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Posts Tagged Pakistan Economy

Army Chief and Economy By Col. Riaz Jafri (Retd)

LETTER TO EDITOR

October 17th, 2017

 

Army Chief and Economy

 

“Army Chief has right to comment on country’s economy, says Abbasi” reads the front page headlines of an English daily of Pakistan of date. One doesn’t know what would be the reaction of the Interior Minister Ahsan Iqbal and are they both on the same page or not?  Apparently not.

 

 

 

 

Of course, the COAS has every right to speak not only on the deteriorating state of the economy but also on other aspects of the governance affecting directly the security of the country for which he is wholly responsible and answerable to the nation.  And, if we wish to talk to the elected representatives and the civilian supremacy etc. then for the information of all, who else in the country has a vote bank larger than that of the COAS, with 9 large constituencies (Corps) each comprising of nearly a lack of Pakistani NIC holding soldiers with right to vote and spread all over Pakistan from Chitral to Gwadar and Torkham to Dalbandin?  

Who represents such a great number of Pakistanis and could speak to protect their interests and rights? 

 

The answer is the COAS.

Col. Riaz Jafri (Retd)
Rawalpindi 46000
Pakistan

E.mail: jafri@rifiela.com

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Will we be the 16th largest economy in 2050? by Khurram Husain

Will we be the 16th largest economy in 2050?

By

Khurram Husain |

2/16/2017 

A REPORT by PwC has everyone talking due to a claim reportedly made in it that Pakistan will be the world`s 16th largest economy by the year 2050.

The finance minister has gone the extra mile by publicly congratulating the country on the `economic turnaround` affected by his government, citing the PwC report and an opinion piece in Bloomberg by George Mason University`s Professor Tyler Cowen, in which he says that `most of Pakistan`s developments are fairly positive`.

Unfortunately, the finance minister, in his enthusiasm, claimed that Bloomberg has also declared Pakistan as the most underrated economy in the world in its recent report titled Pakistan`s Economy Is a Pleasant Surprise. In f act, the piece in question is not a `report` but an opinion column, and below it, the following disclaimer is clearly featured: `This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

In any case, let`s take the example of the PwC report since it is weightier and the claim being made sounds far more spectacular. The first thing to note is this: the PwC report does not say anywhere that Pakistan is going to be the 16th largest economy in the world by 2050. What it says is that Pakistan has the potential to be the 16th largest economy in the world by 2050. There is an important difference between both claims, and it should be borne in mind before popping any corks.

So the first obvious question to ask is this: what needs to be done in order to unlock this potential? The PwC report does not dwell on Pakistan in any detail. It features extended analyses on Poland, India, China, and Brazil, as well as boxed analyses on Turkey, Nigeria, and Columbia. It pinpoints Vietnam, India and Bangladesh `to be three of the world`s fastest-growing economies` till 2050, and says `Mexico could be larger than the UK and Germany by 2050`. Pakistan only features on a couple of lists presented in the report, showing it as having the potential to become a large economy by 2050 in purchasing power parity terms.

`To realize this growth potential,` the report says at the outset, `emerging market governments need to implement structural reforms to improve macroeconomic stability, diversify their economies away from undue reliance on natural resources (where this is currently the case), and develop effective political and legal institutions`.

Next question to ask is: how do they make their projections? What methodology do they use? The report projects future GDP growth rates based on four variables demographics, or the growth of a working-age population; growth in quality of the workforce, measured through average education levels in the workforce; growth in physical capital stock, measured as new investment minus depreciation of existing stock; and technological progress.

As any of these indicators improve, the projection for that country`s future GDP growth rate goes up. On top of that, they make an assumption about real market exchange rates relative to purchasing power parity rates. So if a country is a food importer, and its exchange rate depreciates significantly over time, that would make its food more expensive, thereby lowering its GDP in purchasing power parity terms.

A significant share of the boost that Pakistan gets in this projection comes from the large growth of its working-age population till 2050, compared to the ageing populations of the advanced industrial West or the advanced countries of the Far East (Japan and Korea for example and China`s workforce will be weighed down in the decades to come due to its one-child policy).

Second, Pakistan is food self-sufficient, which means food prices are relatively immune from international shocks, and below what they are in many other countries at the same level of development. This gives a boost to our GDP in purchasing power parity terms.

And that`s pretty much all folks. This methodology says we should grow rather spectacularly in the decades to come because the sheer number of able-bodied people available to work will increase and we can grow enough food to feed them all while keeping food prices under check. In fact, as per the data in the report, Pakistan has the second largest growth in the number of average working age population till 2050,afterEgypt.

