The second day of the Eighth Annual Conference on Management of the Pakistan Economy hosted by the Lahore School of Economics was devoted to discussions on the means and channels of accelerating economic growth in Pakistan. The first session of the day highlighted Pakistan’s strategic importance and its trade relations with its neighbours, particularly India, China, UAE, and Afghanistan. Dr Ijaz Nabi, Country Director, International Growth Centre, Pakistan opened the session proposing regional trade as a vent for economic growth. He provided a historical overview of Pakistan’s trade relations with its neighbours, stating that there still exist substantial economic surpluses in Central Asian Republics, India, China and Iran that Pakistan can profitably exploit. He also shed light on the issue of the Most Favoured Nation (MFN) status granted by Pakistan to India on February 29, 2012, saying that gainers far outweigh losers in trade liberalisation with India.
Furthering the discussion on the prospects for Indo-Pak trade, Dr. Hafeez Pasha, Dean, School of Liberal Arts and Social Sciences, Beacon House National University (BNU) also supported the liberalisation of trade with India terming it as an out-of-the-box injection into the stagnant Pakistan economy. While he agreed that there existed strong tariff and non-tarrif trade barriers in India, he stated that there also existed strong trade complementarities and trade diversion possibilities for Pakistan with India, which can greatly help Pakistan to reduce its import bill and improve its overall balance of payments position.
Dr. Naved Hamid, Director, Centre for Research in Economics and Business, Lahore School of Economics, summarised the various opportunities and pitfalls for Pakistan in trading with neighbours: China, UAE, and Afghanistan. He stated that the general perception that most of Pakistan’s trade (excluding oil imports) is with USA, Europe, Japan, is no longer true as in 2010 trade with neighbors (including China) accounted for 25% of Pakistan’s exports and 35% of the imports. He concluded the session by remarking that the only way Pakistan can get sustained economic growth is to change the mindset of the people from security focus to an economic focus.
The second session aimed at analysing immediate constraints and long term triggers for economic growth in Pakistan. This session focused essentially on steps needed to achieve a quantum leap in private investment activity (domestic as well as foreign) and promote domestic entrepreneurship in Pakistan. Dr. Kamal Munir, University Senior Lecturer in Strategy, Judge Business School, University of Cambridge, commented on one of the most pertinent issue of energy politics, providing an assessment of the privatisation of the energy sector in Pakistan. He said that it is time to revisit the private power policy paradigm again in Pakistan’s context. Competition will remain a pipe-dream and unless this changes, reforms cannot be pro-poor. He proposed that the bulk of energy needs should be indigenously produced and controlled, as relying overwhelmingly on imported fuel and foreign investors exposes Pakistan to massive risks.
Providing another perspective to the issue, Mr. Asad Umar, Former CEO Engro Corp., stated that the immediate threats to Pakistan included difficult access to capital, energy crisis and institutional decay. On the positive front, he remarked that the long term triggers for economic growth in Pakistan are a strong consumer base, wealth of natural resources, and a geo-strategic location. Mr. Sakib Sherani, Former Principal Economic Advisor, Ministry of Finance, Pakistan, added to the discussion by listing further potential growth drivers: Energy availability, Better governance, Improved investment environment, Reverse capital flight, Lower tax rates for formal sector, Greater resource availability for high-priority spending, Improvements in Agricultural productivity, Regional connectivity, and Freeing land markets.
Dr. Syed M. Turab Hussain, Assistant Professor, School of Humanities and Social Sciences, LUMS, concluded the session by identifying and analysing major constraints faced by the industry in Punjab. According to him, the major constraints included Access to Finance, Access to land, Business licensing and permits, Corruption, Crime, theft and disorder, Customs and trade regulations, Electricity, Functioning of courts, Inadequately educated workforce, Labor regulations, Macroeconomic instability, Political Instability, Practices of competitors in the informal sector, Tax administration, and Tax rates.
The final session of the conference attempted to discuss the issue of making Provincial Devolution work in Pakistan. Dr. Ishrat Hussain, Dean and Director, Institute of Business Administration, opened the session by providing an outline of the 18th amendment to the Constitution, the NFC award of 2010 and the Implementation Commission headed by Senator Raza Rabbani which has helped clarify the structure, roles, responsibilities between the Federal and the Provincial governments. He suggested the creation of a District Civil Service structure in addition to the existing All Pakistan, Federal and Provincial Services to help improve the effectiveness of the delivery of services at the local level. Dr. Anwar Shah, Director, Center for Public Economics, Chengdu, China and the Distinguished Professor of Economics, South western University of Finance and Economics, took the discussion forward by providing arguments about whether 18th Constitutional Amendment served as a glue or solvent for nation building and citizenship in Pakistan. He asserted that there is a need for a more thoughtful implementation of the 18th Amendment, with the federal government focusing on federal functions. He proposed some fundamental reforms including fiscal responsibility framework for federal, provincial and local governments, civil service, land reforms, tax and expenditure and government organization, right to information, and bottom up accountability.
Dr. Aisha Pasha, Director, Institute of Public Policy, BNU, commenting on the initial impact of devolution stated that the 7th NFC Award has empowered the provinces by increasing financial resources, but the danger is that it can increase the consolidated fiscal deficit. Both levels of government will have to respond to the new dispensation. She believed that 18th Amendment had the potential of changing the structure of governance, but the way it is implemented, effective decentralization has been effectively postponed. Dr. Musharaff Rasool Cyan, Research Associate, International Centre for Public Policy, Andrew Young School of Policy Studies, Georgia State University, finally concluded the session by reconciling the opposites of local accountability and civil service career incentives in Pakistan. He stated that there is a demand for management skills, initiative, planning and decision making, earlier confined to mostly public order situations. In addition there are twin challenges of meeting programmatic outputs as well as responding to local democracy.
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Labels: Annual Conference, Pakistan Economy
posted by S A J Shirazi @ 5/17/2012 05:55:00 PM,
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