India ranks 50th in global competitiveness

All of the BRIC economies figure in the top half of the ranking, with China followed by India, Russia and Brazil. Several Asian economies perform strongly with Japan, Hong Kong SAR, Republic of Korea and Taiwan, China in the top 20. In Latin America, Chile is the highest ranked country, followed by Panama, Costa Rica and Mexico.

Here’s a look at the world’s top 10 competitive economies:

US

Rank: 1

Score: 5.74

Despite the financial crisis, the United States continues to be the most competitive economy in the world. This is because it is endowed with many structural features that make its economy extremely productive and place it on a strong footing to ride out business cycle shifts and economic shocks. Thus, despite rising concerns about the soundness of the banking sector and other macroeconomic weaknesses, the country’s many other strengths continue to make it a very productive environment.

The United States is ranked first for innovation, and its markets support this innovative activity through their efficient allocation of resources to their most effective use. However, the United States has built up large macroeconomic imbalances over recent years, with repeated fiscal deficits leading to rising and burgeoning levels of public indebtedness.

Switzerland ranks second in global competitiveness

Switzerland

Rank: 2

Score: 5.61

Switzerland retains the same ranking as last year, second only to the United States. Its economy is characterized by an excellent capacity for innovation and a very sophisticated business culture, ranked second for its business sophistication and third for its innovation capacity. The country is characterized by high spending on research and development (R&D), particularly impressive given the country’s small size.

Switzerland’s scientific research institutions are among the world’s best, and the strong collaboration between the academic and business sectors ensures that much of this basic research is translated into marketable products and processes, buttressed by strong intellectual property protection. This strong innovation is captured by the high rate of patenting in the country, for which Switzerland ranks 6th worldwide on a per capita basis.

In addition, Switzerland’s public institutions are rated among the most effective and transparent in the world (4th), ensuring a level playing field and enhancing business confidence.

 

Denmark ranks third in global competitiveness

Denmark

Rank: 3

Score: 5.58

The Nordic members of the European Union continue to hold privileged positions in the rankings. Denmark is ranked third, with Sweden and Finland following closely at 4th and 6th places respectively, the same rankings as last year for all three countries.

As in past years, the Nordic countries outperform the US in a number of areas. For example, like Switzerland, they receive among the best marks worldwide in terms of the acroeconomic environment, as they are also running healthy budget surpluses and have achieved very low levels of public indebtedness. The three countries have among the best functioning and most transparent institutions in the world, ranked only behind Singapore on this pillar.

 

Sweden ranks fourth in global competitiveness

Sweden

Rank: 4

Score: 5.53

Sweden is the 4th most competitive economy in the world. Given the significant focus that the Nordic countries have placed on higher education and training over recent decades, it is not surprising that Finland, Denmark and Sweden continue to occupy the top three positions in the higher education and training pillar.

This has provided the workforce with the skills needed to adapt rapidly to a changing environment and has laid the ground for their high levels of technological adoption and innovation in recent years.

 

Singapore ranks fifth in global competitiveness

Singapore

Rank: 5

Score: 5.53

Singapore, at 5th place, is the top-ranked country from Asia on the strength of its institutional environment, moving up two places from last year as a result of a strengthening across all aspects of the institutional framework. Singapore also places among the top two countries for the efficiency of all of its markets – goods, labour and financial – ensuring the proper allocation of these factors to their best use.

Singapore also has world-class infrastructure, leading the world in the quality of its port and air transport facilities. But Singapore’s overall ranking is constrained by its domestic market size and mixed performance in the macroeconomic stability pillar, where it ranks 59th and 121st for its interest rate spread and government debt, respectively.

 

Finland ranks sixth in global competitiveness

Finland

Rank: 6

Score: 5.50

The Nordic members of the European Union continue to hold privileged positions in the rankings. Denmark is ranked third, with Sweden and Finland following closely at 4th and 6th places respectively, the same rankings as last year for all three countries.

