ISLAMABAD, Nov 1: Contrary to the economic theory, consumers in Pakistan do not get benefit of price reduction despite upsurge in production owing to markets being ruled by monopolists.
As there is no rule of law and effective institutions to tackle problems emanating from adoption of a free market economy model in Pakistan, the companies are maximising their profits and not passing any relief to the end consumers.
These are the findings of a research paper titled: Space for Free Market Economy in Pakistan presented by Prof. Dr Shahida Wizarat at a seminar on Thursday. It was jointly organised by Friedrich Nauman Stiftung, Alternate Solutions Institute, PIDE and Lead Pakistan.
She said that increase in prices of commodities, like cement, fertiliser, sugar and wheat as a result of hoarding by cartels had been witnessed in Pakistan on a regular basis. A cursory glance at other sectors of the economy, including manufacturing tells the same story.
Dr Shahida cited example of capital markets, which in the free market economies, generate funds for industry but in Pakistan these markets generate a very small percentage of corporate finance. She said that they were used for speculation and the situation in the real sector is no different.
A German expert Manfred Richter said lesser public sector involvement would encourage more benefits for public, besides it would create positive results in the shape of poverty reduction and creation of jobs.
He was of the opinion that there was a need for structural changes in the industrial base for diversification if a country wanted to cater to the issues of unemployment and establishment of new industries.
Mr Richter said if the government encouraged and promoted competitions, the end consumers would get the benefits as in the case of telecommunications in Pakistan.
Waqar Ahmed from Saarc Chamber said the non-tariff barriers, coupled with lower infrastructure, were hindering the free movement of goods among the South Asian countries.
Dr Khalil Ahmad from Alternate Solutions also spoke.
