Model for Pakistan's Economy

[FaujHistorian]

I don't know man what you talk about....Peace out.

that's a good way to save Islamists and marxists ideals and laws.

just deny they don't even exist.

 

[AUz]

that's a good way to save Islamists and marxists ideals and laws.

just deny they don't even exist.

lol....dude thats just what I have been trying to ask you all along..

Please "show" me where and how these so-called ideals exist?

 

[FaujHistorian]

lol....dude thats just what I have been trying to ask you all along..

Please "show" me where and how these so-called ideals exist?

Are you not willing to recognize things that are right in front of us?

 

[Chak Bamu]

For Pakistan to progress, we first need to look at Pakistan's own internal contradictions. The friction and fissures are the primary reasons that keep us from benefiting from our strengths.

Give Pakistanis the freedom to improve their lot and this country can easily attain 6-8% growth. Even when our government does nothing extraordinary to improve our economy, we can get this much out of our country. No government has ever done anything particularly positive for Pakistan, all the improvement and progress that is to be seen has been achieved by the dint of a common Pakistani's hard work for improving his and his family's lot.

In my view we really do not need to do anything revolutionary to improve our economy, we need not change people's minds, or change their education, or tell them what is wrong with their beliefs, or exhort them to take a biased look at history to find phatoms of Islamists or marxists, or XYZ-ists. All that has more to do with the proclivities and biases of individuals who take upon themselves to 'educate' us Pakistanis.

Rather than change people's minds and beliefs, we need to re-orient them. Change is hard, particularly when it comes to mindset and belief. But it is easy if you convince someone to take a look at their priorities instead of discarding them.

All the noise about history changes not a single thing when the issue is the psychology of the person making all the noise. Studying history does nothing to alleviate the shortage of energy, for example. The dysfunctional nature of our judicial system stays however it is and no amount of poring over history books would do anything. It is easy to decry Islamist and Marxist, since that is easier than actually doing something about improving creaky leaky infrastructure, increasing school enrollment, or expanding tax net.

We need to address our internal contradictions to smoothen the road to progress. And for that we need to be accepting and accomodating of differences. Holier-than-thou or More-knowledgeable-than-thou attitudes can hardly comprehend the importance of simplicity - does not suit them.

 

[FaujHistorian]

For Pakistan to progress, we first need to look at Pakistan's own internal contradictions. The friction and fissures are the primary reasons that keep us from benefiting from our strengths.

Give Pakistanis the freedom to improve their lot and this country can easily attain 6-8% growth. Even when our government does nothing extraordinary to improve our economy, we can get this much out of our country. No government has ever done anything particularly positive for Pakistan, all the improvement and progress that is to be seen has been achieved by the dint of a common Pakistani's hard work for improving his and his family's lot.

In my view we really do not need to do anything revolutionary to improve our economy, we need not change people's minds, or change their education, or tell them what is wrong with their beliefs, or exhort them to take a biased look at history to find phatoms of Islamists or marxists, or XYZ-ists. All that has more to do with the proclivities and biases of individuals who take upon themselves to 'educate' us Pakistanis.

Rather than change people's minds and beliefs, we need to re-orient them. Change is hard, particularly when it comes to mindset and belief. But it is easy if you convince someone to take a look at their priorities instead of discarding them.

All the noise about history changes not a single thing when the issue is the psychology of the person making all the noise. Studying history does nothing to alleviate the shortage of energy, for example. The dysfunctional nature of our judicial system stays however it is and no amount of poring over history books would do anything. It is easy to decry Islamist and Marxist, since that is easier than actually doing something about improving creaky leaky infrastructure, increasing school enrollment, or expanding tax net.

We need to address our internal contradictions to smoothen the road to progress. And for that we need to be accepting and accomodating of differences. Holier-than-thou or More-knowledgeable-than-thou attitudes can hardly comprehend the importance of simplicity - does not suit them.

Well said


you talk like one of my favorite economists Hernado de soto as to what he said in his book

The Other Path: by Hernando De Soto: Amazon.com: Books

 

[AUz]

Are you not willing to recognize things that are right in front of us?

I am...I know, and have already stated, that there are fundamental problems with Pakistani economy and our policies..but I don't consider it "Islamist-Marxist" fault but our incompetent, corrupt politicians' fault. Simple.

Uptil now, you haven't been able to substantiate your rhetoric with reliable facts. Simple as that.

 

[KRAIT]

I don't know man what you talk about....Peace out.

Wazzup buddy ?

 

[Chak Bamu]

Well said


you talk like one of my favorite economists Hernado de soto as to what he said in his book

The Other Path: by Hernando De Soto: Amazon.com: Books

I get your point. Though I must say that we are not Peru. Our problems are a bit different. But the importance of providing justice is a universal need. Our dysfunctional judicial system is one of the most important drivers of our instability. Incidentally many many people talk about Taliban, being appreciative of their 'speedy' justice, precisely because of our antiquated, byzantine, glacial judicial system.

So, this is one of the internal contradictions of Pakistan that I mentioned. There are others.

But improving our economy has little to do with casuistry, debates, sophisticated analysis, and what-not. China progressed with less-than-perfect systems. India is also an example. We need some stability, some energy, less bureaucracy, and we can do much better.

 

[PakPrinciples]

Japan's population is in similar range as Pakistan.

Japan has really little natural resources and yet they are world power.

