The ‘World Competitiveness Index’ is an annual report published by the Institute for Management Development (IMD) on the competitiveness of nations. The index, first published in 1989, is a worldwide reference point on the competitiveness of countries. It analyses and ranks countries according to how they manage their competencies to achieve long-term value creation.
About the World Competitiveness Index 2022
Institute for Management Development (IMD) recently complied and released the 34th edition of ‘World Competitiveness Index‘ on 15 June 2022.
The World Competitiveness Index 2022 benchmarks the performance of 63 countries based on 333 competitiveness criteria selected as a result of comprehensive research using economic literature, international, national, and regional sources and feedback from the business community, government agencies and academics.
The World Competitiveness Yearbook (WCY) is a comprehensive annual assessment that serves as a global benchmark for countries’ competitiveness. It provides benchmarking & trends, statistics and survey data based on extensive research.
Ranking Parameters
- The Index measures the prosperity and competitiveness of countries by examining the four factors:
- Economic Performance.
- Government Efficiency.
- Business Efficiency.
- Infrastructure.
- In turn, each of these four factors contains five sub-factors. Further, these 20 sub-factors comprise 333 competitiveness criteria.
- Criteria can be:
- Hard Data (statistics from international, regional, and national sources, e.g. GDP) or
- Soft data (executive opinion survey, e.g. availability of competent managers).
- The Hard criteria represent a weightage of 2/3 in the overall ranking, whereas the Survey data represent a weight of 1/3.
| Parameters | Sub-factors |
|---|---|
| Economic Performance | 1. Domestic Economy. 2. International Trade. 3. International Investment. 4. Employment. 5. Prices. |
| Government Efficiency | 1. Public Finance. 2. Tax Policy. 3. Institutional Framework. 4. Business Legislation. 5. Societal Framework. |
| Business Efficiency | 1. Labour Market. 2. Productivity & Efficiency. 3. Finance. 4. Management Practices. 5. Attitudes and Values. |
| Infrastructure | 1. Basic Infrastructure. 2. Technological Infrastructure. 3. Scientific Infrastructure. 4. Health and Environment. 5. Education. |
Key points of the World Competitiveness Index 2022
- Denmark has moved to the top of the 63-nation list from the 3rd position in 2021, whereas Switzerland slipped from the top ranking to the 2nd place in 2022.
- Singapore ranked at 3rd position in the 2022 World Competitiveness Index.
- Other economies in the top ten include Sweden at 4th position, followed by Hong Kong (5th), Netherlands (6th), Taiwan (7th), Finland (8th), Norway (9th) and the USA (10th).
- Among the Asian economies, India has witnessed the sharpest rise, with a six-position rise from 43rd in 2021 to 37th in 2022, due to gains in economic performance.
- Meanwhile, the top-performing Asian economies are Singapore (3rd), Hong Kong (5th), China (17th), and Australia (19th).
Performance of India
In the World Competitiveness Index 2022, India’s overall performance rose from 43rd in 2021 to 37th in 2022. After a stable but stagnant five years, 2022 witnessed significant improvement in the competitiveness of the Indian economy, mainly due to gains in economic performance.
The domestic economy has experienced a stratospheric rise from 30th in 2021 to 9th in 2022. The labour market, a key sub-factor in business efficiency parameter, moved from 15th to 6th position, while the management practices and business attitudes & values also made significant leaps.
Performance on four parameters
- Economic performance: India’s rank improved from 37th in 2021 to 28th in 2022.
- Government efficiency: India ranked 45th in 2022 compared to 46th in 2021.
- Business efficiency: It saw massive improvement from 32nd rank in 2021 to 23rd in 2022.
- Infrastructure: In the case of infrastructure, India’s rank remained unchanged at 49th in 2022.
Reasons for India’s good performance
- Significant improvements in the context of retrospective taxes in 2021
- India appears to have restored the trust of the business community.
- Re-regulation of several sectors, including drones, space, and geo-spatial mapping, also likely played a role in the country’s stellar performance in the 2022 World Competitiveness Index.
- India is a driving force in the global movement to fight climate change, and India’s pledge of net zero by 2070 at the COP-26 summit in November 2021 also sits in harmony with its strength in environment-related technologies in the ranking.
Challenges faced by India in 2022
- Managing Trade disruptions and Energy security
- Maintaining high GDP growth post-COVID
- Skill development and employment generation
- Strategic disinvestment and asset monetisation
- Resource mobilisation for infrastructure development
Attractive factors of India’s economy for business
The top five attractive factors of India’s economy for business are a skilled workforce, cost competitiveness, the dynamism of the economy, high educational level, and open & positive attitudes.