Preparing for the future
By Dr Ishrat Husain
It may sound incredulous that in a situation where we are faced with so many urgent economic problems one should even venture to talk about a long-term vision for the economy.  In fact, it is the absence of a consensus on this vision and strategy that has led us into trouble with sharp swings in our economic fortune. Ad-hoc fire fighting measures or short-term expediency would not suffice, but a systematic action plan anchored in a long-term vision discussed and agreed by all major political parties would set the direction for growth and poverty reduction. However, we should also be clear that we live in an imperfect and uncertain world where unknowns and imponderables would make it difficult to keep this vision and plan static. We have to keep on fine-tuning and adjusting it on a continuous basis in the light of changing circumstances.
 Second, we have to recognise that democratically elected governments will remain a fact of our life. We have to accept that “democracy is a non-negotiable need of Pakistan.” Non-representative transient governments, looking for temporary anchors of legitimacy, cannot introduce long-term sustainable reforms in the economic and social structure of Pakistan.  A multi-ethnic society such as ours can only be satisfied when all constituents have an equal say in managing and directing the affairs of the state. A group of well-meaning and qualified technocrats – civilian or military – can never articulate aspirations of the people nor aggregate the diverse perspectives of a multi-ethnic and uneven society. Non-democratic governments have proved and will prove to be a poor substitute for weaving the mosaic of social cohesion, although they may achieve short-term economic gains and maintain good governance for some spurts of time.
Divorce of politics from economic decision-making and governance is an illusory and impractical proposition. The elegance, orderliness and neatness we are looking for will never be attainable under a messy democratic system. Coalitions are likely to be a permanent feature of our political system. What we can do is to strengthen the political system itself by introducing reforms, including intra-party elections and a strong and independent Election Commission, through screening and disqualification of candidates under the provision of constitution. Checks and balances between various state organs – executive, parliament and judiciary and delegation of decision-making authority and devolution of administrative and financial powers to provincial and local governments will also help in this process.
Third, any long-term vision based on a model of dependence on foreign assistance will remain an artificial construct and add to the already existing uncertainties. Only domestic savings with some foreign direct investment forms a solid basis for sustained and equitable growth. Our history amply teaches us that foreign assistance is volatile, politically-laden and driven by the donors' agenda. Well-meaning reforms, introduced at the behest of bilateral donors or multilateral agencies, may ultimately benefit, but they have been met with fierce domestic resistance.  Who, in the right mind, can believe that any government that receives only 9 paisas out of each rupee of national income can adequately take care of debt servicing, defence, internal security, law and justice, education, health, energy and infrastructure? Tax reforms under these circumstances are thus highly desirable in the larger interest of the country, but because they form part of our agreements with external donors, there is widespread resistance against them. The result is large fiscal deficits and heavy indebtedness with high inflation.
What should be the essential ingredients for such a long-term vision? A number of elements can possibly weave into this vision, but in terms of priority at least three present themselves as priority areas.  These are (a) mass education of the bulging youth, (b) minimising inequalities and disparities through better governance and (c) making Pakistan competitive in the world markets. All three are interlinked and interdependent. As each one of the three key elements will take a long time to fruition, the ball will have to start rolling now.
Pakistan’s first and foremost task is to transform its youthful population into a pool of educated, trained and skilled human resources that not only adds value to productive resources but also becomes a source of supply for the global markets. Sixty percent of Pakistan’s population is below the age of 25 and will enter the labour force in the coming decades. The average years of schooling for our labour force is about 3 years -- the lowest in the South Asian region. The so-called demographic dividends will remain a rhetorical wish unless actions are taken today to lay the foundations for educating and imparting skills to this youthful population. The Education Emergency Report has shown the face of the current situation and we need to pull our financial, managerial, intellectual and teaching resources together to do what many countries in situations similar to us have been able to do over a span of few years. Let us stop the blame game and discontinue the sterile debate on the roles and responsibilities. Whether it is the public sector, private sector, NGOs, local governments, community organisations -- all have to work together because the task ahead is so humongous that no single player can do it alone. Education at all levels – primary, secondary, technical and vocational and higher – has to be accorded equal attention and resources. 
Mass literacy, spread of liberal education and expansion of skills will not only produce employable labour force, but also eventually help in inculcating tolerance and cohesion in Pakistani society and foster trust under the umbrella of a democratic political environment. The size of the economic pie i.e. opportunities for employment will no longer be confined to the boundaries of Pakistan, but will engulf other places where educated and skilled Pakistanis can be absorbed.
The extremist, fundamentalist and separatist elements will no longer be able to exploit discontent and frustration of the wasting youth for their own parochial purposes.
Concomitant with the spread of education and skills is the imperative for minimising inequalities and disparities – regional, income and gender-through equitable economic policies and better governance.
Educated and skilled youth can become a heavy destabilising influence for the society if the thrust of economic policies and distribution of economic gains are skewed towards favouritism, nepotism, money and connections. Blatant injustices in appointments, circumventing the law and rules to award contracts and widespread patron-client relationships, need to be wiped out. In an open society, vibrant media, independent judiciary and an active civil society can play this role. Revolts and revulsions, protests and demonstrations, judgments against excesses should keep these malpractices under control. The increased urbanisation over the next few decades will shift the power dynamics from traditional dynastic politics to a more alert and responsive group of elected leaders, who should prove to be more effective in guaranteeing the rule of law and strong parliamentary oversight. The recent moves under the 18th Amendment and the National Finance Commission award are commendable but devolution has to be extended to the next level, i.e. local governments. Empowerment of local communities in a highly diverse and unequal economic and social milieu is the only way to bridge the trust deficit and overcome the past follies of over-centralisation. Urbanisation, devolution of powers and education will together remove obstacles to socio-economic mobility and reduction in disparities. 
Finally, Pakistan’s competitiveness indicators show that we are a laggard compared to other countries in the region. The gaps in the agricultural yields between progressive farmers and the national average are large. Our manufacturing sector is narrowly based and stuck in products for which the global market demand is either stagnant or shrinking. Entrepreneurial and innovative energies are misplaced and largely directed towards rent-seeking activities such as subsidies, protection, tax evasion, loan default, etc. In terms of technological readiness, Pakistan ranks quite low. We have a gigantic task ahead to invest in science, engineering and technology to improve productivity in agriculture and industry. The latter can be achieved by adopting best practices and narrowing the yield gap in agriculture and developing competitive manufacturing in sunrise industries, while gradually shifting out of the sunset industries. As a late starter, learning from others and leapfrogging the whole cycle confer some advantage to Pakistan as compared to others.
An urban, educated and moderate middle class empowered to govern at the local level while remaining linked with the rest of the world provides the best assurance for the transformation of Pakistan as a self-confident, reliable, prosperous and peaceful member of the comity of nations.
The agenda for translating the above vision for Pakistan into a reality rests primarily on an uninterrupted, discontinuous and fully inclusive path of development where education of the youth takes the centre stage and rule of law, justice, protection of property rights and access to basic services are available to the ordinary citizens of Pakistan, and entrepreneurship and innovation are encouraged to make Pakistani agriculture and industry competitive. All political parties have to join hands, sinking their partisan differences to own and implement this agenda. n
The writer is Dean and Director, Institute of Business Administration, and former governor State Bank of Pakistan.