The recent economic downturn has confirmed that there is urgent need to focus on building the underlying pillars of economic competitiveness, said the Minister of State for Finance and Economic Affairs and chairperson of the Competitiveness Support Fund (CFS), Hina Rabbani Khar, on the release of CSF's report on Drivers of Growth and Competitiveness in Pakistan - A Strategic Framework.
The report is an effort of CSF, a joint initiative of the Ministry of Finance, Government of Pakistan and the United States Agency of International Development (USAID), established to reposition Pakistan's economy on a more global competitive footing.
USAID's support for CSF is part of the $2.8 billion aid that the US Government has provided to Pakistan since 2002 to improve economic growth, education, health and governance and to reconstruct the earthquake- affected areas.
High, sustained economic growth is almost universally considered a necessary condition for improving the quality of life and reducing poverty. Pakistan has done considerably well in the past years and should continue to do as the report provides data showing that consumption, partially fuelled by transfers from abroad, drove strong growth from 2002-07.
However, exports and investment, which hold better potential to drive high sustainable growth, lagged far behind the growth of consumption. The report identifies key drivers of Pakistan's economic growth and competitiveness with the objective to set priorities.
The report categorises why Pakistan is falling behind other high-growth Asian economies. "The report goes beyond the usual macroeconomic prescriptions and focuses on many very practical recommendations. These include measures to foster a thriving entrepreneurial culture and encourage innovation", said Minister Khar.
"Pakistan economy has performed reasonably well amidst enormous internal and external pressures. We have stabilised our economy and now our journey to recovery starts, not withstanding recent floods that played havoc with infrastructure, livelihood of the people, human life and private housing. Our resolve to rehabilitate and reconstruct is even greater than the disaster", said the Minister of Finance, Revenue, Economic Affairs and Statistics, Dr Abdul Hafeez Shaikh in his statement in the report.
Shaikh added: "We are pursuing wide raging structural reforms to cure structural weakness which will defiantly ensure availability of more resources to finance our development efforts. Structural reforms have potential to provide sustainable and growing livelihoods to all market participants. Domestic resource mobilisation is the key feature of our economic policies".
It has long been understood that sustained growth arises out of a complex dynamic process involving labour, capital, natural resources and advancements in production technology through knowledge creation and innovation. Entrepreneurs play a critical role in the growth process whose sustainability largely depends on an enabling policy environment conducive to risk-taking.
The report provides the analytic policy tools Pakistan needs to bolster its economic growth in a sustainable fashion. It seeks to meet its objective by pursuing three principal thrusts; identifies and analyses key internal and external factors that affect Pakistan's recent economic growth and competitiveness performance, the drivers of growth capable of enhancing the country's competitiveness and proposes strategic recommendations which, through their impact on economic growth, aim to make the economy more productive, prosperous and sustainable.
It identifies the importance of competitiveness and finds that: Pakistan's growth has not been sustainable and has not kept up with the growth of its neighbours, exports industries have not become a driver of economic growth, Pakistan needs to decrease its dependency on foreign transfers, increased income and standards of living are a moral imperative, Pakistan needs more jobs, Pakistan's economic competitiveness has now become a matter of national security.-PR