NAZIA JABEEN - The role of economy in shaping up status of a country in international community cannot be undermined. It is the story of past when military might was at the top of elements of power. At present, it’s the economy that determines the future of a country.

WWI and WWII were fought to show off military power to the weaker nations, but with the passage of time economic strength of a country became the sole factor in all games of power politics.

Now nations need not fight wars to capture other countries. Economic sanctions are a soft way to influence and coerce other countries. Take the example of Iran and North Korea. The Government of Pakistan has realised this fact that strong economy is not only essential for retaining the sovereignty of Pakistan, but equally important for survival among the comity of nations with dignity. The central question is: why do economies of some countries thrive, while others perish? Why do some economies make extravagant profits? What is the secret to success? What is the secret to survival?

Charles Darwin pondered over these very questions during the 19th Century. If we relate his theory ‘survival of the fittest’ to the economies of the world, we can find answers to many questions.

In the 21st century, we can think of nature and ecological systems as a vast “free market” of perfect competition, where all living organisms are competing with each other for limited resources (sunlight, water, minerals, etc.)

Likewise, all economies of the world are competing with each other amidst free market economy, with limited resources.

Some countries possess natural resources like oil and gas in abundance, some countries are technologically advanced while some have cheap manpower and low cost of production.

By ‘survival of the fittest’, Darwin did not mean that the toughest will survive, the swiftest will win, the smartest will succeed, or the biggest will dominate.

What Darwin meant was something different from this. He said that the organism that best ‘fits’ in its environment had the best chance of survival.

Likewise, the countries that perform best within the resources bestowed upon them, and which utilise the manpower required for the consumption of resources for maximum output, will have better economies.The WEF's Global Competitiveness Report defines competitiveness as the "set of institutions, policies, and factors that determine the level of productivity of a country.

As Drzeniek noted, economic development relies on good institutions and education. Institutions "influence investment decisions and the organisation of production", while playing a "key role in the ways in which societies distribute the benefits and bear the costs of development strategies."

In fact, the most competitive economies rank highly in these areas.  The most competitive countries maintain road networks, transport infrastructure and primary education of a high quality.

Maintaining strong nationwide institutions and infrastructure often requires a great deal of investment. The most competitive nations all have the means to borrow large sums of money to stay competitive, which can be measured by high levels of government debt.

Six of the most competitive countries have debt equivalent to at least 75 percent of the GDP, exceptionally high compared to other countries reviewed.

Japan's debt, most notably, was worth more than 240 percent of its GDP. Pakistan's debt to GDP ratio was 63 percent by the end of 2014-15.

With a mission to establish Pakistan economically, the Government of Pakistan is focusing on competitiveness, efficiency and innovation driven economy. It has included access to utilities and technological development in new trade policy.

The four key pillars, identified in the Strategic Trade Policy Framework (STPF) 2015-18, are product sophistication, market access, institutional development and strengthening and trade facilitation. These are based on the criteria set for competitive economies. Pakistan is also keen to enhance bilateral and regional economic ties with different countries.

In an IMF working paper, “Structural Transformation and the Sophistication of Production”, Rahul Anand, Saurabh Mishra, and Nikola Spatafora observe that in recent years, a small but rapidly growing literature has emerged, arguing that a key component of economic development and the growth process is an increase in the “sophistication” of country’s production, and in particular of its exports.

     Indeed, it has been argued that what a country produces and exports matters for growth: “… not all goods are alike in terms of their consequences for economic performance. Specialising in some products will bring higher growth than specialising in others” (Hausmann and others, 2007, henceforth HHR; see also Lall and others, 2005).

Some products may yield greater knowledge spillovers, have a greater potential for backward and forward linkages, or offer an easier pathway toward other products with such characteristics.

Ultimately, some products are more sophisticated, in the sense that they are associated with higher productivity levels, and those countries that latch on to such products will perform better.

Over time, the sophistication of a country’s production structure may evolve, through either an increase in the quality of previously produced goods, or a move into new, more sophisticated products.

Second, increasing sophistication of exports, of both goods and services, can be an important contributor to overall economic growth.

Sophisticated sectors are particularly likely to act as an engine of growth for the broader economy, rather than turn into isolated enclaves, if the economy is liberalised, the exchange rate is not over-valued, and there are good information flows.

In more distorted economies, there may be less scope for inter-sectoral and intra-sectoral resource allocation, as well as knowledge and technology spillovers.

Third, an educated workforce, external liberalization, and good information flows are all significantly associated with greater sophistication of exports of goods and services, across a broad range of different specifications. An appropriate macroeconomic policy plays a particularly important role in sustaining sophisticated goods exports. Highly skilled labour and good information flows are especially critical for sophisticated service exports.

Market access for goods means the conditions, tariff and non-tariff measures (NTMs), set by countries for the entry of specific goods into their markets.

Take an example of WTO, tariff commitments for goods are agreed upon and set out in each member's schedules of concessions on goods. The schedules represent commitments not to apply tariffs above the listed rates — these rates are “bound”. Under WTO rules, bound rates may not be raised without compensating the affected members.

As per the principles followed by developed economies of the world, Pakistan is also focusing on enhancement of exports. Especially the sectors of leather, pharmaceutical, fisheries and surgical instruments are identified as higher export potential sectors.

“It is observed that the export target of $35 billion, set in the Strategic Trade Policy Framework (STPF) 2015-18, is realistic and achievable,” a top official of Federation of Pakistan Chambers of Commerce and Industry (FPCCI), said, and added, "This is an achievable target and the government through the policy framework has provided incentives to the business community which would help meet this goal."

The Government of Pakistan has also taken a number of initiatives to revive the economy on strong footings and due to the progressive policies of the government, the inflation rate has declined from double digit to single digit and the GDP growth rate increased to 4.03 percent in FY 14 and 4.24 percent in FY 15 from 3.7 percent in FY 13.

Critics find faults in policies of the government terming them mere jugglery of numbers.  It is suggested that this is not only a rosy picture painted by an artist to amuse people; rather it is based on facts and also recognised by international economic institutions.

Numerous well reputed media outlets like Bloomberg, Forbes and the Economist etc have reported that with a fast-improving security, dynamic Pakistan has the potential to become a global turnaround success story.

Interestingly, the ‘Economist’ had gone ahead of others in May 2015 by saying that Pakistan’s economy was doing even better than the economies of Canada and USA.

Besides all these important factors, economists give much emphasis on change of human behaviour along with changes in institutions. These two changes were identified as reasons behind industrial revolution in England in 18th century.

This theory of change in human behaviour has been compiled and published in "A Farewell to Alms" by the economic historian Gregory Clark. He writes," Thrift, prudence, negotiation and hard work were becoming values for communities that previously had been spendthrift, impulsive, and violent and leisure loving". These values were precisely needed for the accumulation of wealth to raise people out of abject poverty and also to support the institutions that were so essential to industrial revolution.

What all this suggest is, we need to change our behaviour towards work. In our society , there is one person who is responsible of earning livelihood while rest of family members stay home to enjoy at the cost of one's hard work. This injustice and lethargic mood of our people have to be changed. Otherwise, the government's policies to bring people out of poverty cannot be fruitful.

Only machines cannot bring any revolution until it is not coupled with human efforts. Nations are not born rich rather its change of attitude that make them wealthy in the long run.