Business at bay

Heres a refresher to the pro-business PML-N-led government: according to the recently-released Business Environment Rankings Report by the Intelligence Unit of The Economist, Pakistan stands amongst the lowest ten countries out of a total of 82 countries ranked.
Worse still, Pakistans ranking has actually deteriorated from 72 during the tenure of the last government (ranking period of analysis: 2009-13) to 74 during the one year of the usiness-friendly government in place (ranking period of analysis: 2014-18). If these rankings are to be trusted, Pakistans FDI inflows may continue to remain weak over the next few years.
The rankings model seeks to measure the quality or attractiveness of the business environment in the countries under analysis and is reflective of key criteria used by companies to devise global business strategies. More importantly, and this is where the government should seriously take note, the rankings not only incorporate an assessment of historical conditions but are also indicative of expectations about conditions likely to prevail over the next five years (think about re-election?)
On a regional basis too, Pakistan is the "worst" performer in Asia, with even Bangladesh ahead of the curve, ranking at 69. There is, of course, more than one menace that has been leeching the economy. But the fact that perceptions about Pakistan continue a downward spiral is not only worrisome in terms of foreign investment but also in terms of Pakistans position in a highly globalized world order.
With production processes increasingly diffusing across borders, there is little reason for companies to risk their business lines in an environment that poses significant risks, even if there are cost advantages that can be realized.
Why should this raise alarm bells for policy-makers and business leaders alike? Because the rankings realise that a business-conducive environment is not only contingent upon the laws and regulations pertaining to foreign investment but also on domestic economic development and political stability.
Further, Pakistan has fared poorly where other emerging economies have revved up: in becoming part of global supply chains based on comparative advantages. While foreign investment has been wooed through Eurobonds (at the cost of inter-temporal debt burden?); the government should focus more on pursuing a model of competitive, innovation-based economic clusters that not only propel the domestic economy but also attract attention of investors overseas.

====================================

Global Business Environment Rankings

====================================

(South Asia)    2009-13     20014-18

====================================

India              61             57

Sri Lanka          65             61

Bangladesh         71             69

Pakistan           72             74

====================================

Source: The Economist Intelligence Unit