Why Pakistan needs to overhaul its economic strategy

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Lahore: The economy is not just about generating wealth. In Pakistan, some of the selected selected, while the overall society loses. Sustainable economic growth requires better distribution of resources and more integrated social and economic framework.

For decades, Pakistan’s economic strategy has been focused on protecting domestic industries from competition. Instead of giving priority to technical development, the country has allowed obsolete technology to change imports through protection policies. As a result, Pakistan produces goods that are controversial in global markets. For example, the country continues to produce cars using old technology from small plants that have long been abandoned in developed countries. These defective plants lack the scale economies, making it impossible to compete internationally even after more than two decades.

On the contrary, economies like South Korea, China and Malaysia accepted globalization by importing knowledge, technology and skills. Enjoyed these tools, they took advantage of global demand, and accessed the wider markets. These countries did not hesitate to import their shortcomings, but ensured that they exported the world’s need.

In these successful economies, governments also used financial discipline. He run the budget deficit and the debt was higher than the GDP, but made sure that public debt remained managed. Economic growth permanently pushed the gathering of public responsibilities. On the contrary, Pakistani governments have been irresponsible, running unstable budget deficits, which increases the proportion of GDP from debt.

A common feature of high -growing economies is their future -based approach. They sacrifice short -term consumption in favor of increasing long -term income. In the last 25 years, China has saved a third of its national income annually. India has now reached a savings rate of 34 %, while Pakistan’s rate is less than half.

The policy makers here have worked quickly, and ignoring the fact that over time, the comparative benefit of a country is developed. In the period of rapid economic growth, capital and labor change between sectors and industries. A low -skilled workforce gradually turns into a very skilled. This movement of resources is a special symbol of all high growth economies. The sensible governments do not resist such a transition. Instead, they facilitate them by handling their effects.

However, other governments have consistently saved ineffective industries. Due to structural, policy and operational shortcomings, many major sectors are suffering from failure. The power sector is a very clear example. Transmission and distribution infrastructure is outdated, which causes significant energy losses. Political interference, grid modernization of insufficient investment, and incompetence in public distribution companies (disco) increase the problem.

The textile industry struggles with a low price increase, despite the leading export sector. Many mills work with old machinery, which increases the cost of production. Unlike Bangladesh and Vietnam, Pakistan lacks strong global brands and effective supply chains, which limits its competitiveness. The steel and engineering sector also faces major challenges. The country depends on the lack of domestic capacity on expensive imported steel. Once the key producer, Pakistan Steel Mills (PSM) has been inactive since 2015 due to mismanagement and corruption.

Pakistan Railways has suffered years due to incompetence, corruption, outdated infrastructure and financial mismanagement. The absence of an integrated public transport system has resulted in the control of ineffective buses and motorcycles. Similarly, the oil refining department is behind due to outdated technology. Many refineries produce high amounts of furnace oil, a product whose demand is limited. Instead of upgrading the refining capacity, Pakistan is continuing to import better petroleum, which increases the dependence on expensive foreign fuel.