The long story here is that the projections made in the report come with a heavy caveat. In order to unlock this potential, we will need further reforms in our political and institutional systems of rule, as well as diversification of our manufacturing base, increase productivity, and fix our balance of payments to underpin macroeconomic stability.

The short story is that, in our case, the methodology used to make the projections has given us a boost largely on the basis of a growing population.

If we can continue investing in our capital stock at present levels, and educate and feed each of these working-age members of the population at cheap rates, then our economy will have this potential.

The report is not meant to spark national celebrations. It is not even meant as a guide for policymakers. It is mainly aimed at large corporations and is trying to tell their leadership that, over the long run, the trade winds are blowing eastward.

Therefore, in order to position their enterprises to capture the dividends that this large, irreversible shift of economic dynamism towards the east is going to bring, they need to start entering markets like China and India n and solidify their presence in these economies. And in doing so, it uses a very broad brushstroke methodology to highlight the underlying sources of strength in the new centers of dynamism.

Pakistan found itself on the list largely by accident, by virtue of its young population and food self-sufficiency. Perhaps we`ll tap this potential, but let`s not pop any corks just yet.•

The writer is a member of staff.

khurram.husain@gmail.com Twitter: @khurramhusain

Editor’s Note: Even today, Pakistan’s underground tax evaders run economy is bigger than the prevailing economy.

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Pakistan amongst World’s fastest growing e-commerce markets: CEO eBay

Pakistan amongst World’s fastest growing e-commerce markets: CEO eBay

Pakistan amongst World's fastest growing e-commerce markets: CEO eBay

In a Facebook Live session on the page of the World Economic Forum (WEF), Wenig was asked a question regarding his thoughts on Pakistan and emerging markets.

“It’s the fastest growing markets we have around the world. Anywhere where wealth is growing and technology is being adopted, e-commerce is being adopted like crazy,” said Wenig.

 

According to the eBay CEO, the perfect opportunity for e-commerce was in countries where people were growing in wealth and do not have access to goods. “People use e-commerce to get access to those goods”.

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Understanding Pakistani Mistrust of the United States

Over the years, U.S. bashing has become a national pastime in Pakistan. This trend is dominant almost everywhere, ranging from drawing room discussions to media talk shows, and in recent months has assumed alarming proportions due to host of events such as Afia Siddique verdict, Raymond Davis’s capture and subsequent release, incessant drone attacks and above all, the recent killing of Osama bin Laden.

Although it would be an exaggeration to say that everyone in Pakistan mistrusts and hates the U.S., a substantial majority does. Several surveys have revealed that majority of Pakistanis consider USA as an enemy rather than a friend. In fact Al-Jazeera-Gallup Pakistan Survey 2009 revealed that 59% identified the U.S. as the greatest threat to Pakistan. Even India, the arch rival was considered as the greatest threat by only 18% of the respondents. And Taliban, despite blowing off thousands of people, were considered as the biggest threat by only 11%.

Likewise, drone attacks, which are designed to efficiently kill militants while minimizing the collateral damage, evoke far more condemnation from the public than brutal and indiscriminate suicide attacks carried out by the Taliban. It is baffling that majority of Pakistanis feel aggrieved over drone attacks because they consider it a violation of sovereignty despite the fact that the tribal areas targeted by the drones are largely lawless with no effective writ of the state. In essence, so called violation of the sovereignty becomes a meaningless accusation because the writ of the state as well as its monopoly over physical violence, which underpin the entire concept of sovereignty, are simply absent from the tribal areas.

What makes this mistrust and hatred somewhat of an anomaly is the fact that throughout its history Pakistan has received humungous amount of USA economic aid as well as assistance of various types. In fact, Pakistan has registered its highest growth rates during times when it was also the recipient of uninterrupted US aid. It is incomprehensible how Pakistanis keep censuring the US for all of their problems, yet continuing to receive economic and military assistance which is vital for their survival.

Why do Pakistanis hate a country that has helped Pakistan so much? Explanations abound, including an oft-repeated one that Pakistanis, and for that matter a substantial chunk of the Muslim world, are envious of the lifestyle of and economic progress made by the U.S. But this begs another question: why the U.S. is being especially singled out when economic prosperity and liberal lifestyles are prevalent in many other countries.

In my opinion Pakistanis’ irrational hatred of the U.S. emanates from complex interplay between the way the state has cultivated the Pakistani brand of civic nationalism, exaggerated self importance, which a majority of Pakistanis feel, and the U.S. role in the international events particularly those involving the Muslim world. And overarching these reasons is the deep mistrust of the U.S., which makes it impossible for the Pakistanis to believe that U.S. may actually be carrying any noble intentions for Pakistan.

