We should also
learn from the failures of India. They also have a huge demographic Dividend, and some of the best universities in the region, but
failed to reform enough to develop an industrial manufacturing base needed to have a sustainable, adaptable, economy like China. Yes, we are taking on a lot of debt to make CPEC happen, but we need to keep in mind the only way to make CPEC work is make the reforms and
fundamentally transform the nation.
If we fail to reform, in 10-15 years, China will move on to countries in Africa, where there will be more young people, close to raw materials, that they can do the same thing. We have a small window of 10-15 years to change, otherwise we only have to look at India to see what a failure to properly and fully reform looks like.
As you rightly pointed out, Pakistan doesn’t have the luxury of sitting idle for another 2-3 decades and the window is closing very quickly. African countries like Ethiopia has been working really hard to attract foreign investment and try to catch up with China. They have been sending students and officials in mass to train in China and quickly adopted many aspects of Chinese model of development. That’s how they have been growing like 10% per annum. They are clearly in the trajectory of uplifting their nation massively.
I am sure that every patriotic Pakistani would like to see their home country to become an modern, prosperous and powerful country. The process to achieve this goal is industrialization. However this is an extremely difficult task. If I am not wrong, only 2 countries have achieved this feat in the post WWII era, namely China and South Korea. Taiwan has achieved industrialization in some specific areas but not a full one. Clearly other countries who inspired to achieve the same should study and analyze the success and lessons and adopt them at home to create the same outcome.
The experience of both countries can provide some useful insights of the key ingredients of industrializing from an agricultural base economy to an industrial one. By analyzing them, The following elements elements appears to be presented in both countries:
* An central and authoritarian government.
* Large amount of capital (internal or external)
* Cheap and abundant land for industry
* Cheap, abundant power
* Efficient Transportation
* A large number of educated and patriotic people with great work ethic.
* Significant external assistance
I put central government in the first place as another elements are the products of its work. Both China and South Korea has or had an authoritarian and
patriotic central government, which has national development as the upmost priority and is awarded with unquestionably power in implementing any social, political and economical policy that are deemed to be necessary to drive economical development.
Let’s look at South Korea first as it is a bit more practical for Pakistan to analyze and follow as both nations are medium size and are poor in natural resources. China’s industrialization process is at another class of difficulty.
Unlike the current form, the government in South Korea back in 60s, 70s and 80s when it saw rapid economic development was an central and authoritarian one. The most famous one in the 60s was presented as civilian government but in practice a dictatorship under Park, Superme Council members and the Democratic Republic Party (DRP). It regarded economical development as the key priority and used its power to put through radical social and economical policies. South Korea’s economic boom was conducted with severe restrictions on workers right and press freedom. The annual GDP growth was 10%+ during the period of authoritarian governance.
However, in a remote possibility if there is enough political will and alignment within Pakistan to switch to this form of governance to pave the way for development, it is really difficult to be sustainable for a medium size nation like Pakistan due to the severe external pressure. Instantly there will be sanctions from the West and bad publicity from the “free media”. You will be under the siege of the “free world”, just like what China has endured over many years. Maybe this is not a bad thing at all as external pressure is great for nationalism to rise in Pakistan.
A possibly but unlikely solution is to follow Singapore, which enjoys both the fruits of economic development by running an authoritarian government and the praises around the world as the model of development. understandably they have to be aligned with US to enjoy them at the same time but some good statecraft has been shown.
“Reform” in Western economical textbook means privatization and full market economy (ie the invisible hand). It tends to herald withdrawal of public enterprises and central government and weakening of regulatory power. To the opposite, what both China and SK have shown during their industrialization process is that power should be centralized and fully strengthened. The government should be empowered to see resources and production factors like land, worker, and capital allocated and flow to the right sectors and players and ensure market competition takes place.
The real reform is to release the production factor from inefficient to efficient part of the economy and it is highly political. That’s why the central government needs to be empowered to execute them.
Taking industrial land as an example. Abundant land for industry is a key production factor that modern industry requires. It requires by significant land reform and can cause massive social, economical and demographical changes. It cannot happen without radical social reform in the rural area, which requires significant political power and execution capability. This can be a bloody process too. US has fought a civil war for the workers who locked in the Southern plantations and are required for Northern industry.
To conclude the long discussion , I think Pakistan has some elements in place to start industrialization but the most critical one in centralized and authoritarian government is still missing. China can provide much needed help in capital, technology, infrastructure development, military and these elements can take Pakistan to a reasonably good place in term of development. However to move to the next level and complete the industrialization, Pakistan needs to consider whether more radical changes are required to create other required elements. With the increasing induction in robotics, the door of industrialization is not getting wider.
