Pages

Friday, 25 October 2019

Not so Easy Business

By: Muhammad Ali Jan

Pakistan is part of the top 10 economies that improved the most in 2018/19. Source: World Bank's Doing Business 2020 report


Pakistan has jumped 28 places in the World Bank’s (WB) global ‘Ease of Business’ rankings to become one of the world’s top 10 performers for 2019. Naturally, the government is ecstatic and the Prime Minister has tweeted a message congratulating everyone involved in achieving this feat. At a time when the Pakistan Tehreek-e-Insaf (PTI) is finding precious little to celebrate – either on the economic or political front – their jubilation is completely understandable. It is also true that for a government increasingly obsessed with its international image, as well as one extremely popular with overseas Pakistanis, these rankings are meaningful, just like they are meaningful for a section of global investors. However, it is also important to read these rankings with a great degree of caution, and key stakeholders as well as the public at large should be aware of their limitations as well as the errors of commission and omission inherent within them. Indeed, presenting these – or any other global cross-country ranking – as some kind of objective indicator for improved economic governance is not only wrong, it is also dangerously misleading.

Without getting into a detailed critique, I will simply highlight three main reasons why Pakistan’s 28 place jump – from 136 to 108 – may mean very little for actual business development and growth in the country. To begin with, what does the WB’s ‘Ease of Business’ report measure? Briefly put, what it attempts to asses and compare are administrative hurdles across a few areas of business regulation, such as registering property, getting electricity, paying taxes, getting taxes etc. In total, there are 11 main dimensions that are combined to make up this ranking. To be more precise, it tries to assess and compare the legally required time and costs of regulatory compliance for these aspects of private enterprise across the globe. It gathers information on these variables through four sources: the laws and regulations in the books, 'experts' (mostly lawyers, consultants and accountants) supposedly well acquainted with local business practices, certain government officials and the WB staff itself.

The first problem is that, by the Bank’s own admission, this is far from a comprehensive measure of the business environment since it does not cover, for example, aspects like security, macroeconomic stability, corruption, labour skills of the population, the underlying strength of institutions, the infrastructure or the financial system,- all of which impact how easy it is to set up a business. Given the lack of any coherent plan from the government for increasing investment that involves sub-regional businesses as well as the general environment of crushing stagflation, it is doubtful that these reforms on their own can lead to a spurt of new business development.

In addition, underlying these rankings is a certain laissez faire ideological bias so that simply a permissive environment is deemed enough to spur growth and for the fruits of this growth to be widespread. To give one example, while the government has made the payment of tax much simpler by introducing online payment modules, the timing, manner and rate of taxes themselves are considered by observers to be a reason why cash has disappeared from the market and the economy has slowed down. Yet, the ease of business ranking would register the reform on paper as a positive while its effects will not be counted.

This brings us to a much more fundamental problem with the ranking: that its source of information involves tax lawyers, accountants, government officials but not entrepreneurs themselves. This is because the report is mainly about how rules and regulations exist on paper and not how they are experienced by actual actors (i.e. firms) on the ground. A much more reliable measure of actual experience are the WB’s 'Enterprise Surveys' which cover aspects such as access to finance, corruption, infrastructure, crime, and competition by interviewing a large random sample of managers and business owners themselves across a range of enterprise types in different parts of the country. What these reports show is that for economies like Pakistan, where close to 70% of all livelihoods are earned in the Informal economy, the disjuncture between laws on paper and actual experience can be monstrous. In fact, scholars who have compared the two surveys have found almost ‘zero correlation’ between improvement in the ranking in terms of laws and actual experience on the ground.

A final limitation of the report is that, even if one were to accept that the formal laws and regulations are important, they cover them for only two main cities, namely Karachi (where the Sindh government was as involved in these reforms as the federal government) and Lahore. Therefore, in addition to the limitation of only looking at laws on paper and not actual experience on the ground, ignoring the vast informal economy, restricting surveys to legal and government experts and covering a few aspects of regulation with a somewhat simplistic idea that less regulation is necessarily better, the report also suffers from a lack of coverage, which for a country as large and varied as Pakistan, is extremely misleading.

