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The World Economic Forum (WEF) said in its latest global competitiveness report released in September that India had slipped to number 59 in its ranking of 144 countries, or down 10 places in three years, Mint reported. The International Monetary Fund (IMF) noted in its April report on the global economy that the growth in total factor productivity has been coming down since the end of the boom.
Prime Minister Manmohan Singh’s economic advisory council has pointed out that the incremental capital-output ratio (ICOR)—a measure of economic efficiency favoured by Indian planners—has been going up in recent years. Each of these measures requires some explanation. WEF defines competitiveness as the set of institutions, policies and factors that determine the level of productivity of a country.
The total factor productivity used by IMF is one of the three drivers of economic growth according to standard economic models: capital, labour and productivity. The incremental capital-output ratio used by the economic advisory council calculates how much extra capital is needed to produce one additional unit of output; a rise in the ratio tells us that the productivity of capital is declining.
Read the full report here