The World Competitiveness Index (WCI) is a yearly report published by the Institute of Management Development (IMD). The WCI is a comprehensive report that assesses countries on how well they manage their competencies to create long-term value. It measures prosperity and competitiveness by examining four factors: Economic performance, Government efficiency, Business efficiency, and Infrastructure.
WCY is maintained by the Institute for Management Development (IMD). It was first published in 1989. The IMD looked into the effects of COVID-19 on economies all around the world in 2021. It covers 64 different economies in detail. According to the World Competitiveness Index 2024, India ranked 40th, which is an improvement from 43rd in 2019–2021.
In this article, we will study the World Competitiveness Index, a list of the Top 10 countries in the World Competitive Index, and India’s position in the world ranking.
Table of Content
- What is the World Competitive Index?
- Methodology Behind World Competitive Index (WCI) Ranking
- List of Top 10 Countries in the World Competitive Index
- World Competitiveness Ranking 2023 – Key Points
- India in the World Competitive Index 2023
- Factors Influencing World Competitive Index (WCI)
- Importance of World Competitive Index (WCI)
- Recent Steps Taken by India to Increase its Competitiveness
- Way Forward – World Competitive Index (WCI)
- World Competitive Index UPSC
What is the World Competitive Index?
The World Competitiveness Index (WCI), first published in 1989 by the Institute for Management Development (IMD), is a comprehensive annual report that serves as a global reference point for a country’s competitiveness. The index is based on 336 competitiveness criteria selected as a result of comprehensive research using international, national, and regional sources, as well as feedback from the business community, government agencies, and academics.
The World Competitive Index assesses the competitiveness of countries based on factors such as economic performance, government efficiency, infrastructure, and innovation capability.
The WCY considers four factors when ranking countries:
- Economic performance
- Government efficiency
- Business efficiency
- Infrastructure.
It uses a scale of 0–100 for each indicator, with the final score indicating how close an economy is to the ideal state. The index helps policymakers and businesses understand global competitiveness trends and prioritize areas for improvement.
Methodology Behind World Competitive Index (WCI) Ranking
A brief overview of the methods and criteria used in evaluating the competitiveness of the country is given below:
- Data Collection: Researchers gather data from different sources, such as surveys, government statistics, and international organizations, to collect information about each country’s performance in key areas.
- Factor Identification: They identify specific factors that contribute to competitiveness, such as economic strength, infrastructure, technological readiness, government policies, health, education, market efficiency, innovation, business sophistication, financial systems, and cultural factors.
- Weighting: Each factor is assigned a weight based on its importance in determining competitiveness. For example, factors like economic strength and infrastructure might be given higher weights because they have a significant impact on overall competitiveness.
- Data Analysis: The collected data is then analyzed to assess how well each country performs in each factor. This analysis helps to rank countries based on their strengths and weaknesses in different areas.
- Index Calculation: Using the weighted data and analysis results, a composite index is calculated for each country. This index represents its overall competitiveness relative to other countries in the study.
- Ranking: Finally, countries are ranked based on their composite index scores, with the most competitive countries receiving higher rankings and less competitive countries receiving lower rankings.
List of Top 10 Countries in the World Competitive Index
Given below is the list of the Top 10 countries in the World Competitive Index.
|
Rank |
Countries |
|---|---|
|
1. |
Switzerland |
|
2. |
Singapore |
|
3. |
United States |
|
4. |
Denmark |
|
5. |
Netherland |
|
6. |
Finland |
|
7. |
Norway |
|
8. |
Australia |
|
9. |
Sweden |
|
10. |
United Kingdom |
World Competitiveness Ranking 2023 – Key Points
The main keypoints of the index are:
-
Denmark, Ireland, and Switzerland are the top three most competitive economies in the world.
- Denmark has been ranked first since 2019.
- Switzerland has been ranked third due to its strong performance across all factors of competitiveness.
- Ireland made a significant improvement in the ranking, jumping from the 11th position to claim the second spot in the index. The country’s ability to capitalize on market access and trading opportunities improved its competitiveness.
- European countries dominated in the list of top 10 ranking.
- Singapore ranks fourth, down one spot from the previous year.
- For the first time, Japan drops out from Top 25, replaced by South Korea.
- Australia, Canada, New Zealand, the United Arab Emirates, South Korea, and Israel are among the top 25.