This is not to say that the report is entirely devoid of substance or that any other government would not have flaunted a report like this. It is also true that the global 'development industry' continues churn out such reports, even when the rankings contradict one another; to give an example, even as Pakistan has jumped many points on this index, it has dropped three positions from 107 to 110 on the global competitiveness rankings. In fact, the one key lesson of the current economic morass in the country is this: policy makers must dispense with the ‘one-size fits all’ approach to development, particularly that borrowed heavily from the Bank’s neoliberal ‘good governance’ agenda with its laundry list of reforms.

Instead, countries must rely on their own resources (of course, not in an autarkic sense) to chart a home-grown plan for reform, economic growth, decent employment and poverty reduction. Of course, that would require reaching across the aisle - both economically and politically - to people one may not always agree with or like but who are critical stakeholders if any stable and prosperous political economy arrangement is ever to evolve.

The writer is a Research Associate with the School of Global and Area Studies, University of Oxford. He can be reached at muhammad.jan@area.ox.ac.uk.


8 comments:

  1. Under this system of taxation, the tax rate diminishes as the taxable amount increases.

    reduce my inheritance tax

    ReplyDelete
  2. Hello everyone i am happy to say that i was cure from HIV/AIDS by Dr Padman with his herbal medications after i tested positive july 2016 and ever since then i have been on medications to extend my living on earth. One faithful day i was searching on line if i could get some tips on how to cure my illness and i saw a comment on how Dr Padman cure HIV with herbs,i was surprise and i contact him on the email they provided on the comment and i explain my problem to him and he also prepare the herbs and send to me which i use for one week as i was instructed by him and after 2weeks i went to hospital for checkup and i tested Negative and i am fully cured from the disease and i am so greatful to Dr Padman.You can also reach Dr Padman on his padmanlovespell@yahoo.com , https://twitter.com/padman_dr. https://padmanspell.com WhatsApp +19492293867

    ReplyDelete
  3. This is very useful information. Thanks for sharing this with us. If you looking for about Tax Consultants in Barking,
    Tax Consultants in Barking

    ReplyDelete
  4. I am here to testify how great man called Dr KOFI helped me out with herbs and roots which he prepared for me in use of curing my Hepatitis B I takes his product (cure) for (14) days before I am to known I was totally cure out of it, and i promised him that i will testify my healing to the whole world about how he cured me which I am very happy I am doing now , Dr KOFI also cure all kinds of diseases , HEPATITIS, A,B,C , CANCER, DIABETICS , FRIBLOD,ALL KINDS OF SPELL CAST ,and so much more , please you can get him contacted on his email at drkofiherbalcure@gmail.com He can also cure following virus (1).Herpes (2).Cancer (3).Hepatitis (4).Hiv/aids (5).Pcos (6).Fibroid...

    ReplyDelete
  5. I have been suffering from (HERPES) disease for the last four years and had constant pain, especially in my knees. During the first year,I had faith in God that i would be healed someday.This disease started circulating all over my body and i have been taking treatment from my doctor, few weeks ago i came on research on the internet if i could get any information concerning the prevention of this disease, on my research, i saw a testimony of someone who has been healed from (Hepatitis B and Cancer) by this Man Dr EDES and she also gave the email address of this man and advise we should contact him for any sickness that he would be of help, so i wrote to Dr EDES, telling him about my (HERPES Virus) he told me not to worry that i was going to be cured!! hmm i never believed it,, well after all the procedures and remedy given to me by this man few weeks later i started experiencing changes all over my body as the Dr assured me that i have been cured,after some time i went to my doctor to confirmed if i have be finally healed behold it was TRUE, So friends my advise is if you have such sickness or any other at all you can email Dr EDES on : (dredeshome@gmail.com)..... THESE ARE THE THINGS DR EDES CAN ALSO CURE.. GONORRHEA, HIV/AIDS , LOW SPERM COUNT, MENOPAUSE DISEASE, PREGNANCY PROBLEM, SHORT SIGHTEDNESS PROBLEM, Stroke, Bring back ex lover or wife/husband....sir i am indeed grateful for the help i will forever recommend you to my friends!!!... you can as well add Dr EDES on WhatsApp +2348151937428
    VISIT HIS WEBSITE; https://dredesherbal.webs.com

