LAHORE: Planners in Pakistan need to revisit their policies as moving towards economic liberalisation has failed to satisfy the masses at large, though investment and growth reduced poverty significantly.
Except a brief experiment with socialism by ZA Bhutto, all governments in Pakistan have fully supported the free market economy. And while India grew at an astounding pace in the past 25 years, the consumer class in Pakistan is proportionately much higher. The only difference now is that the Indian consumer class is growing at a rapid pace while their growth in Pakistan is very slow.
To grow faster, we have to device policies to increase the income of people in the lower strata of the society. The CPEC and new energy projects promise entrepreneurs new opportunities. Now the challenge for the policy makers is to create an environment for sustainable economic growth. The challenge for policy makers is to manage growth so that it creates the basis for sustainable economic performance.
We must realise that Pakistan is still a nonentity in global trade because successive governments failed to provide basic necessities to the majority of the citizens. By denying most of the population their actual water, sanitation, energy and healthcare needs we are excluding them from participating in development according to their true potential.
Similarly, the failure of the planners to reign in red tape impedes the potential of the businesses to grow at the desired pace. The trickle-down effect did lift millions of Pakistanis out of poverty in the past two decades but still most are below acceptable living standards, and face malnutrition, housing shortages, lack of education and healthcare. Most of them lack access to clean water and sanitation facilities.
To achieve the actual growth potential, the planners have to devise policies to address these gaps. Job creation through growth oriented investment should be facilitated. Priority should be provided to the farm sector that is the main provider of livelihood in Pakistan.
Social sector programmes should be aligned to the needs of the poor. Private sector should be encouraged and facilitated in creating and providing affordable services to the poor.
Urbanisation in the country is lopsided because the larger four or five cities have comparatively better infrastructure, which still needs to be improved. Still, growth is concentrated in these cities.
These cities would generate most of the growth in the manufacturing and services sector. The GDP of Karachi is already higher than the rest of Sindh and that of Lahore more than the combined GDP of Rawalpindi, Faisalabad, and Multan.
These two largest cities of the country are plagued with air pollution, poor water quality, and unreliable utilities. There is lack of green space and reliable transport services.
Pakistan’s manufacturing sector lags far behind China and India, the two largest economies of the region. The manufacturing base is also very narrow. The country failed to exploit the textile potential despite a very strong basic textile sector.
Bangladesh and Vietnam moved far ahead by importing basic textiles and converting it to value-added apparel. The policy makers should engage foreign experts to come up with a policy that promotes value addition.
There is huge potential to export surgical instruments, leather goods, and sports goods, all of which require a prudent policy that facilitates exporters without resorting to any subsidies. Technology upgrade should be encouraged by arranging interest free loans. Ideal efficiency would be achieved only with modern technology.
Powerful technologies would help Pakistan raise productivity and improve efficiency. Lastly, it is absolutely essential to unlock the potential of Pakistani women. Efforts toward closing the gender gap in education and in financial and digital inclusion have not yet been seriously made.
The state would have to take bold initiatives. The most difficult part for the policy makers would be to align national, state, and local leaders to adopt new approaches to governance and the provision of services.
Even the best policies would fail to deliver if institutions are not strengthened and made free from political interference. Strong project-management capabilities would be needed to complete mega projects on time and on budget.