Pakistan Loses its Competitiveness on the
World Economic Forum’s Global Competitiveness Index 2012-2013
Falls 6 points on the Global
Competitiveness Ranking, 124 among 144 economies
Pakistan has been ranked among bottom 20 of the 144
economies around the world in The Global Competitiveness Report 2012-2013,
released today by the World Economic Forum.
According
to the Global Competitiveness Report (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 World Economic
Forum ranks countries on more than 100 economic indicators comparing 144
countries.
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| Klaus Schwab, Founder and Executive Chairman, World Economic Forum |
“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 jeopardizing our future prosperity.” said Klaus Schwab, Founder and
Executive Chairman, World Economic Forum. “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), Labor Market
Efficiency (130) Financial Market Development (73), Technological Readiness
(118), Market Size (30), Business Sophistication (78) and Innovation (77).
 |
| Amir Jahangir Chief Executive Officer Mishal Pakistan, Young Global Leader, World Economic Forum |
‘Pakistan
has lost its competitive advantage almost on all the pillars of the
competitiveness index except for in Health, Primary Education and Labor market
Efficiency’ says Amir Jahangir Chief Executive Officer Mishal Pakistan, countrypartner for the Center of Global Competitiveness and Performance at the World
Economic Forum. Further adding, 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.
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 competiveness 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 (% of GDP) 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
labor market efficiency pillar shows a decline in the cooperation between labor
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 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 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 Global
Competitiveness Report 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.
 |
| Xavier Sala-i-Martin, Professor of Economics, Columbia University, USA |
Xavier Sala-i-Martin, Professor of Economics, Columbia University, USA, said: “The
Global Competitiveness Index 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 optimize 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,
i.e. 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 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 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
Global Competitiveness Report’s
competitiveness ranking is based on the Global Competitiveness Index (GCI), which
was first developed for the World Economic Forum 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.
Mishal Pakistan is the country partner
Institute of the Center for Global Competitiveness and Performance at the World
Economic Forum. World Economic Forum is an independent international
organization committed to improving the state of the world by engaging leaders
in partnerships to shape global, regional and industry agendas.
Read the Global
Competitiveness Report 2012-2013 at http://www.weforum.org/issues/global-competitiveness
