The Global Competitiveness Index

grouped into 12 pillars of competitiveness while preparing the Global Competitiveness index. These indicators include- institution, infrastructure, macroeconomic environment, health and primary education, higher education and training, market efficiency, financial market development, technology, market size and innovation.

Institution is the first pillar which is determined by the administrative and legal framework which in turns helps to generate wealth with the help of interaction between individual, firms and government and the quality of institution has a strong deportment on competitiveness and growth; infrastructure is another important pillar which ensures the effective functioning of the economy. Well developed infrastructure comprise

Business sophistication concerns two elements that are involved: the quality of a country’s overall business networks and the quality of individual firms’ operations and strategies. These factors are particularly important for countries at an advanced stage of development, when, to a large extent, the more basic sources of productivity improvements have been exhausted. The quality of a country’s business networks and supporting industries, as measured by the quantity and quality of local suppliers and the extent of their interaction, is important for a variety of reasons. When companies and suppliers from a particular sector are interconnected efficiency is heightened, greater chances for innovation in processes and products are created, and barriers to entry for new firms are reduced. Individual firms’ advanced operations and strategies like branding, marketing, distribution, advanced production processes, and the production of unique and sophisticated products spill over into the economy and lead to sophisticated and modern business processes across the country’s business sectors. Twelfth pillar: The final pillar of competitiveness is technological innovation. Innovation is particularly important for those economies which approach the frontiers of knowledge. Firms in these countries must design and develop cutting-edge

First criteria is the level of GDP per capita at market exchange rate and second is the sub index weights and income thresholds sub index which include weights of requirement sub index, efficiency enhancers sub index and innovation and sophistication factors. When countries are falling in between two of any three stages are considered to be in transition and for those countries weights change smoothly as a country develops. According to GCI China is now in second stage of development it means it is an efficiency driven economy.

In 1970 China has gone through political and economic reforms which has led the country towards a more liberal economy and played a key role in increasing its ranking in global competitiveness rankings and these reforms helps to facilitate growing business environment. China saw a enormous transfer of foreign businesses paving their way into the Chinese market. Reforms in Agriculture sector, infrastructure development and emphasis on better education arrangements play a crucial role in China’s economic