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Sunday, July 21, 2024

Here’s how to reform Pakistan’s economic policy

The author highlights the steps Pakistan can take to reform its economic policy. According to the author, If Pakistan wants to become an independent, strong nation, it has to establish a uniform and definite position in its policies, especially its economic policy.

One thing is for sure, Pakistan needs reform in its economic policy. Despite its great potential, its economic policy heavily depends on powerful governments and corporations, which mould Pakistan into the small underdeveloped country it is.

If Pakistan wants to bring itself beyond such matters and become an independent, strong nation, it has to establish a uniform and definite position in its policies, especially its economic policy. These would not only ensure the robustness of its financial system but also develop infrastructure and bring maturity in its policymaking.

Uniformity can only be attained by a fixed value on trade policy. You must always have a strict ruling over trade actions. It mustn’t depend on politics, nor on one’s personal interest, because that is a path to destruction.

Read more: Pakistan’s Economic policy requires drastic reforms

People often believe trade is the exchange of goods between governments, but it’s not. It’s between people. People are the only ones impacted by such policies, not high-ranking officials.

It must be in terms of the needs of locals, and not an international strategy. Questionably, some people disagree with the term “Global Village”. But a global village is what made people get so far. But trade is not the only factor. We must make certain that other parts of the country are explored for options pertaining to national advancement.

The given points may seem like a geography lesson but connect deeply to what must be done to ensure the pillars of the treasury are set for life, not with broken and volatile bricks of despair.

Now, there are many ideas dependent on a healthy market.

Read more: Pakistan’s economic policy for the 2020s

Natural resources and capital

Valuable resources stored in the country include gold, carbon, precious stone, fuel and many more are the foundation of a new economy. Basic resources like these are found almost everywhere in the country, but there is little motivation for its use.

But if these same basic products were to be “value-added” to give even greater and fruitful output, its profit would heighten. For example, an extracted raw fuel such as natural gas would have a diminished value in the market due to its imperishability.

However, the same resource, if processed by government-owned companies would surely save it from going to private companies, which would increase the prices, despite their one-time processing machinery purchase. This brings us to our second point, Capital.

Read more: Whats wrong with Pakistan’s Growth Recipe!

Capital, funding, investment, all words of great meaning in this world, but little to no understanding. Pakistan is known to invest in the wrong things. It needs to expand its outreach to large-scale, long-term solutions.

In the first law of thermodynamics, the law of conservation of energy is a significant point. An important incentive to remember when considering an investment is that it is a reproducible asset and exists as a form of energy, which never ceases to exist. It always exists in one form or the other, therefore known as “low-risk security”.

Read more: AWT Investments Set to Transform Pakistan’s Investment landscape

Independent local economies?

This is a highly ignored issue in economics and some economists even suggest its irregularity among many regions. However, independence is the most successful and mature trade guideline.

In the late 1900s, the United States was set for a robust economy, but certainly not for its location in the world, but in fact, the amount of sovereignty it gave to each state, without fear of any state separation. Each state was given a local economy, a presiding officer (Governor) and a state treasurer, who managed the economy.

This way, each economy functioned separately with international companies and governments and gained its own income to combine into the federal saving. This not only helped each state, whether it was the busy commonwealth of Pennsylvania or landlocked Idaho, it even reduced inequalities and discrimination among Americans on nationwide spending. In fact, Idaho is known in many regions for its potatoes which are notably used in McDonald’s.

In Pakistan, it could be a way to cool the national conditions as well as help the economy recover. Every Province must have its own dominant economy, which it centralizes to Islamabad, after taking its own budget from it.

The development would be on the horizon for much of the areas, still recovering from years of natural disasters. It is estimated that if this were to happen, the country could see market stability and vigorous growth among international relations.

Read more: Who is responsible for decline in Pakistan’s economic growth: Oil prices or government’s ineptness?

Education: an unconstructed pillar 

Another over-looked matter would be education.

For long, education has been the bridge between success and principles. Since the beginning of time, some form of learning has always taken shape. Today, two challenges face that learning and believe me when I say COVID-19 has absolutely nothing to do with it.

About 258 million school-aged children are out of school, according to UIS data for the school year ending in 2018. This, just a fraction of the staggering statistics that loom around the internet. 69% of Pakistanis are known to have only studied 0-10 years in education and have gone on to work for less qualified firms which also work for their own interests, not those of the country.

Read more: The ugly truth about Pakistan’s education system

I propose that funding be put into such people and an enhancement be done to the syllabi. All conversations about school syllabi talk about how mind-numbing it is. But it is what it is.

There are solutions to make it a bit more enjoyable, but the important part is not focusing on amusing the children, but teaching them more than something they can read out of a book for example life skills, relevant life skills, pivotal to their career.

In Pakistan, close to 49% speak English as a second language, and only half of them possess quality-writing skills. Real progress needs to be made among the poor community, whether there is return earnings or national benefit.

Read more: Is education in mother-tongue really essential?

Relying on energy production

The country has always relied on non-renewable resources to produce and supply energy. However, capital and great encouragement would help change this.

A study by IRENA, showed, “Natural gas and oil are the two main energy sources, accounting for 43% and 36% of total primary energy supply (TPES) respectively in 2015”. For Pakistan, specifically, it showed that “This could assist policymakers in evaluating the costs and benefits of both demand-side and supply-side”.

Read more: Addressing Pakistan’s Gas Crisis through Energy Efficiency

A report by the EPA highlighted the benefits of such actions.

1. Avoided electricity loss in transmission and distribution due to resistance of wires.

  1. Avoided costs of electricity generation or wholesale electricity purchases.
  2. Lower wholesale market clearing prices.
  3. Avoided risks related to long lead-time investments.”

It is worth noting that over the past few years, Pakistan’s geopolitical strategy has greatly shifted with every new administration in every corner of the world, especially those which prefer Pakistan’s strong views on both religion and policy.

Now, arguably, Pakistan’s somewhat selfish approach over the years has invited much criticism and based Pakistan’s existence on nothing more than funding and investment from foreign powers.

These are just the first steps needed to ensure a lively monetary condition, and a progressive Pakistan.

Read more: Pakistan’s Economy at 2030

The author is the Head of the Department for Social Sciences at TMUC, Pakistan, and an economist specialising in Newtonian Gravity Model Economics. She can be reached at sarinashirazi5@gmail.com. The views expressed in the article are the author’s own and do not necessarily reflect the editorial policy of Global Village Space.