- Among the Asian economies: Singapore (3rd), Hong Kong (5th), Taiwan (7th), China (17th) and Australia (19th) are the top-performing.
- India ranked 40th, down three places from its 43rd place ranking from 2019–2021.
- The latest economy to join the ranking is Kuwait.
- Russia and Ukraine: Not assessed due to limited data reliability.
India in the World Competitive Index 2023
India ranked 40th in the 2023 Global Competitiveness Index (GCI), which is an improvement from 43rd in 2019-2021. The top three factors that positively impacted India’s score are:
- Government Efficiency: India showed progress in government efficiency, indicative of positive development in governance and public administration. It can also be attributed to relatively stable public finances and subsidies provided by the government to the private companies.
- Exchange Rate Stability: Exchange rate stability has contributed to India’s competitiveness score, contributing to a favorable business environment.
- Compensation Levels and Pollution Control: India’s competitive score benefited from its compensation levels and advancement in the pollution control measures.
- Performance on Four Parameters:
| Parameter | 2021 Rank | 2022 Rank |
|---|---|---|
| Economic Performance | 37th | 28th |
| Government Efficiency | 46th | 45th |
| Business Efficiency | 32nd | 23rd |
| Infrastructure | 49th | 49th |
- India’s performance in comparison to the other BRICS countries:
| Country | 2023 Rank |
|---|---|
| China | 17th |
| India | 43rd |
| Brazil | 59th |
| South Africa | 60th |
India’s Strength
India’s strength or the factors that have contributed to India’s score include:
- Strong performance in the economic domain
- A skilled workforce
- High educational attainment
- Policy stability
- A competitive tax regime
- A business-friendly environment
- India’s strengths in various areas, with ranking includes:
| Strength | Ranking |
|---|---|
| Telecom investments | 1st |
| R&D productivity by publication | 2nd |
| Graduates in Sciences | 6th |
| IT & media stock market capitalization | 12th |
| World robots distribution | 12th |
Challenges for India
The report emphasized the challenges faced by India in 2023, which include:
- Maintaining High GDP Growth
- Maintaining Financial Market Volatility
- Controlling Inflation and Fiscal Deficit
- Accelerating Digital Transformation
- Skill development and employment generation.
- Strategic disinvestment and asset monetization.
- Mobilising Resources for Infrastructure Development.
India performed worst in the following sectors:
| Indicator | Rank |
|---|---|
| Scientific and Technical Employment | 61 |
| Enforcing Contracts under Regulatory Framework | 63 |
| Wireless Broadband Users | 63 |
| Internet Users | 64 |
| Particle Pollution Exposure | 64 |
Factors Influencing World Competitive Index (WCI)
The factors that influences the World Competitive Index are:
- Infrastructure: The quality of a country’s infrastructure, such as roads, bridges, and telecommunications, plays a significant role. Good infrastructure facilitates business operations and enhances competitiveness.
- Economic Strength: This refers to how well a country’s economy is performing, including factors like GDP growth, productivity, and employment rates.
- Technological Readiness: This measures a country’s ability to adopt and leverage advanced technologies for productivity and innovation, including internet access and research and development capabilities.
- Government Policies: The policies and regulations set by the government affect competitiveness. Favorable policies can encourage investment and entrepreneurship, while excessive regulations may hinder growth.
- Health and Education: The health and education of a country’s workforce are crucial. A healthy and skilled workforce is more productive and innovative, contributing to overall competitiveness.
- Market Efficiency: This reflects the ease of doing business, including factors like market competition, transparency, and the effectiveness of legal frameworks.
- Financial Systems: The stability and efficiency of a country’s financial systems, including factors like access to capital, banking sector stability, and investor protection, impact competitiveness.
- Innovation: The ability of a country to innovate and adapt to changing market conditions is essential for competitiveness. This includes factors like research and development expenditures and the presence of innovative companies.
Importance of World Competitive Index (WCI)
World Competitiveness Ranking is considered important for evaluating:
- Provides insights into strengths and weaknesses of different economies.
- Helps investors assess attractiveness and stability of countries for investment.
- Assesses Impact of Public Policies and reflects effectiveness of these policies in promoting economic growth.
- The ranking is indicator of quality of Life which reflects social, educational, healthcare, and environmental aspects.
