The Pakistan Institute of Development Economics (PIDE) has recently published a knowledge brief titled “PIDE’s Charter of Economy” which is referred as “economic roadmap” the country is in need of. PIDE is a post-graduate research institute, and a public policy think tank located in the vicinity of Islamabad, Pakistan.
🧵Thread on PIDE's Charter of Economy: 👇
Pakistan economic indicators over the last 72 years have fluctuated widely: Why so much volatility? Why does the economy rudderless & lacking direction? #PIDEresearch@nadeemhaque @saddameconomist @PIDEpk KB: https://t.co/J7xLwqpA05 pic.twitter.com/J6PcMlTbkA
— Pakistan Institute of Development Economics (PIDE) (@PIDEpk) July 26, 2022
First and foremost, pre-requisite of this is policy consistency for at least next 15 years. Once there is a political consensus, there should be no off-tracking from the set direction, whatever the case may be.
One may contradict with suggestions posed in PIDE’s Charter of Economy, but it is a worthy effort which should encourage other policymakers, economists, and political parties to bring forward their own charter of economy in order to have a thoughtful debate regarding long-term planning for the next 20 to 30 years.
It blames political mismanagement behind the nationwide chaos. As it says, “if politics negatively impact the economy, we are going in the wrong direction,” it means that politics and economics must be delinked if we are to take on the path of economic growth and development in the real sense of the word.
The PIDE Reform Agenda shows that investment and productivity are key drivers of growth in any country. Both are not only pretty low in Pakistan but have been in a downward spiral over the years. The real test then is to raise the investment rate and productivity substantially.
Research has amply demonstrated that the state of institutions is a key determinant for long-term growth and development. Realizing Pakistan’s resource limitations, this study emphasizes reforming institutions (laws, rules, procedures, and processes) to raise productivity and investment. Thus, the focus is on altering the software of growth to improve public and private investment productivity.
This approach is consistent with what the world-famous book “Why Nations Fail?” is all about, focusing on strengthening the institutions for the country’s prosperity.
PIDE’s Grand National Dialogue and Charter of Economy
During the PIDE’s webinar on “Grand National Dialogue and Charter of Economy” in which the discussants were Mehtab Haider (Senior Staff Reporter, Jang group) and Shahbaz Rana (Senior Analyst at Express news), identification of problems by them was somewhat same. However, both the discussants blamed different factors behind these problems as Mr.Mehtab pointed out the flaws in our education system and was not convinced by the PIDE’s Charter of Economy, while Mr. Shahbaz focused more on standard shortcomings like inadequate allocation of budget etc.
On the other hand, Mr. Nadeem-Ul-Haq (Vice Chancellor of PIDE) was the moderator whose focus was entirely on growth and investment. He said that our fundamental problem is lack of growth, regardless of formal or informal, and lack of savings which ultimately lead to lack of investments.
He is of the view that growth cannot be sustainable until the investment is adequate.
Moreover, it was also stated that regulation is so strong in the country that people prefer to avoid formal systems due to massive taxation which hinders growth. As corruption is in the genes of country and is involved at every step, accountability mechanisms should be set apart from management and no interference should be made. “Mismanagement cost is higher than corruption,” Mr. Nadeem said.
Regarding PIDE’s stance that economic analysis should not coincide with politics, it is evident in the case of China as it only focused on growth and investment and its position on international platforms is all known. Undoubtedly, Pakistan is at a critical position where consensus among parties and prioritizing the economy is the pre-requisite for bringing the country out of the emergency ward.
All eyes are on the revival of the IMF programme as a drowning man catches at the straw, but it should also not be neglected that Pakistan has a long history with the IMF as it has lent money 22 times during the last 60 years, and they all come with stringent conditions which can be seen in the form of deteriorating economic situation in the country currently. Skyrocketing fuel prices and high inflation are the situations about which nobody is unaware of.
Overall, there is a need to change the system rather than to expect the same system to produce fruitful outcomes.