China leads BRICS in global competitiveness ranking

English>>Business

Editor's Pick

China leads BRICS in global competitiveness ranking

(People's Daily Online) 17:03, September 06, 2013

Email|Print|Comments

twitter

facebook

Sina Microblog

Among the BRICS economies, China has maintained 29th place in the Global Competitiveness Report 2013-2014, unchanged from last year, and ahead of South Africa (53rd), Brazil (56th), India (60th) and Russia (64th), and the gap between China and India has widened from eight places in 2006 to 31, the World Economic Forum (WEF) announced on Wednesday in Geneva.

China's presence in the top 30 is a quite remarkable achievement

Professor Chen Jiangsheng, Director of the research institute of world economy at the Party School of the CPC Central Committee, explains the reasons for the growing gap between China and India. The Indian economy performed well from 1991 to 2007, but was greatly impacted by the world economic crisis in 2007 and has remained sluggish since then. The Chinese economy on the other hand has maintained its momentum since 2007, despite some setbacks.

"For such a big economy, and given the stage of development, a presence in the top 30, is a quite remarkable achievement," said Thierry Geiger, the economist with the WEF who is in charge of the Asia section of the report. In order to maintain and improve its competitiveness, China now needs to focus on more sophisticated factors, such as high levels of education, market efficiency, and adoption of technology, he added.

He attached special weight to market efficiency, saying that China needs to develop the private sector, create a more level playing field for small- and medium-sized enterprises, and provide better access to credit for those companies.

Since 1979, the WEF has released the Global Competitiveness Report every year. Its competitiveness ranking is based on the Global Competitiveness Index (GCI), calculated by drawing together data covering 12 categories, namely institutions, innovation, macroeconomic environment, health and primary education, higher education and training, manufacturing market efficiency, labor market efficiency, financial market development, technological maturity, market size, business sophistication, and innovation.

Innovation the key ingredient in an economy's ability to prosper

Klaus Schwab, WEF founder and executive chairman, stressed the role of innovation. "I predict that the traditional distinction between countries being 'developed' or 'less developed' will gradually disappear," he said. "We will instead refer to them much more in terms of being "innovation rich" versus "innovation poor". He believes that innovation is increasingly the key ingredient in an economy's ability to prosper.

Switzerland tops the overall rankings of 148 economies in the report, followed by Singapore and Finland, Germany moved up two notches to 4th place and the United States reversed a four-year downward trend, rising two places to 5th. Sweden (6th), the Netherlands (8th) and the UK (10th) all dropped places. Two other Asian economies, China's Hong Kong SAR (7th), and Japan (9th), feature in the top 10 of the rankings.

On the question why small countries like Switzerland, Singapore and Finland are among the top rankings, Chen Jiangsheng explained that it is because the report is based not on economic output, but on the efficiency of government, market environment, innovation, and anti-corruption efforts. And these small countries have an advantage in such areas.

Polarization in Asian countries a serious problem

The report also shows that polarization in Asian counties is a serious problem. Some of the least competitive economies belong to Asia, such as Bangladesh (110th), Nepal (117th) and Pakistan (133rd). The ranking of Pakistan has dropped for three years in a row. And Bhutan (109th), Laos (81st) and Myanmar (139th) are included in the rankings for the first time.

The report concluded that in Europe, efforts to tackle public debt and avoid a breakup of the Euro zone have taken the focus away from addressing deeper issues of competitiveness. It further noted that in order to help bridge the region's competitiveness divide, Southern European economies such as Spain (35th), Italy (49th), Portugal (51st) and notably Greece (91st) all need to continue addressing weaknesses in the function and efficiency of their markets, boost innovation, and improve access to finance.

In Latin America, the report pointed out that despite robust economic growth in previous years, the region continues to suffer from low rates of productivity and the results show overall stagnation in competitiveness. Chile (34th) continues to lead the regional rankings ahead of Panama (40th), Costa Rica (54th) and Mexico (55th), which all remain relatively stable.