Case Study Analysis: Competitive Advantages of the Indian Economy

This case study examines the competitive advantages of the Indian economy, focusing on its position on the economic development path and its strengths in business sophistication and innovation, based on the Global Competitiveness Report 2017-2018. The analysis compares India's performance with China's, highlighting India's improvements in infrastructure, education, and technological readiness. It also addresses the barriers to economic development, particularly in financial market development, and the government's efficiency in providing financial resources. The study uses the Porter diamond model to evaluate national competitive advantages and identifies India's progress in pillars related to business sophistication and innovation. The conclusion suggests that India will be an efficiency-driven economy by 2030. The study underscores the importance of innovation, market efficiency, and government support for sustained economic growth. The analysis is based on the Global Competitiveness Report and aims to provide insights into India's economic landscape and future prospects, with the goal of designing a plan of economic development.

Global Competitiveness 1
The Competitive Advantages of the Indian Economy
Name of the student
Name of class
Name of Professor
Name of School
Name of City/State
Date

Global Competitiveness 2
Executive Summary
The countries of China and India have indicated a tremendous progress in their economy. The
major competitive advantages of the Indian economy are outlined in pillars of business
sophistication and innovation. India has improved across infrastructure, advanced education and
preparing and mechanical availability. The performance in ICT has also improved as well as
institution qualities in terms of efficiency. From the Global Competitive Report, China is at 27th
position and India is at the 40th position. However, there are barriers that hinder the development
of India’s economy. The financial systems in India are not readily available and the government
is not efficient in offering financial resources. The economy of India will grow if the production
inputs are used in a proper way. On the other hand, the country of India needs to embrace
innovation in production as well as value development. Appropriate markets that allow product
market efficiency, labour market functioning and financial market development should be
established.

Global Competitiveness 3
Table of Contents
Executive Summary...................................................................................................................................2
1.Introduction............................................................................................................................................4
2.Analytical development..........................................................................................................................4
Task 1: The Position of India and China on the Economic Development Path........................................4
Task 2: The Overall Competitive Position of India and China................................................................6
Task 3: The Rule Applicable For the Evaluation of the National Competitive Advantages of India and
China.......................................................................................................................................................7
Task 4: Competitive Advantages in Pillars # 11 And # 12 for India........................................................7
Task 5: The Barriers to Economic Development in India........................................................................8
3.Conclusion...............................................................................................................................................9
4.References...........................................................................................................................................10
Appendices...............................................................................................................................................14
Appendix A...........................................................................................................................................14
Appendix B...........................................................................................................................................15
Appendix C...........................................................................................................................................16

Global Competitiveness 4
The Competitive Advantages of the Indian Economy
1. Introduction
The world economy has begun to show some encouraging signs of recovery over the few
years. In 2017, the growth of GDP accelerated to 3.5 per cent (Aghdaie et al. 2012, p.12). In
spite of this positive advancement, pioneers are confronting various difficulties with regards to
the financial arrangement. The uneven distributions of economic progress benefits, increasing
environmental degradation and the increased income disparity in developed economies have
increased the sense that the past economic policies did not serve citizens or society well(Baldwin
and Evenett 2009, p.34). The technological disruptions coupled with new fault lines that have
emerged from the global economy as well as the political order have heightened uncertainty
about the type of policies to be implemented. All of these factors are cumulatively posing several
challenges to decision makers in finding new approaches to advance the progress of the
economy. This paper seeks to elaborate the position of India and China on the economic
development path and the competitive advantage of India based on the Global Competitive Index
Report.
2. Analytical development
Task 1: The Position of India and China on the Economic Development Path
The countries of India and China have indicated a drastic progress on the economic
development path. The financial advancement path is the procedure by which countries enhance
the monetary, social and political well-being of its people. The national economy of India and
China was almost at the same level in the fifties (Chen 2016, p.8). During this time, the Indian
economy recorded better performance in terms of gross national product. In the 1970s, a drastic

Global Competitiveness 5
change was observed following the opening of foreign investments. Amid this period, the
Chinese economy recorded a tremendous advancement and outperformed the Indian economy in
all segments. The development of the assembling business also transformed China and
developed a sustainable Industrial substrate (Riasi 2015, p.19). The foreign investments of China
have also maintained a constant development rate and in 2015, the growth rate of China and
India was 1.1 trillion and 137 billion dollars respectively.
In terms of gross national products (PIL), China has recorded exceptional growth in the
last decade but India has outperformed China as far as speed of development of their economy.
The economic development of India is being led by active industry in the technology sector and
has based its economic growth majorly on service industries (Gordon 2014, p.15). The state
investments have been the main reason why India has performed well in the service industry.
However, both countries are facing similar difficulties in terms of economic development as a
result of entirely relying on industrial and service sectors respectively. India and China need to
minimize their dependence on foreign commerce in order to promote a far-reaching economy
and further extend its investment into numerous sectors to avoid being trapped in the
international production chain.
Several kinds of research indicate that better financial systems will propel the Indian
economy to unimaginable heights (Lakner and Milanovic 2015, p.27). The current employment
rate of China and India is 4.7 and 3.6 per cent. The role of the government plays is significant in
ensuring sustainable development since economic development majorly relies on the political
process. In this regard, the poor administrative ability of India has contributed to the gradual
socioeconomic development of the country (Andrews et al. 2016, p.30). As far as financial
unwavering quality, reasonableness and productivity in fighting corruption and an organization

