India has improved its global competitive ranking, reveals the World Economic Forum's The Global Competitiveness Report 2005-2006, while China seems to have slipped.

China and India, 49th and 50th, respectively, now rank much more closely to one another than in previous years. While China dropped 3 ranks, India moved up 5 places. China had a slightly deteriorating score with regard to the country's macroeconomic environment, while India's improved its position due to a somewhat higher rank in the area of technology.

Both China and India have had an excellent growth performance in recent years. However, both countries continue to suffer from institutional weaknesses which, unless addressed, are likely to slow down their ascension to the top tier of the most competitive economies in the world.

Finland remains the most competitive economy in the world and tops the rankings for the third consecutive year in, reveals the report. The United States is in second position, followed by Sweden, Denmark, Taiwan and Singapore, respectively.

The rankings are drawn from a combination of hard data, publicly available for each of the economies studied, and the results of the Executive Opinion Survey, a comprehensive assessment conducted by the World Economic Forum (WEF), together with its network of partner institutes (leading research institutes and business organisations) in the countries covered by the report.

The report contains a detailed country profile for each of the 117 economies featured in the study, providing a comprehensive summary of the overall position in the index rankings as well as a guide to what are considered to be the most prominent competitive advantages and competitive disadvantages of each. Also included is an extensive section of data on over 100 indicators.

This year nearly 11,000 business leaders were polled in a record 117 economies worldwide. The survey questionnaire is designed to capture a broad range of factors affecting an economy's business environment that are key determinants of sustained economic growth. Particular attention is placed on elements of the macroeconomic environment, the quality of public institutions which underpin the development process, and the level of technological readiness and innovation.

The current year's report contains a number of studies that address different aspects of competitiveness and, more generally, themes which emanate from the World Economic Forum's deep concern with growth and development. Of particular note are Columbia University's Jagdish Bhagwati's essay on the importance of globalisation and openness for economic prosperity and Harvard University's Kenneth Rogoff's paper discussing how in today's world exchange rate competitiveness has become an increasingly subtle and difficult-to-measure phenomenon among several others.

Klaus Schwab, founder and executive chairman, World Economic Forum, explains the rationale for the competitive ranking exercise, "Policy-makers are presently struggling with ways of intelligently managing global risks, while preparing their economies to perform well in an economic landscape characterised by growing complexity. The World Economic Forum has for many years played a facilitating role in this endeavour by providing detailed assessments of the economic conditions of nations worldwide."

Schwab adds, "The Global Competitiveness Report is a contribution to enhancing our understanding of the key ingredients of economic growth and prosperity. By highlighting the strengths and weaknesses of an economy, policy-makers and business leaders are provided with a tool to assist them in the formulation of improved economic policies and institutional reforms."

The Forum has been producing The Global Competitiveness Report for 26 years, and its mix of hard and soft data has made it possible to accurately capture the broad range of factors seen to be essential to a better understanding of the determinants of growth. Each year it has delivered a comprehensive overview of the main strengths and weaknesses in a large number of countries, making it possible to identify key areas for reform and policy formulation.