THE country`s economic productivity the efficiency with which it can convert inputs such as labour and capital into goods and services is not in a good state. It has been dragging down growth and leading the country into recurring boom-bust cycles. All economic spheres have been affected: agriculture, manufacturing and public and private services. In general terms, we produce fewer goods and services and that too of poor quality for the domestic and international markets than we import or consume. That low productivity is preventing the economy from becoming part of the global supply chains is evident from consistently declining exports as a percentage of GDPand negligibly low foreign private capital flows. Hence, our growing reliance on foreign borrowings and IMF bailouts to keep afloat.

A recent State Bank report rightly highlights that productivity growth has been falling, even though the issue has featured in economic policy frameworks since at least the late 1990s.

The reason for the lack of improvement in Pakistan`s economic competitiveness is obvious: policymakers` reliance on shortterm solutions for quick but short-lived results, instead of going for politically tough structural reforms to sustainably boost exports and FDI to increase growth. However, the bank says, these approaches have not delivered the desirable outcomes; nor have foreign aid, grants, loans, privatisation and other windfall or external endowments sustainably driven long-term growth prospects. The latest economic crisis shows that no attempt to durably revive growth will succeed without improving economic productivity. As the bank notes: `... access to external support has become challenging, warranting implementation of deep-rooted and long-pending structural reforms to address the underlying issues [of productivity and competitiveness]`. If the economy is to break free from low growth, boom-bust cycles and bailouts, it must execute real reforms, rather than work around them, to increase economic productivity and competitiveness to boost exports, attract FDI, and become part of the global value chains.