That the rule of law plays a very critical role in economic growth and prosperity is not just the message of the 2013, Economic Freedom Index issued by the Wall Street Journal and the Heritage Foundation, but also food for thought for policymakers in Pakistan.
Democracy, the oft-touted symbolic theme for many pre-election speeches at home, was actually put to question by the report under review, with Dr Robert Barro of Harvard University concluding the relative irrelevance of democracy for economic performance of a country. On the contrary, the need for better rules of law was stressed.
Smooth property rights and freedom from corruption are highlighted as two critical elements of rule of law, as is equitable treatment by the government for all firms, organisations and individuals. As for the economic implications, thorough rules of law promote economic wellbeing by drawing in global investment, and generating employment due to favourable business and industry environment.
"The rule of law is a critically important factor in determining which countries attract dynamic flows of global investment capital... (Further) the top quartile of OECD members in terms of rule of law had unemployment rates averaging about six percent in 2011. Members that scored in the bottom half on rule of law averaged about 10 percent unemployment," said the 2013 Economic Freedom Index report.
Cronyism, special privileges for the elite, favouring certain social groups over others, etc. are signs of minimal economic freedom in economies, and cause for a dismal competition that discourages entrepreneurship and prosperity. Unfortunately, Pakistans bureaucratic system is mired in all the problems discussed above, while the state of rule of law in the country is anybodys guess.
Perhaps that explains Pakistans lower ranking relative to regional peers India and Sri Lanka, with property rights and freedom from corruption - the key determinants of rule of law enforcement - being the lowest ranked categories in Pakistans economic freedom score.
With elections right round the corner, perhaps it will be a better idea for aspiring ruling parties to develop strategies for better land tilling procedures, implementation of legal frameworks and efforts to eliminate at least petty corruption. Though idealistic, such efforts will be key for improving the domestic economic picture, and will help Pakistan inch up on the economic freedom ranking.
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2013 Index of Economic Freedom - Selected Countries
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Country Rank Overall
(out of 185 score
countries)
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Hong Kong 1 89.3
US 10 76
Bahrain 12 75.5
UK 14 74.8
UAE 28 71.1
Sri Lanka 81 60.7
India 119 55.2
Pakisan 121 55.1
Bangladesh 132 52.6
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Source: 2013 Index of Economic Freedom