Linkages between trade, development and poverty reduction (TDP)


‘Security concerns overshadowed economic policy implementation’

Business Recorder, March 03, 2009

A senior economist, Dr Kaiser Bengali, has said that there has been less emphasis on implementation of economic policies during the last 30 years as security concerns dominated, with a very narrow military perspective. He urged those who matter that the state has to revert to its role as protectionist and interventionist to create attractive environment for the creation of capital assets.

He was speaking at a seminar on ‘Re-locating the state industrial policy for growth and poverty reduction’, organised by Sustainable Development Policy Institute here on Monday. He said that during the last fiscal year the country collected Rs 1 trillion revenue, while it spent Rs 1.16 trillion on defence, debt servicing and civil administration. He added that the current program of privatisation was meant only to meet the increasing expenditures of the state, “which is not a healthy indicator”.

He deplored that the state took a shift from development to security state after 30 years of its existence in 1977 and whatever policies made thereafter were mostly bureaucratic exercises, lacking political commitment to implement them in letter and spirit.

He said that the GDP growth rate during the Bhutto period was 4.5 percent and development expenditure was 21 percent, whereas average military expenditure was 2 percent of GDP. During the Zia period, GDP growth rate reached up to 6.7 percent, development expenditure 2.7 percent and average military was 9 percent of the GDP. The past investment began to mature, therefore, the GDP growth during Zia era went so high, he added. Dr Bengali sought revival of Pakistan Industrial Development Corporation (PIDC) as the county has reached a situation where private sector would not invest if the state does not invest.

He said that the country has a weak private sector, which cannot compete in an open market. He lamented that the state has failed to invest in human resource and infrastructure.

He said that the objectives of the state should be changed where economic development has to be focused on with industrialisation and industry as its backbone and driving force. “We cannot grow without industry and even other sectors such as agriculture and manufacturing needs industrial input.”

He suggested reducing costs of manufacturing, end to corruption, reduction in export duty, discouraging speculative business of land, besides developing an infrastructure to bring back the economy on right track.

Zubair Faisal Abbasi, research associate, SDPI, presented findings of his research study. In his presentation, ‘Importance of Industrial Policy for Growth and Poverty Reduction’, he said that the public and private sectors should not be taken as opposite forces; rather they should cooperate under a well co-ordinated industrial development design.

He said that the state should assume responsibilities of creating right kind of incentive structures to stop decline of manufacturing output in Pakistan. “We should move away from being neo-liberal and security state to a ‘developmental state’ while focusing on human capital formation and technological capability acquisition for increase in industrial development of Pakistan,” he added.

He said that global and national aggregate data conceals many realities. It is conceivable that the growth, inequality, and poverty exist at the same time. The state has primary responsibility to manage economy in a way that distribution of capabilities becomes a prime objective of the state. He said that the economic change strategy of Pakistan should see who accumulates and for what purposes. Accumulation or economic asset building should be converted into productive investment.

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