The Global Competitive Index (GCI) measures the competitiveness of countries through a set of 12 pillars that encompass both microeconomic and macroeconomic factors, providing insights into their ability to achieve prosperity. India ranked 39th in the 2016-2017 GCI, with notable improvements in areas such as goods market efficiency and business sophistication due to recent economic reforms. However, challenges remain, including labor market rigidities and the need for better health and education systems to enhance overall productivity.

2. The Global Competitive Index integrates the
microeconomic environment and micro/business
aspects of competitiveness into a single index.

3.  This mechanism of measuring competitiveness of nations was
developed by Xavier Sala-I-Martin and Elsa.V.Artadi. This is widely
used by World Economic Forum(WEF) in it’s Global Competitiveness
Report(GCR).
 Before that, the macroeconomic ranks were based on Jeffery Sash's
Growth Development Index and the microeconomics ranks were
based on Michael Porter’s Business Competitiveness Index.

4.  It assesses the ability of countries to provide high levels of prosperity to their
citizens by using available resources productivity.
 It measures the set of institutions, policies and factors that set the sustainable
current and medium-term levels of economic prosperity.
 The index is calculated by aggregating indicators across 12 pillars in the report
which covers both business and social indicators.
 These 12 pillars or indicators directly or indirectly impact the competitiveness of
the country in the global arena.
 The GCI measures 12 pillars which include institutions, macro-economic
environment, infrastructure, health and primary education, higher education and
training, labor market efficiency, goods and market efficiency among others.

6.  India is ranked 39th among 138 countries in the 2016-2017 Global
Competitiveness Index. The index was released as part of the World
Economic Forum’s (WEF) Global Competitiveness Report for 2016-17.
 India has emerged as the highest rising economy due to improvement
in goods market efficiency, business sophistication and innovation.
 India’s overall competitiveness has increased due to improvements in
institutions and infrastructure along with recent reforms such as
opening the economy to foreign investors and increasing transparency
in the financial system.
 Indian economy boasts the highest growth among G20 economies
mainly due to improved monetary and fiscal policies, as well as lower
oil prices which has stabilized economy.

7.  India’s competitiveness has improved across the board, particularly in
innovation (29), goods market efficiency (60) and business
sophistication (35) indicators of GCI.
 India still needs remove labour market rigidities and the presence of
large, public enterprises especially in the utilities and financial sector
make the economy less efficiency.

9.  It is determined by the legal and administrative framework
within which individuals, firms and governments interact
to generate income and wealth in the economy.
 The importance of a solid institutional environment has
become even more apparent during the current crisis, given
the increasingly direct role played by the state in the
economy of many countries.
 The quality of institutions has a strong bearing on
competitiveness and growth.
 It influences investment decisions and the organization of
production and plays a central role in the ways in which
societies distribute the benefits and bear the costs of
development strategies and policies .

10.  Government attitudes toward markets and
freedoms, and the efficiency of its operations, are also
very important
: overregulation, corruption, dishonesty in public
contracts, lack of transparency and trustworthiness.
Proper management of the
public finances is also critical to ensuring trust in the
national business environment .
 An economy is well served by businesses that are run h
onestly, where managers have strong ethical practices
in their dealings with the government .

12.  It determines the location of economic activity and the kinds of
activities or sectors that can develop in a particular economy.
 Well-developed infrastructure reduces the effect of distance between
regions, resulting on the integration of the national market and
connecting it at low cost to markets in other countries and regions.
 The quality and extensiveness of infrastructure networks has an impact
on economic growth and reduces income inequalities and poverty.
 In thisregard,awelldeveloped transport and communications
infrastructure network is a prerequisite for the connection of less-
developed communities with core economic activities and basic
services. Effective modes of transport for goods, people, and services
(such as
qualityroads, railroads, ports, and air transport) enable entrepreneurs t
o get their goods and services to market in a secure and timely
manner, and facilitate the movement of workers to the most suitable
jobs .