Global Competitiveness 6
that watch the laws, India enjoys an added advantage as compared to China. China has better
results than India with regard to government efficiency and legislation quality. The government
of China is competent in directing resources as well as reaching agreements permitting the
country to provide an effective and efficient socioeconomic development (Cetorelli and
Goldberg 2011, p.103). With regard to the economic development path, China is in currently in a
better position than India and it can only surpass China if they develop better financial systems
coupled with promotion of new jobs and higher employment rate.
Task 2: The Overall Competitive Position of India and China
Given the development records, reformed economic systems as well as large markets,
China and India appear to compete in every aspect of investment. According to the Global
Competitive Report (2017-2018), China is currently at the 27th position. It has gained one place
because of its steady growth to its overall competitiveness (Browne et al. 2014, p.41). China has
gained tremendous progress in all columns separated from the macroeconomic condition and
foundation pillar. The advances in this column have declined due to the compounding
government spending shortfalls which have been higher than the normal target. The outcomes of
this decline have been observed in the decline of port infrastructure quality and electricity supply
reliability (Bergquist et al. 2017, p.6). The largest gains have been seen in technological
readiness which has been attributed by increased ICT penetration as well as the extent to which
foreign investments bring new technologies. Further improvements in ICT will foster the
remarkable development of rising advanced businesses and create vital conditions to begin new
ones. The other noteworthy advance that has made China improve in its position is the good
market efficiency (Darvas and Wolff 2016, p.17). The country has slightly minimized the
number of procedures involved in starting a business.

Global Competitiveness 7
Additionally, India has not been left behind on the economic development path progress.
At the moment, the country of India has stabilized at the 40th position (Curran 2000, p.19). The
country has improved across most of its competitive pillars, particularly infrastructure,
mechanical availability and advanced education and preparing (De Loecker and Eeckhout 2017,
p.9). This is a reflex of the recent public investments in these areas. The performance in ICT has
also improved, especially internet bandwidth per user, internet use in schools, broadband
subscriptions and mobile phone use. Institutions qualities have been increased in terms of
efficiency. However, the private sector still experiences corruption which is still a problematic
factor for business growth in India.
Task 3: The Rule Applicable For the Evaluation of the National Competitive Advantages of
India and China
Porter diamond model is the rule appropriate for the assessment of the national upper
hands of India and China. The model expects that the aggressiveness of organizations
significantly identifies with the execution of different organizations (Riasi 2015, p.11). Much of
the time, firms use the model to set up how they can make an interpretation of the national
favourable circumstances into universal benefits. The model recommends that the national
command post of an association is basic in the improvement of preferences on an overall scale
(Dörr et al. 2018). The command post gives fundamental factors that help the association, for
example, government bolster. The model recognizes factor conditions, related and supporting
businesses, home interest conditions, procedure, structure and contention, governments and
chance occasions. The utilization of the model can empower India and China to distinguish what
elements to construct preferences at the national level and it compelling at internationalization
endeavours

Global Competitiveness 8
Task 4: Competitive Advantages in Pillars # 11 And # 12 for India
The 11th and 12th pillars in the global competitive index are business sophistication and
innovation. The business sophistication pillar measures the advancement in business practices
that improve efficiency in goods and services production (Gordon 2014, p.21). The business
sophistication concerns the quality of a country’s overall business network and the quality of the
individual firm’s operations and strategies. They are crucial in the advanced stage of
development. The country of India is attempting to meet all these requirements in pillar eleven.
The local supplier quantity is ranked 53 in the global competitive index while the local quality is
at 69. The nature of competitive advantage is at 28, state of cluster development is at 31, the
extent of marketing at 61, value chain breadth at 30, product process sophistication at 41,
willingness to delegate authority at 45 and the control of international distribution is at 28. This
trend clearly indicates how India is working toward achieving business sophistication (Turvey
2017, p.46).
Furthermore, the advancement pillar centres on development. The pillar is critical for
economies as they approach the edges of data and probability of creating more an incentive by
incorporating and adjusting exogenous innovations (Hoekman 2015, p.23). The firm ought to
concoct competitive edge items to keep up an upper hand and move considerably higher to
esteem included exercises. Be that as it may, the movement of this column requires a helpful
situation to deliver inventive exercises which are upheld by general society and private segments
(International Monetary Fund 2017, p.35). This pillar requires adequate investment in research
and development to build new technologies. India has tried to adopt this pillar and on the
capacity for innovation, it is ranked 29 in the GDI. Besides, the quality of scientific research
institution is ranked 35, PCT patents applications at 63, government procurement of advanced

