The World Economic Forum has ranked India as the 58th most competitive economy in its Global Competitiveness Report 2018. China has slipped down in the rankings to 28, while US has been declared as the most competitive of the 140 economies in the world.

According to the Global Competitiveness Report 2018 released recently, India has bettered its 2017 ranking by five spots — the largest gain among G20 economies. Among Asian nations, Singapore and Japan lead the global competitive index. Singapore and Germany occupy second and third positions, respectively, on the list.

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India ranks 58th with a score of 62, taking a five-place jump from its 2017 data ranking. According the the WEF report, India remains the region’s main driving force through the sheer size of its economy and the quality of its research institutions.

In Asia, Singapore and Japan have progressed well by making significant changes to the economy and workforce. According to the report, China’s slip is attributed to its slowing macroeconomic situation and persisting barriers within the work force.

On research and development, the report says, China and India are top performers in the upper- and lower middle-income brackets, and they are catching up with or even outperforming the average among high-income economies. While China is already more advanced when it comes to investing in R&D than the average high-income economies, India it says is not far behind though let down by its “less-efficient bureaucracy for business creation and insolvency”.

The catch-up process is reflected in the emergence of Chinese and Indian companies in technology-intensive sectors, says the report.

In terms of broad-based information and communication technologies (ICT) adoption, however, it’s the Republic of Korea that has emerged as the world leader with a near perfect score of 91.3. In this area, India is among the weakest performers, with a score of 28.0 (117th), despite its vibrant IT sector, notes the report.

In South Asia, India and Pakistan, according to the report, demonstrate the lowest levels of technological readiness, which confirms the challenge for large emerging economies “to fully integrate their entire population— especially those living in the e living in the most remote areas—into modernization processes”.

Talking about the the importance of openness for competitiveness, “at a time of escalating trade tensions and backlash against globalization”, the report says more open economies are more innovative and have more competitive markets.

The report finds India a relatively “closed” economy, on par with Brazil, and calls Singapore, Germany, Netherlands, Sweden, Finland and the United States some of the most open countries in the world. The Islamic Republic of Iran and Ethiopia are among the least open, says the report.

Stating that the financial system continues to be a source of weakness in some economies, the report says India, China, Russia and Italy, all scoring of 84 or less, are among the G20 economies that present specific vulnerabilities in their financial systems. On the other hand, Finland, Hong Kong SAR, Switzerland, Luxembourg and Norway have the most stable financial markets, with a score of above 95. India’s score on this pillar is 83.2, and the WEF report specifically mentions that the country’s financial system stability is mainly held back by “relatively low performance on soundness of banks and regulatory capital ratios”.

In South Asia, India leads in all other areas of competitiveness except for health, education and skills.

Stating that India has demonstrated sizeable improvements over the past year, compared with the 2017 backcast edition, the report says: “India is a remarkable example of a country that has been able to accelerate on the pathway to innovation (where it now ranks 31st, with a score of 53.8), due, particularly, to the quality of its research institutions. In spite of a high degree of entrepreneurship (61.1, 23rd), business dynamism is hampered by administrative hurdles.”

It adds: “While Indian companies can access the 3rd largest market in the world (which translates into a perfect mark of 100.0 on the Market size pillar), the country would benefit from increased trade openness (136th) to drive productivity growth. More investments will be necessary to spur innovation beyond hubs of excellence and diffuse economic growth more broadly. This includes continuing to widen the adoption of ICT technologies (28.0, 117th) and improving the quality and conditions of human capital across the country, taking advantage of an extremely young population. India currently ranks 108th on the Health pillar and 96th on the Skills pillar of the index.”

According to the WEF, the Global Competitiveness Report 2018 used a new methodology, guided by the emergence of new fundamental changes in the functioning of national economies with the advent of what WEF calls the Fourth Industrial Revolution. The report gives priority to technology, acknowledging it drives the economic progress in the modern era.