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CSF PIDE Conference-Islamabad Arthur

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Economists have a very poor track record of forecasting the future as the dynamic interactions between complex variables, an imperfect understanding of the non-economic factors and the occurrence of unanticipated exogenous shocks turn their judgements into hit and miss episodes. Despite these weaknesses economic forecasting flourishes as a discipline and the economists show indomitable courage to sketch out their scenarios of an uncertain and unknown future.

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									INITIATIVE TO UPGRADE COMPETITIVENESS
         OF PAKISTAN’S ECONOMY

                Arthur Bayhan
           Chief Executive Officer
      Competitiveness Support Fund (CSF)
 World Economic Forum - Global Competitiveness Report (GCR)
 Improving Pakistan’s Competitiveness


            Improved                          Sustained           Poverty
          Competitiveness                     Economic           Reduction
                                               Growth




Globalization is a reality that
countries can no longer escape

Competitiveness is the only way to
benefit from globalization and not
become a victim


                                                                             2
                       Competitiveness Support Fund – Pakistan
 World Economic Forum - Global Competitiveness Report (GCR)
 Improving Pakistan’s Competitiveness


            Improved                          Sustained           Poverty
          Competitiveness                     Economic           Reduction
                                               Growth



The World Economic Forum’s Global
Competitiveness Report Is the Most Influential
Ranking of Country Competitiveness and Effects
Pakistan’s Image in the World Among Business,
Government and Financial Leaders

Understanding and Monitoring the Rankings is
Important

Improved Competitiveness Leads to Sustained
Economic Growth Which Has Proven to Be Effective
in Poverty Reduction
                                                                             3
                       Competitiveness Support Fund – Pakistan
World Competitiveness Ranking 2006
               (Total 125 Countries)


     USA - 6                              FINLAND - 2

    THAILAND - 35
                                      S. KOREA 24

                                     S. Africa - 45
JORDAN - 52                                        China - 54

  India - 43                   KAZAKHSTAN - 56
              TURKEY - 59


            PAKISTAN - 91
                                                                4
         Competitiveness Support Fund – Pakistan
      Global Competitiveness Index
       Components for 2006: Pakistan

•   Institutions=                                   79
•   Infrastructure =       67
•   Macro economy =                                 86
•   Market efficiency =                             54
•   Technological readiness =                       89
•   Innovation =                                    60
•   Business sophistication =                       66
•   Education =                                     104

                                                          5
          Competitiveness Support Fund – Pakistan
                 Global Competitiveness Index
          Components for 2006: Pakistan, India, Thailand



•   Institutions=             79                        34    40
•   Infrastructure =                                    67    62       38
•   Macro economy =                                     86    31       88
•   Market efficiency =       54                        21    31
•   Technological readiness =                           89    55       48
•   Innovation =              60                        26    33
•   Business sophistication =                           66    25       40
•   Education =                                         104   49       42


                                                                   6
              Competitiveness Support Fund – Pakistan
                          Global Competitiveness Report Has Two Indices
Pakistan ranked 67th on the Business Competitiveness Index of Michael Porter
Pakistan ranked 91st on the Global Competitiveness Index up from 94th place in 2005
Lower rankings on the GCI reflect inclusion of low health and education indicators

      Business Competitiveness Index (BCI)                                Global Competitiveness Index (GCI)

Rank
120
                                                                    Rank
                                                        108         120
                                                              100                                                        99 98
100
                                                                    100                                      91 94

 80                                  72                                                          79 80
                                                                     80
                     64         65           67 67
                          57
 60                                                                  60               54
                                                                                45         48
                                                                           43
 40                                                                  40
             31
        27
 20                                                                  20

  0                                                                   0
        India        China     Sri Lanka   Pakistan   Bangladesh            India     China     Sri Lanka   Pakistan   Bangladesh




              2006
              2005
             Source: World Economic Forum, Global Competitiveness Report, 2006-2007


                                                                                                             7
                                Competitiveness Support Fund – Pakistan
CSF Action Plan to Improve Pakistan Ranking on Global Competitiveness Index


                             Pakistan Can Improve by 6-8 Rankings Per Year

                                  Rankings Can Improve to 60-65 by 2010


                                                                          63
                                                                 70
                                                    77                    50%
                                     84
             RANKING




                                                                 44%
                       91
                                                    38%
                                      33%

                            27%




                         2006          2007          2008        2009     2010
                                                    YEARS



                                                                                 8
                       Competitiveness Support Fund – Pakistan
CSF Action Plan to Improve Global Competitiveness Index Rankings
Improving Pakistan’s Competitiveness


CSF Action Plan: Next Steps

     1. Promote Broad Understanding and Support for Government’s
        Economic Reform Agenda
        • Provincial Government Leadership Workshops
        • Presentations on Competitiveness to Business Leaders
        • Orientations for Local and International Press

