Improvement in GCI ranking

It is a matter of some relief that at a time when the country is facing all sorts of problems, it has at least managed to bounce back to 118th position from last year's 123rd in the overall ranking in the Global Competitiveness Index (GCI) released by the World Economic Forum (WEF) on 7th September, 2011.
The GCI, it may be mentioned, was introduced in 2004 and comprises 12 categories of pillars of competitiveness, which together provide a comprehensive picture of the country's competitiveness landscape. These pillars are institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication and innovation. The rankings are calculated from both publicly available data and the Executive Opinion Survey, a comprehensive annual survey conducted by the WEF with its network of Partner Institutes.
Commenting on the performance of Pakistan, the Global Competitiveness Report notes that the country still requires improvement in several categories and needs to particularly concentrate on the most basic areas of competitiveness like institutions (107th), infrastructure (115th), health and primary education (121st) and macroeconomic environment (138th). Further, in order to benefit from the scale advantages associated with its significant market size (30th), Pakistan will have to decrease regulatory rigidities in the labour market (136th) and reduce barriers to domestic and foreign competition in order to render the markets for goods and services more efficient (93rd). The most problematic factors for doing business in Pakistan identified by the Report include government instability/coups, corruption, policy instability, inadequate supply of infrastructure, inefficient government bureaucracy, access to financing, inflation, poor work ethics in national labour force, inadequately educated workforce, tax rates and regulations, crime and theft, restrictive labour regulations and poor public health.
As for other countries, Switzerland topped the overall rankings, while Singapore overtook Sweden for second position. Northern and Western European countries dominated the top ten, with Sweden (3rd), Finland (4th), Germany (6th), the Netherlands (7th), Denmark (8th) and the UK (10th). Japan maintained its ranking as the second-ranked Asian economy at 9th place.
The news that Pakistan has improved its ranking in the latest GCI, though encouraging on paper, is likely to be received with certain degree of scepticism within the country for obvious reasons. Some of the people could even question the authenticity of the Report because overall competitiveness of the country would seem to be waning due to deteriorating socio-economic indicators in the country in the previous year. However, it is difficult to complain about the credibility of the GCI because of the reputation of the institution involved and the hard work put in the exercise. The only explanation for improvement in the Index then could be that among the 142 economies included in the exercise, some of the economies may have witnessed even more deterioration in the relevant indicators than Pakistan during the year or the "pillars" included in the GCI were insufficient to capture the total picture of the level of competitiveness. The veracity of this statement could be ascertained by the fact that factors like increasing militancy, worsening security situation which could be very important in our context have not been given much weight in the Index due to the presumption that they are generally normal everywhere and therefore do not deserve a place of significance in such exercises.
Anyhow, whatever the degree of credibility of the exercise, the crucial aspect to be noted is that Pakistan still continues to be a country with a very low ranking in the GCI and, therefore, better to be avoided as a favourable destination of investment and a place of doing business. The cost of such a low ranking is, nonetheless, evident in the form of fast dwindling foreign investment and the lack of enthusiasm on the part of local investors to make concerted efforts to enhance productivity of the economy. There is hardly any need to emphasise that fundamentals of competitiveness have to be substantially improved to meet the challenges of anaemic growth, fiscal imbalance, inflation, rampant poverty and unemployment, etc, and this objective cannot be achieved without focusing on appropriate measures and making a long-term commitment to revive the economy. Fortunately, "pillars" like institutions, business sophistication and goods and labour market efficiency included in the Index could be built and strengthened mainly with honesty of purpose and sheer devotion at the top and do not require the infusion of a lot of financial resources. Some of the problematic factors like crime and theft, corruption and poor work ethics in labour force could even be overcome by setting the right example and putting in a proper mechanism to punish the wrongdoers. It is to be remembered, however, that the improvement in the GCI ranking would be a slow process even with the best of intentions but the adoption of such a route at the earliest is a must to attract the attention of investors, infuse confidence in the business community and steer the economy towards a sustainable path of development.