Although economic managers of the country are never tired of boasting of a number of achievements during the last few years, some of the basic factors which normally propel the economy continue to be in poor health.
According to the Global Competitiveness Report 2007-08, released by the World Economic Forum (WEF), Pakistan ranked 92, down one point over the previous year, in the global race for competitiveness among 131 economies. Compared to certain other countries in the region, at 92 Pakistan was far behind India's position at 43 and Sri Lanka's ranking at 79 but ahead of Bangladesh's 107 and Nepal's 114. Pakistan's ranking among Islamic countries was also dismal.
In terms of Global Competitiveness Index (GCI), Malaysia stood at 21, Kuwait at 30, Qatar at 31, Saudi Arabia at 35, UAE at 37, Oman at 42, Bahrain at 43, Jordan at 49, Turkey at 53, Indonesia at 54, Kazakhstan at 61, Uzbekistan at 62, Morocco at 64, Azerbaijan at 66, Egypt at 77, Syria at 80 and Libya at 88. The countries that were behind Pakistan included Nigeria at 95, Kenya at 99, Tanzania at 104, Albania at 109 and Tajikistan at 117.
The reasons for the low ranking of Pakistan in the Muslim world were the lack of institutions, infrastructure, health and primary education, goods market efficiency and technological readiness.
According to the latest global ranking, the United States has gained the title as the world's most competitive economy followed by Switzerland, Denmark, Sweden, Germany, Finland, Singapore, Japan, the United Kingdom and the Netherlands. China and India continue to lead the way among large developing economies. Several countries in the Middle East and North African region are in the upper half of the rankings, led by the Israel, Kuwait, Qatar, Tunisia, Saudi Arabia and the UAE.
In Sub-Saharan Africa, only South Africa and Mauritius feature in the top half of the rankings, with several countries in the region positioned at the very bottom. The methodology to calculate the GCI may not be scientific, given the constraints, but is, more or less, trust-worthy. The survey questionnaire to compute rankings was designed to capture a broad range of factors affecting an economy's business climate that are critical determinants for a sustained economic growth.
Twelve pillars of competitiveness were identified to provide a comprehensive picture of the business landscape in various countries around the world at all stages of development. These pillars include Institutions, Infrastructure, Macro-economic Stability, Health and Primary Education, Higher Education and Training, Goods Market Efficiency, Labour Market Efficiency, Financial Market Sophistication and Innovation.
GCI rankings are calculated from both publicly available data and the Executive Opinion Survey, a comprehensive annual survey conducted by WEF together with its network of Partner Institutes. This year, over 11,000 business leaders were polled in 131 countries covered by the survey.
The GCI prepared by WEF could, in our view, serve a very good purpose. Overall, it is meant to annually deliver a comprehensive overview of the main strengths and weaknesses in a large number of economies, making it possible to identify key areas for policy formulation and reforms. As could be seen, developed countries of the world are generally at the top of the ranking while underdeveloped countries are positioned in the lower half of the Index. The countries with very poor ranking in GCI are likely to face a bleak future due to their inability to respond properly to uncertainties and vice versa.
On a closer look, it would be clear that the components of the Competitive Index have been so designed as to specially gauge the resilience of the economies in the face of adverse developments and the capacity to adjust to unexpected shocks, particularly originating from exogenous sources.
A classic example to judge the veracity and relevance of GCI was during 1970s when international oil prices jumped suddenly and the economies of oil importing countries with poor GCI ranking floundered for a long time. Economies of the developed countries also suffered but adjusted to the situation and recovered rather quickly. Parameters like innovation, financial market sophistication and a highly educated workforce helped these countries to restructure their economies in line with the changed realities in a relatively short period of time.
Coming specifically to the case of Pakistan, a very low ranking (92 out of 131) is a reflection that our economy continues to be highly dependent on favourable domestic developments and the positive trends in global economic environment. The claims of the government that the economy is now, more or less, resilient and could easily absorb the consequences of adverse internal or external shocks are premature.
Obviously, we cannot dispute the conclusions of the WEF because most of the pillars included in the GCI are not only relevant for the purpose but also reflect a true picture of the prevailing situation. Parameters like innovation, technological readiness, infrastructure and institutions are undoubtedly in a very poor state in the country and it is very hard to escape the conclusion that the economy of the country would continue to be vulnerable until and unless we make conscious and concerted efforts to improve the fundamental factors on which the economic destinies of the countries depend.
This would necessitate a drastic change in our approach and a huge shift in the allocation of resources. The task is, by no means, easy but a realisation that something is amiss in our development strategy should at least force us to think more rationally and from a longer term perspective.