Prerequisites for economic development


WEB DESK: Addressing a seminar “Building for Tomorrow” organised by General Electric (GE) on 17th May, 2016 in Islamabad, Minister for Planning, Development and Reforms, Ahsan Iqbal asserted that the country could not achieve economic stability due to political instability, inconsistent and outdated policies and disjointed governance in the past.

He argued that those who fail to embrace change will be wiped out and those who embrace change will be the beneficiaries. “If you look at Pakistan, we have not done as bad as many of us would like us to believe. We have missed many opportunities in the past and if we summarise those missed opportunities we can attribute this story of dropped catches to three or four factors,” he added. Japan, South Korea, China, Malaysia, Taiwan, Singapore, Indonesia, Turkey and India ensured political stability and policy continuity and were able to reap the benefits. In Pakistan, we were more involved in playing political games and lost sight of economic gains.

Countries that learnt to be more competitive by enhancing productivity, better quality and fostering innovations could win the battle. Pakistan had old infrastructure as investment was not made in energy, physical or human infrastructure. While the successful countries adopted collaborative platforms for governance, Pakistan persisted with silos and disjointed platform of governance. Talking about the future, Ahsan Iqbal said the timing was right for strong investment infrastructure.

Together with long-term technology partners, Pakistan could usher in a new era of prosperity and be one of the top 25 economies of the world as envisioned under the “Vision 2025”. The China Pakistan Economic Corridor (CPEC) has improved investment profile of the country and turned Pakistan into a safe haven for billions of dollars investment. Shahid Khaqan Abbasi, Minister for Petroleum and Natural Resources, who was also present at the seminar, said that government’s efforts to strengthen the economy were reflected in a steadily rising growth rate, low inflation and increased transparency in decision-making. Progress made in the last three years was equal to 65 years of previous governments, according to him.

We feel that Ahsan Iqbal has the right credentials of a true professional and what he stated at the seminar cannot be denied. Another positive aspect of his address was that he did not try to exclude the PML (N) governments in the past from mismanaging the economy. Most of his observations seemed to have been based on his experience and educational background. Political instability and inconsistency in policies are often the root causes of economic backwardness which he amply highlighted in his address. Failure to embrace change and disjointed governance are also factors that could pull back country’s development.

However, Ahsan Iqbal seems to have missed certain peculiar characteristics which are also holding back our development potential. Some of them include the reluctance to control the burgeoning population growth rate, absence of meritocracy, widespread corruption, poor law and order and relentless confrontation with some of our neighbours. The minister may have deliberately avoided mentioning these factors so as not to discourage foreign investors from making their investment plans in the country. Besides, his optimism in the economic prospects of the country seems to be somewhat misplaced. For instance, he believes in the crucial role of innovations and infrastructure upgradation in fostering the development of a country but how these improvements could be made in Pakistan is difficult to imagine.

The government is dissaving and private sector does not have either the means or the will to save the needed amounts. As such, foreign investment could be the only source to spur investment in infrastructure but FDI was only about dollar one billion during July-April, 2016 which is a meagre amount for our requirements. The efficiency of the CPEC in sharply increasing the level of investment is yet to be tested. Innovations and advanced technologies could only be expected from well-educated and talented people but the level of education in Pakistan is very low compared to other countries and talented people available in the country are leaving for greener pastures abroad due to obvious reasons.

Also, competitiveness of the economy is often stifled when exchange rate does not guarantee competitiveness in the international market and subsidies are given to several sectors to accommodate their grievances. It is true that some of the countries as mentioned by Ahsan Iqbal were in the same league a few decades ago but their culture, work ethics, education levels, etc, are quite different from Pakistan’s which seemed to have accelerated their development process. Khaqan Abbasi’s remarks that the progress in the past three years of PML (N) government was equal to the previous 65 years, however, deserve no comment.- Business Recorder