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Monthly Archive November 2016

Understanding Global Competitiveness – Pakistan

Global competitiveness – A report annually published by World Economic Forum  (WEF) assess the economic landscape of 138 countries and share its insights about the economy, development,  and prosperity in those countries and then bring them to a ranking to form a Global Competitiveness Index (GCI).  Global competitiveness report 2016-2017 was published on September 28, 2016, and is available to general public. The report has placed Pakistan, my home country,  at the 122nd position on an index of 138 economies and Singapore, currently living here, on 2nd after the Switzerland. I considered it a good opportunity to  understand the competitiveness in the context of Pakistan & Singapore and then to put it in simplest possible words to share my understanding with other fellows, who like me, don’t have much economic or governance background.

Before I get into the base data and the statistical analysis tools adopted for this index, I will prefer to highlight what competitiveness is and what are the areas considered for this assessment and then the respective institutes responsible for that area so you will be in a better position to understand the actual performance of a particular state institution. WEF defines the competitiveness as a set of institutions, policies & factors that [collectively] determine that how productive an economy is. The productivity so determined actually translates into the level of prosperity & well-being that a country can achieve. GCI is a function of three areas named as Basic requirements, Efficiency enhancers, and Innovation & Sophistication. Each of these three areas is a key to a particular type of economy as described by WEF. Basic requirement area is a key for a factor-driven economy, Efficiency enhancers area is a key for efficiency-driven economy and Innovation & Sophistication drives an innovative economy. The performance of a country in all these three areas is important to have a vibrant and robust economy. All these areas supplement each other  in order to have a strong functional economy. After knowing the three key areas of an economy, let me take you  one step deeper to know what lies in each area and after knowing that you will be able to understand the sectors that are accounted in for the global competitiveness.

1- Basic Requirements

The Basic requirement area of an economy actually serves as a key , as WEF says, for a factor-driven economy. The pillars that collectively affect the performance level of a country in “Basic requirement” area are:

1.1 Institutions

1.2 Infrastructure

1.3 Macroeconomic environment

1.4 Health & Primary Education

2- Efficiency enhancers

In addition to the basic requirements being in place, there is another set of elements to provide an efficient economic environment called efficiency enhancers.  They are:

2.1 Higher Education & training

2.2 Goods market efficiency

2.3 Labor market efficiency

2.4 Financial market development

2.5 Technological readiness

2.6 Market size

3- Innovation & Sophistication

The third area that is used in determining the GCI is innovation & sophistication of an economy. This stands on following two pillars:

3.1 Business sophistication

3.2 Innovation

I intend to continue this as a series of writings, so for today, I stop here and in my subsequent posts I will try to elaborate on each of these three areas and the respective pillars so I can take you along gradually to the ultimate departments and ministries responsible for managing these departments.