Wednesday / Nov 08 2023

Newspaper : The News

Pakistan finds itself in deep economic problems with growing international debt, massive industrial closures due to myopic IMF-driven policies including huge interest rates, stagnating exports, increasing imports, poor educational system, and a failed judicial system.

We have a very low international innovation index, our schools and colleges largely produce ignoramuses and there is increasing frustration among our youth so that about one million young men and women are migrating each year to greener pastures abroad.

In order to break us from the shackles of the past that has led to this abysmal situation, we need a clear vision and implementation policy of what must be done to migrate from a low value-added natural resource-based economy to a technology-driven high value-added knowledge economy. The internationally accepted process for preparing a national roadmap for socio-economic development involves a regular nationwide ‘foresight’ planning exercise according to a very clearly laid out UN protocol on a specific format.

This exercise involves massive consultations with the private sector, provincial and federal governments as well as subject specialists in each area, before preparing short-, medium- and long-term strategies for development. One such exercise was conducted under my supervision in 2003-2005 and the resulting 300-page document approved by the cabinet in August 2007. Since then, no such exercises have been carried out to ensure consistency of short-, medium- and long-term development strategies.

All the major opposition parties need to be involved in such exercises so that when there is a change of government, the previous policies are not abandoned, and we do not go round and round in circles. There needs to be a consensus among all major parties regarding policies in such critically important areas as education, health, science & technology, innovation, agriculture, energy, water, export enhancement and others.

In this context it must be understood that it is the private sector that has to play a pivotal role. The government’s role is primarily to facilitate the process of entrepreneurship and industrialization. This will need to be done by ensuring access to capital and information, training highly skilled personnel, and providing standards and quality-related services. In this development process, public policies such as socio-economic and financial policies at macro level, and industrial policies at the sectoral level, as well as legislation (such as protection of selected intellectual property, competition laws and fast commercial courts) can facilitate the process of entrepreneurship.

All this must be complemented with a visionary science and technology policy that is focused on training high-level human resources, building technology infrastructure and providing incentives for private firms to indulge in ‘learning by doing’ practices to build their absorptive capacity for external technology. Encouraging joint ventures for production of value-added goods and services (such as vaccines, electronics, engineering goods, automobiles etc) and collaboration with foreign firms could greatly help Pakistan build its local technology capabilities.

A product-oriented approach rather than a generalized approach is the need of the hour. For instance, the government could facilitate the manufacture of vaccines, biosimilars, nano-pharmaceuticals and nutraceuticals in the pharmaceutical area. In the energy sector we should go for the large-scale manufacture and export of wind mills, next-generation solar panels and hydroelectric plants.

In the field of minerals, we should ban the export of raw materials and only allow the export of finished purified high-value-added products after facilitating joint ventures. In the agriculture area, huge opportunities exist in halal food exports, fisheries, processing and export of fruits and vegetables, as well as organic cotton and its certified textiles. In all such fields, the government should formulate clear long-term policies in consultation with the opposition, help in the training of skilled manpower and offer tax incentives.

In the 1960s, Wapda was setting up such industries, running them for a few years and then transferring them to the private sector after demonstrating their profitability. This freed the private sector from risking huge capital investments, particularly when the change of governments leads to drastic changes in government policies. Government insurance could be offered as protection against losses due to the law-and-order situation. This would be a key step to attract foreign investment. Such steps by the new government could give a big boost to our faltering industrial sector.

While foreign direct investment is much needed to boost our industrial sector, it can only happen if we have a strong judicial system and we are ranked high on the World Bank Ease of Doing Business index. To achieve a high ease of doing business ranking, the regulatory environment in a country should be more conducive to the setting up and operation of a local firm. The rankings are determined based on the scores on 10 topics, each consisting of several indicators related to ease of doing business. Pakistan is shamefully ranked at 108 in the world, well below even Bhutan or Mongolia!

Pakistan’s real wealth lies in the potential creativity of its youth. We have a large young population, and our future depends on quality education so that we can develop into an innovation-driven society. Innovation has been a driving force that has transformed economies across the globe. It encompasses the development and application of new ideas, processes, technologies, and products, creating a ripple effect of economic growth, improved standards of living, and increased competitiveness. Innovation serves as a catalyst for economic growth by increasing productivity and efficiency, thereby contributing to overall GDP expansion. It generates new business opportunities and drives the creation of innovative industries.

One of the most fundamental ways that innovation transforms economies is through significant investments in R&D. Governments and private sectors worldwide allocate substantial resources to fund research activities and development projects. These investments not only foster the discovery of cutting-edge technologies but also create a strong foundation for sustainable economic growth.

Besides quick access to justice, intellectual property rights, such as patents, trademarks, and copyrights, are also essential for encouraging innovation. We must also introduce policies to facilitate funding for startups, research projects, and small businesses. Entrepreneurship-friendly policies, such as business incubators, tax incentives, and streamlined regulations are also needed to encourage individuals to take risks and embark on innovative ventures.

However, for all this to happen we require a visionary, honest and technologically competent government that can take this country forward so that it transitions to a technologically driven knowledge economy. For this, ministers and secretaries must all be top experts in their respective fields – so a technocrat government is the urgent need of the hour.

---