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Why India went down in the Global Competitiveness Index rank?

India’s score was stable but other countries scored better

India ranked 68th position in the latest Global Competitiveness Index, which is 10 ranks below than the position in 2018. A total of 141 countries have been ranked in the latest Global Competitiveness Report.  It is said that slipping the rank for India hasn’t come just because of India’s score fell in the latest report but several competitors surged ahead.

Let’s understand what GCI is?

Current GCI is the fourth version of the global competitiveness index, also known as GCI 4.0. The fourth version was introduced in 2018. The total countries mapped by this year’s GCI account for 99 per cent of the total GDP of World.

The basic notion of this index is to map the factors that determine the Total Factor Productivity in a country. Total Factor Productivity is the efficiency with which different factors of production such as labour, land and capital are put to use to make the final product. People believe that TFT is an economy which determines the long-term economic growth of a country.

What is mapped by GCI

As per the report, GCI 4.0 is the product of an aggregation of 103 individual indicators which is derived from a combination of data from the World Economic Forum’s Executive Opinion Survey and international organizations.

The data and/or response is tracked on 12 factors that is divided into 4 broad categories by GCI. “Enabling Environment” is the first category which includes factors like the macroeconomic stability, institutions, and infrastructure of the country and its ability to adopt new technology. The second category is “Human Capital” which includes the l of skills and health in the economy. State of “Markets” is the third factor that brings labour, financial, product and the overall market size. The fourth and last category is “Innovation Ecosystem” which includes innovation capability and business dynamism.

All these 12 factors from all the categories have sub-factors. For example, within “Institutions” under the “Enabling Environment”category, Global Competitive Index tracks the performance on detailed factors. The detailed factors are the performance of the public sector, the state of corporate governance, the level of transparency and corruption, the incidence of terrorism and few others.

In total, there are 103 individual factors that GCI 4.0 maps to arrive at the final result.

How countries are ranked?

The report says that the performance of country depends upon the overall GCI results as well as each of its components is reported as a progress score. The progress score varies from 0 to 100 where 100 represents the ‘frontier’. The frontier is an ideal state where an issue ceases to be a constraint to productivity growth. For example, the average GCI score this year across the 141 countries was 60.7. This means the ‘distance to the frontier’ stands at almost 40 points.

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How India fared this year?

India’s overall score (61.4) of 2019 fell by mere 0.7 in comparison to last year’s score. But this mere slippage was enough to take the country down to 68th position from 58th in 2018. The report suggests that in South Asia, India loss of ground despite having a stable score was mostly due to faster improvements in countries which were ranked lower in previous lists. The countries who were close to India previous year in the list were Columbia at 57th position (had 62.7 in 2018 which went 1.1 points in 2019), South Africa (62.7 in 2018 which went 1.7 points up in 2019), Azerbaijan at 58th position (62.7 in 2018 which went 2.7 in 2019), and Turkey at 61st position (62.1 which went 0.5 in 2019).

India is behind China at 28th position with 73.9 points by 14 points and 40 places. However, India is on top within the South Asia and followed by Sri Lanka at 84th position, most improved country in South Asia. Bangladesh (105th), Nepal (108th and Pakistan (110th) is next to come in the region.

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