- Allows countries to compare and set goals for improvement.
- Influences policy reforms to enhance competitiveness and attract investment.
Recent Steps Taken by India to Increase its Competitiveness
India has been making economic reforms to improve its competitiveness, including digital growth, trade policy reforms, and inward and outward looking measures. These reforms aim to alleviate poverty, create better jobs, and improve India’s global competitiveness. Some of the recent steps taken by the government to boost the economy include:
- Make in India: Launched in 2014, this initiative aims to foster innovation, build infrastructure, and make India a hub for manufacturing, design, and innovation.
- Production Linked Incentive (PLI): A scheme introduced in various sectors to improve India’s manufacturing capabilities and exports.
- PM Gati Shakti National Master Plan: This plan aims to reduce logistics costs, increase price competitiveness, and streamline digital services.
- National Infrastructure Pipeline: It is a government initiative to improve the quality of life for citizens by providing world-class infrastructure.
- National Monetization Pipeline: It is a plan to monetize core assets of the central government over a four-year period, with the potential to generate Rs 6 lakh crore. The NMP is a roadmap for monetizing brownfield infrastructure assets across the following sectors roads, railways, shipping, aviation, power, telecom, oil and gas, and warehousing.
-
Atmanirbhar Bharat Abhiyaan or Self-reliant India: The aim is to make the country and its citizens independent and self-reliant in all senses. The five pillars of Aatma Nirbhar Bharat –
- Economy
- Infrastructure
- System
- Vibrant Demography
- Demand
- New, Emerging And Strategic Technologies (NEST): It ensures India’s active participation in international technology governance forums, facilitating collaboration with foreign partners and addressing issues related to new and emerging technologies.
- 6G Technology: The Department of Telecom in India has established six task forces dedicated to 6G technology to drive technological advancements aimed at enhancing competitiveness
- Other initiatives include: Bharatmala and Sagarmala Project, Start-up India, and Special Economic Zones.
Way Forward – World Competitive Index (WCI)
To improve the competitiveness of India, there is a need for a multifaceted approach. Some of the measures that can be taken to enhance India’s competitiveness are:
- Infrastructure Development: Investing in infrastructure, such as transportation, energy, and digital connectivity.
- Enhance Ease of Doing Business: Continuously work towards simplifying regulatory processes, reducing red tape, and improving transparency to attract both domestic and foreign investment.
- Promoting innovation and research: Increase funding for research and development across various sectors to drive technological advancements and improve productivity.
- Education and Skill Development: Prioritize investments in education and skill development programs.
- Digitizing systems and Upgrading technology: Upgrade technology by digitizing systems to streamline processes and improve efficiency.
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World Competitive Index UPSC
The WCI evaluates various factors that contribute to a country’s competitiveness, including economic performance, government efficiency, business efficiency, and infrastructure. It aims to provide a comprehensive overview of how well countries manage their competencies to create long-term value..
For individuals preparing for the UPSC exams or interested in global economic rankings, the World Competitiveness Index offers valuable insights into how countries are performing on the world stage and what drives their prosperity and competitiveness
Conclusion – World Competitive Index
The World Competitiveness Index is an annual ranking of 63 countries, released by the Institute of Management Development (IMD). In 2022, Denmark topped the list, followed by Switzerland and Singapore. India’s rank improved from 43rd to 37th, the biggest jump among Asian economies. Some factors that contributed to India’s score include: Exchange rate stability, Compensation levels, and Advancements in pollution control.
FAQs on World Competitive Index
What is the rank of India in world competitive Index?
India ranked 40th in the 2023 Global Competitiveness Index (WCY), which is an improvement from its 43rd place in 2019–2021.
Who publishes World Competitiveness Index?
The International Institute for Management Development (IMD) publishes the World Competitiveness Index (WCI) annually.
Which country has highest global competitive index?
According to the 2023 IMD World Competitiveness Ranking, Denmark is the most competitive country in the world. The ranking also includes Ireland and Switzerland in the top three.
What is the least competitive country in the world?
According to the 2023 IMD World Competitiveness Ranking, Yemen followed by Mozambique and Chad are the least competitive country in the world.
Why is Denmark the most competitive country?
Denmark is the most competitive country in the world due to its economic performance, government efficiency, business efficiency, and infrastructure.