    ReplyDelete
  6. I have been suffering from (HERPES) disease for the last four years and had constant pain, especially in my knees. During the first year,I had faith in God that i would be healed someday.This disease started circulating all over my body and i have been taking treatment from my doctor, few weeks ago i came on research on the internet if i could get any information concerning the prevention of this disease, on my research, i saw a testimony of someone who has been healed from (Hepatitis B and Cancer) by this Man Dr EDES and she also gave the email address of this man and advise we should contact him for any sickness that he would be of help, so i wrote to Dr EDES, telling him about my (HERPES Virus) he told me not to worry that i was going to be cured!! hmm i never believed it,, well after all the procedures and remedy given to me by this man few weeks later i started experiencing changes all over my body as the Dr assured me that i have been cured,after some time i went to my doctor to confirmed if i have be finally healed behold it was TRUE, So friends my advise is if you have such sickness or any other at all you can email Dr EDES on : (dredeshome@gmail.com)..... THESE ARE THE THINGS DR EDES CAN ALSO CURE.. GONORRHEA, HIV/AIDS , LOW SPERM COUNT, MENOPAUSE DISEASE, PREGNANCY PROBLEM, SHORT SIGHTEDNESS PROBLEM, Stroke, Bring back ex lover or wife/husband....sir i am indeed grateful for the help i will forever recommend you to my friends!!!... you can as well add Dr EDES on WhatsApp +2348151937428
    VISIT HIS WEBSITE; https://dredesherbal.webs.com

    ReplyDelete
  7. QUICK RELIABLE CURE, Am so glad expressing my profound gratitude to a man that is so concerned about other people's well being. I was suffering from (HERPES SIMPLEX VIRUS) over 4 years, i have spent thousands of dollars in buying expensive drugs and visiting several hospitals in different countries, i was really in severe pain "until" one glorious morning, i read about Doctor Razor on the internet on how he had helped and cured so many people suffering from HERPES 1&2, HPV, CANCER, HIV/AIDS, ALZHEIMER, FIBROID, ENLARGED PROSTATE, HEMORRHOIDS' PILE and HEART DISEASE ETC. So i contacted him through this Email: drrazorherbalhome@gmail.com and i shared my problems with him, he gave me the healing procedure and i followed them. 18 days later he told me to go for a medical test, behold the result was negative, now am (HERPES SIMPLEX VIRUS)  Negative. I just want to use this platform to thank Doctor Razor for curing me from that deadly virus and also for exposing his herbal cure to the world, please you can as well contact him at drrazorherbalhome@gmail.com (or) Whatsapp/Call him +2349065420442 for solutions to your health problems

    ReplyDelete
  8. QUICK RELIABLE CURE, Am so glad expressing my profound gratitude to a man that is so concerned about other people's well being. I was suffering from (HERPES SIMPLEX VIRUS) over 4 years, i have spent thousands of dollars in buying expensive drugs and visiting several hospitals in different countries, i was really in severe pain "until" one glorious morning, i read about Doctor Razor on the internet on how he had helped and cured so many people suffering from HERPES 1&2, HPV, CANCER, HIV/AIDS, ALZHEIMER, FIBROID, ENLARGED PROSTATE, HEMORRHOIDS' PILE and HEART DISEASE ETC. So i contacted him through this Email: drrazorherbalhome@gmail.com and i shared my problems with him, he gave me the healing procedure and i followed them. 18 days later he told me to go for a medical test, behold the result was negative, now am (HERPES SIMPLEX VIRUS)  Negative. I just want to use this platform to thank Doctor Razor for curing me from that deadly virus and also for exposing his herbal cure to the world, please you can as well contact him at drrazorherbalhome@gmail.com (or) Whatsapp/Call him +2349065420442 for solutions to your health problems...

    ReplyDelete