Where Does Pakistan Stand Globally?

Any country that wants to succeed in the global economy needs to closely study competition, not to mimic but to understand how other countries have identified what works for them and how to benchmark themselves with what others do globally.

The table below is from the Global Competitiveness Report, a survey conducted annually by the World Economic Forum.

It is a useful tool summarising the factors on which the competitiveness of 133 countries are assessed on a relative scale. Based on the twelve pillars of assessment, Pakistan ranks 101 out of 113 countries in the 2009-2010 survey. This shines a light on the areas where Pakistan has to work to achieve greater competitiveness.

What Does Pakistan Need to do to Become Competitive?

Improving the competitiveness of any country is not easy and Pakistan is no exception. But its potential can be achieved if a clear roadmap is developed. This will require not just fresh ideas, public-private partnerships and foreign investment but also improving the infrastructure, developing its human capital and funding critical new technologies. A plan to achieve this will need the following:

1. Clear vision.

Pakistan needs a coherent vision and strategy.

Attaining competitiveness is synonymous with creating national wealth.

Owing to its geography and demography, Pakistani industry and business have the ability to become more competitive for its own domestic market and compete regionally and globally, if they act in a structured and collective manner. Experts in the field have increasingly started citing South Asia as the fastest growing region in the world.

While this conclusion is driven by India’s nascent economic strength, which in turn is premised on India’s fast growing middle class, educated population base and stable politics, it is important to recognise that Pakistan possesses similar characteristics and potential.

There are some key problems in evolving a clear vision. There is lack of consensus about what this vision should be. This stems from a psychological barrier in the minds of Pakistan’s public and private sector players that Pakistan cannot be globally competitive. Overwhelmed by current challenges, there is little appreciation of the economic opportunity that the country presents and how to unlock this value.

Also activity across government departments and agencies is not coordinated in pursuit of the goal of attaining competitiveness. There is, for example, lack of alignment between the government’s social policies, especially education, and its economic, foreign and defence policies.

Furthermore, policy inconsistencies between successive governments have left little room for the private sector to innovate and generate fresh ideas. This lack of coordination is exacerbated by an over-reliance on foreign assistance and policy prescriptions from multilateral agencies.

Key indicators Population (millions), 2008 …………………………… 167.0 GDP (US$ billions), 2008………………………. 167.6 GDP per capita (US$), 2008 ………………………. 1,044.5 GDP (PPP) as share (%) of world total, 2008 … 0.64 GDP (PPP int’l $) per capita, 1980–2008 Pakistan 3,000 South Asia 2,000 1,000 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 Global Competitiveness Index Stage of development Rank Score (out of 133) (1–7) GCI 2009–2010 ……………………………………………….101 … 3.6 Transition 1–2 1 GCI 2008–2009 (out of 134)…………………………………………101… 3.7 GCI 2007–2008 (out of 131)…………………………………………..92… 3.8 Factor driven Basic requirements…………………………………………………..114….. 3.5 1st pillar: Institutions …………………………………………………104 ….. 3.3 2nd pillar: Infrastructure……………………………………………..89 …. 3.1 3rd pillar: Macroeconomic stability…………………………..114 …. 3.8 4th pillar: Health and primary education …………………..113 …. 3.9 Efficiency enhancers………………………………………………….92 ….. 3.7 2 Transition 2–3 3 Innovation driven Efficiency driven Institutions 7 Innovation 5th pillar: Higher education and training …………………..118 …. 2.9 6th pillar: Goods market efficiency……………………………..83 …….. 4.0 7th pillar: Labor market efficiency …………………………….124 …. 3.5 8th pillar: Financial market sophistication…………………..64 ….. 4.2 9th pillar: Technological readiness……………………………104 …. 2.9 10th pillar: Market size………………………………………………..30 …. 4.7 6 Infrastructure 5 4 Business sophistication Macroeconomic stability 3 2 Market size Health and primary education 1 Higher education and training Technological readiness Innovation and sophistication factors ……………………….84 …. 3.4 11th pillar: Business sophistication …………………………….81 …… 3.8 12th pillar: Innovation………………………………………………….79 …….. 3.0 Financial market sophistication Labor market efficiency Pakistan Goods market efficiency Factor-driven economies The most problematic factors for doing business Government instability/coups …………………….. 19.2 Policy instability …………………………………………… 13.3 Corruption ………………………………………………….. 11.5 Inflation ………………………………………………………… 9.3 Access to financing ……………………………………… 8.7 Inefficient government bureaucracy ……………………….8.0 Inadequate supply of infrastructure ………………. 7.5 Crime and theft ……………………………………………. 5.4 Inadequately educated workforce ………………. 3.9 Tax rates ……………………………………………………….. 3.6 Tax regulations ……………………………………………… 3.3 Poor work ethic in national labor force …………… 2.5 Foreign currency regulations ………………………… 1.5 Restrictive labor regulations ………………………….. 1.4 Poor public health ………………………………………… 0.8 0 5 10 15 20 25 Percent of responses Note: From a list of 15 factors, respondents were asked to select the five most problematic for doing business in their country/economy and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings.

What can be done?

Sustainability, environmentally conscious, inclusive growth from the bottom up and global competitiveness are all interconnected. Yet, much of the thinking and work being done today is not looking at the inclusive approach for growth. Policy-makers are thinking in pieces as unique problems that can be addressed separately.

The overall economic, political and social canvas needs to be addressed in a coordinated fashion for Pakistan to take advantage of its growth opportunity. There are four key areas where action should be taken.

1. The private sector should help generate a national debate on the need to develop a shared mindset across government, industry, the media and other key stakeholders to attain competitiveness.

This will serve as a signal not only to the international community but also to the country’s public sector administration, business community and labour force that Pakistan is serious about competing.

2. The government should be willing to pull all the levers at its disposal to implement such vision.

This involves creating an environment that gives foreign and domestic companies a reason to invest and stay in Pakistan. This in turn could be achieved through a realignment of tax and investment policies, especially in sectors where investment is a critical precursor to long-term structural change.

3. A global media campaign targeted at international as well as domestic investors should, be launched, highlighting the trade and investment opportunities in Pakistan and the government’s agenda of reform.

4. The government’s social and economic policies including education, transport, infrastructure, energy and communications must be aligned with this vision. This coordinated approach should extend to Pakistan’s defence and foreign policies, which should also reflect Pakistan’s aspirations of rapid economic progress.