Wednesday / Nov 01 2017
Newspaper : The News
According to independent economists, Pakistan is facing a serious economic situation. The country is on the verge of economic collapse owing to massive corruption and financial mismanagement.
The 18th Amendment has added to our woes as a large amount of funds have been transferred to the provinces – a significant portion of which has either been plundered or ended up as foreign assets of corrupt politicians. The federation has been weakened as a result of this amendment as money that could have been used to build dams or improve the education and health sector has been lost. The reluctance to transfer funds to local bodies has made a farce out of the so-called democracy that we profess to have.
Pakistan has been struggling to cope with massive problems. These include poverty, the law and order situation, illiteracy, the closure of large industries due to a lack of competiveness, the dearth of effective justice and rampant corruption. An important factor that has contributed to this is the deplorable state of our educational system.
The higher education sector did initially make spectacular progress between 2002 and 2008 after the Higher Education Commission was established. The chairperson of the Senate Standing Committee on Education described it as “Pakistan’s golden period in higher education” during a formal press statement in 2008.
Professor Michael Rode, former chairman of the UN Commission on Science, Technology and Development stated that: “The progress made was breathtaking and has put Pakistan ahead of comparable countries in numerous aspects”. But this was short-lived as the budget for higher education was slashed by the previous government. The incumbent government has initially enhanced allocations for higher education but later slashed the development budget by 60 percent in the last financial year. This brought it to a level below the lowest allocation of the PPP government and far below the amount that was allocated under former president Musharraf.
Pakistan spends only about 2.2 percent of its GDP on education. We are, therefore, ranked among the bottom 10 countries in the world in terms of expenditure on education. This is deliberate. An illiterate population can be readily exploited. As a result, we have witnessed corrupt politicians coming into power repeatedly through exploitation at the hands of feudals and massive rigging of elections (45 percent of the votes cast in the previous election were fake, according to the Election Commission). A large number of suicides are reported each month among the poorer sections of society who are struggling to survive. The number of robberies have grown with each passing week as desperation prevails among the youth owing to industrial stagnation and the lack of jobs.
In this knowledge-driven world, only those countries that have invested in education, science, engineering and innovation have progressed rapidly. The divide between the rich and the poor today is simply a “knowledge divide”. There is a clear different between countries that have acquired knowledge in cutting-edge fields and used it to invent new products and processes and others who are simply importers of technology. Even small countries, such as Finland and Austria, with populations of about quarter or half of Karachi have higher exports than Pakistan – a country that is a nuclear power with a population of 220 million.
Among the OIC member states, only Turkey, Iran and Malaysia have progressed rapidly due to their heavy investments in education. However, OIC member states on average invest only about 0.46 percent of their GDP in science and technology as compared with between two percent and four percent of GDP spent by developed countries. Not a single university from the Muslim world is among the top 100 of the world and only a few are among the top 400. The research and development (R&D) manpower per million population in OIC member states is only 649 per million population as compared with 3,780 per million population for developed countries. The majority of patent applications came from Iran, Malaysia, Turkey and Indonesia.
Private sector R&D has been growing rapidly in developed countries and in emerging economies. Today, about 70 percent of R&D spending in China comes from the private sector. It is about 68 percent in the US, 75 percent in Korea and about 70 percent in Germany. But it is less than one percent in most OIC member states, including Pakistan. This is due to the lack of a clear vision among leaders in OIC member states of the significance of private sector research and development to the nation-building process. Most of the funds spent by governments are wasted as the expenditure is not linked to a holistic roadmap for transitioning towards a knowledge economy.
Many countries have introduced substantial tax incentives to the private sector to encourage joint projects between industries, universities and government research institutions. For example, companies in Denmark are allowed to deduct 150 percent of their investments in co-financed R&D projects in partnership with universities and research centres. Similarly, in the US, a 75 percent tax credit is given to companies that contract out research to universities.
The UK has established a Technology Strategy Board to support joint projects between R&D institutions, SMEs and the industry. Various tax incentive schemes exist in Finland, Belgium, France, Norway, Canada, Brazil, Korea, China, India and many other countries.
In Pakistan, a 15-year tax holiday was granted to the IT industry in 2001 when I was the federal minister for science and technology. This helped to boost IT businesses from only $300,000 in 2001 to over $3 billion presently. However, similar incentives were not approved by successive governments to boost high-tech industries. The result is that Pakistan has been left far behind in almost all high-tech areas. The introduction of governance reforms is the need of the hour. We must implement the 320-page roadmap that was prepared under my leadership and approved by the cabinet on August 30, 2007. This will help us emerge from the depths that we have sunk into because of massive borrowing.