Corporate Pakistan has huge earnings and savings that cannot be fully employed in productive pursuits either because of a lack of sufficient demand or sluggish economic growth. Generally, even the installed industrial capacity remains underutilised.

And there are millions of able-bodied young men and women, including a sizable number of educated youth, who cannot find work or productive pursuits.

Not only both idle human resource and money, but the enormous natural resources — including mineral wealth — await exploitation to their full potential, while the teeming millions are trapped in poverty and hunger.

Apparently, time has bypassed the existing economic model that has so vigorously being enforced by successive governments over the past few decades. It is unable to propel the country’s social and economic progress, and policymakers are stuck with what seems to be an ‘overarching’ problem of macroeconomic stability. Economic development has been assigned a low priority.

While macroeconomic stability is the product of sound, balanced and harmonious development, efforts have been virtually focused on acquiring a constant inflow of foreign debts or on printing currency to stimulate growth. Heavy debts are required for investments and for managing the balance of payments and debt servicing. External capital inflows are not efficiently or productively used to earn and pay back the loans. Once the foreign external capital and financial inflows tend to dry up, the debt-addicted economy returns to the same distressed position.

No doubt, foreign loans and investments help spur economic growth, provided that the capital inflows are properly used to build a self-reliant and self sufficient economy, at least in areas where the country enjoys a domestic advantage. With the international economy now under severe stress, as indicated also by falling oil prices, it is time to shift the focus to putting the domestic economy on a sound footing.

The huge, idle, unutilised or underutilised reservoir of human and natural resources needs to be harnessed to spur economic development and promote the peoples’ well-being

Within the domestic market, the issue of demand and supply cannot be insulated. The lowest monthly domestic inflation recorded for November since the last six years brings the demand side into focus. The situation can be explained by a sharp decline in monetary expansion during July-November, the fall in prices of oil and food group and drop in consumption of petroleum. It is the demand for goods and services that stimulates production and improves the supply of goods and services, not so much as vice-versa.

Neither the mode of austerity in the Eurozone nor the US stimulus model has helped the West pull out from the fragile economic recovery. In fact, the Eurozone is dangerously close to deflation and is approaching its third recession since the start of the current global financial turmoil. The key issue is to push up demand to spur economic growth. That means prosperous consumers.

The country’s current economic model promotes social exclusion and there is no apparent serious move to tackle the problem but for the rhetoric of ‘inclusive growth’. There is no policy of equitable income and asset distribution, which is skewed in favour of the rich. Many frustrated people are rallying behind Mr Imran Khan and Dr Qadri, seeking better days. The official policies and programmes are not designed for public or common good. There is a strong resistance to change, and this is engineering crisis after crisis. And economic growth remains largely elusive but for short spurts.

Speaking at a conference organised by the Pakistan Institute of Development Economics (PIDE) last week, eminent economist Dr Akmal Hussain said latest estimates indicate that 39.7pc of the population is currently living below the poverty line. Dwelling on the issue of inequality, he revealed that the richest 18,000 are using 70 times more per capita income than the rest of the country’s population.

At the same conference, PIDE vice-chancellor Prof Dr Asad Zaman observed: “Initially, it was thought that economic growth was synonymous with capital accumulation and took place through technology and industrialisation. In reality, growth is a multidimensional concept which builds on human capabilities”.

While the importance of capital accumulation cannot be denied, ‘ideas’ are emerging as the primary factor in pushing up investment and growth. This has not been fully recognised in policy changes over the past few decades.

First, the concept of socioeconomic development has been substituted by economic growth, with the quality of growth deteriorating and the ‘trickle-down effect,’ whatever its merit, fading. Growth may or may not produce jobs, and, as Joseph Stiglitz points out, it does not measure the standard of living of the teeming millions.

Initiatives for ‘people-centred economic development,’ taken in the 1970s, have been abandoned. Cash-strapped governments are incapable to work a welfare state. The common citizen is left to fend for himself, but there are many opportunities opening up for him in this transitional phase of the political economy.

The government needs to extend the masses a helping hand to fend for themselves, not so much by schemes like the BISP, but by providing impetus for the utilisation of the huge, idle reservoir of human and natural resources for economic development and peoples’ well-being.

Published in Dawn, Economic & Business, December 8th , 2014