Professor Ahsan Iqbal, Minister for Planning, Development and Reforms, while inaugurating the 31st Annual General Meeting and Conference of the PSDE, said that in rapidly changing environment, it is inevitable to invest in human resources to become a knowledge economy. We have the option to change our fate by not doing what we have been doing and by looking into future avenues. The Minister highlighted that in 1960s, when Pakistan was on the path to prosperity, everyone thought that Pakistan would become another Japan but derailment of the process of development pegged us back. He said that failure in non-economic factors has kept us behind and political instability has created environment of uncertainty.
The Minister further emphasized that it is the human capital which will bring the change we are waiting for. He added that that fractured social platform is result of the Martial Law and another reason for crisis is the failure to distinguish between growth and development. He further said that the theme of the Conference is very appropriate because we need to understand how these Vision 2025 goals can be achieved. He said that the enablers outlined in the Vision 2025 are eco-system for the 2025 goals.
Highlighting the role of Pak-China Economic Corridor, he said that CPEC is a game changer and added that governments may change but policies and focus should not change, since stability itself is a great virtue for growth. Professor Iqbal said that soon India would also realize CPEC is very important even for India for its trade with China. CPEC will transform the region, he added.
The Minister said that the lackluster growth is because of lacking knowledge for commodities and so we are looking-forward to cluster based growth. Pakistan has a great advantage due to its location and Pakistan must move its position from Geo-Strategic to Geo-Economic. Concluding his address, the Minister said that the foreign delegates of the Conference should act as ambassadors and spread the word when they return home that Pakistan is not what CNN makes you believe it to be; rather it is a friendly country. In 2013, Forbes declared Pakistan a crisis state and now in 2015 they see it is as an emerging market with strong growth.
Earlier, the Vice Chancellor PIDE, Dr. Asad Zaman, who is also the President of PSDE in his presidential address said that some people are pessimistic about the future but pessimism is part of the problem. He said that with added optimism, the future of Pakistan can be brighter than ever. Progress depends on coordinated effort on multiple fronts, he added. He said that putting people first is required to bring change, as mankind stands as the most important element of universe. He referred to Quran, which distinguishes mankind from all other beings on the basis of having knowledge. Dr. Zaman further said that history is witness to the transformational power of knowledge. Citing the example of Arabs, he said Arabs were very backward but by the virtue of knowledge they became the leaders of the world for 1000 years. The VC PIDE said that in spite of great scientific knowledge, a moral decline has been observed. He said that our job as a society is to bring mankind to power where they can progress and achieve full potential and therefore to impart knowledge three major components i.e., physical, emotional, and spiritual should be stressed. Dr. Zaman also remembered Mahbub ul Haq, a local unsung hero, who emphasized that humans are both means and ends to growth. The philosophy proposed by Dr. Haq stands in stark contrast to the materialistic school. Therefore, we are looking forward to community driven growth.
Earlier, presenting the Secretary’s Report, Dr. Munir Ahmad, Secretary PSDE, said that PSDE is playing its part in bringing positive change in Pakistan. The PSDE invites speakers of global repute for better dialogue. He also explained the concept behind the new logo of PSDE, the green color in which reflects that environment as top priority.
The inaugural session was followed by a panel discussion, the theme of which was “Productivity-Led Growth and Development”. The panel discussion was chaired by the Minister of Planning, Development and Reforms, Professor Ahsan Iqbal. The Ambassador of South Korea to Pakistan, Song Jong-Hwan was the co-chair.
While presenting his views on the theme of the panel discussion, the first panelist Jwa Sung-Hee, Professor of Policy, Saemaul Yeungnam University, South Korea emphasized the instrumental role of corporations for increasing productivity. He said that the key to modern capitalist system are corporations. Markets alone may not always provide explanation for sustained economic growth. Professor Sung-Hee talked about the “Holy Trinity” of economic development and said that the trinity is completed with incorporating a missing link of corporations.
Shenggen Fan, DG IFPRI, Washington, D.C., USA, cleared the definitional discrepancies in the definition of total factor productivity (TFP), emphasizing the need for all the factor inputs while defining the TFP. He asserted that if a major structural shift from agricultural to industrial sector takes place, it must not come at the expense of decline in productivity in any sector. Talking of labor productivity, he said that labor productivity is not low; rather it is TFP which is low, the reason for which is non-inclusion of natural resources, such as water, into TFP. Dr Fan also stressed the need of allocating more GDP to the agricultural research.
Nadeem Javaid, Chief Economist, MPD&R, presented the trajectory of development stages ensuring productivity increase. The trajectory starts with factor-driven stage followed by investment-driven stage characterized by manufacturing and efficiency, which is followed by innovation-driven stage achieved through knowledge education, training, and creativity. Dr Javaid stressed the invigorating the role of government and improving institutional quality to the productivity. In addition, he viewed implementation of reforms and operationalization of social capital as the pre-requisites for increasing productivity. The Chief Economist said that the corporate sector has the better space for raising productivity and in this context Pakistan is lagging behind. To address this issue, mutual trust building in the business sector is crucial and mandatory in equal measures. Ali Salman, Executive Director, PRIME Institute, shed light on the ways in which productivity has been given prime importance in the Vision 2025. He also stressed that the Government of Pakistan must minimize wasteful expenditures in the name of R&D.
