A MAN wakes up in the morning, takes a bath, combs his hair, leaves home and gets on the first bus that comes his way.
This is how an economist described the state of our economy — nobody knows where it is headed.
In a recent conference to discuss the prospects for Pakistan in a changing world, speakers agreed that our economy needs one thing the most: a direction.
The three key speakers were Masood Ahmed, president of the Centre for Global Development and former director of the IMF’s Middle East and Central Asia department; former State Bank of Pakistan governor Ishrat Husain; and Kaiser Bengali, former adviser to chief ministers of Sindh and Balochistan.
Mr Ahmed said it’s time we learnt from successful economies, which have three things in common: they have macroeconomic stability, they create conditions to sustain growth, and they try to achieve a social consensus on a broad economic strategy.
“Our focus as a country has to move from day-to-day management of the economy ... to thinking about what kind of big changes are coming that we have to be prepared for,” he said.
One of the key major trends of the global economy is the impact of technology on economic development, something we in Pakistan don’t seem to appreciate enough, he said. “Technology is going to affect the way manufacturing works, the way in which services work. It’s in the early phase. People are still trying to figure out how much impact it will have.”
In the United States, for example, it has been estimated that technological advances — robotics and automation, additive manufacturing, big data, the Internet of Things — are going to affect half of the jobs that are being done today.
“Our focus as a country has to move from day-to-day management of the economy ... to thinking about what kind of big changes are coming that we have to be prepared for,” says Masood Ahmed
As for developing countries, the World Bank has estimated that 70 to 80 per cent of the jobs will be radically redefined over the next 10 to 15 years by technology.
A case in point is Bangladesh. “Some people now think that in 10 years they won’t need to produce textiles in Bangladesh at all because everything that can be produced there can be produced by robots more cheaply in the country where the products are consumed,” Mr Ahmed said.
“So, if all the jobs disappear, for many countries the traditional role of development — which is to go from agriculture to light manufacturing to more advanced manufacturing — will change,” he said.
Now, what we can do (apart from panicking) is to go beyond dealing only with the immediate problems, and plan for the future as well. The changes Mr Ahmed is talking about may not be just around the corner, but sooner or later we have to make a quantum leap from the Flintstones to the Jetsons.
Dr Husain in his speech bemoaned the fact that the country’s governance was full of paradoxes.
He said there’s too little governance in areas where the government should be actively working, such as sanitation, education and health. At the same time, there’s too much governance in areas where the government needs to allow space to the private sector to focus on new product development, innovation and exports.
Moreover, there’s too little coordination and too much centralisation. “Each ministry is working in a silo, protecting its turf and not talking to each other,” he said. “You have a beautiful education policy which has no linkage with the labour policy. So the labour policy is going in one direction and the education policy in the other, leaving you with an oversupply of unemployable graduates.”
And lastly, there’s too much confrontation and too little collaboration. In successful countries, Dr Husain said, the private sector and the government sit together and discuss how issues can be dealt with.
But in our case, “the gap between performance and policy arises because we don’t have a tradition in this country of working together,” he said.
We must adapt
Dr Bengali then took the discussion forward, stressing the fact that we should own up to our mistakes instead of passing the buck. And our favourite whipping boy, he said, is the IMF.
“I’m not a supporter of neoliberal ideology. I’m a socialist. But I have always defended the IMF because my argument has been that a bank will always work to make sure that its money is safe. If you don’t want to accept the condition, don’t go to the bank.”
His statement may well be added to Dr Husain’s list of paradoxes, but that’s beside the point.
Dr Bengali’s assertion was that if we have our balances right we won’t have to go to the Fund, whose loans always come with strings.
Building on the point stressed by Mr Ahmed, Dr Bengali said the world is changing rapidly in terms of technology. And here we are, exporting just three things for the past 70 years: rice, leather and textiles. “But if don’t adapt, we won’t be a part of a global economy,” he said.
So what does the future hold for us?
We can only hope our man on the bus will have some sense of direction when he gets up the next morning.
Published in Dawn, The Business and Finance Weekly, September 11th, 2017