Search

Economy – Why is it going wrong?

The Asian Development Bank has recently given quite a grim warning about the Pakistani economy by essentially citing that the growth trajectory will remain on a declining trend at least for the foreseeable future. With the GDP growth rate currently at a paltry 2.80% and expected to be further under pressure in the coming days, the situation does not augur well for an average Pakistani – not only growth being well below inflation, but also job creation being only just one third of the desirable level. Unlike the developed western or European economies, Pakistan’s peculiarities are quite different: It has a burgeoning population with a population growth rate next to none and nearly 2-2.5 million people enter the job market every year from what is a rather a young population where majority are 35 years or under – Youth as we know can be quite volatile, meaning, in essence, the current situation depicts to be an explosive mix of elements that can go wrong the moment any government fails to deliver on its promises on upward social mobility. PTI is no different. Little wonder that public love affair with the party is waning fairly quickly – As the election time promises fail to materialize the dissatisfaction mounts and the public temper rises. The fact that Pakistan already has a painfully long history of successive government-delivery failures (almost since the 70s now) is not helping either – naturally, as a result the threshold of public patience stands quite thinned! Also, in the process the desperation has grown to an extent where the masses are even willing to condone inefficiencies cum corruption as long as they got something in return! The average man on the streets neither understands nor really cares about the economic mumbo jumbo on deficits and debt! And for this reason alone, despite numerous allegations, the Muslim League perhaps still remains the party that finds the most traction with the Pakistani people, because its shortcomings aside, the thing is it visibly undertook projects that positively affected the life of the common man, thereby creating an impression of a government, which not just takes, but also gives. And this is precisely where the Imran Khan government is failing: the empathy is missing. The heart or more appropriately the rhetoric may be in the right place, but operationally it finds itself to be out of its depth in being able to solve the issues confronting an average Pakistani.
So, the question here arises that where exactly is this government going wrong? Answer: Mainly, in its mindset and in its understanding of Pakistan’s economic culture. Very few governments understand that changing culture can often be impossible. Economic management is a science, which relies on elements such as economic history, structure, environment and culture, as much as it relies on pure economic theories. Meaning policies needs to be devised in the context of an economy’s history, environment, culture and its existing structure. Any government that does not understand these elements when devising economic policies will just end up facing a brick wall instead of making any progress. Numerous management gurus like Drucker, Schumpeter, Porter, Prahalad and others, have delved into the process of changing organizational or even an economic culture and have almost unanimously come out in observing that such a thing is almost impossible over an economic cycle spanning as long as half a century (50 years).
The only way to change a culture is to totally deconstruct and then rebuild an organization or an economy and still this may not be fool proof – with economies this option may simply just not be there. Their solution lies in first understanding the very culture and environment of an economy and then build the desired ‘change’ around the very underlying realities that otherwise are largely unalterable. It is obvious that PTI failed to comprehend this and although at places well intentioned, it simply rushed into bringing about a change that simply went against the ethos and the operational dynamics of the Pakistani economy. A tunnel vision of people who are either simple accountants or have little experience in the way of working in Pakistan have ended up unleashing dynamics that have resulted in scaring people away from operating or in putting up the cost of doing business so high that it has just become unviable for most to operate. The unnecessary registration drives, abolishment of zero-rating instead of finding viable solutions, an unbridled FBR, unrealistic interest rate hikes, an over devalued currency, etc., all of these, unless quickly checked or corrected, will cause nothing but more damage and pain.



--!>

PM resolves to facilitate trade with Afghanistan

--!>