What it is and what it will take
Despite 68 years of Pakistan, the economy has not yet gained desired stability. Not only has Pakistan missed opportunities that came its way in 1960s, 1980s, and the year 2002, mismanagement still continues to hamper progress. And yet the prevailing economic scenario indicates that the year 2015 would prove a game changer.
This is an attempt to highlight weaknesses and strengths so that correct direction could be determined, priorities adjusted, foundations laid and homework done!
One of the problems confronting the economy has been lack of internal unity of Pakistan as a nation. This lack of unity sprawls in the form of provincial rivalry, sectarian hatred, unequal distribution of wealth and clash of institutions. Thrice, the constitution has been jackbooted, causing further deterioration to the common man’s existence below poverty line. Unfortunately, previous governments have brought the country to bankruptcy, economy to a moribund condition, public opinion and attitudes towards polarisation. Apart from the opportunities which have not properly been availed, our 68-year history is replete with episodes of quixotic misadventures, neglect of health, education and skill development. Neither is there transparency, nor accountability for ending corruption and abuse of power.
Three Indian wars against Pakistan, Afghan war from 1989 to 1998 and war on terror along with its offshoots are huge factors which have constrained the progress and prosperity of Pakistan. Connected with these are after-effects of violence, smuggling and narcotic business, which provide funds for terrorism.
Three Indian wars against Pakistan, Afghan war from 1989 to 1998 and war on terror along with its offshoots are huge factors which have constrained the progress and prosperity of Pakistan
But, on the tough terrain of Afghanistan not one, but two powers had been defeated: one in the West through guerrilla-warfare and stinger missiles and the other in the East through diplomacy as evidenced from a democratic government in Afghanistan.
As stated above, the future of Pakistan economy is bright. Judiciary is more independent than ever. For the first time, a government has been able to complete its five-year tenure and the right to govern the country was peacefully transferred to the next democratically elected party.
In presence of already pronounced appreciation of Asian Development Bank and IMF, the recent UN report before announcement of the budget for the current year, is further confirmation of the positive trends in Pakistan’s economic situation. The report also reveals the incessant efforts made by the present government to remove constraints against energy and infrastructure development. Reduction in inflation, control over budget deficit and increase in foreign exchange reserves are indicators which point towards economic strength.
After the success of Swat and Waziristan operations, harmony of civil and military relations augurs well. In sheer frustration, Indian RAW has intensified subversive and terrorist activities within Pakistan such as savage killings of innocent Peshawar Army school students and brutal murder of peaceful Ismailis recently in Karachi.
With this brief statement of facts, some measures and solutions to reinforce Pakistan economy are suggested below:
Firstly, the energy crisis has caused serious set-backs as it badly affects gross domestic product (GDP) which further results in fiscal deficit. Energy shortage is mainly due to water shortage in the dams, subsidised prices in the past, ad-hoc management of short falls and the 1990 decision to get power from imported oil. The urgency and intensity of the problem can be gauged by recalling and comparing Pakistan 60 megawatt at its birth in 1947 with that of 2012, when only the short fall was approximately 8000 MW (sources: Pakistan institute of Development Economics, Islamabad). The crisis can be managed by harnessing energy from wind and sun, procurement by Iran–Pakistan gas pipeline, and construction of more dams.
Secondly, Foreign Direct investment (FDI) has great potential if it is used to develop and improve techno-scientific basis for bumper growth in agriculture, industry and service sectors. In the first quarter of Pakistan’s history, many industries such as Shell Petroleum, Lever Brothers’ vegetable oil, pharmaceutical companies like Glaxo and so on and so forth were established through FDI. It is only in 2015 that Pakistan has regained confidence of the investors as is evident from signing of agreements worth US $ 42 billion with China.
Thirdly, as for trade with India, if viewed retrospectively, is a tricky proposition. Import of agricultural and textile is not Pakistani priority because the country is already self-sufficient in this regard. The best strategy, if harmonious co-existence is required, is competition with India not only at the level of international markets, but also in respect of improving quality of common man’s life at home.
