India continues to remain ranked 43rd on an annual World Competitiveness Index compiled by Institute for Management Development (IMD) with some traditional weaknesses like poor infrastructure and insufficient education investment keeping its ranking low, the international business school said.

Singapore has retained its top position on the 63-nation list.

Denmark has moved up to the second position (from 8th last year), Switzerland has gained one place to rank 3rd, the Netherlands has retained its 4th place and Hong Kong has slipped to the fifth place (from 2nd in 2019).

The US has moved down to 10th place (from 3rd last year), while China has also slipped from 14th to 20th place. Among the BRICS nations, India is ranked second after China, followed by Russia (50th), Brazil (56th) and South Africa (59th).

How are the countries ranked?

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.

This information feeds into four categories — economic performance, infrastructure, government efficiency and business efficiency — to give a final score for each country. There is no one-size-fits-all solution for competitiveness, but the best performing countries tend to score well across all four categories.

A marked pattern in this year’s results, which are an amalgam of hard data taken from 2019 and survey responses from early 2020, is the strength of smaller economies.

The top performers

Factors behind Singapore’s success are its strong economic performance which stems from robust international trade and investment, employment and labour market measures, the report said. 

Stable performances in both its education system and technological infrastructure – telecommunications, internet bandwidth speed and high-tech exports – also play key roles.

Denmark, in 2nd, can credit a strong economy, labour market, and health and education systems. In addition, the country performs very well in international investment and productivity, and topped Europe in business efficiency, it said.

Switzerland has been gradually edging towards a podium position, from 5th to 4th and now 3rd in 2020. Robust international trade fuels its strong economic performance, whilst its scientific infrastructure and health and education systems show steadfast displays.

The number of small economies – broadly defined as such by their GDP –  in the top ten is striking.

How has India fared in the rankings?

India was ranked 41st on the IMD World Competitiveness Ranking, being produced by the business school based in Switzerland and Singapore every year since 1989, but had slipped to 45th in 2017 before improving to 44th in 2018 and then to 43rd in 2019.

While its overall position has remained unchanged in the 2020 list, it has recorded improvements in areas like long-term employment growth, current account balance, high-tech exports, foreign currency reserves, public expenditure on education, political stability and overall productivity, the IMD said.

However, it has moved down in areas like exchange rate stability, real GDP growth, competition legislation and taxes.

Arturo Bris, head of competitiveness center at IMD Business School, said India continues to struggle on the list and the recent country rating downgrade by Moody’s reflects the uncertainties regarding the economy’s future. 

Setback for Asian economies

With the exception of Singapore, the Philippines, Taiwan and the Korean Republic, most Asian economies dropped in rankings this year, the IMD said.

The reason for the Asian economies’ less stellar performance as a region, this year is partly the result of the trade frictions between China and the US, particularly because these economies are highly dependent on trade with China.

About Singapore, which moved to the top rank last year, the IMD said its position is largely driven by the relative ease of setting up business, availability of skilled labour and its cutting-edge technological infrastructure.

The IMD said the impact of COVID-19 on the competitiveness ranking has partially been captured by executives’ opinions about the effectiveness of the different health systems.

In the ASEAN countries included in the survey, only Singapore and Thailand have a positive performance in the effectiveness of the health infrastructure.

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