Boosting competitiveness and export performance

As a nation, we are facing an alarming situation over the low competitiveness of our businesses. As a result, our exports have been declining constantly for the past few years. The slightest improvement in some areas is just because of some cosmetic and non-sustainable measures of the government towards improving the export performance. These include lowering the currency value and/or providing tax rebates and subsidies to some favourable sectors.

I am not against these measures as these do have some positive impact but by any means you cannot categorise them as long-lasting solutions to our chronic economic problems. Our policymakers have never adopted measures to cure the root causes of these problems. The fact is our market share in world trade is declining constantly. Many Asian countries like Bangladesh, Sri Lanka and Cambodia were behind Pakistan some years ago but they are now creating great challenges for Pakistani businessmen in many product categories.

On the other hand, our economy is not well connected with the world. We rank 155 out of 159 in the trade openness index. Even African countries such as Kenya, Ethiopia and Burundi are ranked well above us. We have become one of the least competitive countries in the world.

The advent of globalisation and increased competency in the use of knowledge as a source of competitive advantage has changed the current business atmosphere. Only firms with premier abilities of using operand and operant resources can make sustainable progress. Knowledge creating and using abilities collectively help firms to gain competitiveness at national and international levels. Competitiveness of a country assimilates through the competiveness of its firms and sectors. Therefore, measuring it is necessary to understand its inherent market structure and the competing ability of its firms and sectors to ensure future strategic planning and investments. But our government has never tried to measure the competitive ability of our firms and our policymakers are unaware about the operational deficiencies of our businesses.

But global competitiveness rankings are important for two prime reasons: they are a set of diagnostic tools which highlight the strengths we can build on and the challenges that must be overcome.

In the backdrop of CPEC and increasing middle-class economy, Pakistan has phenomenal growth potential in the area of infrastructure, IT, textile, health, energy and agribusiness. A huge potential for investment lies in the service sector, too. The recent flux of investment from China and other countries have made the future growth prospects very bright. However, certain fundamental economic restructuring is required for sustainable economic growth. As a result, there is great need for conducting a countrywide survey for measuring the competitive positioning of our firms and benchmarking them with international standards. The competitiveness reports integrate the macroeconomic and the micro-business aspects of competitiveness and highlight the areas of intervention. These reports are a diagnostic tool for policymakers and business leaders in their attempts to formulate the appropriate structural reforms to move the country forward. They highlight the area of improvements and provide seed information for policymakers to intervene.

Due to the continuous decline in export performance, our government is under pressure to stem the rot and is struggling to make improvements. Hence, building a competitive business environment by scientifically conducting research on measuring the competitiveness of our firms and sectors becomes important, so that a long-term growth strategy is developed. Besides, this is also the right and sustainable path to improve our export performance by giving subsidies and tax rebates to the sectors.

Published in The Express Tribune, July 5^th, 2017.

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