What gives.

on topic.

Both China and Japan are very good examples for Pakistan

We too can be as prosperous as them as soon as we start working hard as service providers for the rich Western countries.

peace

There are a number of reasons such as the inefficiency of a civilian democracy, the bad policy of free trade for developing economies, etc...

If you are interested in what steps can be taken to improve the economy a really great book you should read is "Kicking Away the Ladder: Development Strategy in Historical Perspective" by Ha-Joon Chang (possibly the best known development economist today). He also has another book titled "Bad Samaritans" and both of his books outline all the lies of neoliberal economic policies that countries like the US promote but never followed themselves and how they lie to countries like Pakistan screwing up our own economies. Once you read these you will completely change how you view things particularly Europe and N. America as models of development and people you even want any advice from (particularly considering their development was abnormal since all of them benefited from slavery, colonialism and theft). He also has a new version of another great title called "Reclaiming Development" which I want to order but is currently not in stores. You should check it out as well if you can.


Riaz Haq also had a good post on his blog about this subject:
Haq's Musings: Asian Tiger Dictators Brought Prosperity; Democracy Followed

One reason to note is Pakistan's tax to GDP ratio is too low at only 10% it does not even cover the 2014 budget at 12.5% nor has it covered the budget since Musharraf left office. Without increased tax collection not only does the country accrue yearly deficits (i.e. loans it has to pay compounding interest on and I believe we currently devote a third of the total budget to paying down the debt and the interest its gathered) but it does not have the capital required to invest in industry which includes building power plants to meet the countries energy needs.

• Simply put investment drives real GDP growth:

FDI (foreign direct investment) is great but aside from being unreliable it generally accounts for a very small fraction of total investment within a country (ex. in India’s case it translates to about 0.8% of GDP while in China it is about 1.5% of GDP in total when you subtract outflows from netflows as per World Bank figures). Most investment will come from indigenous businesses and the government. Pakistan is under investing in itself (ex. about 15% of GDP in Pakistan compared to China at 49% and India at 36% of GDP as per the World Bank - Gross capital formation (% of GDP) | Data | Table). If the Pakistani government simply raises tax revenue to invest in its own industries those businesses which benefit from that investment will then continue to invest portions of future profits back into further expanding operations at home. This has an additional benefit for the economy because it keeps revenue generated from industry within Pakistan instead of being wired out of the nation and can slowly replace imports that eat up valuable foreign exchange.​

• On page 3 of "An Exploration into China's Economic Development and Electricity Demand" by Zhaoguang Hu, Xiandong Tan, Zhaoyuan Xu the correlation between GDP growth and electricity consumption for China from 1978 to 2009 was 0.993, for Japan from 1965 to 2006 was 0.9903 and for the US from 1949 to 2006 was 0.9921 which confirms that an accompanying increase in electricity production is a must for economic growth and this is generally where electricity/energy elasticity comes in (generally I have seen figures around 0.8 meaning a 1% increase in GDP required a 0.8% increase in electricity production). Unfortunately, we come back to the same problem being not enough tax revenue is collected to invest in electricity production so the country winds up paying uneconomical rates to IPPs and requiring loans from foreign nations and economic bodies (ex. ADB, IMF, WB, etc...) which need to be repaid with interest when all of this could have been avoided and the country would have saved billions over the long term. Furthermore, without tax revenue for investment we cannot exploit our own vast indigenous sources of energy (ex. Thar lignite, Shale gas, Shale oil, etc...) and are required to import fuel which compromises Pakistan’s long term security and interests (ex. During a time of war if we are somehow blockaded by a number of enemy nations allying together like during 1971 when the USSR, India and the Mukti Bahini worked together to shut us out of Bangladesh we need an increased ability to produce our own fuel).

Another issue to take note of is Nawaz Shariffs plan to give India MFN status an agreement akin to free trade discussed by Ha-Joon Chang. This kind of agreement would be detrimental to Pakistan's economy particularly considering large subsidies India provides to its agricultural industry (which affects the pricing of a large portion of all value added products they produce) and because of the benefits it attains from an economy of scale due to its much larger population. Historically all of today's largest most developed economies employed tariffs, duties and taxes to ensure that their own indigenous industries were able to out-compete larger and/or established foreign businesses doing trade within their own borders and only when those indigenous businesses had fully industrialized and were able to compete on a global scale (regardless of subsidies or economies of scale your competitors might gain advantages from) did you open up your economy to free trade. Pakistan is still a developing economy and free trade or this MFN nonsense is not a good idea regardless who it is particularly not in the case of India which has continued to occupy Pakistani territory (i.e. our province of Kashmir).

However, one part of this argument that needs to be noted is that a large portion of Pakistan's economy is considered undocumented and I have read reports stating it is about 36% the size of the current GDP but it could actually be much larger meaning the economy is a lot bigger than anyone currently thinks.

I can keep going on about this subject but I am going to stop here because longer posts tend to go unread and what I stated above in addition to the books I recommended will give you a very good idea of what needs to be done.

 

[FaujHistorian]

@PakPrinciples

I appreciate the info. I have read it and I understand his attack on developed countries and freed trade type of agreements.


But let me ask you a simple question.

How do you fit S Korea's meteroic rise as an industrial power house.

While the same culture, same language, same history of North Korea resulted in utter devastation of its economy.


Thank you