I'm not merely trying to play nice to Pakistan. Almost all developing countries have people who are corrupt with questionable loyalty and Pakistan is no different in this regard. At the risk of getting reprimanded for straying off-topic, let me elaborate my position.
Future is always unwritten. Prior to the 2008 economic meltdown, almost every analyst was bullish about world economy. In retrospect, it seems foolish - but this was not conventional wisdom back then. Subsequently, Iceland's economy had a meltdown into a seemingly bottomless pit. But a decade later, the country was back to where it was before
https://knowledge.wharton.upenn.edu/article/icelands-economic-recovery/
Did we expect that COVID or Russo-Ukrainian war will wreck world economy a decade ago? How can we say that something else domestically or internationally not affect South Asian economies one way or the other? I think there is a fair chance of India reaching $5 trillion economy before or by 2030, but this is based on optimistic assumptions that nothing catastrophic will affect the economy. All our rosy long term predictions on where Bangladesh or India's economy will be in a decade from now is based on an implicit optimistic assumption that everything else will be equal. This is not always granted.
So why do I think Pakistan's economic trajectory can recover and course correct? Because most of Pakistan's economic problem is related to BOP crisis. Recent news posted in this forum show that:
a) The current PDM administration has cut all fuel subsidies.
b) Reko Diq mines are set to contribute about $2 billion revenue annually in a few years
c) Gas reserves that were found recently could further contribute $1 to $2 billion annually.
The above may not sound much given the size of Pakistan's economy, but it could just be enough for the country to balance its books. With a little bit of political stability and improvement in credit rating, sustainable growth (that does not result in a BOP crisis) can be achieved within a few years. Future is always unwritten
Thanks for the optimism but I stand by my words.
You have talked about macro indicators, which is the same approach most Pakistani economists take, including Imran Khan's appointees. It is the 'trickle down' approach that fixing the macro will take care of the micro. Look after the rich and the poor will eventually benefit down the line.
That simply does not work in Pakistan. LOL. I sound like
@jamahir
Pakistan now has shiny malls and imported good, luxury car dealerships and stratospheric house prices, but all this opulence is funded by corruption. Corruption in the sense that very few people pay income tax. If Pakistan had the same tax rates and collection as developed countries, all these shiny things would disappear. Instead we would have good schools, universities, hospitals, public parks, public transportation, clean air, and a host of things which are nonexistent in Pakistan. KIds in rural areas would not be dying of water poisoning and malnutrition while the upper middle class drives by in imported cars on artificially expensive motorways built with corruption.
You also mentioned Reko Dig, so let me give you three models around the world:
- The Russian model where a handful of billionaire oligarchs control the country's mineral wealth while the general population wonders if they had been better off under the Soviets, with at least some things guaranteed.
- The GCC model where the dictators spend the nation's wealth on shiny new buildings and billion dollar weapons systems. Instead of building universities to train their own people in 21st century technologies, they import workers or export money so other countries can build those universities and train their people.
- The Norway model where the income from mineral wealth goes into a national fund which helps build schools, universities, hospitals and fund retirement and social benefits for the whole country.
What's the difference between these three models? It's the people running the country. Afghanistan has more mineral wealth than Saudi Arabia. LIthium, copper, rare earths, you name it, they've got it in abundance and good quality. Sadly, even if they develop those resource, we know the West and other countries will make sure they follow the Russian or GCC model, not the Norway model.
So, coming back to Pakistan, I do not see any chance of improvement for the masses regardless of global changes or massive resource discoveries. The entrenched corrupt system simply will not go, not least because it is defended by foreign interests that want to make sure Pakistan remains where it is.
