Atif Mian : why is the country still far from economic independence?
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Pak_88
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Can't we have him on some sort of govt position overseeing economic issues? He seems concerned enough, and has certainly got the talent, skill and know-how. Asad Umer isn't a miracle worker, and he (and Pakistan) requires all the help they can get.
niaz
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In my humble opinion, the reason why Pakistan‘s economic potential has not been realised and since the 1970’s; except for a few years under the Musharraf era; our economy has been stagnant despite putting up many large heavy capital-intensive projects.; is because we are pursuing growth thru ‘Tricke down’ effect.
“Trickle-down” is based on the theory that investors, savers, and company owners are the real drivers of growth because they provide jobs. Benefits from the wealthy trickle down to the general population thru increased tax revenues, capital gains and because people with jobs have more disposable income & thus spend more.
In Pakistan, this has resulted in a small percentage of extremely rich individuals and a minor increase in the middle class. However, most of the rich & the upper-middle-class individuals spend money on the imported items instead of using locally manufactured goods, they educate their children in the UK or the US, spend their holidays in foreign countries and even go abroad for treatment.
Additionally, even though there are many advantages of the large inward remittances; in Pakistan’s case, it has also many negative effects. The excess cash without a corresponding increase in the production of goods & services causes inflation, especially in the housing market. According to my info, houses even in the small towns of Punjab are beyond the reach of the majority of the population. This has increased the poverty through overcrowding.
Another major reason has been the unbearable law & order situation caused mainly due to the Jihadists who believe that this world is nothing and the 'Panacea' of all ills is the creation of an Islamic Emirate based upon a 7th Century model so that everyone can go heaven after his death.
I am a great fan of Dr Mahbubul Haq. In my humble opinion, real growth comes from the bottom up. This is directly related to the ‘Human resource” development. This means improving the quality of education (quantity alone is not enough), improving the skill level of the local population, better health facilities and the overall quality of life. However, this assumes a good law & order situation and without the State forcing their version of religion down every ones’ throat.
Improved quality of the Human Resources would unlock the entrepreneurial potential of the local population and the result in sustainable growth in all spheres of the economy.
“Trickle-down” is based on the theory that investors, savers, and company owners are the real drivers of growth because they provide jobs. Benefits from the wealthy trickle down to the general population thru increased tax revenues, capital gains and because people with jobs have more disposable income & thus spend more.
In Pakistan, this has resulted in a small percentage of extremely rich individuals and a minor increase in the middle class. However, most of the rich & the upper-middle-class individuals spend money on the imported items instead of using locally manufactured goods, they educate their children in the UK or the US, spend their holidays in foreign countries and even go abroad for treatment.
Additionally, even though there are many advantages of the large inward remittances; in Pakistan’s case, it has also many negative effects. The excess cash without a corresponding increase in the production of goods & services causes inflation, especially in the housing market. According to my info, houses even in the small towns of Punjab are beyond the reach of the majority of the population. This has increased the poverty through overcrowding.
Another major reason has been the unbearable law & order situation caused mainly due to the Jihadists who believe that this world is nothing and the 'Panacea' of all ills is the creation of an Islamic Emirate based upon a 7th Century model so that everyone can go heaven after his death.
I am a great fan of Dr Mahbubul Haq. In my humble opinion, real growth comes from the bottom up. This is directly related to the ‘Human resource” development. This means improving the quality of education (quantity alone is not enough), improving the skill level of the local population, better health facilities and the overall quality of life. However, this assumes a good law & order situation and without the State forcing their version of religion down every ones’ throat.
Improved quality of the Human Resources would unlock the entrepreneurial potential of the local population and the result in sustainable growth in all spheres of the economy.
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VCheng
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Many people know this common sense approach, but it just that Pakistan has never gotten around to actually doing what needs to be done as you have outlined. Social development has always taken a back seat to other more pressing issues, mainly security and economy related, leaving precious little available for the people.
Sine Nomine
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@BHarwana
@niaz Sir,your take on CPEC and his statement "To make matters worse, Pakistan's "in-law" finance minister strips away independence of the central bank and sets the terrible policy of keeping the exchange rate appreciated. Now Pakistan has the dutch disease, on steroids."
Please explain above for layman like me.
@niaz Sir,your take on CPEC and his statement "To make matters worse, Pakistan's "in-law" finance minister strips away independence of the central bank and sets the terrible policy of keeping the exchange rate appreciated. Now Pakistan has the dutch disease, on steroids."
Please explain above for layman like me.
niaz
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@BHarwana
@niaz Sir,your take on CPEC and his statement "To make matters worse, Pakistan's "in-law" finance minister strips away independence of the central bank and sets the terrible policy of keeping the exchange rate appreciated. Now Pakistan has the dutch disease, on steroids."
Please explain above for layman like me.
In my humble opinion, there are no “Free Lunches”. Everything has a price. On the surface, CPEC appears to be extremely useful. We have seen that income from the transit of goods from Iraq thru Turkey during the long Iran/Iraq war greatly helped the Turkish economy.
Remembering the ‘Bara’ markets where the majority of goods ostensibly imported for Afghanistan were actually offloaded & sold in Pakistan; even if a fraction of the cheaper and of better quality Chinese goods passing thru Pakistan ends up in the local shops; Pakistan’s indigenous manufacturing would be seriously damaged.
I, therefore, reserve my judgement and wait to see what actually happens.
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