Global Competitiveness 9
technology products at 8, availability of scientists and engineers at 32 and company spending on
R and D at 23.
Task 5: The Barriers to Economic Development in India
With respect to financial market development pillar, India is experiencing a lot of
challenges as compared to China. In India, the financial services are not readily available as
compared to China. China has affordable financial services and finance projects through local
equity market (Helpman et al. 2017, p.47). The country of China has facilitated easy access to
loans and available venture capital. On the other hand, the pillar of financial market development
seems to be a barrier to development in India. The government of India is not efficient in
providing financial resources and this has been a barrier to development. Furthermore, India
lacks quality legalisation system as compared to China (Bacchetta et al 2013, p.18). The legal
right system needs a lot of procedures before allowed to access financial services. The
government of India need to develop a better financial system to effectively avail financial
services to people to foster socioeconomic development. The better financial system will put
India in the right position to compete in China.
3. Conclusion
From the Global Competitive Report, it is evident that India will be an efficiency-driven
economy in 2030. This is attributed by the improved performance in ICT in almost all sectors.
The improved ICT performance has increased institution quality in terms of efficiency. Besides,
the country has a competitive advantage in all sectors. With regard to business sophistication and
innovation, the country of India is trying to achieve numerous requirements by coming up with
more innovative systems. The country has improved almost in every pillar ranging from the
enabling environment pillar, human capital, markets and innovation system. However, India has

Global Competitiveness 10
to improve its financial system to give a better competitive advantage over China. It should
improve the banks soundness as well as avail financial services to people for the socioeconomic
development.
Conclusively, the prosperity of India will increase if the inputs of production are utilized
accordingly to fulfil the continuous human demands. Therefore, the country of India ought to
embrace innovation to represent a critical driver in production and value development. The
country also needs to provide an enabling environment by providing better infrastructure,
institutions as well as enable technological readiness. Appropriate markets that allow product
market efficiency, labour market functioning and financial market development should be
established.

Global Competitiveness 11
4. References
Aghdaie, S.F.A., Seidi, M. and Riasi, A., 2012. Identifying the barriers to Iran’s Saffron
exportby using Porter’s diamond model. International journal of marketing studies, 4(5), p.129.
Andrews, D., Criscuolo, C. and Gal, P.N., 2016. The best versus the rest: the global productivity
Slowdown, divergence across firms and the role of public policy (No. 5). OECD Publishing.
Bacchetta, P. and E. van Wincoop. 2013. “The Great Recession: A Self-Fulfilling Global Panic.
NBER Working Paper No. 19062. Cambridge, MA: National Bureau of Economic Research.
Available at http://www.nber.org/papers/w19062 on 7th October 2018
Baldwin, R. and Evenett, S., 2009. The collapse of global trade, murky protectionism and
thecrisis: Recommendations for the G20. Cepr.
Bergquist, K., Fink, K. and Ruffo, J., 2017. Identifying and ranking the world’s largest clustersof
inventive activity (No. 34). World Intellectual Property Organization-Economics andStatistics
Division.
Browne, C., Di Battista, A.t.t.i.l.i.o., Geiger, T. and Gutknecht, T., 2014. The executive opinion
survey: The voice of the business community. The Global Competitiveness Report 2014–2015,
pp.69-78.
Cetorelli, N. and Goldberg, L.S., 2011. Global banks and international shock transmission:
Evidence from the crisis. IMF Economic Review, 59(1), pp.41-76.
Chen, J., 2016. How do switching costs affect market concentration and prices in network
Industries? The Journal of Industrial Economics, 64(2), pp.226-254.

Global Competitiveness 12
Curran, P.J., 2000. Competition in UKHigher Education: Competitive Advantage in the
ResearchAssessment Exercise and Porter's Diamond Model. Higher education quarterly, 54(4),
pp.386410.
Darvas, Z. and Wolff, G.B., 2016. An anatomy of inclusive growth in Europe. Bruegel
BlueprintSeries 26, October 2016.
De Loecker, J. and Eeckhout, J., 2017. The rise of market power and the
macroeconomicimplications (No. w23687). National Bureau of Economic Research.
Dörr, S., Raissi, M. and Weber, A., 2018. Credit-supply shocks and firm productivity
inItaly. Journal of International Money and Finance, 87, pp.155-171.
Gordon, R.J., 2014. The demise of US economic growth: restatement, rebuttal,
andreflections (No. w19895). National Bureau of Economic Research.
Helpman, E., O. Itskhoki, M.-A. Muendler, and S. J. Redding. 2017. “Trade and Inequality:From
Theory to Estimation.” The Review of Economic Studies 84 (1): 357–405. Available athttps://doi.
org/10.1093/restud/rdw025 on 7th October 2018.
Hoekman, B., ed. 2015. The Global Trade Slowdown: A New Normal? A VoxEU.org
eBook.London: CEPR Press. Available athttp://voxeu. Org/sites/default/files/file/Global
%20Trade%20Slowdown_nocover. Pdf on 7thOctober 2018.
IMF (International Monetary Fund). 2017. World Economic Outlook Update, April 2017:
Gaining Momentum? Washington, DC: IMF. Available
athttp://www.imf.org/en/Publications/WEO/ Issues/2017/04/04/world-economic-outlook-
april2017 on 7th October 2018.