Fourthly, Pakistan’s performance in exports has been slow. Not to compare it with Malaysian achievements, even Bangladesh has fared better than Pakistan. But fortunately the encouraging aspect of Pakistan’s economic scenario is the presence of products which have potential for expansion. These products including textile, garments, jewellery, sports and surgical goods in manufacturing and rice and cotton in agriculture are called “export drivers”. A simple useful corrective formula of demand supply relation is: the higher the growth, the bigger the available facility for exports; which further invites more competitive environment in international markets for quality goods.
Fifth, as for literacy rate, Pakistan ranks third from bottom in the comity of nations, but the country ranks among the toppers in tax evasion. At present, a difficult situation has developed: on one side is failure of tax reforms while, on the other side, is pressure from Intentional Monitory Fund to enhance the range and rate of taxes. The improvements in the current vicious situation is possible if Pakistan follows Chinese reforms making provinces and districts responsible to collect taxes and spend on the development of respective areas.
Sixth, apart from reforms mentioned here, some essentials are necessary corollary for higher economic growth. Elimination of feudalism through confiscating land, property and wealth is a method of bloody revolutions while imparting techno-scientific knowledge, education in life values and skills and inculcating awareness of human rights are procedures and projects which stretch on for decades. In the context of Pakistani social set up, introduction of unambiguous laws about holding agricultural land, not on the basis of family as a unit of the land lord for a period of one hundred years, could bring better prospects. In this way, not only land would be protected from fragmentation, but it would help in creating more unified family structure and in evolving attributes of collective consciousness.
The problem, however, is that most members of parliament belong to the agricultural class, and do not want any such laws. Various institutions especially media in consultation with the Election Commission should call for constitutional amendments such as disqualification of the candidate from contesting the election who has already enjoyed two terms either as MNA or MPA, as restriction of two years of holding the coveted position of prime minister or president was there before 18th amendment. If a large number of youth is not allowed to vote on account of age limit of 18 years, why should not there be old age limit of 70 years? If any one less than 18 years is not sufficiently mature then a person of 70 is not sufficiently healthy and energetic to participate in the stressful ordeal of legislature! Another law should also be introduced that only one member from the immediate family of a grandfather should be allowed to contest elections, and moreover, only against one seat of either national or provincial assembly. Like minority seats, a specific percentage should be allowed to political parties for issuing tickets to candidates belonging to various classes such as agricultural, tenant, industrial, working classes, etc, for contesting elections.
Needless to say that getting rid of corruption and debt by studying experiences of developing and developed countries is a pragmatic approach, but simultaneous study of the ground realties of Pakistan is imperative for these two social evils have aggravated during conflict with terrorism
Seventh, optimal production in the field of agriculture, industry or skilled manpower is possible with research and innovation, which brings along welfare. Even reliance on “reverse engineering” would be beneficial for economic boost. But this is insufficient. Without workshops and laboratories, without hands-on activities, the bulk of knowledge is just theory. Production or creation results is possible only when the abstract idea is translated into concrete terms as China did by pumping water out of the river Yangtze up towards the north to irrigate the land for cultivation of rice. Innovation, increase in growth and foresight for intelligent decisions would greatly help in development and progress.
Eighth, needless to say that getting rid of corruption and debt by studying experiences of developing and developed countries is a pragmatic approach, but simultaneous study of the ground realties of Pakistan is imperative for these two social evils have aggravated during conflict with terrorism. Providing palliatives is an ad-hoc measure and a temporary relief. It does not cure the disease. And even though it is all quiet and clear on all fronts, control over corruption and debt requires a holistic policy by constituting law against tax evasion.
It appears that Paul Kennedy’s prediction in “The Rise and Fall of Great Powers,” of 1988 and the more recent specific book “The Growth Map” (2010) by Jim O’ Neill about economic opportunity for countries such as BRICS which stand for Brazil, Russia, India, China and South Africa and under their shadow rise in output of N-11 countries, which includes Pakistan, are no wild speculations. Certainly, the significance of Pakistan as frontline state in the changing scenario is a geopolitical reality. This has strongly been confirmed not only by Chinese declaration that enemies of Pakistan are enemies of China, but by signing agreements of $42 billion on a wide range of economic activities during recent visit of the Chinese president.