Since independence, the state in Pakistan has tried to cultivate civic nationalism through fusion of Islam and “Honour” centered patriotism. The central purpose of infusion of religion with state has been to use it as a unifying force. Let’s not forget that Pakistan is a home to various ethnicities that have a strong penchant for greater autonomy. To prevent the emergence of any ethnic based secession movement, the state has tried to unite diverse ethnicities through the promotion of the common factor of religion. While this approach has failed to check ethnic strife, it has nevertheless nurtured a mindset that is very conscious of its Islamic identity and consequently feels aggrieved when anything happens to the Muslims around the world. Even purely regional disputes of Muslims with non-Muslims have a potential of creating a strong reaction in Pakistan. In the case of the U.S., its support to Israel has created a very strong resentment in Pakistan and even huge U.S. assistance to the country has not been able to ameliorate the situation. Pakistan, like most of the Arab world, yet despite being a non-Arab country, is held hostage by the Palestine issue. Whereas Arab resentment can still be somewhat understood due to its regional context, Pakistan’s ferocity apparently defies logic. Due to this particular way of perceiving things, Israeli attacks in Gaza give rise to far more anger against the U.S. than against Taliban atrocities committed within Pakistan.

Another issue is that as a nation, Pakistanis needs some citable evidence of their country’s importance in the international arena. Unfortunately, since economic success has largely eluded Pakistan, things like “strategic location” and nuclear arsenal become the “symbols” of national pride and importance. Due to this exaggerated feeling of self importance as well as interpretation of the U.S. as an-anti Muslim country, a majority of Pakistanis actually believe that the U.S. is fearful of the nuclear arsenal and is waiting for an excuse to purge it. In fact everything, from war in Afghanistan to suicide blasts on the Pakistani soil, is interpreted as U.S. conspiracy to create “conducive” environment for purging nuclear arsenal. Conspiracy theorists argue that the U.S. has “bought” Taliban and is using them to destabilize Pakistan with the eventual aim of taking hold of the nuclear arsenal. Unfortunately, the U.S. invasion of Iraq on flimsy grounds has merely exacerbated the situation, providing the conspiracy theorists irrefutable “evidence” of US hegemony. They argue that if the U.S. can invade a country that did not possess weapons of mass destruction then to assume that it would leave a nuclear armed Muslim country alone is sheer naivety. This belief is so pervasive that immediately after the recent attack on the navy compound in Karachi, some of the media persons were openly alleging that USA was behind the attack and the sole purpose was to create doubts about the capability of the armed forces to defend the nuclear assets in case of a terrorist attack. Nuclear Arsenal, more than anything else, is the main driver of the conspiracy theory industry in Pakistan. And this conspiracy theory mindset is deeply suspicious of everything the U.S. does. The Pakistani media has been responsible for aggravating the situation more than anyone else. Its hard earned independence has unfortunately come at the time where it has actually become jingoistic. Consequently rather than playing any meaningful progressive role, it is merely reinforcing rabid anti Americanism in order to commercially capitalize on the existing hatred. Opinions are not changed or even challenged, just reinforced and strengthened.

To some extent the suspicion ridden environment has also worsened due to the negative perception about the dealing tactics of USA with Pakistan. The impression of the majority of the Pakistanis is that U.S. does not consider it more than a client state. Instead of engaging with the people of Pakistan, US strikes deals with shady characters in the establishment and political top tier. Most of the Pakistanis feel that the case for war on terror has never been convincingly presented to them. The irony is that the elements which are striking deals with the U.S. are also highly critical of it, when it comes to public posturing. This kind of double behavior merely aggravates the negative impression of the U.S. in the eyes of masses. Apart from behind the door deals, another perception is that U.S. often bullies Pakistan and cares little for what the people of Pakistan feel. The recent issue of Raymond Davis merely worsened USA’s repute in the eyes of ordinary Pakistanis who construed the release of Raymond as an affront and open coercion by the superpower.

Despite the mistrust, the fact is that both countries need each other as they are fighting a common enemy. The U.S. cannot and should not leave Pakistan completely in isolation even after withdrawal from Afghanistan as to do so would be a repeat of the grave mistake it made in late 1980s when after the defeat of Soviet Union it simply packed up from the region. However, the prevailing deep mistrust has to be removed and both the parties need to take concrete steps. Pakistani media has to exercise maturity and try to cultivate rational self interest instead of indulging in rightwing hollow sloganeering about so called national honor and violation of sovereignty. Media needs to understand that freedom of expression comes with a responsibility that it would not be used for cheap sensationalizing and petty commercial interests. Pakistanis need to be convinced that due to their irrational and delusional mindset, they are getting completely isolated in the world while at the same time strengthening forces of extremism. They need to understand that USA and Pakistan are facing a common enemy and Media can potentially play a constructive role by at least allowing space to liberal opinion. At present the media is overwhelmingly dominated by the right wingers.

