Media is generally obsessed with rankings, because rankings make headlines. A recent example is that of Pakistan’s position on the global Corruption Perception Index. Unfortunately, it is also becoming a reference point for the government officials when they have little real performance to show. Granted the country’s overall ranking slipped in the latest Corruption Perception Index issue; thanks to the political interest this subject has gained, for the first time there has been an open debate on the details of the index, what such indices show, and what should be the takeaways from such global rankings.
Another recent global ranking where Pakistan’s improvement caught headlines is the Index of Economic Freedom 2019 by the Washington-based Heritage Foundation. The foundation describes economic freedom as, “the fundamental right of every human to control his or her own labor and property. In an economically free society, individuals are free to work, produce, consume, and invest in any way they please.
In economically free societies, governments allow labor, capital, and goods to move freely, and refrain from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty itself.” A similar index called the Economic Freedom of the World by Faser Institute says, “in an economically free society, the primary role of government is to protect individuals and their property from aggression by others. The EFW index is designed to measure the extent to which the institutions and policies of a nation are consistent with this protective function and the freedom of individuals to make their own economic decisions.”
Put another way, economic freedom for a country is judged by its performance against four pillars: Rule of law that includes property rights, government integrity, judicial effectiveness; Government size gauged by government spending, tax burden and country’s fiscal health; Regulatory efficiency or business, labour and monetary freedom; and open markets characterized by trade, investment and financial freedom. For simplification purpose (as there are other factors and sub-indices), where does Pakistan stand along these four pillar? Surely not to high up the ladder.
Instead of celebrating a tad increase in global ranking or score – or criticizing a slip here and a slip there – the authorities should use these studies as ground works for policy making, and build on them where there are discrepancies, and not just use them for face saving, highlight a political agenda, or stirring up conspiracies.
Not that this or any other global ranking is free of any biases, contradictions or mere explanations not agreed by all, these studies could also help the academia, research institutes and universities at home in their research work or them playing the devil’s advocate to initiate debate on crucial issues and contentions.
Quick takeaways from Pakistan’s recent performance on the Index of Economic Freedom are presented here, which could become discussion point for improvement, policy formulation, or further research. Despite improvement in the with judicial effectiveness and property rights scores in 2019, protection of property right is still one of the weakest in the country; courts are slow, outdated, and inefficient; and corruption is rampant in government, politics and law enforcement. Monetary freedom, trade freedom and fiscal health have further deteriorated highlighted by complex tax system, cumbersome licensing requirement procedure, contract enforcement subsidies and protection to certain sectors, significant number of non-tariff measures in force, excess state involvement and restriction on foreign investments.