Pakistan has adopted a neoliberal regime to open the economy to global competition and reduce the role of the state. This directional change brought increased flow of overseas remittances, speculative investment, and consumerism. Consequently, the economy in mid-2000s grew but commodity-producing sector contracted. Public sector spending has been falling, especially on social sectors. There are inadequate provisions for social security and employment based income guarantees. However, this growth and stability was short lived and there is now a fragile state and slowing economy. In the absence of an effective regulatory role of the state, and due to the failure in developing a long-term strategy to harness the labour force potential, there is a huge informal sector existing side by side with the formal economy. Almost 22 million of the employed labour force is earning its livelihood in streets and the government has no record of it. The informal workers can be categorised as self-employed workers and wage workers, doing diversified jobs from petty traders to small producers and from rickshaw driver to shoe shiners. It is difficult to measure the value added contribution of the informal sector in Pakistan. Indirect estimation approaches on the basis of employment and hours worked have been used to estimate the contribution of informal economy. For instance, Idris (2008) estimates the share at 36.8 percent of GNP, which is significant. Arby, Malik and Hanif (2010) measured the size of informal economy in Pakistan through a monetary approach. They find that the size has declined considerably.

Purpose This paper aims to explain the empirical relationship between competitiveness and economic growth in a globalizing world. In recent times, the advanced economies have experienced a slowdown of growth, whereas the BRICS countries continue to experience high growth. The authors explore the following question: Does competitiveness of nations’ degree of competition explains this differential in growth? The authors explore competiveness and growth in a macroeconomic perspective for the large economies in the OECD and BRICS countries. Design/methodology/approach The authors use dynamic panel data modelling technique to find the relationship between competitiveness and economic growth. This technique enables to control heterogeneity problem of this group to some extent. The focus variable of this study is annual GDP growth rate for the period 2007-2017. The proxies for measuring competitiveness in this paper are trade as percentage of GDP, product market regulation, unit labour cost and global competitive index. Innovation prevalence of foreign ownership, efficiency, competition, state of cluster development, venture capital availability, extent of market, research and development expenditure as percentage of the GDP mergers and acquisitions and multifactor productivity are the control variables. Findings The authors find that the degree of competitiveness competition is less likely to impact economic growth in the OECD countries because they have more or less similar competitive environment. Innovation, extent of market and state of cluster development and venture capital availability explaining growth differential. Increased competition is likely to affect growth negatively. This explains the oligopolistic structures of the world economy. However, the BRICS countries vary significantly in competitive environment. This is the reason of volatility in their growth. The conclusion is that competitiveness is important for sustained growth. Competitiveness is, however, an outcome of a set of policies, not a policy itself. Research limitations/implications Productivity data for OECD and BRICS countries are not available. Various series are not comparable. OECD countries have discontinued yearly unit labour cost series, and high frequency series are available but no such series for BRICS exists. Practical implications First, this paper proposes that wage growth, measured by the unit labour cost growth rate, is an important determinant of competitiveness amongst the nations. Wage growth is falling short of productivity growth in the OECD countries. This has implications for the long run sustainability of growth, skill development and inequalities in the region. Since 2011, world economic recovery is slow. Wage growth is imperative for generating sufficient private demand in the OECD countries. Second, this paper provides evidence that competitiveness is important for explaining growth in the OECD and the BRICS countries. However, it also highlights that competitiveness can be measured effectively by the trade differential or with the help of unit labour cost. Unaligned real effective exchange rate in terms of unit labour costs is the real cause of the problem. Originality/value Research in this area is still in infancy. This research finds that how competitiveness affects growth. A more competitive nation can sell more, but not necessarily grow rapidly. In development process, growth comes first, and at the latter stages, countries have to introduce effective reforms for competitiveness. This is the effect of competitiveness on growth by comparing various indexes.

The Iqbal Memorial Lecture was instituted in 1994 when the Pakistan Society of Development Economists (PSDE) celebrated the completion of a decade of steady progress. A brief announcement stated: “The Iqbal Memorial Lecture attributed to the national poet [Emphasis added], Allama Muhammad Iqbal has been included in the programme for the first time. Professor Ian M. D. Little is delivering that lecture” [Secretary’s Report (1994), p. 1472]. Iqbal, the poet and philosopher par excellence, has made incisive remarks or comments on economic and social issues in his poetry, philosophical writings, and in the course of his discourses as well as some famous letters, particularly those written to the Quaid-i-Azam, Muhammad Ali Jinnah, the founder of Pakistan. But these do not make Iqbal an economist. The Secretary of the PSDE was, therefore, careful in observing that the lecture commemorates our “national poet”. However, it will be of great interest to this largest national congregation of economists and other scholars concerned with development to know that the very first published book of Iqbal related neither to poetry nor philosophy, but economics. It was written in Urdu. He also taught the subject at undergraduate and Master’s level, even though he had not studied it as a student. At the Government College, Lahore, Iqbal studied English, Philosophy and Arabic for his B.A. and then completed the M.A. in Philosophy.

A close reading of the speeches and statements of the founding father of Pakistan, Quaid-i-Azam Muhammad Ali Jinnah, brings forth a striking consistency of understanding and approach towards priorities that the nation must determine to move steadily on the road to progress and development. These priorities were—in that order—education, industrial development and defence. Political historians generally present descriptive analyses of what appear to be radically different phases of the Quaid’s passage to lead the nation to its destiny—freedom. But at no point in any phase does one come across a weakening of resolve to advocate the priorities of Education, Industry and Defence—EID, for short. No better acronym of happiness would be possible for the Muslims of British India, EID being happiness and progress for them literally as well as religiously. After the adoption of the Pakistan Resolution in March 1940, the Quaid reiterated these priorities time and again. There is a noticeable accent in his speeches to specify the ramifications of these three pillars of progress.

The paper has been written in personal capacity and the usual disclaimers strictly apply.