THIS is apropos of M. Fazal Ilahi’s letter ‘Trade not aid’ (Sept 23). Ideally, trade not aid must be the significant component of our economic policy. This suggestion is often raised by our politicians.

Even in international trade and investment-related forums, developing countries, including Pakistan, sometimes urge upon developed and rich countries to evolve a world economic order which ensures to provide more facilities to developing countries to promote trade rather than providing them aid/loan.

Admittedly, foreign aid is not an unmixed blessing. It does have its pitfalls. However, in the event of a wide resource gap amidst growing socio-economic requirements, foreign aid/loan, whether unilateral or multilateral, becomes inevitable or inescapable for a developing country like Pakistan and its efficacy and usefulness is determined by its judicious and productive use through effective and efficient management.

The Second-World-War-ruined economies of Germany and Japan soon assumed the posture of developed and forward-looking economies through the assistance of the World Bank and IMF which came into existence after the war.

India, having a socio-economic milieu similar to us, is now included among the 10-most-developed countries of the world. These countries effectively utilised foreign aid and fully exploited manpower and material resources.

During the 60s and later, foreign aid played a spectacular role in our country. Most of the country’s infrastructure, especially highways and dams and public enterprises such as PIA, Railways, Steel Mills, etc., owe their existence to foreign aid.For the last few years or so, whatever economic development was made is slowly and gradually receding mainly due to mismanagement and corruption. Meanwhile, the rapid growth in population is exerting its own pressure on depleted resources. The overall state of the economy is precarious. The quantum of investment (both local and foreign) is nil or negligible, mainly due to terrorism and the energy crises. The new government, despite its efforts, is finding it difficult to prevent the downward slide of the economy.

In such a dismal state of the economy, the component of foreign aid/loan will rise and thus the solution of “trade not aid” appears to be without any substance, having no relevance with the ground reality and must be termed as a myth. In the era of globalisation, economics should be given priority rather than politics. Besides, good governance combined with the rule of law must be the cornerstone of our economic-development strategy.

M. NAZIR ALI
Former KCCI secretary
Karachi