As elections approach and mainstream political parties put forward their recipes to resurrect a struggling Pakistani economy, it is important for the academics and the people to be asking them some very specific questions about their policy choices once they are elected (or re-elected) to power. It needs to be ascertained that what they propose in their future economic policies is, indeed, doable, especially in context of ground realities peculiar to Pakistan. More importantly, that it is in sync with the rest of the world and resembles the course adopted by other emerging economies in their bid to become successful - no reinventing the wheel please! Economic globalisation presents both opportunities and challenges for developing and emerging economies. The recent financial crisis, and the Asian financial crisis in the late 1990s, demonstrates some of the risks associated with financial globalisation. Nevertheless, history has shown us that the most important factor for successful economic development is that a country engages with the world economy, particularly through trade and investment. However, other factors are important as well. In 2008, the Commission on Growth and Development released its Growth Report, identifying the policy ingredients of 13 economies that experienced an average of 7 percent growth a year for at least 25 years since 1950. The report identifies five main characteristics of high growth countries. First and most important, all of these countries were engaged with the global economy, importing technology and knowledge from the rest of the world and exporting goods to the global market. Second, high growth countries ran relatively stable and predictable macroeconomic policies. Third, they had high saving and investment rates. Fourth, they depended on a well managed market system that provided proper price signals and relatively clear property rights that gave outsiders an incentive to invest. And finally, most of the countries had strong political foundations.Brazil, India, Vietnam, and China provide clear examples of engaging with the world economy. As the report notes, Brazil was among the first to achieve sustained high growth starting in 1950, but was also the first to lose this status in 1980. Although Brazil was pursuing an import substitution strategy at the time, it was in fact engaging with the world modestly: between the early 1950s and early 1980s, exports as a share of GDP doubled from 5 percent to 12 percent. But following the 1973 oil shock, the country turned inwards again. Brazil’s exports as a share of GDP fell all the way back to 6 percent by the mid-1990s. However, when Fernando Henrique Cardoso became President, he again changed course to liberalising trade and investment, in addition to implementing other market-oriented reforms (which were generally also continued by his successor Lula) and the exports surged to 16 percent of GDP in 2004 (although declining somewhat since then as the domestic market began to expand). These reforms set the stage for impressive recent growth performance: Brazil’s economy emerged strongly from the recent financial crisis with growth of 7.50 percent in 2010 (although growth has since slowed).India provides another example of the importance of engaging with the world economy. After independence, it initially pursued a policy of autarky with poor results. The years between 1950 and 1975 were characterised by increasing levels of protectionism. Modest liberalisation began in 1976, but it was not until the early 1990s that India began to significantly implement market reforms and shift to an outward-oriented economy. It removed most of its import licensing requirements, lowered tariffs on industrial goods, cut export prohibitions on many products, lifted exchange controls, and allowed greater foreign investment into its economy. As a result, India’s export to GDP ratio increased from around 7 percent in 1990 to about 20 percent in 2010. And its growth performance has been impressive, averaging 9 percent a year in the five years leading to 2008. Unfortunately, this may not continue as the appetite for reform appears to be declining.Vietnam provides yet another example of the power of engaging with the world. In 1986, Vietnam began its liberalisation programme known as “doi moi”. The reforms included freeing up the private sector, de-collectivising agriculture, and liberalising trade and foreign investment. The result has been an average annual growth rate of 7.3 percent between 1990 and 2010. And this has been accompanied by significant growth in trade and FDI. When the reforms began in 1986, exports made up about 6 percent of the economy; in 2010, exports made up more than 7.5 percent of GDP. Agricultural reforms have been particularly successful. As the Economist wrote in its special report on Vietnam: “An agricultural miracle has turned a country of 85 million once barely able to feed itself into one of the world’s main providers of farm produce.” Vietnam has achieved this by strategising to remain close to the overall working models of China and Brazil. For example, despite providing a freehand and a productive environment to the private sector, and private entrepreneurship in general to flourish, the state still remains heavily involved in the economy - the state-owned firms still control about 40 percent of economic output. Finally, China also strongly demonstrates the above mentioned policy ingredient of engaging with the world economy, but another one to highlight here would be its sustained high savings and investment. According to the US Congressional Research Service, China’s domestic savings as a share of GDP was 32 percent when reforms started in 1979. The reforms led to significant growth in household and corporate savings; gross savings reached 53.9 percent of GDP in 2010. These savings have allowed China to finance high levels of domestic investment, a major engine of growth. China’s gross capital formation has boomed, particularly in the 2000s, reaching 48 percent of GDP in 2010. An OECD Survey estimates that the expansion of the capital stock contributed 6 percentage points annually to China’s 10.80 percent annual growth rate between 2003 and 2008 - accounting for more than 50 percent of growth. Savings and investment have clearly been a major part of China’s development story. Finally, to sum it up: what really formed the foundations of this Chinese economic miracle? Answer: connectivity and engagement with the world economy or in one word, ‘exports’.Pakistan has important lessons to learn from the examples of Brazil, India, Vietnam and China. Today, we have discussed as how developing countries can achieve strong and sustained growth through focusing on becoming an integral part of the global trading system that, if managed properly, provides boosts in income (domestic and foreign inflows), thereby increasing household and corporate savings and raising investment (both foreign direct and domestic). An increase in savings helps facilitate capital formation, in turn unleashing a growth cycle that then generates its own momentum. Still, for all this to happen, the economic managers need to also simultaneously manage the following key elements in an economy: Stable macroeconomic policies; Prudent management of the market-based system; andLaying strong policy foundations. In another column, however, I will explain the role of these three elements in the success of our above mentioned economies and what lessons can Pakistan learn from their policy initiatives in these three areas. 

The writer is an entrepreneur and economic analyst.Email: kamalmannoo@hotmail.com