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In the good books of the business class

I couldn’t help noticing the contrast between Singapore and India in this year’s Global Competitiveness Report, released by the World Economic Forum last week. Singapore, it says, is the world’s third most competitive most economy, behind first-placed Switzerland and second-ranked Sweden. America is fourth and India far behind, ranked 51st out of the 139 countries surveyed.

Singapore, according to the report, has the least corruption, the most efficient government and the most trusted politicians in the world while India is bedevilled with corruption, red tape and politicians low on public trust. Yet there is no getting around the fact that India is now the world’s fourth biggest economy, smaller only than America, China and Japan.

That’s a fact supported by figures while which government is the cleanest and best is a matter of public perception. India’s gross domestic product now amounts to 5 per cent of the world’s GDP, based on purchasing power parity, according to the International Monetary Fund. In other words, India produces 5 per cent of all the goods and services available in the world based on the calculation that you can get the same amount of goods for the same amount of money in different countries.

That’s a big if, of course. Groceries are cheaper in India than they are in Singapore. But incomes are lower, too. That is why purchasing power parity is used to calculate living standards across countries.

India is not only the world’s fourth biggest economy based on purchasing power parity. It is also the world’s fourth biggest exporter and has the fourth biggest domestic market, according to the Global Competitiveness Report.  Only America, China and Japan have bigger foreign and domestic markets.

These are the findings of the report’s authors, led by the economist Xavier Sala-i-Martin of Columbia University.

Much of the rest of the report is based on the opinion of others, on what it calls an “executive opinion survey”. More than 13,000 business executives were surveyed in 139 countries. They were asked to evaluate, on a scale of one to seven, various aspects of the country where they did business – for example, the quality of education, the standard of infrastructure, the extent of corruption and the level of public trust in politicians.

That is how Singapore emerged as the country with the cleanest government and the most trusted politicians, based on the assessment of the executives in Singapore. And how were the executives chosen for the survey? With the help of Singapore’s Economic Development Board. The report says it relies on partner institutes to carry out the survey. In India, the partner institute was the Confederation of Indian Industry.

Singapore is renowned for clean government and farsighted leadership while the corruption and red tape in India are common knowledge.

But this reliance on an executive opinion survey makes the report subjective. It’s possible that one country is more business-friendly than another and is, therefore, rated more highly by businessmen. The World Economic Forum has been described as a “rich man’s club” and this is reflected in the report’s assessment of labour markets.  Countries are graded according to how easy it is to hire and fire workers. Singapore is, therefore, ranked more highly than India.

The big surprise is that, according to the report, Singapore has the highest quality of higher education.  Yes, Singapore has a good education system with world-class universities. But the very best?

America and Britain lag far behind, if you look at the report. America is 26th, Britain 28th, while India is 39th. That’s when I decided to plough through the lengthy document, available on the internet, and find out how it arrived at those conclusions. For they fly in the face of everything – the reputation of universities and academics, the works published, the media coverage, and the choices students make.

For if Singapore offers the best education, why do young Singaporeans on government scholarships go to America and Britain? And if India is so far behind, how come Indians make up a third of Microsoft’s researchers and hit it off in Silicon Valley?

It turns out the quality of higher education was assessed by the business executives who took part in the survey. They were asked: “How well does the educational system in your country meet the needs of a competitive economy?”

It’s true, education is geared to the marketplace in Singapore. Many students, after high school, prefer to enrol in polytechnics to pick up job skills instead of going to junior college, which prepares them for university.

This is a system that has worked very well for Singapore. Unemployment is only 2.3 per cent. The report shows how highly business executives think of Singapore. That has its rewards. Foreigners have been investing even more in Singapore than Singaporeans themselves. Singapore attracted more than S$18 billion of investment commitments in 2008, of which more than S$16 billion was from foreigners.

It pays to be in the good books of businessmen. Imagine what a difference it could make to India, already one of the world’s biggest economies.

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