World Economy

Some Ways to Fix the Pakistan Economy

Some Ways to Fix the Pakistan EconomySome Ways to Fix the Pakistan Economy

After 68 years, since  independence in Pakistan in 1947, the economy has not yet gained the desired stability. Not only has it missed opportunities that came its way in the 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, Shahid Zubair wrote for the Pakistan Today website.

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 polarization. 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.

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.

 Bright Future

As stated above, the future of Pakistan’s 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.

 Possible Solutions

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, subsidized 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, was approximately 8,000 MW. 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 has great potential if it is used to develop and improve techno-scientific basis for bumper growth in agriculture, industry and service sectors. In 2015, Pakistan has regained confidence of the investors as is evident from signing of agreements worth $42 billion with China.

Thirdly, as for trade with India, if viewed retrospectively, is a tricky proposition. Import of agricultural and textile is not Pakistan’s priority because the country is already self-sufficient in this regard.

Fourthly, Pakistan’s performance in exports has been slow. Not to compare it with Malaysian achievements, even Bangladesh has fared better than Pakistan. Products including textile, garments, jewelry, sports and surgical goods in manufacturing and rice and cotton in agriculture are called “export drivers”, need expansion.

 China Model

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. 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.

The problem, however, is that most members of parliament belong to the agricultural class, and do not want any such laws.

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.

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 – Brazil, Russia, India, China and South Africa – and under their shadow rise in output of N-11 countries – Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, Turkey, South Korea and Vietnam – are no wild speculations.