Competing at the global level

The only Asian countries below Pakistan in the Global Competitiveness Index (GCI) for the year 2011-2012 are Nepal and Yemen. As world economics today moves towards the notion of sustainable development, some parts of the globe still need to witness mere development on their part. Global warming and climatic concerns are playing their role to trigger implementation of environment-friendly policies for development as well as for its sustenance. Alongside, major happenings in terms of declining confidence in the strength of developed economies with their exorbitant debt levels, unemployment levels that are becoming difficult to control and the crumbling social security system, are contributing towards the debate on future growth policies for the developing economies as well as for emerging ones.
Competitiveness, according to the GCI, is defined as the set of institutions, policies and factors that determine the level of productivity in a country. Each country in the world has its own dynamics of being competitive. Every nation does not compete on similar grounds. A country’s position on the path to development is most likely to define its strengths at that particular point in time. A traditional growth model suggests that that an unavoidable shift from an agro-based economy to being manufacturing-intensive is required to take place so that the secondary sector is developed and per capita incomes could be boosted. Alongside, productivity in the primary sector needs to be enhanced for ensuring food security and maximising production for domestic use as well as exports. Such enhancements result in the adoption of technology and high yielding techniques for agricultural purposes. Technological improvements help in augmenting productivity with a lesser number of labourers working on the field. Later on, economies are expected to thrive with a well-embedded tertiary sector (including financial and other services).
When David Ricardo talked about his revolutionary comparative advantage theory, global economics was familiarised to how two nations could gain from trade by producing goods for which they had a relative edge in efficiency. Post World War II, global trading transactions grew enormously to reach where the world is today. As the famous saying by John Donne goes, “No man is an island,” the same holds true for countries in today’s scenario. None of them can survive without others in times of immense interdependence.
Here comes in the role of competitiveness and how a better global standing implies better incomes for one’s own people. The Global Competitiveness Report divides countries into three stages of development, namely those that are factor-driven, efficiency-driven and innovation-driven along with those that are in transition from one to another. India, Pakistan and Bangladesh all fall into the first category; however the index rankings for India and Pakistan are 56 and 118 respectively. China, without a doubt has managed to enter the second category whilst struggling with its huge population resulting in lower per capita incomes.
Comparing Pakistan’s performance with that of the East Asian tigers does not hold much value as the latter now compete at a whole different level, that of innovation, research and technological advancements. A more valid comparison is that with a nation of the same category and more so the same region. India, an economy dependent on agriculture with a strengthening manufacturing and IT sector and population that is almost seven times larger than that of Pakistan, is performing well in exploiting its sheer market size and labour force. Both South Asian nations are faced with similar challenges including an energy shortage, corruption in government machinery, lack of deeply embedded educational systems for ensuring highest levels of literacy, a shortage of infrastructural linkages and various others. All Pakistan needs is focused policy-making that matches the essential requirements of today, which include a long-term solution to the energy crisis so that it does not come in way of the country’s growth path, and a revamped public education sector to ensure mandatory primary education and help in developing a skilled work force. Without these factors, it would be next to impossible to improve our competitiveness in at least the sectors which are functioning and make a mark on global fronts to rise as an emerging economy.

The writer is sub-editor, Profit and can be reached at [email protected]