Peo­ple, busi­ness and growth

The Pak Banker - - MARKETS/SPORTS - Amir Hus­sain

Do­ing busi­ness in Pak­istan is a chal­leng­ing ven­ture that tends to sur­pass pro­fes­sional com­pe­tence, en­tre­pre­neur­ial skills and acu­men. Those who have cho­sen this coun­try as their busi­ness des­ti­na­tion must, there­fore, have very strong nerves and the abil­ity to tackle the flu­id­ity, rent-seek­ing, nepo­tism and klep­to­ma­nia of the po­lit­i­cal elite.

It re­quires ex­tra­or­di­nary dy­namism and risk ab­sorp­tion abil­i­ties to carry out prof­itable busi­nesses in this coun­try. Those who have earnt bil­lions through kick­backs, com­mis­sions, tax eva­sion, con­tra­band and the mis­use of pub­lic of­fice have stashed away their ill-got­ten money for off­shore in­vest­ments. These in­vest­ments are meant to ac­cu­mu­late wealth ex­po­nen­tially so that a por­tion of it can be rein­vested to buy vot­ers as well as the ad­min­is­tra­tion and, at times, to evade ac­count­abil­ity and jus­tice. This ugly busi­ness con­tin­ues at the cost of pub­lic wel­fare, so­cial ser­vices and eco­nomic de­vel­op­ment.

There must a se­ri­ous as­sess­ment and an em­pir­i­cal anal­y­sis of the core fac­tors of cor­po­rate sick­ness and the im­pact of in­dus­tri­al­i­sa­tion on poverty. It has been ar­gued that the in­ef­fi­ciency of the cor­po­rate sec­tor as well as the slow in­dus­trial de­vel­op­ment and busi­ness growth in our coun­try is pri­mar­ily an out­come of an in­ter­ven­tion­ist state. Pak­istan lags be­hind the Asian economies in in­dus­trial de­vel­op­ment and busi­ness growth be­cause of an over-re­liance on the gov­ern­ment.

Con­trary to this lib­eral eco­nomic ethos of ra­tio­nal choice and the in­vis­i­ble hand to push eco­nomic growth, Pak­istan has pro­moted the vis­i­ble hand of the gov­ern­ment as a key de­cider of the eco­nomic growth tra­jec­tory rather than the free mar­ket. This re­liance on state in­ter­ven­tion­ism has been much deeper than a Key­ne­sian model of de­mand man­age­ment. The ar­gu­ment goes fur­ther to ad­vo­cate a free-mar­ket busi­ness ethos as a way for­ward for eco­nomic growth and busi­ness de­vel­op­ment.

This clas­si­cal model of eco­nomic lib­er­al­ism of­ten loses sight of the deep-rooted is­sues of lo­cal gov­er­nance and lead­er­ship. Fur­ther­more, it is a proven fact that all the de­vel­oped economies of the world never prac­tised a free mar­ket eco­nomic the­ory at any stage of their eco­nomic de­vel­op­ment. Gov­ern­ments have al­ways played a crit­i­cal role as the sta­bil­is­ing agents of the cap­i­tal­ist econ­omy, not only dur­ing slumps but also dur­ing times of an eco­nomic boom. New­lye­merg­ing economies like In­dia, Brazil and China have never fol­lowed a free- mar­ket eco­nomic model. In­stead, they have fol­lowed cen­tral plan­ning and pro­tec­tion­ism to achieve global com­pet­i­tive­ness. What has worked more than the free mar­ket is im­proved gov­er­nance, fis­cal au­ton­omy, pro­mot­ing lo­cal busi­ness ini­tia­tives and en­cour­ag­ing pro­tec­tion­ism to safe­guard the na­tional in­dus­try first.

