Can Pakistan ever be on a path of sustainable economic growth?

Yes.  The path to sustainable economic growth exists.  Dozens of countries around the world have successfully improved living standards, and prosperity of its citizens by adopting one path, or another.  The path to becoming a middle-income country, or even an upper-income country exists, but it’s a path that does not align with the path predominantly chosen by politicians, and rentier policy makers.

We have one of the fastest growing populations in the world, a potential demographic dividend, that can become a demographic liability if the status quo continues.  A human capital de elionebt plan which covers both immediate needs, as well as long term capacity development is critical.  There are more than 23 million children out of school in Pakistan, and the number is only deteriorating over the last few years.  A population that is not educated, or skilled, cannot differentiate itself, or even demand a premium in the global marketplace for talent.  An unskilled workforce acts as a drag on economic growth, as the country cannot embark on activities that are heavily reliant on intellectual capital.

An unskilled and uneducated workforce effectively acts as a drag on the productivity of an economy.  Productivity can only be increased once an economy can generate more output from similar levels of input, the same can only be achieved through acquisition of scale, and technology.  We cannot have either scale, or technology with an unskilled workforce.  Educating the children of today and imparting skills such that the workforce is equipped to deal with technological and economic demands of the next few decades remains critical.

If education continues to be an afterthought, and remains on the back burner, then we shall never be able to get on a path of sustainable economic growth.  Education and development of intellectual capacity is a prerequisite.  Without universal literacy, no country ever has been able to graduate to a middle-income or upper-income country on the path of development.

Before a population can educate itself, it needs to feed itself first.  Pakistan has one of the highest rates of malnourishment amongst it’s children.  Despite being an agrarian economy, food insecurity is high.  A distorted market structure has led to a scenario where the country has to import even basic staples like wheat.  Absence of supply chain infrastructure results in colossal wastage of agricultural produce, despite there being food insecurity. A country that cannot feed itself, cannot educate itself, and consequently cannot attain sustainable growth, or improve livelihoods of it’s population base.

Agricultural yields continue to be among the lowest as compared to peers, and other economies in similar stage of economic growth.  With the exception of a few products, yields have largely remained stagnant over the last decade even though the population continues to grow.  The country imports more than US$ 4 billion of basic food staples on an annual basis.  An amount which will continue to grow as the population, and overall income levels grow.  Absence of a robust supply chain infrastructure, low yields, and a distorted market often results in shortages which drives up food inflation, making it increasingly difficult for households to afford food.

As food affordability reduces, so does calorie and micronutrient intake, which directly has an impact on the ability of a population to learn and educate itself, as stunting kicks in.  It is estimated that almost 40 percent of children under five years in Pakistan are stunted.  In the presence of political brouhaha and an elite that dominates all discourse, very little, or nothing is being done to solve these structural issues.

A well-fed and educated workforce is critical for any transition towards a middle-income economy.  A sovereign that isn’t able to feed it’s population, or educate its children cannot ever attain broad based sustainable growth.  There may be boom-bust cycles driven by injection of external capital, or yet another round of subsidies, and amnesties.  But the duration of these cycles continue to shorten.

The economy has been sustaining itself on borrowed capital, and even borrowed time.  Inability to address structural issues has led us to a scenario where it’s already too late.  We can either fix these structural issues and ensure broad based growth for everyone, or we can continue operating an elite focused economy that continues to survive courtesy of one bailout, or another.

If the status quo continues, the answer to the question is a very clear no.

 

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Ammar H. Khan
The writer is the chief risk officer for Karandaaz Pakistan, an organisation that seeks to promote financial inclusion in Pakistan. He has previously worked at several financial institutions in Pakistan, both in commercial banking and capital markets

4 COMMENTS

  1. President Xi Jinping is absolutely correct when he says we have to decide what we want from independence.
    For 75 years we have been swinging and dangling without getting our feet on the ground.
    We must shun America and say goodbye, it is nice to know you are alive and well at the other end of the world. We now have to say hello to our immediate neighbors. Salams

  2. Article described the issues. Our politicians know all these problems as they are from us but cannot disrupt status quo.

    In a 5 year parliamentary cycle after various forms of overt and covert martial laws the government can only fire fight and aim to survive public outcry for a 75 years of neglect.

    Hence they disregard expensive, labour intensive and less ballot box loving remedies of long term ailments like poverty, health and education and focus on growth. So that they can create a feel good factor by dishing out public money in the final year to return to power. A second consecutive term from same right or left centrist party might see some attention to these long term remedies. But a return to second consecutive term has not yet happened due to the civil military imbalance due to an oversized defence need.

    Privatisation and industrialisation could have got even the uneducated public to get middle class status but mubashir hassan’s nationalisation policy killed this chance of a sustainable economic growth in the 80s.

    A sustainable farm is known concept in understanding a progressive cycle. When Sohail Warraich asked the same question posed in this article to ousted PM Nawaz Sharif he replied بھائ یہ قوم تو بھینس ہی کھا جاتی ہے ۔

    So Politicians are trying their best in the circumstances that they encounter but it’s a vicious cycle of uneducated masses and unless we can all hunker down for 25 years and just educate everybody change can only emerge through serendipity.

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