Pakistan among bottom-20 in Global Competitiveness Report 2012-2013

 * Falls 6 points on the Global Competitiveness Ranking to 124th place among 144 economies

ISLAMABAD: Pakistan has been ranked among the bottom 20 of the 144 economies around the world in the Global Competitiveness Report (GCR) 2012-2013, released on Wednesday by the World Economic Forum (WEF).

According to the GCR 2012-13, Pakistan lacks a long-term view of competitiveness. The level of corruption and poor governance are some of the factors slowing down Pakistan’s economic growth, therefore ranking Pakistan at 124 among 144 other countries on the index. The WEF ranks countries on more than 100 economic indicators comparing 144 countries.

“Persisting divides in competitiveness across regions and within regions, particularly in Europe, are at the origin of the turbulence we are experiencing today, and this is jeopardising our future prosperity,” said WEF Founder and Executive Chairman Klaus Schwab. “We urge governments to act decisively by adopting long-term measures to enhance competitiveness and return the world to a sustainable growth path.”

Pakistan’s 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).

“Pakistan has lost its competitive advantage almost on all the pillars of the competitiveness index except for in health, primary education and labour market efficiency,” said Mishal Pakistan Chief Executive Officer Amir Jahangir. Mishal Pakistan is the country partner for the Centre of Global Competitiveness and Performance at the WEF. Although 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, he added.

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 Favouritism 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 compositeness 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 the 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 the government’s performance has been weak with the budget balance ranking (percentage of gross domestic product) deteriorating from 108 to 125 from 2011 to 2012, respectively. The General Government Debt has also seen poor performance as it has lost 11 points from last year, by being ranked at 107 in the current year.

Although Pakistan ranked 41 in 2011 on the Tax Collection Efficiency index, however the economy has lost its competitive advantage due to decline in 2012 by ranking to 59, limitations on the ease of access to loans and venture capital availability, where Pakistan stands at 65 and 55, respectively.

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 GCR also identifies that the 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 on the broadband usage, but the individual Internet usage has declined, ranking the country at 120 in 2012 from 98 in 2011. The government’s Procurement of Advanced Technology 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 commercialisation of research has not been a priority in Pakistan, where the industry university collaboration has also seen negative 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 the 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 improvements on the performance of the Securities and Exchange Commission, where Pakistan has shown improvements on the Regulations of Securities Exchanges by being ranked 55 as compared to 70 last year.

Switzerland, for the fourth consecutive year, tops the overall rankings in the GCR 2012-2013. Singapore remains in second position and Finland in third position, overtaking Sweden (4th). These and other Northern and Western European countries dominate the top 10 with the Netherlands (5th), Germany (6th) and United Kingdom (8th). The United States (7th), Hong Kong (9th) and Japan (10th) complete the ranking of the top 10 most competitive economies.

Columbia University, USA Professor of Economics Xavier Sala-i-Martin, said, “The Global Competitiveness Index (GCI) provides a window on the long-term trends that are shaping the competitiveness of the world’s economies. In this light, we believe it offers useful insight into the key areas where countries must act if they are to optimise the productivity that will determine their economic future.”

The report indicates that Switzerland and countries in Northern Europe have been consolidating their strong competitiveness positions since the financial and economic downturn in 2008. On the other hand, countries in Southern Europe, like Portugal (49th), Spain (36th), Italy (42nd) and particularly Greece (96th) continue to suffer from competitiveness weaknesses in terms of macroeconomic imbalances, poor access to financing, rigid labour markets and an innovation deficit.

Despite growing its overall competitiveness score, the US 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 still 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.

In the Middle East and North Africa, Qatar (11th) leads the region while Saudi Arabia remains among the top 20 (18th). The United Arab Emirates (24th) improves its performance while Kuwait (37th) slightly declines. Morocco (70th) and Jordan (63rd) improve slightly. In sub-Saharan Africa, South Africa (52nd) and Mauritius (54th) feature in the top half of the rankings. However, most countries in the region continue to require efforts across the board to improve their competitiveness.

The GCR’s competitiveness ranking is based on the GCI, which was first developed for the WEF by Sala-i-Martin, a co-author of this year’s report, in 2004. Defining competitiveness as the set of institutions, policies and factors that determine the level of productivity of a country, GCI scores are calculated by drawing together public and private data around 12 key categories – the pillars of competitiveness – that together make up a comprehensive picture of a country’s competitiveness.

* Top 10 most competitive economies :

1) Switzerland

2) Singapore

3) Finland

4) Sweden

5) Netherlands

6) Germany

7) US

8) United Kingdom

9) Hong Kong

10) Japan

Daily Times report

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