News: Pakistan loses competitiveness
Publication: Pakistan News Watch
Date: September 6, 2012
Web Address: http://news.one.com.pk/2012/09/06/competitiveness-drops/
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Pakistan loses competitiveness
ISLAMABAD, Sept 5: Pakistan’s competitiveness has come down by six points on the World Economic Forum’s Global Competitiveness Index 2012-13. Pakistan has been ranked among bottom 20, of the 144 economies around the world, according to the Global Competitiveness Report 2012-2013 released on Wednesday.
The report was released through Mishal Pakistan, country partner of the Centre of Global Competitiveness and Performance at the World Economic Forum. Currently Pakistan stands at 124th among 144 economies, making it one of the least competitive countries in the world.
According to the Global Competitiveness Report 2012-13, Pakistan lacks a long-term view of competitiveness. Corruption and poor governance are some of the factors slowing down Pakistan’s economic growth.
Pakistan secured ranking on 12 pillars: institutions (115), infrastructure (116), macroeconomic environment (139), health and primary education (117) higher education and training (124), goods market efficiency (97), labour market efficiency (130) financial market development (73), technological readiness (118), market size (30), business sophistication (78) and innovation (77).
Though Pakistan showed good performance on the innovation and sophistication pillars, but on the factors for basic requirements and efficiency enhancer pillars Pakistan continues to show poor performance. The Pakistani business community has identified corruption as the most problematic factor for doing business in the country.
The report indicates that Pakistan has failed to come up with effective regulations on intellectual property protection, where the country lost its position of 93 to 108 from 2011 to 2012 respectively. Poor governance in terms of favoritism in decision-making (129) and wastefulness of government spending (96) have also shown significant decline in rankings.
The efficiency of legal framework in challenging regulations has also impacted the competitiveness of Pakistan’s economy as it has declined from 79 in 2011 to 97 in 2012. The law and order situation has been a serious threat to economic activities, with war on terror and other target killing issues impacting throughout the year, the Reliability of Police Service has gone to 127 in the current year as compared to 116 in the last year.
On the macroeconomic pillar government’s performance has been weak with the budget balance ranking (% of GDP) deteriorating from 108 to 125 from 2011 to 2012 respectively.
Although Pakistan ranked 41 in 2011 on the Tax Collection Efficiency index, the economy has lost its competitive advantage due to decline in 2012 by ranking to 59, limitations on the labour market efficiency pillar shows a decline in the cooperation between labour and employer relations whereas the rank has slipped from 80 to 90. The report also identifies that businesses in Pakistan are shying away from reliance on professional management as ranking has decreased from 88 to 101.
Although Pakistan has seen some improvement on the broadband usage, the individual internet usage has declined, ranking the country at 120 in 2012 from 98 in 2011. The government’s procurement of advanced tech products has not been a priority where it showed deterioration from 91 to 109 this year as compared to last year.
The state of cluster development has also been neglected and reflects in the report where the rank has plunged from 48 to 62. The commercialization of research has not been a priority in Pakistan, where the industry-university collaboration has also seen fall from 69 to 81.
Nonetheless, Pakistan has also shown some positive indicators on improving its competitiveness, where the burden of government regulation has improved from 76 in 2011 to 62 this year. Similarly transparency of government policy making has also been improved, from ranking of 119 to 109. The country credit rating index has also improved from 123 this year to 116 compared to last year.
The economy has shown flexibility in the hiring and firing practices where it has improved the rank from 33 last year to 21 this year. The pay and productivity index has also shown gains where Pakistan has improved 13 points and ranks at 73. The report has shown significant improvement in the performance of the Securities and Exchange Commission on regulations from 70th rank last year to 55th rank.