 

Germany ranks seventh in global competitiveness

Germany

Rank: 7

Score: 5.46

Germany remains among the top-10 ranked countries, although it slips two positions to 7th place. The country is ranked first out of all countries for the quality of infrastructure, with particularly good marks for its transport and telephony infrastructure. The efficiency of its goods and financial markets is another strength, buttressed by a very high level of business sophistication (ranked first on this pillar), although it should be noted that there has been a measurable decline in the business sector’s assessment of the country’s financial markets over the past year.

These attributes allow Germany to benefit greatly from its significant market size (ranked 4th on this pillar). On the other hand, Germany’s labour market continues to be very rigid (ranked 122nd on the labour market flexibility subpillar), where a lack of flexibility in wage determination, high nonwage labour costs and the cost of firing provide a hindrance to job creation.

 

 

Netherlands ranks eighth in global competitiveness

Netherlands

Rank: 8

Score: 5.41

The Netherlands moves up two spots to 8th place, and rounding out the list of the European countries in the top 10. The country’s companies are highly sophisticated and are the most aggressive internationally in adopting new technologies (ranked first for its technological readiness), buttressed by an excellent educational system and extremely efficient factor markets.

The improvement in the ranking can be traced mainly to an even better assessment than last year of the functioning of its markets. The labour market in the Netherlands is notably efficient compared with the situation in many other European economies, and its goods market is ranked third for its excellent functioning.

 

 

Japan ranks ninth in global competitiveness

Japan

Rank: 9

Score: 5.38

Japan, at 9th place, enjoys a major competitive edge in the areas of business sophistication and innovation, characterized by a high availability of scientists and engineers, high company spending on R&D, and an excellent capacity for innovation (ranked second on all three indicators). The country’s overall competitive performance, however, is dragged lower by its macroeconomic weaknesses, with extremely high deficits (ranked 110th), which have led to the build-up of one of the highest debt levels in the world (ranked 129th).

Financial markets also remain an area of concern, traced to a lack of trust in the banking sector. Japan’s current ranking marks a drop of one position since last year, with a measurable weakening across a broad range of areas, most notably a number of aspects of the country’s public institutions.

 

Canada ranks tenth in global competitiveness

Canada

Rank: 10

Score: 5.37

Canada moves up three places to join the top 10 (ranked 10th). Canada benefits from top-notch transport and telephony infrastructure; highly efficient markets, particularly labour and financial markets (ranked 7th and 10th respectively); and well-functioning and transparent institutions (ranked 15th). In addition, the educational system gets excellent marks for quality, which has prepared the country’s workforce to adopt the latest technologies for productivity enhancements (ranked 9th).

Canada’s main weakness remains its macroeconomic stability, where it is ranked 43rd, mainly linked to the significant government debt of nearly 70% of GDP, which places the country 107th out of 134 countries on this indicator. On a more positive note, however, the government has been running small surpluses over recent years, which is allowing the country to put the debt level on a downward trend.

 

India ranks 50th in global competitiveness

India

Rank: 50

Score: 4.33

India, at 50th place, derives substantial advantages not only from its market size (ranked 4th for its domestic market size and 5th for its foreign market size), but also from its strong business sophistication (ranked 27th) and innovation (ranked 32nd). The country is endowed with strong business clusters and many local suppliers, and ranks an impressive third for the availability of scientists and engineers and 27th for the quality of its research institutions.

However, India’s overall competitive position is weakened by its macroeconomic instability (109th), with the government running one of the highest deficits in the world (ranked 127th), unsustainable levels of government debt (ranked 113th), and fairly high inflation. Health and primary education is another area of concern, with poor health indicators (ranked 105th for both infant mortality and in life expectancy, for example), related to the high prevalence of diseases such as tuberculosis and malaria. Educational enrolment rates also remain low at all levels, with the primary educational system in particular getting poor marks for quality.