News: Enter the Competition
Name of the Newspaper: The News
Date of publication: Sunday, Oct 08, 2006

Most of the emerging economics of the modern era have been guilty of promoting a macro level growth with little or no effects trickling down to the cross-section of the society. Achieving sustainability in growth to allow the economic success enough time to make an impact is the greatest challenges for developing courtiers such as ours.

While figures say Pakistan’s economy is heading in the right direction, the test of sustainable growth appears tougher than ever “Growth is coming mostly in non-real sectors”, like telecommunication and the services sector where indigenous value addition u till now is limited. Many people having made money in the real estate boom seem to have no idea what to do with this money other than import luxury cars on reduced duty. The real sectors of agriculture and industry have seen little true growth over the past few years “says Abrar Raza of KASB Securities”.

How can the emerging positive numbers of the country’s economy then be used to fuel a growth in real terms? The government believes it might not be possible by following the conventional path.

“The problem is that we have been working in a cylindrical shape. There has been no cross-fertilization or true utilization of ideas Research is the next step and we need to determine a practicality between research and industry”. Minister of State for Finance Omar Ayub Khan tells The News on Sunday.

There is a conscious effort on part of the government to ensure value addition in Pakistani products to make them more competitive in the global market. The Competitiveness Support Fund (CST) a joint venture of the government of Pakistan”. Ministry of Finance and the US Agency for International Development (USAID) plans to conduct a number of studies on the global competitiveness of selected economic sectors in Pakistan. The studies will examine where competitiveness already exists within targeted sectors and where it can be improved. CSF will use the studies to forward recommendations to the government on policy interventions it should take to make certain sectors more internationally competitive.

The CSF shall help us determine in which sectors our industry has a competitive advantage over other countries, finding and then supporting such sectors is the mandate of the CSF. The CSF shall also try to find out how productive we actually are and where are we lagging behind. Another important function of the CSF is to allow us to bench mark ourselves in comparison to other developing economics says Omar Ayub.

The results of the bench-marking exercise have been positive. In its newly released Gobal Competitiveness Report 2006, the World Economic Forum has released figures that show Pakistan might be taking steps in the right direction--- albeit small ones. The World Economic Forum presents two competitiveness rankings—the Business Competitiveness Index (BCI) and the Global Competitiveness Index (GCI).

Pakistan had a relatively good showing on the BCI, developed by Harvard Business School competitiveness expert, Dr. Michael Porter. In the new BCI, Pakistan ranks 67th among 121 countries.

On the GCI, Pakistan Improved from last years 94th place to 91st place this year. 125 countries participated in this year’s survey Pakistan’s gains take on added significance when compared to the drop in rankings experienced by many noteworthy emerging markets, GCI rankings dropped by 9 for Russia and Brazil by 6 for China by 2 for Thailand and by for Malaysia.

To improve Pakistan’s ranking further, new sectors with the country’s competitive edge shall need to be discovered and one of the ways of doing that is to induce the academia to play its role in research. The CSF has entered into a memorandum of understanding with the Higher Education Commission (HEC) to achieve just that. The two have agreed to work together to generate and identify science and technology based projects at universities through out the country that have the potential to be commercialized.

It was also agreed that cooperation could build off of activities already initiated by the HEC. As a first step, the CSF shall determine research projects that shall have commercial viability and then provide grants for such research”.

“Research is vital for sustainable growth. To make research effective need to bride the gap between what goes on in universities and what is required by those in the industries and farms. Scientists working in laboratories are experts in their own fields of work but they do not necessarily understand the dynamics of a marketplace, which is totally driven by economic incentive. That is where the CSF shall come in and found projects with a potential to attract investment explains Omar Ayub.

The CSF shall further conduct trade fairs in collaboration with the HEC to highlight the science and technology based projects developed at universities. The aim of the fairs shall be to attract private sector representatives looking for innovative products and systems to commercialize Activities related to another key point of cooperation promoting professionalism in business schools, will be dealt within a second venture between the CSF and HEC.

The CSF aims to highlight a number of sectors that shall be the new forbearers of growth in the country. The food processing industry is one such sector that has shown considerable potential Biotechnology is another.

The government however, insists that the advent of these new sectors does not mean a shift paradigm from the conventional sectors of growth like textile and leather. “The government shall not stop focusing on the existing sectors and the CSF shall also find out modes of increasing the competitiveness of existing sectors as well. Further we are only interested in increasing the scope of the economy and not of limiting it in any way, says Omar Ayub. The motorcycle industry for example is one sector that is doing really well in Pakistan and the CSF is conducting a study to increase the productivity of this sector as well.

The government seems to believe that poverty reduction and economic growth will depend in the long run on Pakistan’s ability to be a competitive economy. Only time shall tell if competitiveness will bring about such a largscale change or not, but the identification and success of any of these new sectors will be an achievement in itself.