We need to get our competitiveness back!

Published: May 7, 2012

DISMAL: 0.2% is Pakistan’s share of global trade despite being ranked 30th in market potential.

KARACHI: The “Global Competitive Report” issued by the World Economic Forum is one of the most comprehensive annual benchmarking of the state of competitiveness of various global economies. In the latest report for 2011-1012 Pakistan has improved by five places, up from its worst placement at 123 in 2010-2011 to 118 (sample of 142 countries). Our best ranking was back in 2006, when we ranked 91 but have sadly dropped 27 places since.

This benchmarking takes into account 12 key pillars of any economy ranging from institutions, infrastructure, macroeconomic environment, education (primary and higher), goods and labour market efficiency, financial markets, technological readiness, market size, business sophistication and innovation.

Today eight Asian and four Middle Eastern countries rank in the top 30 competitive nations in the world. However, two of the largest economics in Asia, Pakistan and Bangladesh, continue to rank very poorly. Bangladesh has however over the last decade risen from being ranked eight positions below Pakistan, to now ranking 10 positions above Pakistan.

Despite moving up 5 places, Pakistan remains one of the poorest performers of the developing Asian economies today. It is also distressing to note that Pakistan earns its lowest marks, with no sign of improvement, in the most basic areas of competitiveness, i.e. institutions (107th), Infrastructure (115th), health and primary education (121st) and macroeconomic environment (138th). Pakistan desperately needs a policy framework and a strategy to enhance its global competitiveness.

Pakistan which historically had led the developing nations in Asia on GDP (PPP) per capita lost its competitiveness after 1996 and the gap has been growing as the rest of Asia has been growing their GDP at a much faster rate (see graph). India, our biggest neighbour, and soon to be our biggest trading partner is rated 56th; 62 positions ahead of Pakistan.

Pakistan industries and entrepreneurs are unfortunately playing with a serious handicap. Despite being ranked 30th in market potential, due to this handicap Pakistan has less than 0.2% share of global trade. It is vital that we as a nation address the core issues behind this uncompetitiveness. We need a three pronged approach consisting of enhancing governance by improving institutional building coupled with focus in developing our human resources and infrastructure.

As we progress in strengthening democratic norms in Pakistan with the first parliament soon to complete its term, we must not take our eyes away from our global competitiveness as that drives our economic growth. Economic development reduces poverty, provides funds for education, infrastructure improvement and investment in institution building.

Our biggest advantage is our sheer scale as it relates to our market and population size. However, the more sustainable advantage was highlighted in the recent “INSEAD Innovation Index 2011” study which was our “Innovation Efficiency”; the immense resilience shown by Pakistani businesses and entrepreneurs in an adverse environment to deliver impressive results.

We have a hardworking, innovative and resilient workforce. If we have to play in the big leagues we must take stock of our core competences – innovation, market size, strategic location, mineral wealth and solid entrepreneurial spirit to create value.

The writer works in the corporate sector and is active on various business forums and trade bodies.

Published in The Express Tribune, May 7th, 2012.

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