Ayesha Mudassar

Effective implementation of productivity-enhancing reforms will surely propel the country towards sustainable and inclusive economic development. This was stressed by Member Planning Commission Asim Saeed during a recent panel discussion on Expansion of Manufacturing Base and Integration with Global Value Chains, reports WealthPK. Sharing the findings of the study titled “Sectoral Total Factor Productivity in Pakistan,” conducted jointly by the Planning Ministry and Pakistan Institute of Development Economics (PIDE), he said that the country’s average productivity growth had been 1.5% over the decade from 2010 to 2020. “The productivity growth is not enough to achieve the desired GDP growth of around 7-8%. It also acts as a barrier to private sector development and global market integration,” he noted.

Asim said that the only sustainable way for Pakistan to rid itself of the perplexing macroeconomic woes was to substantially substitute foreign currency refinancing and more foreign debt with a foreign currency stream of export dollars. “This is possible only if we wholeheartedly embrace productivity enhancement as a key priority,” he remarked. Talking to WealthPK, National Productivity Organisation (NPO) Chief Executive Officer Muhammad Alamgir Chaudhry said productivity was regarded as one of the indicators of a country's development, as it had a direct impact on economic growth and social welfare. However, Pakistan has had a long history of low productivity, he noted.

According to the Asian Productivity Organisation (APO) Databook-2022, Pakistan’s productivity is lower than its regional competitors. Over the period from 2015 to 2020, it grew at a 1.6% annual rate in Pakistan compared to 2.6% in India, 4.6% in China, 4.9% in Bangladesh and 5.2% in Vietnam. The negative trend of productivity is affecting all sectors of the economy, including agriculture, manufacturing and services. “Low productivity results in an increase in production costs, which leads to price escalation and a loss of competitiveness at the international level,” NPO CEO Alamgir stated. He further stated that the impediments to productivity growth included regulatory complexities, a lack of technological adaptations and an anti-export bias of trade policy.

“Through the optimal utilisation of resources, adoption of innovative technologies and investments in education and infrastructure, Pakistan can enhance its global competitiveness, attract investment and raise the standard of living for its citizens," he added. Alamgir said productivity growth could also be attained by reducing barriers to trade openness and bolstering competition-based markets. “To move the country towards a higher growth trajectory, prudent measures are inevitable to improve productivity. A comprehensive and coordinated effort from policymakers, businesses and other stakeholders is required to achieve the objective,” he concluded.

Credit: INP-WealthPk