Pak­istan’s econ­omy rated ‘mostly un­free’

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Pak­istan’s econ­omy is ‘mostly un­free’ as peo­ple are not em­pow­ered enough to work, pro­duce, con­sume, own, trade and in­vest as per their per­sonal choices, ac­cord­ing to a re­cent study con­ducted by a lead­ing Wash­ing­ton­based think tank.

The 2015 In­dex of Eco­nomic Free­dom, which is de­vel­oped by the Her­itage Foun­da­tion in part­ner­ship with The Wall Street Jour­nal, ranks Pak­istan 121st among 178 coun­tries of the world when it comes to eco­nomic free­dom.

The in­dex cat­e­gorises coun­tries in five groups: free, mostly free, mod­er­ately free, mostly un­free and re­pressed. Pak­istan ranks in the sec­ond last cat­e­gory with the likes of Nige­ria ( 120), Kenya ( 122), In­dia (128) and Bangladesh (131).

“Pak­istan has pri­va­tised some state- run in­dus­tries, but the econ­omy is still heav­ily reg­u­lated, and poor se­cu­rity dis­cour­ages for­eign in­vest­ment,” the Her­itage Foun­da­tion said in its brief com­men­tary on the state of eco­nomic free­dom in Pak­istan.

Re­ac­tion in Pak­istan to the in­dex and Pak­istan’s poor rank­ing in it was some­what mixed. Some eco­nomic ex­perts were cog­nisant of the fact that the gov­ern­ment’s reg­u­la­tion of the econ­omy has many short­com­ings. But many on the left of the po­lit­i­cal spec­trum chose to de­light at Pak­istan’s ab­sence of eco­nomic lib­erty.

Speak­ing to The Ex­press Tri­bune, tax­a­tion ex­pert Dr Ikra­mul Haq said a poor reg­u­la­tory frame­work is eat­ing away at the eco­nomic free­dom of the av­er­age Pak­istani cit­i­zen.

“Reg­u­la­tory short­com­ings and en­force­ment is­sues have cur­tailed eco­nomic lib­erty in Pak­istan,” he said.

Tak­ing into ac­count na­tional poli­cies that im­prove or r hurt eco­nomic free­dom of or­di­nary cit­i­zens, the in­dex dex as­sesses an econ­omy via 10 broad in­di­ca­tors, namely prop­erty rights, free­dom from cor­rup­tion, fis­cal free­dom, om, gov­ern­ment spend­ing, busi­ness free­dom, labour ur free­dom, mon­e­tary free­dom, trade free­dom, m, in­vest­ment free­dom and d fi­nan­cial free­dom.

In Pak­istan’s case, four of the 10 in­di­ca­tors showed im­prove­ment over the last year, four showed de­te­ri­o­ra­tion while two re­mained flat.

Pak­istan’s score went up by 0.4 points over the last year, which is re­flec­tive of im­prove­ments in the cat­e­gories of in­vest­ment free­dom and free­dom from cor­rup­tion. How­ever, th­ese im­prove­ments are coun­ter­bal­anced by de­te­ri­o­ra­tions in labour free­dom and busi­ness free­dom.

With its over­all score be­low the world and re­gional av­er­ages, Pak­istan is ranked 25th among 42 coun­tries of the Asia- Pa­cific re­gion.

The Her­itage Foun­da­tion says in­ef­fi­cient reg­u­la­tory agen­cies in­hibit busi­ness for­ma­tion in Pak­istan. “Ac­cess to bank credit also un­der­mines en­trepreneur­ship, and the fi­nan­cial sec­tor’s seclu­sion from the out­side world has slowed in­no­va­tion and growth,” it noted.

The In­dex of Eco­nomic Free­dom is not the only in­dex that paints Pak­istan’s econ­omy in a bad light. For ex­am­ple, the World Bank Group’s Do­ing Busi­ness 2015 re­port also ranked Pak­istan 128th out of 189 economies of the world in terms of the ease of do­ing busi­ness that it of­fers to en­trepreneurs.

How­ever, the col­lec­tive weight of the Her­itage Foun­da­tion’s re­search and ob­ser­va­tions from the World Bank mean lit­tle to an econ­o­mist like Kaiser Ben­gali who has strong left­ist lean­ings. It may ar­guably be one of the most prom­i­nent think tanks in­ter­na­tion­ally, but Ben­gali says its re­search and find­ings stand dis­cred­ited be­cause of a clear rightwing bias.

“By eco­nomic free­dom, Her­itage Foun­da­tion ac­tu­ally means the lib­erty of multi­na­tional com­pa­nies to loot and plun­der in de­vel­op­ing coun­tries. I’m happy that it doesn’t con­sider Pak­istan to be eco­nom­i­cally free,” Ben­gali said.

Ben­gali cur­rently serves as the head of the Balochis­tan Chief Min­is­ter’s Pol­icy Re­form Unit and has pre­vi­ously served as an eco­nomic ad­vi­sor to the Sindh gov­ern­ment.

Balochis­tan, with its abun­dant min­eral re­sources, would stand to ben­e­fit tremen­dously if its min­ing laws were lib­er­alised to be­come more in­vestor friendly, but left­ist pop­ulism like that of Ben­gali has so far pre­vented that from hap­pen­ing. In­deed, it was a pop­ulist up­roar that forced Chilean min­ing com­pany Antofagasta and Canadian min­ing gi­ant Bar­rick Gold to aban­don their planned $ 3 bil­lion joint ven­ture to de­velop the Reko Diq cop­per and gold mine.

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