14.  The stability of the macroeconomic environment is
important for business and, therefore, is significant for
the overall competitiveness of a country.
 Although it is certainly true that macroeconomic
stability alone cannot increase the productivity of a
nation, it is also recognized thatmacroeconomic
disarray harms the economy, as we have seen in recent
years.

15.  The government cannot provide services efficiently if
it has to make high-interest payments on its past
debts. Running fiscal deficits limits the government’s
future ability to react to business cycles.
 Firms cannot operate efficiently when inflation rates
are out of hand. In sum, the economy cannot grow in a
sustainable manner unless the macro environment is
stable.

17. INDICATOR VALUE RANK/138
Malaria cases/100,000 pop 1312.4 41
Business impact of malaria 3.6 57
Tuberculosis cases/100,000 pop 167 111
Business impact of tuberculosis 3.7 129
HIV prevalence, % adult pop 0.3 60
Business impact of HIV/AIDS 3.7 127
Infant mortality, deaths/1,000 live births 37.9 115
Life expectancy, years 68 106
Quality of primary education 4.7 40
Primary education enrollment, net % 92.3 92
Rank(out of
140)
Score(1–7)
Health and primary education 85 5.5

18.  A healthy workforce is vital to a country’s competitiveness
and productivity. Workers who are ill cannot function to
their potential and will be less productive. Poor health
leads to significant costs to business, as sick workers are
often absent or operate at lower levels of efficiency.
Investment in the provision of health services is thus
critical for clear economic, as well as moral, considerations
 Workers who have received little formal education can
carry out only simple manual tasks and find it much more
difficult to adapt to more advanced production processes
and techniques, and therefore they contribute less to
devising or executing innovations.

19. INDICATOR VALUE RANK/138
Secondary education enrollment, gross % 68.9 102
Tertiary education enrollment, gross % 23.9 93
Quality of the education system 4.5 29
Quality of math and science education 4.6 44
Quality of management schools 4.6 43
Internet access in schools 4.2 74
Availability of specialized training services 4.5 55
Extent of staff training 4.6 30
Rank(out of 140) Score(1–7)
Higher education
and training
81 4.1

20.  In particular, today’s globalizing economy requires
countries to nurture pools of well-educated workers
who are able to perform complex tasks and adapt
rapidly to their changing environment and the
evolving needs of the production system.
 This pillar measures secondary and tertiary enrolment
rates as well as the quality of education

21. INDICATOR VALUE RANK/140
Intensity of local competition 4.7 96
Extent of market dominance 4.2 31
Effectiveness of anti-monopoly policy 4.3 31
Effect of taxation on incentives to invest 4.5 25
Total tax rate, % profits 60.6 123
No. procedures to start a business 13 132
No. days to start a business 29 115
Agricultural policy costs 4.1 44
Prevalence of non-tariff barriers 4.6 47

22. INDICATOR VALUE RANK/138
Trade tariffs, % duty 13 123
Prevalence of foreign ownership 4.4 72
Business impact of rules on FDI 4.6 71
Burden of customs procedures 4.6 37
Imports as a percentage of GDP 24.6 121
Degree of customer orientation 4.6 71
Buyer sophistication 4.5 17
Rank(out of 140) Score(1–7)
Goods market
efficiency
60 4.4

23.  Countries with efficient goods markets are well positioned to
produce the right mix of products and services given their
particular supply-and-demand conditions, as well as to ensure
that these goods can be most effectively traded in the economy.
 Healthy market competition, both domestic and foreign, is
important in driving market efficiency, and thus business
productivity, by ensuring that the most efficient firms,
producing goods demanded by the market, are those that thrive.
 Market efficiency also depends on demand conditions such as
customer orientation and buyer sophistication. For cultural or
historical reasons, customers may be more demanding in some
countries than in others. This can create an important
competitive advantage, as it forces companies to be more
innovative and customer-oriented and thus imposes the
discipline necessary for efficiency to be achieved in the market.

