India Has A Long Way To Go

Global Competitiveness Report 1997

Indias competitive edge in the global economy during 1997 is unlikely to sharpen over that of the previous year, says the Global Competitiveness Report 1997, prepared by the World Economic Forum. Its position in a competitiveness ranking featured in the report is 45th among 53 countries. During 1996, India was 45th among 49 countries.

The competitiveness index of the various national economies was constructed on the basis of eight factors of openness, government, finance, infrastructure, technology, management, labour and institutions.

The index drew information from a quantitative data set, including a variety of economic and social variables as well as from the World Economic Surveys 1997 business executive survey. The report said it defined a nations competitiveness as her ability to achieve sustained high rate of growth in per capita real income as measured by the per capita gross domestic product in real prices. Its index is designed to identify the underlying factors determining economic growth.

 

The 1996 index broadly indicated that the highly competitive economies did tend to grow faster than the less competitive ones.

The 1997 rankings place Singapore and Hong Kong on the top of the list, followed by the US. Among emerging markets, Indonesia has made a giant leap to the 15th place from the 30th, while China has moved up to the 29th place from the 36th.

The report said that India is the least open economy, behind only to Vietnam and Zimbabwe, indicating the extent of the countrys integration into the world economy and the degree of liberalisation of its external trade and investment.

regimes. Indias tariffs and hidden exports are the 45th highest out of the 53 countries studied, it said.

India has received its highest ranking of 23 for the overall role of its government, which covers aspects such as its fiscal policies, the extent of its intervention in the market and the quality of its services.

But the report singles out factors like the level of state interference, competence of the government, and tax burden and evasion as the drawbacks in the system.

State interference in India ranks 48th while the governments competence and taxes occupy the 39th and 45th positions.

Indias financial market is placed 38th. The parameters considered in this case are the ability to facilitate optimal intertemporal consumption and savings behaviour and the efficiency of the financial intermediaries in channeling savings into productive investment.

The countrys infrastructural facilities, however, occupies a low 48th place while technology, which includes the stock of accumulated knowledge capital, stands at 36th.

The quality of Indias management, which measures the business environment, competitive strategies, product development and marketing, is placed 38th. But the labour markets efficiency and the flexibility is ranked at an average 30th position, as also legal and social institutions.