The latest IMD World Competitiveness Yearbook 2011 released on Monday shows that while the US has returned to the top position in global competitiveness rankings, India has slipped from No31 in 2010 to No32 in 2011. China?s rankings, while ahead of India, slipped from No18 to No19 during the period. However, what?s more striking is that India is ranked higher than China in terms of both business and government efficiency.
While the report ranked India in the 29th position in government efficiency, China was ranked lower in the 33rd rung. And in the case of business efficiency, India was ranked at a respectable 22nd position, marginally ahead of the 25th position held by China. But China?s overall ranking surged ahead of India primarily because of its gains in two other areas ? economic performance and infrastructure. China was ranked third in economic performance and in the 28th position in infrastructure, whereas India could only secure the 18th ranking in economic performance and 50th ranking in infrastructure.
Competitive ranking, however, does not always have a significant impact on global FDI flows. Though the US, which has the highest FDI inflows is ranked high in the global competitiveness rankings, the second-largest beneficiary of FDI inflows is China, which is No 19. Similarly, though India is ranked among the top 10 nations in terms of FDI inflows, its ranking in the global competitiveness is closer to 30.
IMD?s world competitiveness rankings for 2011 indicate a substantial reordering in the global hierarchy of nations, with the US moving up two ranks to share the No 1 position with Hong Kong, which has moved up one rung from the second position. However, Singapore, which was ranked the most competitive nation in 2010, slipped two notches to the third position. The IMD attributed the improvement in the US position to the recovery in its financial markets and its business efficiency.
The other major gainer was Sweden, which rose from No 6 to No 4, highlighting the competitiveness of the Nordic model. Switzerland and Taiwan were ranked at the fifth and sixth positions, respectively. However, while Switzerland?s ranking slipped by one rung over that in the previous year, Taiwan improved by two.
The biggest gainers were Qatar and Germany. While Qatar?s ranking improved by seven to the No 8 position, the competitive ranking of Germany went up six places to be at 10th position among the 59 nations, mainly due to its buoyant exports and a more flexible labour market.
Among Bric countries, China topped the list, even as its ranking fell one rung to the 19th position. India?s scenario was similar, with the ranking slipping one notch to 32.
The trends were disparate in the other two Bric countries: while Brazil?s ranking went down seven rungs to the 44th position in 2011, Russia improved its standing by climbing two rings to the 49th position.
The major highlight of the global competitiveness rankings for 2011 is the ranking of nations by efficiency of business and government. In more advanced economies like Japan, Belgium, Ireland, US and Germany, the government lags behind business in efficiency. Switzerland is the major exception.
In emerging economies, the highest gap in efficiency between government and business was in Brazil. While the country was ranked 55th in terms of government efficiency, the country was ranked 29th in business efficiency, a difference of 26. In the case of India, the difference was just seven ? No.29 in government efficiency and No.22 in business efficiency. A sound balance between government and business efficiency was found only in Hong Kong, Singapore and Australia.