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| April 15, 2003 | Tuesday | Safar 12, 1424 |
Quest for prosperity must not be abbreviated: expert
ISLAMABAD, April 14: The government must strive for economic and human development as a policy and not as an aim merely incidental to macroeconomic stability.
This was stated by former head of Pakistan Institute of Development Economics, Prof Nawab Haider Naqvi, while delivering a lecture on ‘Pakistan economy: continuity or change’ at the Institute of Policy Studies (IPS), here on Monday.
“The quest for economic prosperity for the voiceless millions must remain unabbreviated so that they can behold the clear blue sky spangled with the stars of hope,” Prof Naqvi said.
The IPS chairman, Prof Khurshid Ahmed, presided over the function whereas the audience included economists, government officials and students from various institutions.
He said if it was maintained that high rates of economic and human development were immiscible with macroeconomic stability, “then we had better concede defeat in the war on underdevelopment and poverty and human deprivation.”
However, he believed that the growth experiences of many developing countries showed conclusively that with commitment and wisdom “this war can be won”.
Describing the motivation of his lecture as “creative destruction,” Prof Naqvi termed false the official premise that economic growth would result automatically from reduction in the deficits and from a series of poverty alleviation measures.
About Pakistan attaining the status of middle income country, Prof Naqvi said: “With an average growth rate of per capita income of only 1.08 per cent in 1998-2002, it would take 55.6 years just to double it, 94.5 years to reach $2000, which roughly is average for middle income countries”.
This scenario was, however, unlikely because the process of structural transformation had practically stalled in the country, he added.
He said agriculture’s share in GDP had declined to about 24 per cent, that of manufacturing was still only about 18 per cent (as against low income countries’ average of 33 per cent). The investment rate had fallen to an all-time low, he added.
Even worse, unemployment rate was now close to a socially disruptive eight per cent. The rich/poor gap was wider than ever, and poverty had gone up, he observed.
“It is my contention that,” Prof. Naqvi stated, “the present development - or rather non-development - strategy must be changed to attain financial solvency as an integral part of a comprehensive effort at economic and human development.”
He termed the ‘debt reduction strategy’ as an approach far from being economically sensible. It was like re-creating the cow from its minced meat, he said.
He advised the government to follow the path outlined in the Pakistan’s First Perspective Plan which aimed to reduce indebtedness to zero in 20 years, while achieving a growth rate of 7.2 per cent and raising the investment and saving rates fo 18 per cent and 22 per cent of GNP, respectively.
Economic development, Prof Naqvi pointed out, was essentially a plurality in nature as distinct from a focal concentration on just one element of development policy. This is “wrong-headed”, he remarked.
Quoting Joseph Stiglitz who described market fundamentalism as both ‘bad economics and bad politics,’ Prof Naqvi said there was no such thing as a minimalist government.
“If a government is correct or inefficient, then it should be made reasonably honest and operationally efficient.
But the situation was that “a minimalist government is what Pakistan now has; and as a direct result of the government’s mad rush to attain fiscal solvency it is set to become soon literally Lilliputian,” he said.
Prof Khurshid, in his concluding remarks, lambasted the cliche of continuity of current policies and characterized it as a recipe for disaster. Change was the need of the hour, he said.
He identified four failures of Pakistan’s economic policy- making: looking for foreign aid, uni-dimensional approach, adhocism and elitism.
Instead of our own short and long-term interests, people at the helm of affairs focused on how to obtain maximum foreign aid. “This has proved disastrous to our economy,” he noted.
The economy, he emphasised, could not be isolated from political, educational and social perspectives or afford obsession with one aspect of economic development.
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