Sweden, another technology powerhouse in Europe, ranks second, followed by Singapore and the United States, which both fell by two positions from their ranking last year. The African nation of Chad figures at the bottom of the list of 139 countries.
The global competitiveness rankings are viewed as a barometer of the business climate in 139 countries and mirrors the assessments of leading businessmen on a range of political, social, and economic parameters.
Though Switzerland has "[state-supported] monopolies in key sectors, it maintains overall economic stability and largely open trade and investment policies," said Margareta Dryeniek Hanouz, senior economist and director of the WEF, who is also the co-author of the report.
India has been pushed down to 51st position from 49th due to its poor performance in a range of social sector areas such as education, health and infrastructure.
Though India has performed well in complex financial sector areas, attaining the 17th rank globally in terms of its financial markets, 44th in business sophistication and 39th in innovation, it has failed to improve the basic drivers of competitiveness, the report said.
Life expectancy is 10 years shorter in India as compared to China and Brazil. Despite high economic growth, India continues to be plagued by budget deficits, high public debt and high inflation. In contrast, China has over USD 2 trillion in forex reserves and a sound macro-economic environment.
TheWEF, which is a non-governmental organisation, is largely known for its annual Davos show of captains of industry and business and political leaders. In the face of a growing economic crisis in the western world, the WEF has increasingly promoted "compassionate capitalism" as an economic model, analysts said.
Global Competitiveness Report
The Global Competitiveness Report is a yearly report published by the World Economic Forum. The first report was released in 1979. The 2009-2010 report covers 133 major and emerging economies, down from 134 considered in the 2008-2009 report as Moldova was excluded due to lack of survey data.Switzerland leads the ranking as the most competitive economy in the world, as the United States, which ranked first for several years, fell to fourth place due to the consequences of the financial crisis of 2007–2010 and its macroeconomic stability. China continue its relative rise in the rankings reaching 27th.
The report "assesses the ability of countries to provide high levels of prosperity to their citizens. This in turn depends on how productively a country uses available resources. Therefore, the Global Competitiveness Index measures the set of institutions, policies, and factors that set the sustainable current and medium term levels of economic prosperity."
Description
Somewhat similar annual reports are the Ease of Doing Business Index and the Indices of Economic Freedom. They also look at factors that affect economic growth, but not as many as the Global Competitiveness Report.One part of the report is the Executive Opinion Survey which is a survey of a representative sample of business leaders in their respective countries. Respondent numbers have increased every year and is currently just over 11,000 in 125 countries.
The report ranks the world's nations according to the Global Competitiveness Index. The report states that it is based on the latest theoretical and empirical research. It is made up of over 90 variables, of which two thirds come from the Executive Opinion Survey, and one third comes from publicly available sources such as the United Nations. The variables are organized into nine pillars, with each pillar representing an area considered as an important determinant of competitiveness.
The report notes that as a nation develops, wages tend to increase, and that in order to sustain this higher income, labor productivity must improve in order for the nation to be competitive. In addition, what creates productivity in Sweden is necessarily different from what drives it in Ghana. Thus, the GCI separates countries into three specific stagesti factor-driven, efficiency driven, and innovation-driven, each implying a growing degree of complexity in the operation of the economy.
In the factor-driven stage countries compete based on their factor endowments, primarily unskilled labor and natural resources. Companies compete on the basis of prices and sell basic products or commodities, with their low productivity reflected in low wages.
To maintain competitiveness at this stage of development, competitiveness hinges mainly on well-functioning public and private institutions (pillar 1), appropriate infrastructure (pillar 2), a stable macroeconomic framework (pillar 3), and good health and primary education (pillar 4). As wages rise with advancing development, countries move into the efficiency-driven stage of development, when they must begin to develop more efficient production processes and increase product quality. At this point, competitiveness becomes increasingly driven by higher education and training (pillar 5), efficient markets (pillar 6), and the ability to harness the benefits of existing technologies (pillar 7).
Finally, as countries move into the innovation-driven stage, they are only able to sustain higher wages and the associated standard of living if their businesses are able to compete with new and unique products. At this stage, companies must compete by producing new and different goods using the most sophisticated production processes (pillar 8) and through innovation (pillar 9). Thus, the impact of each pillar on competitiveness varies across countries, in function of their stages of economic development. Therefore, in the calculation of the GCI, pillars are given different weights depending on the per capita income of the nation. The weights used are the values that best explain growth in recent years For example, the sophistication and innovation factors contribute 10% to the final score in factor and efficiency-driven economies, but 30% in innovation-driven economies. Intermediate values are used for economies in transition between stages.
2010-2011 rankings
The following are the top 30 countries in the 2010-2011 Report.| 1. Switzerland | 5.63 |
| 2. Sweden | 5.56 |
| 3. Singapore | 5.58 |
| 4. United States | 5.43 |
| 5. Germany | 5.39 |
| 6. Japan | 5.37 |
| 7. Finland | 5.37 |
| 8. Netherlands | 5.33 |
| 9. Denmark | 5.32 |
| 10. Canada | 5.30 |
| 11. Hong Kong SAR | 5.27 |
| 12. United Kingdom | 5.25 |
| 13. Taiwan | 5.21 |
| 14. Norway | 5.14 |
| 15. France | 5.13 |
| 16. Australia | 5.11 |
| 17. Qatar | 5.10 |
| 18. Austria | 5.09 |
| 19. Belgium | 5.07 |
| 20. Luxembourg | 5.05 |
| 21. Saudi Arabia | 4.95 |
| 22. South Korea | 4.93 |
| 23. New Zealand | 4.92 |
| 24. Israel | 4.91 |
| 25. United Arab Emirates | 4.89 |
| 26. Malaysia | 4.88 |
| 27. China | 4.84 |
| 28. Brunei | 4.75 |
| 29. Ireland | 4.74 |
| 30. Chile | 4.69 |
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