each of the 63 ranked economies to evaluate their ability to foster an environment where enterprises can achieve sustainable growth, generate jobs and increase welfare for its citizens.
The IMD Business School said it takes into account a wide range of statistics such as unemployment, GDP and government spending on health and education, as well as data from an executive opinion survey covering topics such as social cohesion, globalisation and corruption.
The study said the Asia-Pacific region has emerged as a global beacon with 11 out of 14 economies either improving or holding their ground.
India's ranking has improved by one place in past one year to 43rd, driven by a robust rate of growth in real GDP, improvements in business legislation and an increase in public expenditure on education.
India was ranked 45th in 2017, but higher at 41st in 2016.
The IMD study said the challenges before India remain maintaining high growth with employment generation, digital literacy and internet bandwidth in rural areas, managing fiscal discipline, as also issues related to the implementation of Goods and Services Tax and resource mobilisation for infrastructure development.
In the 2019 rankings, India has scored well on several economic parameters and tax policies but has lagged in terms of public finance, societal framework, education infrastructure, health and environment.
In the top-five, Switzerland has climbed to fourth place from fifth, helped by economic growth, the stability of the Swiss franc and high-quality infrastructure. The Alpine economy ranked top for university and management education, health services and quality of life.
The United Arab Emirates ranked 15th as recently as 2016 entered the top five for the first time.
The effects of rising fuel prices influenced the ranking, with inflation reducing competitiveness in some countries. Stronger trade revenues helped oil and gas producers such as this year's biggest climber Saudi Arabia, which jumped 13 places to 26th, and Qatar, which entered the top 10 for the first time since 2013.
Venezuela remained anchored to the bottom of the ranking, hit by inflation, poor access to credit and a weak economy.
"In a year of high uncertainty in global markets due to rapid changes in the international political landscape as well as trade relations, the quality of institutions seem to be the unifying element for increasing prosperity," said Arturo Bris, IMD Professor and Director of IMD World Competitiveness Center, which compiles the ranking.
"A strong institutional framework provides the stability for business to invest and innovate, ensuring a higher quality of life for citizens," Bris said.
"While still setting the pace globally for levels of infrastructure and economic performance, the competitiveness of the world's biggest economy was hit by higher fuel prices, weaker hi-tech exports and fluctuations in the value of the dollar," it added.