The U.S. has to engage with the people of Pakistan and dispel this impression that it is just a bullying coalition partner. It has to highlight its contributions to the country of Pakistan and those are many. Above all, it needs to strengthen democracy in Pakistan and should completely discard the previous policy of dealing with the unelected institutions.

 
 Additional Reading

FT Article: Distrust runs deep between Pakistan and US

By Farhan Bokhari in Islamabad and James Lamont in New Delhi

Reference

 

Shops burn following a deadly car bombing at a market in Peshawar©AFP

Inferno: shops burn following a deadly car bombing at a market in Peshawar

As the death toll steadily rose on Wednesday from a powerful car bomb in Peshawar, Hillary Clinton, the US secretary of state, stood up grimly in Islamabad to appeal for Pakistanis to overcome the misperceptions and stereotypes they had of the US.

Misperceptions carry the weight of fact in Pakistan; nowhere more so than where the US, and arch-rival India, are concerned.

Before the latest wave of terror attacks that have swept Pakistan’s big cities, rumours swirled in the capital about the US’s imperial ambitions for Pakistan.

A large contingent of US marines was imagined to be stationed at the embassy compound. Likewise, hundreds of houses were supposedly rented in the city to house staff of Blackwater, a private military company.

 

These fictions unnerved embassy staff, all too familiar with the incendiary nature of the society around them. They feared a possible repeat of the 1979 storming of the embassy. Then, an inaccurate radio report blaming the US for bombing the Masjid al-Haram in Mecca stirred students to burn the embassy down. Yet the attack on the mosque was the work of someone closer to home: a Saudi Arabian zealot.

Thirty years later, such grand misunderstandings still play themselves out on the streets of Pakistan. The brutal killings meted out by Taliban militants on Pakistan’s people are somehow either the US’s fault, or the handiwork of India.

Afghan map

Distrust between Islamabad and Washington runs deep, in spite of an embrace that spans decades when Pakistan was seen as a strategic counterweight to Moscow-leaning New Delhi and Soviet-occupied Afghanistan. Times have changed and more development assistance is on offer. Yet perceptions of the US have worsened. On the streets, Pakistanis are openly defiant towards the US. In the highest offices in government, officials are similarly resentful. They complain that the US has treated Pakistan as a “hired gun” to fight the Soviets and more recently al-Qaeda militants responsible for the 2001 terror attacks on New York and Washington.

Mrs Clinton’s visit offers a chance for the top US diplomat to present Washington’s case for a long-term relationship with a country where anti-US sentiment is fervent. “I want you to know that this fight is not Pakistan’s alone,” she said in remarks aimed at Pakistani sceptics. “So this is our struggle as well and we commend the Pakistani military for their courageous fight and we commit to stand shoulder to shoulder with the Pakistani people in your fight for peace and security.”

Mrs Clinton’s formidable task is to convince Pakistan’s leadership of Barack Obama’s determination to turn a page. Her visit comes amid controversy in Pakistan over the passage of a bill to triple US help to the country to $1.5bn a year. It also comes in the face of a widespread militant assault.

“The US in the past has only preferred to do business with people who suited its own interests. The interests of Pakistanis have never been considered,” said Ghaus Khan, an Islamabad student, on Wednesday, echoing wider public views.

General Ashfaq Pervez Kiyani, the Pakistan army’s chief, in a rare public criticism, cited “serious concern” over the Kerry-Lugar bill which was viewed as intrusive in areas including military promotions and Pakistan’s nuclear program.

Mrs Clinton has tried to emphasise development goals over military ones. On Wednesday, she offered US help to modernise Pakistan’s electricity infrastructure. Little investment went into power during Mr Musharraf’s time in office and now cities are blighted with outages.

“What do people in Pakistan want? Good jobs, good healthcare, good education for our children, energy that is predictable and reliable – the kinds of everyday needs that are really at the core of what Americans want,” she said.

That question is on the minds of many Pakistanis too. Instead of jobs, schools and hospitals they have escalating terror attacks.

“The people of Pakistan will be convinced of good American intentions when we see them in real life,” Mr Khan said. “There is a long history of bad American behaviour towards our people.”

 
 

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