Building a knowledge economy

Thursday / Nov 08 2012

Newspaper : The Express Tribune

Pakistan is on the verge of bankruptcy and the only way out of this quagmire is for our leaders to revise national policies drastically so that we can build a knowledge-based economy and tap into our real wealth — the 90 million or so youth below the age of 20. This investment must be made if Pakistan is to emerge from the deprivation that afflicts its people. Other countries have successfully shown the way so the path is well established.

In 1960, Singapore was a relatively poor country. Along came Lee Kwan Yew and took charge as prime minister. The key to his economic policies was the development of a highly skilled workforce that could meet the needs of modern industrial research and manufacturing. Massive investments were made in education, science and technology. Yew developed an excellent infrastructure in order to attract foreign investments and established a corruption-free government. He realised that in order for Singapore to emerge from its problems, it had to make a drastic change in its national policies and become export-oriented. The manufacturing sector’s contribution of 14 per cent of GDP in 1964 jumped up to 24 per cent by 1978. The availability of high quality university graduates attracted foreign companies to invest massively in Singapore’s rapidly growing economy and a magical transformation began to occur. The unemployment rate that stood at 10 per cent in 1965 fell to 3.6 per cent by 1978.

During the subsequent eight-year period, the share of skilled employees in the total workforce increased from 11 per cent in 1978 to 22 per cent in 1985. With the establishment of high-tech industries, salaries also grew from an annual average of $18,400 in 1978 to $27,000 by 1985. Many value-added industries were set up with a particular focus on electronics, engineering goods and petrochemicals.

Singapore’s GDP was $12 billion in 1980 but has risen to above $250 billion, well above that of Pakistan. Some 3,000 multinational companies have set up operations and now biotechnology is being given a very high priority in the development plans. In 2000, Singapore declared biotechnology its fourth economic pillar, revamped its National Science & Technology Board (renaming it the Agency for Science, Technology and Research) and spent $570 million in establishing three biotechnology research institutes. In Pakistan, alas, the National Commission of Biotechnology that I had established when I was the minister of science and technology in 2001, was abolished by a subsequent government, as it considered biotechnology irrelevant to our national development. The National Commission for Nanotechnology, also established under my charge, met the same fate. Pakistan is about 36 times bigger in population and has far more natural resources than Singapore. Yet, it has a much smaller GDP than Singapore’s. The reason is rampant corruption at the highest levels and a lack of focus on education that can help us transition to a knowledge-driven economy.

Malaysia’s transformation under Mahathir Mohamad is also an eye-opener. Malaysia’s GDP shot up from $26 billion in 1970 to $300 billion at present, as a result of determined effort to transform Malaysia into a knowledge economy. Today, Malaysia contributes 86.5 per cent of all high technology exports from the Islamic world. The major focus of these is in the field of electronics, particularly microchips and semi-conductors. The per capita income also shot up from less than $1,000 in 1970 to $14,500.

Another single visionary leader, General Park Chung-hee, also made all the difference in one country, South Korea. Under General Park, South Korea’s per capita income rose from $72 in 1961 to above $30,000 and its GDP rose to an astonishing $1.12 trillion by placing emphasis on large-scale manufacturing of high technology goods, including electronics, automobiles, ships and steel industry.

Our present government approved an education policy under which seven per cent of GDP was to be spent on education with 20 per cent (1.4 per cent of our GDP) going to higher education. When will our leaders have the good sense to implement these policies? We must learn from the examples given above before it is too late. One good leader can make all the difference.