of the private sector concerned rather only focusing on public spending for the provision of public goods and facing serious problem of budget deficit due to prevalence of sluggish economic activity and low revenue generation.
To establish a comparatively advantageous industrial sector the federal and provincial governments concerned may steer and opt the role of “Big Brother” following the example of South Korea which started with $87 GDP per capita in 1961 and attained around $23000 in the year 2015 by focusing outward-looking industrialization. In absence of an augmented state policy framework, the other instruments of industrial development including investment, technology, skilled labor force and experienced management may not guaranty industrial development. Therefore, the role of the state in form of strengthened industrial policy may be witnessed among all most recently economically developed countries including China.
Keeping in view the interest of Chinese Investors regarding relocation of their low-end industry to Pakistan, the potential sectors including pharmaceutical, Mines and Mineral; auto and steel industry may be focused for development through Pak-China Industrial Cooperation under CPEC. Whereas, the foreign investors may be attracted to the existing sub-sector industrial clusters in which Pakistan has definite comparative advantage over other countries due to cheap skilled labor and abundant raw material. These industrial clusters majorly include surgical instruments, leather equipment, and sports. Further the Chinese support may be sought for technology exchange to transform the other low performing sectors including textile, furniture and food processing into better performing sectors.
To develop the interest of foreign investors more specifically Chinese investors in the potential sectors, a comprehensive package of investment and tax incentives; and a holistic commerce strategy are the key feature of any industrial policy. Therefore, before making any commitment with Chinese Government, the offers of others developing countries majorly including Nigeria, Burundi, Kenya, Rwanda, Uganda and Tanzania already engaged with China under industrial cooperation and FDI may be examined deeply by the government departments concerned. After the 18th amendment, the Industries, Commerce and Investment departments of the provinces concerned have a major role to orchestrate an integrated policy framework with the objective to stimulate domestic and foreign investment through rational incentives and establish outward growth orientated industrial clusters by considering regional dynamics. In view of future prospect under CPEC, there is an urgent need to revamp the institutional structure of Industry, Investment and Commerce related government departments and equip them with high-level professionals and technocrats of the field concerned. Only the technocrats and professionals; equipped with alternative and adaptive approach; can set priorities and accomplish targets through inside solutions, multiple cycles of monitoring; and tool of trial and error.
(The writer is serving as Assistant Chief in Planning & Development Department, Government of the Punjab, and has recently done masters in International Trade and Economic Cooperation from South Korea)