“Competitiveness is prerequisite to overcome poverty. It requires a strong base of human and technological resources,” said social scientist Noor Fatima in a talk at the Centre for Democratic Development run by the Human Rights Commission of Pakistan.
Ms Fatima, who is researching the role of foreign agencies in the economic development of Pakistan, said the donors “ultimate goal is profit”.
She cautioned that “purely market-led strategy” only increases corporate profits. “It does not help a national economy to develop, if the SMEs (small and medium enterprises) and local market are not protected through stronger governance,” she said.
“If you cannot compete in large manufacturing, you have to depend on SMEs,” she said.
In Pakistan, the over-regulated and incentives-denied SMEs contribute just 35 per cent to the total manufacturing whereas in the highly developed Japan it is 80 per cent.
“Poverty reduction is impossible if the economy does not lead to competitiveness driven by the private sector,” she asserted.
Ms Fatima, who is doing research after doing her masters in management sciences from the Berlin University, observed that human development is the end while economic growth is the means.
“Pakistan’s future growth potential to reduce poverty is strongly dependent on its social capital — that is trained human resource. At present the level of social capital is very low and lags behind other South Asian countries,” she said quoting from the World Development Reports 2005 of the World Bank.
Pakistan ranked 91 and India 55 among 104 countries judged by foreign investors on the bases of corruption, rule of law, technical and cultural innovations, security and good governance, she said.
Ms Fatima urged Pakistan to follow the European model of development as did the Southeast Asian countries successfully. She also called for “labour intensive activities” to help reduce unemployment and poverty.