India has witnessed the sharpest rise among the Asian economies, with a six-position jump from 43rd to 37th rank on the annual World Competitiveness Index compiled by the Institute for Management Development, largely due to gains in economic performance.
Denmark has moved to the top of the 63-nation list from the third position last year, while Switzerland slipped from the top ranking to the second position and Singapore regained the third spot from fifth, a global study showed on Wednesday.
Others in the top 10 include Sweden at the fourth position, followed by Hong Kong SAR (5th), the Netherlands (6th), Taiwan (7th), Finland (8th), Norway (9th) and the USA (10th).
Meanwhile, the top-performing Asian economies are Singapore (3rd), Hong Kong (5th), Taiwan (7th), China (17th) and Australia (19th).
After a stable but stagnant five years, 2022 witnessed significant improvement in the competitiveness of the Indian economy, IMD said, adding that this is largely due to gains in economic performance (from 37th to 28th).
The domestic economy has experienced a stratospheric rise from 30th to 9th position in a year, Institute for Management Development (IMD) noted.
The labour market, a key sub-factor in the business efficiency parameter, moved up from 15th to 6th, while management practices and business attitudes and values also made major leaps.
"With Prime Minister Narendra Modi having made major improvements in the context of retrospective taxes in 2021, India appears to have restored the trust of the business community. Its re-regulation of a number of sectors, including drones, space and geo-spatial mapping, also likely played a role in the country's stellar performance in the 2022 WCR," economists at IMD World Competitiveness Centre said.
India is also a driving force in the global movement to fight climate change and Modi's pledge of net-zero by 2070 at the COP26 summit in November 2021, sits in harmony with its strength in environment-related technologies in the ranking.
The challenges that India faces include managing trade disruptions and energy security, maintaining high GDP growth post the pandemic, skill development and employment generation, asset monetisation and resource mobilisation for infrastructure development.
The top five attractive factors of India's economy for business are - a skilled workforce, cost competitiveness, dynamism of the economy, high educational level and open and positive attitudes.
The IMD World Competitiveness Ranking (WCR) found that inflationary pressures are affecting the competitiveness of national economies along with COVID, and the invasion of Ukraine by Russia.
The three most important trends found to be impacting businesses in 2022 are inflationary pressures (50 per cent), geopolitical conflicts (49 per cent) and supply chain bottlenecks (48 per cent) with COVID being the fourth (43 per cent).
"Inflationary pressure is affecting most economies," said Christos Cabolis, Chief Economist at the WCC.
"Other global challenges affecting the competitiveness of countries include variants of COVID-19 with respect to the number of infected people around the world; differing national policies to address COVID (the 'zero-tolerance COVID' policy versus the 'moving on from COVID' policy); and the invasion of Ukraine by Russia." Meanwhile, China slipped one spot this year, reversing its strong upward trend of recent years, signalling a poor economic recovery exacerbated by its zero-COVID strategy.
China improved its business efficiency, more specifically productivity, and increased its real GDP growth rate compared to the last year.
"Going forward, China needs to restructure the economy from manufacturing to high-value services and from investment to consumption. It also needs to build a unified national market to enhance long-term economic prosperity, and it will only achieve its socio-economic development goals by using a macroeconomic policy mix," explain the economists at IMD's WCC.
IMD business school in Switzerland and Singapore released the 2022 World Competitiveness Ranking. Its think-tank, IMD World Competitiveness Center, ranks 63 economies and assesses the extent to which a country promotes the prosperity of its people by measuring economic well-being via hard data and survey responses from executives.