The chal­lenges for the eco­nomic man­agers in Pak­istan to achieve cor­po­rate and in­dus­trial growth are mul­ti­fold. They in­clude an en­vi­ron­ment of en­ergy crises; se­cu­rity con­cerns; ris­ing pub­lic debts and ex­ter­nal li­a­bil­i­ties; widen­ing fis­cal deficits; soar­ing in­fla­tion; un­em­ploy­ment; and slug­gish eco­nomic growth. An ef­fec­tive im­ple­men­ta­tion of long-term growth strate­gies along­side the ag­gres­sive pur­suance of con­tex­tu­ally-in­formed ac­tions for all the ma­jor sec­tors of the econ­omy is crit­i­cal to achieve rapid eco­nomic growth.

The ma­jor in­ter­nal rea­sons iden­ti­fied for the sick­ness of cor­po­rate en­ti­ties in­clude the lack of ef­fec­tive cor­po­rate plan­ning; pro­duc­tion is­sues; the un­avail­abil­ity of raw ma­te­ri­als; fi­nan­cial prob­lems; and the lack of man­age­rial ca­pac­ity to ef­fec­tively man­age op­er­a­tions. The ob­so­lete tech­nol­ogy, the in­abil­ity to ef­fec­tively mar­ket prod­ucts and ser­vices in the lo­cal mar­kets, the bar­ri­ers to en­try in the in­ter­na­tional mar­kets due to the lack of qual­ity stan­dards and a short­age of skilled hu­man re­source have added salt to in­jury. The chal­lenges con­fronted by var­i­ous sec­tors of the econ­omy owing to the ex­ter­nal busi­ness en­vi­ron­ment in­clude the high pro­duc­tion cost trig­gered by the high in­put cost of raw ma­te­ri­als and util­i­ties; huge trans­porta­tion costs; a high in­ci­dence of taxes, mo­nop­o­lies and car­tels; the de­clin­ing ex­ports due to non-tar­iff bar­ri­ers; the de­val­u­a­tion of the ru­pee; the en­ergy cri­sis; the spike in fuel prices; the de­te­ri­o­rat­ing law and or­der sit­u­a­tion; high markup rates; and run­down trans­port net­works.

The core ob­jec­tives of eco­nomic growth should re­volve around the cen­tral idea that fos­ter­ing sus­tain­able im­prove­ments in the so­cial and eco­nomic life of the peo­ple will re­sult in (and is a pre­req­ui­site for) sus­tain­able peace in the coun­try. This will build the req­ui­site ca­pac­ity of the pop­u­la­tion, which in­cludes en­gen­der­ing the de­sired vi­sion, val­ues, hope and de­ter­mi­na­tion and help­ing peo­ple de­velop a wide range of knowl­edge and skills. We may con­clude that pro­mot­ing learn­ing must be cen­tral to any ef­fec­tive in­ter­ven­tion.

The peo­ple we reach will need to learn how to think, act and in­ter­re­late in ways that pro­duce the out­comes that they want within them­selves, their com­mu­ni­ties and through their in­sti­tu­tions of gov­er­nance and lo­cal de­vel­op­ment pro­cesses as well as through the col­lab­o­ra­tive net­works and part­ner­ships that they build. Un­til this re­quired learn­ing hap­pens, no amount of money will suf­fice. But the form of learn­ing that is needed must be an­chored in con­crete de­vel­op­ment ac­tion.

In this con­text, peo­ple don't re­ally 'learn' sim­ply by be­ing ex­posed to top­down busi­ness and eco­nomic growth mod­els. It is in­evitable that the gov­ern­ment, the civil so­ci­ety and the pri­vate sec­tor must work to­gether to cre­ate an in­clu­sive eco­nomic growth model. This form of in­ter­con­nect­ed­ness is the only vi­able so­lu­tion to pro­mote busi­ness growth, fuel eco­nomic de­vel­op­ment and en­sure a pros­per­ous fu­ture for the poor in Pak­istan. If democ­racy fails to de­liver, we must ques­tion it and as­pire to­wards a higher level of par­tic­i­pa­tory democ­racy.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.