Wednesday December 06, 2023

Transformation twins

November 05, 2023
Representational image. — APP/Flie
Representational image. — APP/Flie

Pakistan’s economic challenges primarily stem from the absence of rule of law and good governance. Instances of unconstitutional rule and the exclusion of large segments of the population from the governance and economic process have worsened these issues. Additionally, there are conceptual confusions regarding economic systems and strategies that have contributed to the ongoing economic crisis. In Western literature, economics is often described as the “efficient management of scarce economic resources”. However, this notion of efficiency is not an isolated concept but is closely tied to broader systems of governance. Efficient management of a nation’s economic resources requires an effective and transparent governance ecosystem, which increasingly involves the use of cutting-edge technologies.

The governance of a country serves as the foundation for making and implementing economic decisions. This includes policy formulation, regulatory oversight, and resource allocation, all of which directly impact a nation’s economic efficiency. However, traditional governance models can be cumbersome, burdened by bureaucratic red tape and lacking transparency, leading to inefficiencies and corruption. In this context, the rule of law plays a crucial role in ensuring that governance processes are fair, predictable, and transparent.

In traditional economic textbooks, the four factors of production are defined as land, labor, capital, and entrepreneurship. However, it is necessary to reconsider these terms in light of modern advancements to ensure clarity. For example, in an era where solar and space economics are gaining prominence, the term ‘land’ seems restrictive. A more inclusive term like ‘natural resources’ would better encompass these new forms of capital. Similarly, the term ‘labour’ feels outdated in a digital age where cognitive abilities and intellectual skills outweigh mere physical strength and manual labour. It is disheartening and concerning when economic managers and policymakers emphasize the large young population of over 30 million without acknowledging that they haven’t invested in providing these young people with free, compulsory high-tech education and the necessary skills required not only by the country but also the global economy.

In today’s era of advanced technology, achieving universal quality education is more feasible and simpler than ever. Key enablers for this transformation include solar energy, which can power remote or underserved areas, and widespread broadband access to enhance the reach and quality of education. Financial barriers to educational technology can be overcome through easy loans or subsidies.

Universal education has far-reaching impacts beyond academics: it fosters democratic engagement, stimulates economic growth, and promotes social equity. Given these immense benefits, prioritizing investments in sustainable energy, broadband, and financial inclusion for educational technologies can lead to systemic changes across political, social, and economic sectors. Another conceptual confusion arises from the notion that it is not the state’s role to run businesses. However, policymakers often adopt this idea without fully understanding its implications. This catchphrase may be suitable for countries that provide standard education and a conducive environment for the common people to engage in business with the latest technologies. China and Vietnam, for example, have state-owned enterprises that play vital roles in their economies.

State-owned enterprises in Pakistan burden the economy and become liabilities due to the lack of good governance under rule of law. Unconstitutional governments have created individuals, groups, and organizations that not only seek personal gain but also undermine these state-owned enterprises from within. The solution lies not in selling these enterprises, but in making them free from corruption and mismanagement. Who will invest for the common people? Rent-seekers, hoarders, blackmailers, smugglers, money launderers, corrupt individuals, and criminals? In developing countries, it is the duty of the state to invest in the people and provide them with basic human needs and infrastructure facilities.

To achieve efficient governance under rule of law, two prerequisites must be understood and met. First, proactive disclosure and dissemination of information are crucial. Transparency and access to information, facilitated by proactive disclosures and data dissemination by public bodies, are essential for democratic governance. This right is not only enforceable by constitutional courts but also fundamentally imperative for economic stability, political integrity, and societal well-being. Proactive disclosure and dissemination of substantiated information will establish transparency, accountability, and efficiency. It will also help reduce resource waste and significantly curb corruption. Information transparency and accessibility are at the core of good governance and the rule of law, without which corrupt elements will continue to exploit the people. Digitized information can empower citizens to make informed decisions from a political standpoint. Voters can track the performance and voting history of their elected officials, promoting transparency and accountability in political representation.

Second, the role of digitization and digitalization is crucial. The practical realization of the right to information depends on complete digitization and digitalization of government processes. Without these digital transformations, access to information acts will remain largely theoretical and difficult to implement. The government must adapt to digital paradigms, as it is legally obliged to under right to information acts. Digital access to information can revolutionize transparency and accountability in the economic sphere. For example, making budget allocations and actual expenditure reports digitally available can eliminate guesswork and enable citizens to hold their government accountable for any misappropriation of funds.

The digital transformation of government operations, processes, and economic transactions is a necessity that goes beyond traditional administrative boundaries. It touches upon rule of law, good governance, economic vitality, social inclusion, and the collective prosperity of a nation’s people. Digital technologies can serve as a catalyst for transparency, accountability, and effective resource management, which are the cornerstones of a resilient and progressive society. Digitization also improves economic efficiency by automating processes such as taxation, reducing opportunities for tax evasion, and ensuring optimal allocation of collected funds. Real-time data and predictive analytics enable more informed decisions about resource allocation. Digital identity systems and e-governance platforms facilitate inclusive governance and direct interactions between the state and its citizens, strengthening rule of law.

Economics revolves around the optimal utilization of scarce resources, and digital technologies play a crucial role in enhancing economic efficiency. Effective resource management requires robust governance underpinned by the rule of law, transparency, accountability, and efficiency. Implementing these principles can significantly reduce resource waste and mitigate corruption, which often consumes a large portion of available resources. Good governance is essential for unlocking untapped economic potential.

The writer is an advocate of the high court and a former civil servant.