Pakistan slipped in global rankings across most key indicators of economic competitiveness in an influential annual report compiled by the World Economic Forum, though it included some key victories for the Nawaz administration on education policy, fiscal governance, and removing the burden of government regulations on businesses.
The 2016 Global Competitiveness Report, which compares governance in 140 countries, ranked Pakistan 126th – 14th from the bottom – for this year, compared to 125th last year. That overall weakness, however, hides several interesting patterns within the components of the rankings.
The WEF finds that state institutions such as the judiciary appear to have weakened, transparency in government decision-making has decreased, and availability of internet access in schools deteriorated in 2014. On the other hand, Pakistan jumped 28 ranks on measures of the government’s budget deficit as a percentage of the size of the economy.
The biggest improvement was in the rankings for quality of higher education, a category in which Pakistan jumped dramatically from 131st to 75th place worldwide, a leap of 56 places in the rankings.
The performance of the Federal Bureau of Revenue (FBR) has also been on the decline, with major indicators showing poor performance over the last year. The burden of customs procedures has been ranked at 111 this year as compared to 87 in 2014.
For an administration that sees itself as pro-business, the WEF report included some good news: Pakistan’s ranking in decreasing the burden of government regulation improved from 103 in 2014 to an impressive 86 in 2015. However, worryingly, the performance of the Competition Commission of Pakistan (CCP) on effective anti-monopoly policy has significantly deteriorated, slipping from 85 in 2014 to 106 in 2015.
Other regulatory bodies have also shown weak governance indicators, losing ranks to other emerging markets. The Accountant General of Pakistan, for instance, has gone from the rank of 90 in the last year to 117 in 2015 on the strength of accounting and reporting. Similarly, the Securities and Exchange Commission of Pakistan (SECP), which had seen great success over the last few years, proved to be weaker as it ranked 93 compared to 71 in 2014 among 140 regulators of security exchanges globally. Among South Asian nations, India led the way at 55, improving by 16 points. Sri Lanka (68) also ranked higher than Pakistan.
Business managers surveyed by the report’s authors cited tax rates, inflation, access to financing, inefficient government bureaucracy, and policy instability as the other most problematic factors identified by the businesspersons. In what might lend support to key PML-N critic Pakistan Tehreek-e-Insaf (PTI), people have reported corruption as the number one problem in doing business this year, which in the previous year was the second most troubling factor.
Pakistan has also shown resilience in improving macro-economic indicators in the basic requirement pillars, while the pillars for efficiency enhancers, innovation, and sophistication have shown weaknesses over the last one year.
Judicial independence and transparency
Judicial independence lost its ranking by 15 points, slipping from 67 of last year to 82 in 2015, according to the report. People’s perception about judicial independence has greatly changed in last couple of years and political parties are also complaining about this element.
According to the report, the government has shown greater favoritism in decisions and on the indicators of transparency in government policymaking, Pakistan stood at 125th, highlighting secrecy in official business.
Published in The Express Tribune, October 1st, 2015.