LAHORE

A report on ‘the state of the economy’ has pointed out serious weaknesses in economy of the country in several areas, as the key economic fundamentals, including savings, investment, exports, governance, and level of human development, not only remain weak but at best have not shown much improvement over the last several years.

“The rate of gross fixed capital formation as percentage of GDP remained at 15 percent- well below the level of a decade ago. Exports fell short of targets and actually declined in 2014-15. Indeed, Pakistan’s relative int’l position in exports is worse than it was in the year 2000.”

The biggest failure of the government has been the inability to develop a wide range of exports of manufactured goods as evidenced by only $4.4 billion of such exports in 2014 from $0.7 billion in 1990 (8 fold increase) compared to India which expanded these exports 18 fold. The report recommends establishment of a high level representative commission to develop a 10 years export plan.

The Shahid Javed Burki Institute of Public Policy Netsol (BIPP) launched its eights annual report entitled "The State of the Economy: Technology and Development" on Monday in Lahore. Eminent individuals from the federal and provincial governments, international institutions, academia, civil society organizations and donor agencies attended the event. Khurshid Mahmood Kasuri, former Minister for Foreign Affairs, was the chief guest while Dr Iftekhar Ahmed Chowdhury, former Minister for Foreign Affairs, Bangladesh presided over the ceremony. The major thrust of the report is to suggest policies to reset the economy to its long term potential growth path and the inextricable nexus between technological advancement and economic development.

The report advocates government's focus, without losing the strategic perspective, on a number of priority areas that are hindering the development of economy. A robust long-term strategy can be developed once these problems have begun to be addressed. More specifically, in addition to the government’s priority areas of “3Es” i.e., the revival of the economy, overcoming serious energy shortages and address the problems created by the emergence of extremism, the report underscores the need to adds some more “Es” to the administration’s initial list: education, environment, external relations and exports.

The report also notes some improvements in macro-economic indicators in terms of a moderate decline in the fiscal deficit, abatement of inflationary pressures, sharp increase in the gross foreign exchange reserves, modest revival of economic growth and broad compliance with the IMF program.

On energy, the report recommends formulation of a comprehensive energy policy including gas; improvement and better management of distribution and transmission; priority development of hydel resources; and accelerated implementation of a couple of on-going projects.

Regarding education, the report observes that Pakistan has seriously lagged behind internationally in raising the levels of education and literacy for decades. Lack of basic education and skills is a major hurdle in the way of reviving strong growth. A major turnaround of educational attainment will require simultaneous action on several fronts: increasing public spending on education, reversing the almost steady decline in the quality of public education by devolving authority to local governments, tightening accountability mechanism, mobilizing and encouraging high performing civil society and private non-profit educational institutions to expand and lead especially in the new areas of vocational training and adult literacy.

As for extremism, while noting the important achievements since the launch of Zaeb e Azb in North Waziristan and targeted operations against pockets of terrorism and those abetting it though illicit financing, the report avers that to succeed in the battle against terrorism, not only militancy but the etiology and root causes of terrorism need to be firmly tackled. The report suggests that the main reason why extremism has developed as a highly disruptive force is the failure of the political system and economic institutions to accommodate those who occupy society’s fringes.

The pathology of governance dysfunction ricochets throughout the report with strong advocacy to improve quality of governance.