Since long country is locked up in a situation of economic volatility, infrastructural deficit, financial disaster in public sector entities and growing poverty. Reformatory policies undertaken by different sectors of the economy from time to time failed to bring the desired results due to bad governance and corruption at all levels and above all state involvement in the economy. In the wake of this constrained situation, for an effective turnaround country’s economic managers need to follow the growth strategies of fast emerging Economies like China, which also basically being an agrarian economy started with reformatory policy for their agriculture sector. In this regard China’s very. Friendly initiative to launch China China-Pakistan Economic Corridor program, which is a pilot project of the Belt and Road initiative for greater economic cooperation with Pakistan, which in the course of time will be beneficial for adjoining South Asian, Middle East and central Asian states also. It has not only in a way introduced China’s model of economic activity to boost the economic process in Pakistan, but also has helped ongoing projects and those in the pipeline where investment was most needed particularly projects relating to energy, infrastructure, Gawadar port development, job creation and promotion of social sector activities. But in order to sustain benefits derived and to be derived in the future Pakistan need to replicate reformatory policies undertaken by China and other emerging economies of South East Asia.
To quote, the present issue of opposing corporate farming by farmers of all four provinces, which is being vehemently urged by our economic managers and legislators needs to be looked into in the context of the strategy of China in this regard.
Chinese Government despite 80% of the farmer’s reliance on collective farming for their living thought of land reforms allowing communal land to be leased out to individual households with total freedom to grow crops of their choice and to sell the surplus of their produce (above state quota) in the open market. These reforms gave a tremendous boost to agriculture production. Further fast growth of the agriculture sector led to the growth of agro-based industries not only in rural but also in urban outskirts. This also motivated the rural workforce to move to an industrial area which gave filip all fast growth of Chinese economy.
For a faster move towards globalization, China started setting up economic zones along its Eastern border during the eighties, which not only gave a boost to its exports but also attracted heavy foreign investment due to sizeable relaxation introduced for taxation and business rules for potential investors.
In Pakistan’s scenario, landless cultivators and haaris have to be allowed small farms and provided low-cost inputs under strict monitoring of the Ministry of Agriculture. To ensure a sustainable irrigation system close watch should be on the source of water that is on the entire canal network in order to curb the menace of diversion of irrigation water to the big farms illegally as is the practice in all the four provinces. Further, unlike in China stress should be on setting up agro-based manufacturing units in rural areas to check the flow of population to already overcrowded urban industrial centers. This is essential to curtail unemployment and growing poverty in the rural sector.
For the growth of the urban economy, the Chinese government felt the need to give a simultaneous boost to domestic demand and enhance household disposable income. Along with maintaining the external surplus position investments both indigenous and foreign were diverted to reorient the economy towards the domestic demand. The twelfth five-year plan devised in 2010 has a main focus on enhancing household consumption. For that wage levels were raised sizably to induce workers to consume more. Apart from raising wage levels, strong social safety nets and incentives to contribute towards pension funds relieved workers, particularly semi-skilled and unskilled particularly women from precautionary savings, thus prompting them to consume their earnings freely, resultantly, by 2011, China attained the position of the largest contributors to global consumption growth. In Pakistan’s scenario no doubt it is not possible in view of the already low level of savings (below 11% of GDP) and investment but good governance to check unjustified increases in prices and unbridled corruption at all tiers of government offices and state-owned corporation and ensuring unhampered access to various schemes floated for poor under social safety nets, can give fillip to domestic demand of all goods and services which is essential for enhancing economic activity in the country, through consumers driven growth pattern.
Reformatory steps to promote consumption-driven growth is also the need of the time as adjoining South Asian countries are continuously increasing their market share in exports to economically rich countries and also to the countries within the region. Increased economic activity based on consumption-driven growth would attract private foreign investment also.
India proceeded with regulatory steps, particularly in the manufacturing sector by lifting licensing requirements in 1991 which were mandatory for entering manufacturing and trade activity and as such foreign competition was totally barred from certain industries, particularly heavy machinery and automobile industry. Thus removal of licensing requirements and reduction in tariffs attracted heavy foreign investment, particularly in heavy engineering and pharmaceutical and IT industry, which gave impetus not only to capital goods export but also India captured the wide global market of IT software and services export, as by 2022 India’s export of goods and services stand at 22.79% of their GDP. While looking towards India’s growth pattern Pakistan needs to create a congenial business-doing environment despite its liberalized trade and business-doing policies at work since the last one decade. Lack of sustainable infrastructure particularly relating to energy and water supply and most importantly growing terrorism both within and on borders of the country are to be addressed vigorously and earnestly to promote economic activity both in the urban and rural sectors.
Further, attention is to be paid to human capital development with a focus on the development of workforce expertise in new technologies in vogue relating to all trades and industries.
Keeping in view the downturn in the global economy particularly of economically rich countries with grave repercussions on their financial sector above described emerging economies growth model needs to be followed modestly as recessionary pressure along with the revenges of pandemic is now gradually moving towards emerging and developing economies.
Due to the fall in demand for its exports China is faced with a peculiar position of overburdened investments and low productivity, which apart from the global recession and COVID pandemic impact, is being caused due to growing aging population and shrinking workforce due to restricted population growth policy.
Pakistan on the other hand is faced with a high population growth rate, particularly in the age group of 5 to 35 years, which continues to add to labor force thus aggravating the unemployment situation in a scenario of stagnant or rather very low growth rate of the economy. To remedy this situation apart from addressing education and health care issues labor laws pertaining to manufacturing industries will have to be reviewed so as to provide a congenial working environment to the workforce to enhance their working efficiency.
Further financial system will have to boost up its access to potential entrepreneurs living in far-flung and unbanked areas enabling them to get self-employed by setting up small businesses. Internet and digital along with mobile banking introduced by conventional and microfinance banks has considerably improved financial inclusion. State Bank’s efforts are needed to bring down discount rates to give a fillip to private sector borrowings, particularly to the manufacturing sector is no doubt the need of the time.
Apart from these reformatory steps to enhance commercial activity and job creation country’s economic managers will have to pay special attention for lowering inflation and budget deficit, which is enhancing both internal and external borrowings hampering the country from attaining a sustained growth rate.
India despite being a fast emerging economy is also caught in the turmoil of a fast increase in working age population and lack of jobs, rising inflation and in- equitation of income. This scenario has made it difficult for India to achieve all the 17 SDGs by the year 2030.
Apart from Other reformatory steps, China gave preference to heavy investments in the energy sector. Initially, China relied on coal as an energy source, but gradually harnessed all renewable energy sources and resultantly is now the largest energy-producing country from diverse sources.
Pakistan also needs to replicate the energy-producing pattern of China. Instead of relying on conventional sources must harness alternate available sources of energy to combat the growing crisis in this area.
India’s focus on the development of invisible human infrastructure through support for vocational education and export-oriented technological parks has tremendously contributed towards the development of their service industry and enhancing its share in total exports of the country. No doubt Pakistan has made a great headway in this regard, but there is a need to develop more technological parks not only to facilitate the application of the latest technology in all sectors of the economy but also to boost up share of services in total exports of the country.