Pakistan is always considered to be the land of opportunities having the potential to show its global existence but unfortunately, instead of changing many things like infrastructure (since the 90s) and working on Pakistan’s economic policies, very crucial ones remain unchanged. Human capital outcomes remain low, the country continues to experience periodic economic boom and bust cycles. The problems faced by the people of Pakistan are largely still the same as they were 30 years ago, while over the same period, people of South Korea, Malaysia, Thailand, and China have increased their incomes several-folds.
Like many other Pakistanis, I also wish to have a bright future for Pakistan and its residents but results always demand struggle not from tomorrow but from today, and to my opinion, it’s high time to catch the future and reach the place where countries transformed themselves within a single generation. During the last few years, we witness progress in some domains but then, the entire world has changed dramatically with the onset of the COVID-19 pandemic, making existing vulnerabilities even starker. Growth will remain low in the immediate future, and the gains made in poverty reduction are in jeopardy as many could fall back into poverty. Human capital gains, especially for women, could reverse as households make negative coping decisions. At the same time, the crisis offers us an opportunity to reset old ways of working and reboot to bounce back better. Pakistan has a young population with bright ideas. The digital economy is likely to thrive as we find new ways of working and connecting so, this is not the time to curse fate but the right time to work on women first. By closing its gender gap in economic participation, Pakistan could boost annual GDP growth by 30% while also enhancing its human capital. Incentivizing girls to stay in school longer, improving access to reproductive health services, providing the opportunity to skill up, and transforming social norms on women’s paid work is critical for women to join the workforce, and would also help reduce Pakistan’s high fertility and stunting rates. The enabling environment is key, including at a fundamental level, safe transport, childcare support, and harassment-free workplaces. Progressive legislation and its implementation are also essential to help women to get paid equitably for their labor, take senior or management positions, and be safe from gender-based violence.
Another area that requires focused attention is the fiscal space, which requires assurance to spend on the people of Pakistan. Many successive governments have been unable to broaden their revenue base, and this hampers effective public service delivery. Fiscal space is also limited by the increasingly unsustainable power sector deficit which is currently equivalent to 4.2% of GDP. Rightfully, the government has begun to take action by examining expensive contracts with power producers and paving the path for bringing in cheaper renewable energy into the mix. Much more needs to be done, including making distribution companies more efficient, better targeting of subsidies to the poor, and bringing greater transparency in transactions and contracts. Pakistan is resilient in the face of hardship like few other nations, and its young people are passionate about change so, it’s the right time to catch fate.
Another important but more severe issue other than the challenges of development is the issue of inertia in decision-making, which is a longstanding problem. Pakistan must urgently update its decades-old regulatory and planning processes and streamline procedures to ensure timeliness, quality, equity, and efficiency for its public and private investments. Successful governments have combined planning, budget, and expenditure under one roof that provides a coherent approach to recurrent and development budgets. Pakistan must also make more use of technological solutions for transparency and accountability. Government functions including e-procurement must be modernized and service delivery made responsive to citizen needs. The current crisis has shown us that speed is always of the essence, especially when people’s lives are at stake.
There is a long journey for Pakistan to catch up in terms of inclusive growth and sustainable development, but it is not impossible. In order to gain economic well-being Pakistan needs to focus on,
- Market-based reforms in the energy sector.
- Establish world-class science-based academic institutions in partnership with China as knowledge spillovers are critical to support long-term growth and productivity.
- Price water usage and stop agriculture support prices, especially for sugar cane.
- Increase the tax net through proper documentation whilst reducing taxes on the formal sector.
- Diversify and expand the export base through new products, new services, and new markets.
- Encourage the development of digital infrastructure in order to bridge the digital divide and democratize learning and market access.
- Introduce market-based reforms and investment in the transport industry, especially high-speed rail, port infrastructure, and intra-city transport.
- Encourage local and international tourism.
- Reduce the propensity for real estate to be used to park black money.
- Invest in environmental and social assets.
- In addition, greater involvement of women in the labor force will also drive economic growth. The female labor force participation rate in Pakistan is just 18%.
The Author is MD IRP/ Faculty Department of H&SS, Bahria University Karachi