     2. Communicate Priorities to Relevant Ministries and Institutions
        and Ensure Timely Provision of Data to International Sources

     3. Ensure Accurate Implementation of Executive Opinion Survey
        for Next Global Competitiveness Report – March 2007

     4. Focus CSF Activities on High Impact Areas

                                                               9
                     Competitiveness Support Fund – Pakistan
 Operational Windows of the CSF

                           Competitiveness
                              Support
                               Fund




                                 Matching
 Technical
                                  Grants:
 Assistance:                                             Business Incubators/
                                  Cluster
Sectoral and                                               Venture Capital
                                Development
 Regulatory



                                                                   10
               Competitiveness Support Fund – Pakistan
                  Technical Assistance Window

1.       Prepare and publish First Annual State of Pakistan’s
         Competitiveness Report

2.       Carry out Competitiveness Analyses to Recommend Specific
         Actions with High Potential Impact Beginning with:
     –      Motorcycle industry
     –      Food processing sector
     –      Fishery
     –      Automotive industry
     –      Gender contribution to economic growth

3.       Increase Public Awareness of Innovation and Competitiveness by
         Better Preparing Journalists in Cooperation with Stanford
         University Innovation Journalism Fellowship Program


                                                                11
                   Competitiveness Support Fund – Pakistan
       CSF PARTNER ORGANISATIONS
CSF Has Signed MOUs for Cooperation With:
 •   HEC:   Commercialize Research for
            Knowledge-based Enterprise
            Development

 •   PARC: Agribusiness

 •   Government of Sindh: Cluster Development

 •   World Economic Forum
                                                      12
            Competitiveness Support Fund – Pakistan
               Matching Grant Window

•       Main Criteria:
    –      High potential to generate jobs, income, exports
           and investments
    –      High potential to improve quality of products and
           services
    –      Benefits a “cluster” of firms in an economic
           sector
•       Amounts: US$20,000-US$125,000 (catalytic
        investments triggering large potential impacts)

•       Co-Financing Requirement: 50%

•       Participants: Private Sector, Government and
        Academia: “Triple Helix”


                                                               13
             Competitiveness Support Fund – Pakistan
            Matching Grant Window
CSF Uses the "Triple Helix” Approach
  CSF Uses the “Triple Helix” Approach




                                                14
      Competitiveness Support Fund – Pakistan
         CSF-HEC Joint Initiatives

• Commercialize applied research and link private sector
  with university research
   – 20% private industry, 30% HEC and 50% CSF


• Promote knowledge-based enterprise sector by
  facilitating international patent registrations from
  Pakistanis and Pakistani institutions

• Organize for first time trade fairs highlighting science
  and technology-based projects developed at
  universities to attract private-sector investors looking
  for innovative products and systems to commercialize

                                                     15
           Competitiveness Support Fund – Pakistan
Business Incubator Window Concept
                  Incubator Set-up
              Fin)
 GOP (Min. of Ind.)


 Funds for Business
    Incubation                          Bilateral Agreement
                                        • Details of investment and
            Application
                                          contribution by applicant
                                          institutions
   IBA/University/
   LUMS/IBA/Uni           Approval
   versity/
  Pub-Pvt. Consortia                    • Industry Specialization
                                          based on local competitive
           50%                            advantage
           contribution
                                        • Annual Targets/output
      Bilateral                         • Commitment for outcome
     Agreement                          • etc
                     50% contribution
     with TOR


      Business
     Incubator


                                                                       16
         Competitiveness Support Fund – Pakistan
Business Incubator Window: Operations
        Business Incubator
              Board of
              Directors                          Potential
                                                 Potenti
                                                Incubate
                                                 al
            MANAGERS                            es           Business Incubator Services
                                                             • Links to industry, universities,
                                                               research institutes
                                                             • Business support services to
                            Detailed Joint 2 yr.               enhance and develop business
                              Proposal with                                -
                                                             • Daily handson managerial
                          Funding & ValueAddn.                 mentoring (general
                                                               management, finance,
                              Requirements                     accounting, marketing,
                                                               production, R&D)
                                     Approval                • Financial resources for R&D
                                                               and initial marketing expenses
                                 2 Year                      • Access to potential private
          Funding              Incubation                      investors and strategic partners
          $ 15,000– 150,000
                                 Period                      • Training and coaching on
                                                               dealing with the potential
                                     Graduate after 2 yrs.     foreign investors and strategic
                                                               partners.
                       Create Commercial Entity
       Reclaim company
                            With 85% B.I.
       ownership after    Board Ownership
       share buyback



                                                                                             17
                    Competitiveness Support Fund – Pakistan

								
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