These last two years have been quite tough on Pakistan’s industry, courtesy the short-sightedness of the present government. Pakistan, like many other developing countries of the world, continues to go through a period of power and energy shortages. Nevertheless I can’t think of any other example except ours, where domestic consumption is given priority over industry that creates jobs or where the AAA industrial consumers are made to pay for the line losses owing to the theft of others or where national competitiveness is compromised to cover-up for the inefficiency of the government producers and its functionaries. On the other hand with all progressive global governments what we see today is a reawakening, that their foremost responsibility is to spur growth and to shore up employment at home and not to any misplaced notion of being lauded by the big boys of financial world like the IMF, World Bank, S&P, Moody’s etc – It may be good to remember here that IMF has just recently been caught on the wrong side of prudence in its post 2008 assessment of Greek solvency and as for these rating agencies, not too long back they were found guilty of some glaring conflict-of-interest violations in the run up era to the 2008 financial crisis!

Notably, even the world’s leading/large developed economies who are today considered the knowledge-based economies are ironically being seen going back several ‘stages of growth’ by arguing that a certain level of manufacturing base should always be maintained in an economy to hedge against unemployment, inflation and restricting undesirable imports. The United States of America (USA) as we know after a long time has renewed its focus on shoring up American manufacturing in order to replace some its imports and boost its exports – for example, amongst many other sectors, textile manufacturing (known for its ability to create a high number of jobs) in the U.S., facilitated by the government, is also back on the rise. Today’s Japan is being seen to facilitate national manufacturing in order to cut cost of doing business at home and to try and move back to home its off-shore production. And it is in this context that economist Jeff Madrick’s recent work serves as a timely reminder to all struggling economies, in reiterating that the historical models of sustained growth do still remain valid in today’s modern day world: gradual development of ‘home-based’ core industries; economic diversification; improvement in literacy and education, especially for women; only gradual opening of capital markets; guarded privatization; and a focus on self-sufficiency on power and energy - albeit at competitive rates - as an economy’s top national industrial priority.

Sadly in Pakistan we seem to be moving in the opposite direction. What Mr. Dar needs to understand is that unless his measures are aimed at putting the people back to work and at enhancing the disposable income of an average Pakistani, they will just not work. The fact is that owing to some poor economic management by the PML-N leadership, Pakistani exports are declining sharply and this implies that Pakistan’s competitiveness as a manufacturing base is eroding. And if this decline is not timely arrested the biggest sufferer will be our average worker. Developing countries basically convert the advantage of abundant and cheap labor into low cost goods, which they then export to the developed world. Loss of our export markets means that we are losing our capacity on employability to our competitors like Bangladesh, Myanmar, Vietnam, and India – a dangerous scenario especially in our case where both the growth in population and in employable youth is amongst the highest in the world. A World Bank or IMF pat on the back of our economic leadership may serve them very well to strengthen their future CVs, but not the Pakistani economy, because what the Pak economy instead needs today is economic activity and for profits to return to its documented markets so that productive investment can take place in ventures that can generate export led growth and employment. The trouble is that there is not much time on hand, since markets once lost are difficult to win back and even so, can take ages.

Importantly, it is this very ability of a political government to channel money/investment in labor intensive ventures where its economic management’s mettle is truly tested, as not only does it require some difficult cum testing decision-making, but it also entails visionary leadership – sadly PML(N) leadership is falling short on both these counts. As the world economy continues to go through a slow consumption cycle the global competition on the supply side has stiffened in recent years. Countries that are serious about competing and maintaining their national competitiveness are preparing themselves by undertaking some landmark economic reforms internally. For example, Modi’s government is preparing to launch India’s biggest overhaul of labor laws since independence in a bid to create millions of manufacturing jobs. To spur industrial investment, India is drafting a bill that will loosen strict hire-and-fire rules and make it tougher for workers to form unions, but at the same time also ensuring workers rights by making it mandatory on employers to pay three times the current severance package. Pakistan, it appears is yet to wake up to these new emerging realities.

Finally, even the modern day global trade dynamics are changing course. Gone are the days where countries single mindedly focused on expansion of trade or had blind faith to slip into the prescribed WTO straight jacket to become a part of the global trade order. Both, the 2008 Financial Crisis and a Noodle Bowl effect of FTAs, RTAs, PTAs, etc have slowly but surely undermined the once unquestioned wisdom of multilateral functioning. Present thinking being that while expanding global markets is good, history offers lessons that only fair and ‘constructive trade’ is what nations should be seeking - ‘Constructive’ referring to a realization that only such trade is welcome which tangibly adds value to the home economy and ensures a gradual but clear development of its core “national industries”.