The Ambassador of South Korea to Pakistan, Song-Jong Hwan, through a case study of Korea, stipulated the endogenous and exogenous determinant factors of high sectoral productivity in Korean economy. These factors include investment in education, sincere leadership, hard-work and sacrifice of people, building infrastructure, forestation, textile sector, heavy chemical industry, relying more on the intellectual driven growth, and export driven growth.
While summing up the panel discussion, Professor Ahsan Iqbal upon realizing the importance of productivity and its efficient role in increasing economic efficiency, declared 2016 as the year of productivity, quality and innovation, “the year of PQI”. He also emphasized breaking productivity down into macro-productivity, firm level productivity and individual level productivity.
In the afternoon session, Dr Shenggen Fan, D.G. IFPRI, moderated and chaired a lively panel discussion on “Exports, Regional Connectivity and Growth Potential of Asia”. The panelists included, Syed Komeil Tayebi, University of Isfahan, Iran, Mingtai Fan, Chinese Academy of Social Sciences, Beijing, China, Faheem ul Islam, Member Private Sector Development, MPD&R, and Ejaz Ghani, Professor, PIDE, Islamabad. Dr Fan started off the discussion by highlighting the importance of exports, regional connectivity and growth for not just Asia but Pakistan in particular.
Professor Sayed Komeil Tayebi thanked the organizers for affording him the opportunity to visit Pakistan for the first time and participate in the conference. The speaker focused on sustainability, or lack thereof, connectivity, trade and development as well as highlighting important trends in bilateral trade patterns between Iran and Pakistan. He highlighted the importance of connectivity for improving growth and development. Unsustainable regional and global connectivity causes trade diversion and creation through exchange rate uncertainty, so sustainability in connectivity is essential for countries in Asia. Prof. Tayebi concluded his discussion by highlighting the fact that Pak-Iran trade relations are virtually non-existent and intra-industry trade measures are close to zero, suggesting the need to promote or encourage intra industry trade between the countries.
Dr Mingtai Fan, focused on different perspectives related to regional connectivity growth potential of Asia in his talk. He stressed two fundamentals that have emerged in current international trade liberalization efforts, the first of which is deeper integration in regional trade, and the second is greater fragmentation in regional economic integration by FTAs. The question is whether these are creating competition or cooperation? Are they stepping stones or stumbling blocks for multilateral integration of economics? Dr. Fan also highlighted the fact that the dynamic strategies in Chinese FTAs have created shallow integration in terms of flexibility with varying degrees of depth and coverage. They have also created deep integration by One-Belt and One-Way and APFTA strategy. Dr Fan said that there is great potential for South Asian integration and use of other creative destruction mechanisms for international flow of goods and services.
Dr Faheem ul Islam stressed on the importance of South Asia in the global economy in his talk. He said that Asia’s diversity is also its greatest strength. The potential of regional connectivity is currently untapped and great enhancements in trade can result from better inland connections. Pakistan will play a key role in facilitating such connectivity. Dr Islam highlighted the key features of CPEC and how it will benefit not just Pakistan but Asia as well. He stressed the need to prioritize regional infrastructure development which is a win-win situation for all countries. Dr. Faheem concluded by acknowledging that major benefits and challenges exist in regional integration and we require an economic paradigm rooted more in domestic demand, ;particularly consumption.
Dr Ejaz Ghani pointed out that Pakistan has been struggling to boost its exports and benefit from trade liberalization efforts. Regional integration is important for export promotion, but robust growth cannot be achieved unless certain factors counting exports; supply bottlenecks such as energy shortages and limited diversification of exports is addressed. A recent initiative for Regional Comprehensive Economic Cooperation is an important effort that Pakistan desires to be part of Pakistan is well integrated with ASEAN economies and ample trade potential can be tapped if Pakistan diversifies its trade.
The proceedings of the Day 1 of the 31st AGM & Conference of the PSDE ended with the traditional Allama Iqbal Lecture, which was delivered by Jwa Sung-Hee, Professor of Policy, Saemaul Yeungnam University, South Korea. The theme of his lecture was “Achieving Sustained, Indigenous and Inclusive Growth”. Paul Vendenberg of the Asian Development Bank Institute (ADBI), and Qazi Azmat Isa, Chief Executive Officer, Pakistan Poverty Alleviation Fund (PPAF) were the discussants, while Syed Nawab Haider Naqvi, former Director PIDE and founding President PSDE was in the chair. In his lecture, Professor Sung-Hee proposed that we should try to understand the issue of inclusive growth, which the current ideology of economics is failing to address. Identifying extractive and inclusive institutions, he elaborated on why nations fail. He declared economic discrimination to be a necessary condition of economic development, stressing that egalitarianism can become a trap by helping those who are not efficient. The discussants tend to agree with the presenter and stressed the need to keep efficiency in focus. Vendenberg believed that political regimes, due to compulsions, do not always take perfect decisions. While discussing the lecture, Qazi Azmat Isa said that South Korea kept on the sustained path of development irrespective of the political regime because it had invested heavily in his social sector. Concluding the discussion, Professor Naqvi said that those countries become developed which grow continuously for twenty-five years.
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