24.  The efficiency and flexibility of the labor market are
critical for ensuring that workers are allocated to their
most effective use in the economy and provided with
incentives to give their best effort in their jobs.
 Labor markets must therefore have the flexibility to
shift workers from one economic activity to another
rapidly and at low cost, and to allow for wage
fluctuations without much social disruption.

25.  Efficient labor markets must also ensure clear strong
incentives for employees and promote meritocracy at
the workplace, and they must provide equity in the
business environment between women and men.
 Taken together these factors have a positive effect on
worker performance and the attractiveness of the
country for talent, two aspects of the labor market that
are growing more important as talent shortages loom
on the horizon.

27.  An efficient financial sector allocates the resources
saved by a nation’s population, as well as those
entering the economy from abroad, to the
entrepreneurial or investment projects with the
highest expected rates of return rather than to the
politically connected. Business investment is critical to
productivity

28.  Therefore economies require sophisticated financial
markets that can make capital available for private-
sector investment from such sources as loans from a
sound banking sector, well-regulated securities
exchanges, venture capital, and other financial
products.
 In order to fulfill all those functions, the banking
sector needs to be trustworthy and transparent, and—
as has been made so clear recently—financial markets
need appropriate regulation to protect investors and
other actors in the economy at large .

30.  The technological readiness pillar measures the agility
with which an economy adopts existing technologies
to enhance the productivity of its industries, with
specific emphasis on its capacity to fully leverage
information and communication technologies (ICTs)
in daily activities and production processes for
increased efficiency and enabling innovation for
competitiveness.

31.  The central point is that the firms operating in the
country need to have access to advanced products and
blueprints and the ability to absorb and use them.
Among the main sources of foreign technology, FDI
often plays a key role, especially for countries at a less
advanced stage of technological development.

33.  The market size is the tenth pillar of economy.
 The size of the market affects productivity as large
markets allow firms to exploit economies of scale.
 In the era of globalization, international markets have
become a substitute for domestic markets, especially
for small countries . The exports can be thought of as a
substitute for domestic demand.
 By including both domestic and foreign markets in
measurement of market size, we give credit to export-
driven economies and geographical areas that have
single common market.

34.  India is ranked 3rd in the world in market size with the
score of 6.4 .
 The parameters on which the countries are compared
are :
 Domestic Market Size
 Foreign Market Size
 GDP
 Exports as a percentage of GDP

35.  Business Sophistication concerns two elements that
are intricately linked: the quality of a country’s overall
business networks and quality of individual firms’
operations and strategies.
 The quality of a country’s business networks and
supporting industries is measured by quantity and
quality of local suppliers and extent of interaction.
 When companies and suppliers are interconnected ,
efficiency is heightened, greater opportunities for
innovation are created and barriers to entry are
reduced.

36.  India is ranked35thin Business Sophistication with a
score of4.4.
 The parameters on which the countries are compared
are :
 Local Supplier quantity
 Local supplier quality
 State of cluster development
 Nature of competitive advantage
 Value chain breadth
 Product Process sophistication
 Extent of marketing

38.  The final pillar of competitiveness focuses on technological
innovation.
 It is important for economies as they approach frontiers of
knowledge.
 Firms must design and develop cutting edge products and
processes to maintain competitive edge and move toward
even higher value added activities.
 Progression requires an environment that is conducive to
innovative activity and supported by both public and
private sector.
 Progress is achieved by investment in R&D and presence of
high quality scientific research institutes.

39.  India is ranked29thin Innovation with a score of4.0.
 The parameters on which countries are compared are :
 Capacity for Innovation
 Company spending on R&D
 Quality of scientific research institutions
 Availability of Scientists and Engineers
 University-industry collaboration in R&D
 Government procurement of advanced tech products

41. THANK YOU !