Pakistan slips to 123rd place in global competitiveness

Continued security challenges, setbacks from the global economic downturn have reduced Pakistan’s score in the WEF.

ISLAMABAD: Continued security challenges, setbacks from the global economic downturn, continuing electricity shortages and mixed macroeconomic results have reduced Pakistan’s score in the World Economic Forum’s (WEF) annual Global Competitiveness Report. However, it also contained good news from the country’s private sector, the Competitiveness Support Fund (CSF) announced on Thursday.

In the report, Pakistan’s score dropped from 3.58 in 2009 to 3.50 this year. While this is a relatively modest decrease in numeric terms, it was sufficient to move Pakistan from 101st to 123rd place among 139 nations ranked by the WEF.

Switzerland retains the top overall ranking in The Global Competitiveness Report of 2010-11.

Causes of the decline

A review of Pakistan’s lowest scores reveals that performance is negatively affected by three major factors - the security situation, human resources and macroeconomic performance.

The continued low rates of enrollment in primary, secondary and tertiary education bring down the score as does the low rankings for efficiency of labour markets. Many human resources related scores inhibit a stronger performance for the country.

Despite notable advances on some macroeconomic indicators such as reduction in debt and deficit, inflation and interest rates suffered low marks and Pakistan ranks low given the objective data on macroeconomic situation compared with results of other countries.

Infrastructure rankings were also low, brought down in part by very low marks from electricity situation.

Positive news in the report

Scores for competitiveness of Pakistan’s private sector improved. Rankings for the sophistication of business strategy and operations were relatively good.

Improvements were noted in intellectual property protection from 95th place to 86th, judicial independence from 95th place to 74th, national savings rate from 114 to 89, venture capital availability from 66 to 51 and flexibility of wage determination from 97 to 95. However, technological readiness needs greater support given the low level of access or utilisation of computers, the Internet and broadband connectivity. Good scores for equity finance, venture capital and improved scores for access to credit were noted.

Published in The Express Tribune, September 10^th, 2010.