Daily Times

When it comes to the regional discussion, South Asia remains incomplete without the mention of Pakistan. However, Pakistan has been in discussion for its crumbling economy, poor negotiations with the IMF, consistent political turmoil and a looming default threat especially in the aftermath of Sri Lanka’s Economic Default.

There have been many solutions presented by economic experts and we see that IMF continues to squeeze Pakistan for every rupee in taxes and tariffs. I intend to write this article to bring to light the lessons we can learn from other regional actors like China, India and Bangladesh. These economies have shown great resilience and tenacity to grow in difficult global situations. China, the world’s second-largest economy, is an enigma to global economists while many argue that its era of growth is over, the fact of the matter is that China contributes 18.72 per cent to the Global GDP which grew from 14. 41 per cent in the last decade. China also managed to expand its exports from 1.66 trillion in 2010 to 2.7 trillion in 2020. As the country enhanced its economic outreach, it was also able to sustain its financial prowess through continuous innovation. The country recorded over 1,593,427 patents in 2020 from a meagre 391,177 in 2010.

In an attempt to understand Chinese growth, the IMF conducted a study revealing “1979-94 productivity gains accounted for more than 42 per cent of China’s growth.” The economic reforms of 1978 changed the fate of China. Also known as the “productivity boom,” the Chinese government brought in reforms that increased rural property rights and stimulated the formation of small non-agricultural companies in rural areas. Moreover, de-collectivization and better pricing for agricultural products led to more productive (family) farms and increased labour productivity. Combined, these factors prompted many labourers to abandon agriculture. Tens of millions of people have shifted from traditional agriculture to value-added manufacturing as a result of the fast expansion of village businesses. After the 1978 reforms, China was able to continue to reap the benefits of its growing economy by introducing reforms that granted more autonomy to enterprise managers. With this, the enterprises were free to set their production objectives, sell some products in the private market at competitive pricing, offer bonuses to good employees and fire poor ones, and retain a percentage of the firm’s profits for future investment. As China opened its economy to Foreign Direct Investment, built factories, created jobs, linked China to international markets, and led to important transfers of technology. In one final area, price reform, the Chinese have moved with caution, allowing autonomy to producers of consumer goods and agricultural products but far less autonomy to other sectors. Several bouts of inflation have plagued the Chinese economy over the past two decades, discouraging the government from implementing a comprehensive price liberalization program. Inflation may pose the greatest threat to Chinese economic growth, although it has been largely handled thus far.

As India opened its economy to the world, FDI flooded in to capture the share of one of the world’s fastest-growing populations.

Thus, Chinese economists, through far-sightedness, managed to pull off an economic miracle. They have been absolute masters at developing a consistent series of economic reforms that built on the strengths of the past, tie them to present economic needs and built on further for the future.

Following the success of China is India. With a GDP of US$ 3.12 trillion in FY22, foreign exchange reserves of US$ 524,520 million and merchandise exports of US$ 32.62 billion in September 2022, India is set to become the world’s third-largest economy by the year 2030 with an estimated GDP growth of 8 per cent to 8.5 per cent. So what has truly contributed to this dramatic growth of the Indian economy? India’s average GDP growth in the past decade was 5.5 per cent and according to Chetan Ahya, Morgan Stanley’s Chief Asia Economist, “India will be one of only three economies in the world that can generate more than $400 billion annual economic output growth from 2023 onward, and this will rise to more than $500 billion after 2028.” India’s magnanimous economic success can be attributed to several reforms. Similar to China’s journey, India began its industrialization in the 1950s by implementing a five-year plan that engaged in raising maximum resources and investing in the creation of large State-owned-enterprises (SOEs), including steel, chemicals, machines and tools, locomotives and power. These industries were preferred over consumer-based products encouraging India’s production and reliance on national products than importing these expensive items. Trade protection and government interference protected these industries from international competition and kept their growth trajectory. Perhaps by discouraging consumerism early on India was able to direct its nation and the economy to the more important economic factors.

The country became the world’s office due to the global preference for IT and software outsourcing services. But even before that as India opened its economy to the world, FDI flooded in to capture the share of one of the world’s fastest-growing populations. India’s continuous success lies in the country’s reform strategy of aligning its national strengths to the needs of the world while also boosting sectors that are predicted to grow in the future.

Lastly, we look at Bangladesh whose economy continues to bloom at its full potential. During July 2021-June 2022, Bangladesh exported more than $52 billion in goods, demonstrating the potential that the country holds. Adding the service exports to this number, the total exceeds $61 billion. The country is also preparing to establish 100 Special Economic Zones (SEZs) to further enhance its economic potential and make it an industrial giant. With all the progress in sight, global agencies believe that Bangladesh is “all set to emerge as a developing economy by 2026.” What the country did right, was prioritized its industrial needs over the infrastructure preparing the country for an “export-focused” outlook. Today, as it reaps the benefit of its exports, the world is reminded that in the last fifty years, Bangladesh’s economy grew by 271 evidence of its prudent economic administration, efficient fiscal management, and macroeconomic stability. Another lifeline of Bangladesh is its $22 billion worth of remittances. Now that the country has established itself as a global priority in textiles, the Bangladesh Garment Manufacturers and Exporters Association is now devising a strategy to win a $100 billion apparel shipment target by 2030. By staying true to its export strategy and investing in it, Bangladesh has presented itself as an economic wonder to the world.

Perhaps towards the closure of this article, one thing that Pakistan needs to learn from these regional actors is devising a strategy that closely aligns with the long-term economic goals and committing to it regardless of the regime changes, despite the differing opinions or the international pressure.

The writer is the Foreign Secretary-General for BRI College, China. He tweets @DrHasnain_javed