Competitive Advantages of the Indian Economy

It is important to note that India has taken strong steps in ensuring an enabling environment for economic development. Precisely, India’s policies on investment, licensing, and production have been changed to suit the needs for economic development of the country. The economic reforms witnessed the years after 2007 have supported the country’s economic growth. India’s demographics play a very important role in its economic development. However, India’s business sophistication is still low but the current effort by the government and the private sector is likely to improve the country’s economy through this pillar. Most traditional theories of global economics differ by mentioning elements, or factors, that a country or region inherently possesses, such as land, location, natural resources, labour and population size as the primary determinants in a country's comparative economic advantage (Pitelis, 2010; 272).

There are various tools that can be utilised to explain the competitive advantages of India including the global competitive index and the concept of economic development. This analysis will utilise the two tools. Global Competitive Index (GCI) is a set of institutions, policies, and factors that determine the level of productivity of a country, conditions of public institutions and the technical conditions (Pitelis, 2010; 273). GCI utilised data that is accessible in to the public, and findings made by the World Economic Forum on annual basis. The 1980s were the years of change for India as the government came with policies that liberalised its economic development path. The policy changes facilitated the GDP growth surge (Pettinger, 2012; par. The GDP of the country averaged between 14 and 15 percent in real dollar terms (8.

6 percent) between 2003 and 2007. The economic reforms witnessed the years after 2007 have supported the country’s economic growth. The competitive environment in China is favourable and intense and thus more investment is happening and will continue to happen as long as the country keeps the business environment as it is (Klaus & Sala-i-Martín, 2017). The Indian government seeks to protect some of the sectors from external competition unlike in China where companies are facing competition on a global scale. One of the issues that China has to deal with is the imbalance in its growth strategy; the country relies heavily on exports and less on domestic demand. The current household consumption stands between 35 and 40 percent of the GDP while India has about 55 percent (Merrill, Taylor, & Poole, 2010; 5).

Task 2: The Overall Competitive Position of India and China India and China are all pushing forward in their development agenda. Task 4: Computation of the Competitive Advantages in Pillars # 11 and # 12 for India The 11th pillar of the 12 pillars of competitiveness entails business sophistication which has two key factors; the quality of the overall business networks of a country and the quality of individual firm’s operations and strategies (Daniel, 2016; par. On the other hand, the 12th pillar involves innovation. Innovation is particularly important for economies as they deal with the frontiers of knowledge; therefore, the chances of increasing value through mere integration and adaption of exogenous technologies disappear significantly (Daniel, 2016; par. India’s business sophistication is still low. However, the current effort by the government and the private sector is likely to improve the country’s economy through this pillar.

Conclusion Critical Evaluation of the Report Presented by the Indian Bureaucrats The report presented by the bureaucrats to the Governor of Reserve Bank of India has some flaws that have to be looked into while planning for the country’s economic development. One of the issues is that India is not fully an efficiency-driven economy as claimed by the bureaucrats; rather it has some aspects of factor-driven economy and efficiency-driven economy (Schwab, 2017; 4). As the analysis of the 11th and the 12th pillars of competitiveness with regards to India indicate that India is yet to utilise innovation. Research and development in the country is still low compared to China. Therefore, there is need to consider the issue of innovation which is more likely to increase the country’s foreign trade while planning for national economic development.