The problems being faced by Pakistan today have no short cut solutions. Whether economic, political or social, these problems are so deep rooted that any steps taken to rectify the situation will leave inevitable ramifications in the short run but if done right, the trickle-down effect of these steps is the only way to hit these problems at their core. It is vital to challenge our underlying values and begin with the basics again. Any other quick fix will be nothing but a band aid on these ever growing wounds- temporary and ultimately useless!
This idea is exactly what has been very effectively discussed in “Economic Management in Pakistan” by Dr. Kamal Mannoo. Dr. Mannoo is a widely acknowledged writer with “Economic management in Pakistan” being his second book following the first one being “ A Study of WTO” which was widely received, both on the domestic and international front. Moreover, he is also a renowned industrialist being a part of various private and public sector corporate Boards. His articles and papers have been published in recognized journals, both in Pakistan and internationally which is basically what this book is based upon.
Believing economy to be the foremost concern of Pakistan, the author stresses upon a lack of vision, professional strategy and effective management. There is no right answer to these economic problems which is why decision making should be more reliant on risk minimization and effective measures that are best suited to real life scenarios. An important point raised is the increasing awareness of the public masses who despite their impatience for a rescue from these economic problems cannot be fooled easily. Therefore, it might be an effective idea for the government to take a more transparent approach when sharing their short and long term plans and effectively utilize professional management structures to ease into the tough decisions. In a situation as Pakistan is in right now it is better to avoid a conflict of interest with its own people.
Blaming neo-liberal market fundamentalism ruling the market for the global financial crisis of 2008, Dr. Mannoo believes has been detrimental on many levels leaving more than 40% of our world’s population poverty-stricken. Pakistan has been one of the most to suffer in terms of persistent poverty. Given this delicate situation, the economic team and the government will have to come up with a well balanced approach regarding the selling of public sector enterprises. Let this not be another opportunity to let the greed and self interest rule but rather “sound economic governance requires management skills entailing professional expertise combined with pragmatism, practicality, prudence, an eye for detail, entrepreneurship and vision”.
Dr. Mannoo has actually attempted to suggest a guideline to the new government to work towards bringing about the much needed economic revival in Pakistan. The key to this, however, is mainly a new corporate responsibility and focus on “good corporate governance”. It is important to direct funds towards community, education, infrastructure and curbing the energy crisis. Due importance must be given to the concept of ‘fusion economics’ under which it’s important to think outside ideological economics and take the initiative to do what would more effectively work in a given situation: forming different combinations of market tools and central planning in accordance with what of more or less would suit a particular situation. Some examples of such mixed economies are Vietnam, Laos, Mongolia and Malaysia.
It is mandatory at this stage to have our eye on the future. New trends such as “community over individual, greater social benefit over self and a level of state oversight that maintains fair play without stifling the potential of private entrepreneurship” will need to be adapted. The only question left to ask at this point is that who will actually take the initiative to move the economy and country in the right direction?
This book has been divided into three units: General
Economic Management, Industrial Revival and MFN & Trade Liberalisation with India.
One extremely commendable characteristic of this book is the emphasis that the author has laid upon the initiative that Pakistan as an economy has to take to be more connected with and mindful of international economies. This challenges the underlying trend that runs in our country of not thinking outside the box or taking actions that are long sighted and based on the bigger picture. Whatever that the new government decides to do for the struggling economy, their plans and strategies have to be in accordance with the rest of the world and at the same time suited best to Pakistan’s own unique situation. This concept makes up for two very interesting chapters in the book from Unit 1 namely “No Reinventing the Wheel! (part 1 and 2)” where Dr. Mannoo uses case studies of relevant examples such as that of China, Brazil, India and Vietnam outlining important lessons to be learnt by Pakistan mainly becoming an integral part of the global trading system in a way which best suits the economy.
Unit 1 deals largely with the concept of general economic management. Interestingly enough the author has tried to cover several factors that effectively influence and shape up the Pakistani economy rather than talking about the economic front in isolation. These factors include hostility and unrest generated by economic hardships among the general public; illegality and corruption; existing trends towards higher levels of economic inequality, unwise deployment of scarce resources and lack of accountability represented by the government and dark political environment stifling innovation and confidence of investors. The author continues to stress the importance of realizing the basic issues: “To sum it up, what it all means is that when finding solutions to come out of our present economic difficulties, it is important to take into account the notion that this crisis is not due simply to the greed or dishonesty of the ruling executive, but also largely due to the fundamental structural shortcomings in our basic financial management of the Pak economy”.
There are special mentions about the judiciary, China’s inclination towards engaging India more in economics relations than Pakistan, health status of the population; role, policies and objectives of State Bank of Pakistan, few but significant commonalities that Pakistan shares with Brazil, the rise of Renminbi as an international currency rather than the US dollar and Chinese structural reforms.
One thought-provoking chapter is “Contradictions Facing Pakistan!” which asks a very important yet underrated question “whether it is even possible to install a mature, stable Western style democracy within a civilization consisting of arguably one of oldest feudalistic cum centric cultures?” Many accredit the incomplete and not fully matured nature of Pak-style democracy to the growing extremism and intolerance not realizing how the merits and demerits of democracy translate into our culture and lifestyle. The contradictions currently facing Pakistan are categorized into three levels: the balance of power going beyond just the military, the judiciary and the political parties, translating into a power struggle between the feudal, the middle class and the poor: a trade-off between cheap labor and exports which may help the transition from poverty towards middle-income countries but may not necessarily move towards greater development- it’s important to work on continuous improvement on the labor skill to achieve sustainable growth; third contradiction is related to the reforms that Pakistan requires which can only result in a secure environment which works towards strengthening the national institutions and core values.
The second unit, “Industrial Revival”, focuses mainly on what Pakistan needs to work on with special emphasis on the public sector enterprises, the energy crisis, attracting FDI and highlighting role of women entrepreneurs which would help generate a positive image in the international market. It is important to clearly define state owned companies from the private ones and realize that more than ownership it is about rapid development. A fresh strategy needs to be revised where the government needs to demonstrate political will and firm resolve and the private sector to act more in terms of national interest and seeing the bigger picture. It can prove to be dangerous when the government starts competing with its own private sector. Angell’s illusion that businesses and trade have incentive to exploit and be aggressive is what rules the economy in Pakistan. It is important to challenge this assumption to reduce resentment and encourage faster prosperity. However, regrettably enough, there are no short term solutions to bring about the needed reforms in the power sector. Right now it may be the government’s only option to raise the power tariff but work towards an optimization plan simultaneously with eyes on a comprehensive long term vision.
The last unit deals with the ongoing issues between Pakistan and India and how it might be a smart choice for South Asian nations to speak in a common voice at the international level particularly trying to resolve three long-standing international concerns: IMF taking a more effective stance on representing Asia, Europe and US to open up their investment markets to Asian funds and promote success of Doha rounds to liberalize trade even more. Normalizing relations and liberalizing trade with India would play a major role in economic revival of Pakistan but at the same time not compromising issues that would endanger Pakistan. This is very tricky area for both the countries as mostly security concerns outweigh any chances of collaboration.
Dr. Mannoo should be commended for writing a comprehensive, concise guide for running the reader through Pakistan’s economic problems and all other interrelated ones. Even though its seems to be too simplistic a view at some occasions and sidelining importance of culture and lifestyle during case studies, it definitely makes us challenge our preconceived notions and dares us to step outside of our comfort zone. This book is a must read for students of economics, business and commerce to understand the true nature of our problems outside the written texts where they can discover that answers to our problems are not always black and white.