RAWALPINDI, Feb 2: The Centre for International Development (CID) at the Harvard University will carry out a study to help Pakistan design a plan for structural transformation of the country’s economy and to maintain its current rate of growth.
The Asian Development Bank is funding the study which will be completed by September 2009.
Pakistan’s objective is to maintain or increase its current economic growth rates — 7.5 per cent over the past four years — well into the future.
To help policymakers and entrepreneurs better understand the importance of structural transformation in achieving this goal, and to illustrate what it will take to make the current growth rate sustainable, the study will examine the potential for structural transformation.
Four analytical papers on structural transformation of country’s economy will be prepared, explaining the causes of slow structural transformation of the economy.
The analysis will assess Pakistan vis-à-vis other countries in Asia.
The first paper will provide an assessment of Pakistan’s economic structure in terms of what a country produces.
The second paper will examine the quality and sophistication of Pakistan’s exports.
A strong empirical relationship exists between a recently developed measure of a country’s export sophistication and that country’s level of income. This relationship suggests that, as countries develop, they change their export package. The measure also reflects structural transformation.
An in-depth and detailed analysis of Pakistan’s export structure will provide key information for assessing the speed and direction of its transformation, and for comparisons with other Asian countries.
The third paper is a diagnostics analysis of the impediments to structural transformation in Pakistan.
Structural transformation does not come naturally; rather, it must be induced by policy.
The question is: how? Most often reform is required, either to facilitate the transfer of resources across sectors, to develop new activities, or to increase competition. This raises the next question: which reform will deliver the most benefit? The purpose of this growth diagnostic exercise is to pinpoint where a little reform can go a long way.
The fourth paper will employ the output of the previous three to propose a plan for industrial development in Pakistan, based on the belief that structural transformation is not automatic but must be induced through policy.
The CID team of consultants will work closely with the Planning Commission, and will also make presentations to the three main stakeholders -- the government, policy makers, and entrepreneurs. Each group plays a different and important role. The government must demonstrate the political will to undertake structural transformation; policy makers must take part in designing the plan, and entrepreneurs will be responsible for carrying it out effectively.
A report of ADB says if Pakistan is to maintain, and even increase, its growth rate, it needs to accelerate its structural transformation and improvements in the quality and diversification of its exports.
Pakistan’s transformation during the last three decades has not been as fast and as intense as that of the successful Asian economies.
