In addition, with changing trade rules regulated by international arbitration bodies, competition policy would provide the basis for ensuring that firms play by the rules.
Such rules seek to ensure that firms are not engaged in anti-competitive practices
By M. Osman Ghani
Increasing productivity of various sectors of the economy is a major priority of policy makers and government. However, merely increasing and stockpiling of goods and services is meaningless unless they are of good quality and are made attractive and competitive, not only to satisfy domestic customers but also to attract increasing number of foreign buyers. The terms efficiency and competitiveness also refer to best utilisation of the available resources. In a country like Pakistan, at least 35-40 per cent of available water is misused or evaporated before reaching the final users, 30 per cent of electricity is lost at transmission and distribution stages, bulk of it being eaten up by the inefficient and corrupt system. According to some estimate, one third of agricultural produces in Pakistan are wasted at various stages. If these losses are cut down by 50 per cent and sectoral productivity is also improved, then revenue generation can be increased improving Pakistan’s gross domestic product (GDP) growth by 7 – 10 per cent per annum.
Pakistan has a semi-industrialised economy, which mainly encompasses textiles, chemicals, food processing, agriculture and other industries. Growth poles of Pakistan’s economy are situated along the Indus River, diversified economies of Karachi and Punjab’s urban centres coexist with lesser developed areas in other parts of the country. The economy has suffered in the past from decades of internal socio-political disputes, under utilisation of natural resources, a fast growing population, lower levels of foreign investment, and mis-management of the economy.
Like other countries, national development of the Pakistani economy is linked to job creation and employment generation, especially within the disadvantaged and backward segments of the population. The manufacturing sector in Pakistan is the second largest contributor to the country’s GDP, with the greatest potential to generate employment opportunities and enhance national economic growth. Small and medium enterprises (SMEs) may play a vital role in the economic activity of both developed and developing countries, and it is now widely accepted that the greatest potential impact on the economic growth will occur via the SMEs manufacturing sector in Pakistan. SMEs are relatively small, skills in the sector are limited, and the sector’s links with the broader economy are insufficient. A practical strategy is needed in Pakistan for reducing input costs and promoting the implementation and sustainability of a technology transfer initiative aimed at enhancing the competitiveness of the manufacturing enterprises. This postulates understanding the constraints to manufacturing competitiveness and to offer a model for inter-firm linkages appropriate to the Pakistani context.
In 2008, the National Research Council (NRC) of the USA appointed an ad hoc committee of experts to provide advice for advancing the competitiveness and productivity of the US construction industry, as efficiency improvements is a means to cut wastage in time, costs, materials, energy, skills and labour. The ad hoc committee was of the view that improving efficiency will also improve overall productivity and help individual construction firms produce more environmentally sustainable projects and become more competitive. A range of activities that could improve construction productivity were identified that could lead to breakthrough improvements in construction efficiency and productivity in 2 to 10 years, in contrast to 20 years. The committee identified five major activities for breakthrough improvements. These are:-
(1) Widespread deployment and use of interoperable technology application, also called Building Information Modeling (BIM); (2) Improved job-site efficiency through more effective interfacing of people, processes, materials, equipment, and information; (3) Greater use of prefabrication, preassembly, modularisation, and off-site fabrication techniques and processes; (4) Innovative, widespread use of demonstration installations; and (5) Effective performance measurement to drive efficiency and support innovation.
The five activities are interrelated, and the implementation of each will enable that of the others. Deploying these activities will require a strategic, collaborative approach led by those project owners who will most directly benefit from lower-cost, higher-quality sustainable projects, namely, the large corporations and government agencies that regularly invest hundreds of millions of dollars in buildings and infrastructures projects.
Competitiveness is a more recent concept, which has become more in vogue as growth in international trade has outpaced growth in GDP. International competitiveness is a concept that is relevant primarily at the level of the firm and not so much at the national level. Competitiveness as it relates to nations refers to the macroeconomic and socio-cultural and institutional environment. This environment can either facilitate or retard the competitiveness of the domestic or international firms that operate within the country’s borders.
Change is the only constant in today’s global economy. Countries that are flexible and prepared to undertake necessary change are more likely to prosper in this challenging economic environment. Trade liberalisation and opening of markets by developed countries in the 1990s meant that the era of preferences may be fast coming to a close. This means that the competitiveness of a nation’s firms is an increasingly important determinant of its ability to generate wealth in international trade. Competitive industries reinforce the virtuous link between international trade, domestic growth and employment.
Protectionist policies that have sheltered less efficient producers are already under attack. The manufacturing and agro-industrial sectors will have to compete on their own merit. In addition, with changing trade rules regulated by international arbitration bodies, competition policy would provide the basis for ensuring that firms play by the rules. Such rules seek to ensure that firms are not engaged in anti-competitive practices.
A landmark definition of competitiveness was offered in the Report of the President’s Commission on Industrial Competitiveness (1984) in the United States. According to this report, competitiveness is the extent to which a nation can, under free and fair market conditions, produce goods that can gain international market share and increase the real incomes of producers.
The World Competitiveness Yearbook 1996 defines competitiveness as the “ability of a country to create added value and increase national wealth by managing assets and processes, attractiveness and aggressiveness, globality and proximity and by integrating these relationship into an economic and social model.” Assets and processes refer to the resources and production processes of the country. Attractiveness means that the country creates an environment that encourages inflows of foreign direct investment and other partnerships, while aggressiveness is the push to enter foreign markets by investing overseas. A report on the competitiveness of Australia’s information industries notes that a firm is considered to be competitive if it can hold or increase its market share, while making an acceptable return on its investment. Competitiveness, therefore, is reflected by market share and profitability benchmarks.
Competitiveness is a goal of the firm. It is influenced by the strategic interface between the firm and the market place. There are two broad types of competitiveness. These are; competitiveness based on costs or pricing of the product (price competitiveness); and competitiveness based on product quality, design, innovation, skill intensity and flexibility (quality competitiveness). Economic history seems to suggest that as countries grow and develop, there is a tendency to increase the relative share of quality competitive commodities that they produce.
For Pakistani entrepreneurs, there are several sectors which could become competitive and profit earning. Success being shown by industries such as, cement, defence and banking sector are unique in Pakistan’s history.
Pakistan now boasts a powerful industrial, technological and research-based developing and manufacturing for its armed forces. It exports a wide variety of small and large weapons, ranging from modern fighter jets, battle tanks, armoured vehicles and submarines to unmanned aerial vehicles, and personal grenade launchers for urban combat. Pakistan has become an increasingly important player in the world’s arms industry; a global industry and business which manufactures and sells weapons and military technology and equipment. Products also include guns, ammunition, missiles, military aircraft, military vehicles, ships, electronic systems, and more. The arms industry also conducts significant research and development. Accordingly to the Business Monitor, Pakistan’s defence industry contains over twenty major public sector units (PSUs) and over hundred private-sector firms. The majority of major weapons’ production and assembly is undertaken by the state-owned PSUs, while the private-sector supplies components, bladed weapons and field equipments. Major PSUs include the Pakistan Ordnance Factory (POF), Heavy Industries Taxila (HIT), Pakistan Aeronautical Complex, Karachi Shipyard and Engineering Works (KSEW) and the Pakistan Machine Tool Factory etc.
According to many experts the quality of defence products in Pakistan is far better than produced by many regional countries, including India. The clear lesson is that other industries and productive sectors in Pakistan can also repeat the success story of banking, cement and defence industries of Pakistan for entering into the club of global players in the years to come.
Source: http://jang.com.pk/thenews/mar2010-weekly/busrev-01-03-2010/index.html#1
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