|News; Pakistan ranked 124 among 144 economies
Date: September 6, 2012
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Pakistan ranked 124 among 144 economies
ISLAMABAD: Amidst rampant corruption and poor governance, Pakistan has been ranked in the bottom 20 of the 144 economies around the world in The Global Competitiveness Report 2012-2013.
According to the report, which was released by the World Economic Forum on Wednesday, Pakistan lacks a long-term view of competitiveness. The World Economic Forum ranks countries based on more than 100 economic indicators. It has ranked Pakistan 124 among 144 countries on the index.
Pakistan’s ranking on 12 pillars is as follows: 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).
‘Pakistan has lost its competitive advantage on almost all the pillars of the competitiveness index except health, primary education and labour market efficiency’ says Amir Jahangir, chief executive officer Mishal Pakistan, country partner for the Center of Global Competitiveness and Performance at the World Economic Forum.
The Pakistani business community has identified corruption as the biggest challenge in doing business in the country. The report indicates that Pakistan has failed to come up with effective regulations on intellectual property protection. Hence, the country lost its position of 93 to 108 from 2011 to 2012. Poor governance in terms of favouritism in decision-making (129) and wastefulness of government spending (96) have also shown a significant decline in rankings. The efficiency of the legal framework in challenging regulations has declined from 79 in 2011 to 97 in 2012.
The law and order situation has been a serious threat to economic activities. Subsequently, the reliability of police service has gone from 116 last year to 127 in the current year.
In terms of the macroeconomic pillar, the government’s performance has been weak with the budget balance ranking (percent of GDP) deteriorating from 108 in 2011 to 125 in 2012. The general government debt has lost 11 points from last year and has been ranked 107 in the current year.
Although Pakistan ranked 41 in 2011 on the tax collection efficiency index, the economy has lost its competitive advantage due to a decline in 2012 to 59. With regard to limitations on the ease of access to loans and venture capital availability, Pakistan stands at 65 and 55 respectively.
The labour market efficiency pillar shows a decline in cooperation between labour and employer relations as the rank has slipped from 80 to 90. According to The Global Competitiveness Report businesses in Pakistan are shying away from reliance on professional management as the ranking has decreased from 88 to 101. Although Pakistan has seen some improvement in broadband usage, 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.
The state of cluster development has also been neglected and its rank has plunged from 48 to 62. The commercialisation of research has not been a priority in Pakistan, where industry university collaboration has seen a fall from 69 to 81.
Nonetheless, Pakistan has also shown some positive indicators in improving its competitiveness, where the burden of government regulation has improved from 76 in 2011 to 62 this year, similarly the transparency of government policy making has also improved from 119 to 109. The country credit rating index has improved from 116 last year to 123 this year.
The economy has shown flexibility in hiring and firing practices where it has improved from 33 last year to 21 this year. The pay and productivity index has also shown gains where Pakistan has improved 13 points and now ranks at 73. The report has shown significant improvements in the performance of the Securities and Exchange Commission, where Pakistan has shown improvements in the regulations of securities exchanges. It has been ranked 55 as compared to 70 last year.
Despite growing its overall competitiveness score, the United States continues its decline for the fourth year in a row, falling two more places to seventh position.
In addition to the burgeoning macroeconomic vulnerabilities, some aspects of the country’s institutional environment continue to raise concern among business leaders, particularly the low public trust in politicians and a perceived lack of government efficiency. On a more positive note, the US remains a global innovation powerhouse and its markets work efficiently.
The large emerging market economies (BRICS) displayed different performances. Despite a slight decline in the rankings of three places, the People’s Republic of China (29th) continues to lead the group. Of the others, only Brazil (48th) moves up this year, with South Africa (52nd), India (59th) and Russia (67th) experiencing small declines in rankings