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Global Competitiveness Report 2016
Amit Kumar Anand
www.amitkanand.com
September 28, 2016
1 Introduction
• The Global Comp...
2. an increasingly important element
of competitiveness is creating an en-
abling environment for innovation.
3. innovatio...
2. opening the economy to foreign investors
and international trade.
3. increasing transparency in the financial
system.
6 ...
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Global Competitiveness Report 2016

Global Competitiveness Report 2016, Civil Services Notes, IAS, IFS, IPS

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Global Competitiveness Report 2016

  1. 1. Global Competitiveness Report 2016 Amit Kumar Anand www.amitkanand.com September 28, 2016 1 Introduction • The Global Competitiveness Report 20162017 comes out in the context of persistent slow growth and a near- term outlook that is fraught with renewed un- certainty fueled by continued geopolitical turmoil, financial market fragility, and sustained high debt levels in emerging markets. • GDP growth has fallen from levels of 4.4 % in 2010 to 2.5 % in 2015. • Many economies around the world strug- gle with the double challenges of slowing productivity growth and rising income in- equality, often exacerbated by rapidly ag- ing societies. • Based on digital platforms, the Fourth Industrial Revolution is characterized by a convergence of technologies that is blurring the lines between the physical, digital, and biological spheres. • Breakthroughs in technologies such as artificial intelligence, biotechnology, robotics, the Internet of Things, and 3D printing, to name a few, will provide new avenues for growth and development in the future but could also give rise to significant social challenges. 2 Fourth Industrial Revolu- tion • This transformationthe Fourth Industrial Revolutionis not defined by any partic- ular set of emerging technologies them- selves, but rather by the transition to new systems that are being built on the infras- tructure of the digital revolution. • As these individual technologies become ubiquitous, they will fundamentally alter the way we produce, consume, communi- cate, move, generate energy, and interact with one another. • And given the new powers in genetic engi- neering and neurotechnologies, they may directly impact who we are and how we think and behave. 3 Main Findings • Many of the competitiveness challenges we see today stem from the aftermath of the financial crisis. • The great recession led many advanced economies to implement very loose mon- etary policy, which in turn fueled a global commodities boom that masked many of the competitiveness challenges of commodity-exporting emerging markets. • Vulnerability to commodity price fluc- tuations in emerging economies and the promises of the Fourth Industrial Revo- lution underscore the importance of in- novation as a source of competitiveness and economic diversification to reignite growth. • Against this background, it is clear that 1. monetary stimulus is not enough to reignite growth if economies are not competitive. 1
  2. 2. 2. an increasingly important element of competitiveness is creating an en- abling environment for innovation. 3. innovation in turn goes hand in hand with openness and economic integration. 4 India’s Performance 1. India’s rank 39; highest jump of 16 places from 55. 2. India’s GCI score stagnated between 2007-14. After the new government came to power in 2014 GCI has improved year on year. 3. Health and basic education improved through out the decade. 4. Infrastructure improvement was small until 2014 but picked up after improved public investment and sped up approval procedures to attract private resources. 5. Due to governance scandal and unman- ageable inefficiencies India’s institutional environment deteriorated until 2014 as businesses lost trust in government and public administration, but this trend re- versed after 2014. 6. Financial market development also im- proved after 2014 but not upto the pre 2008 levels. 7. Financial market development is the pil- lar which is most dragging down India’s competitiveness.RBI has increased trans- parency in financial market and have shed light on huge NPA, previously not reported. 8. Technological readiness is also area of concern where progress had stagnated. Digital India could lead to significant im- provements. 5 Reasons for India’s im- proved Performance 1. Improved monetary and fiscal policies, as well as lower oil prices, the Indian econ- omy has stabilized and now boasts the highest growth among G20 countries. 2
  3. 3. 2. opening the economy to foreign investors and international trade. 3. increasing transparency in the financial system. 6 Areas for improvement 1. The labor market is segmented between workers protected by rigid regulations and centralized wage determination and millions of unprotected and informal workers. 2. The efficiency of the domestic market is hindered by fiscal regulations that allow federal states to levy different levels of value-added taxes. 3. lack of infrastructure and ICT use remain bottlenecks. 3

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