Daily Times

LAHORE: The Lahore School of Economics Wednesday held 13th international annual conference on ‘Management of the Pakistan Economy’ at its Main Burki campus.

The theme of this conference is ‘Igniting Technology led growth in Pakistan: Role of Monetary, Fiscal and Investment Policies’. The two-day event will be devoted to discussions on past successes and constraints on technology-led growth and to draw guidance on how macro and micro level policies can contribute to accelerating economic growth in Pakistan.

The conference started with a keynote address by LSE Rector Dr Shahid Amjad Chaudhry to set the stage for detailed discussions held at the conference to explore how monetary, fiscal, investment and governance policies could help ignite technology-led growth in Pakistan. He remarked that the timing of the this year’s conference fit well with the need of the hour, as all the issues the conference aimed to address were relevant to the issues confronted by Pakistan’s economy at present.

Sharing his experience when he was the Pakistan’s adviser on finance, revenue, planning, economic affairs and statistics in the caretaker government in 2013, he said in April 2013, when Pakistan was facing severe foreign exchange crises, as both the World Bank and the Asian Development Bank (ADB) had stopped new adjustment lending to Pakistan, he led an economic team to the International Monetary Fund (IMF) that successfully negotiated an Extended Fund Facility (EFF) on more favourable terms than the previous three years IMF standby.

Giving full credit to the government of Pakistan’s finance team led by Finance Minister Ishaq Dar, which subsequently held detailed negotiations with the IMF, and subsequently signed the IMF 2013-16 EFF Programme, he said to maintain the current turnaround in the economy, “we should focus on technology, especially in the context of the China-Pakistan Economic Corridor (CPEC)”. “We have mastered and excelled in all technologies that we have considered essential. Yet in the other 90% of the economy our technology is 50-80 years behind the times.”

Dr Shahid summarised the belief held by economists at the LSE that absence of modern technology adoption was due to factors that we normally do not focus on when discussing technology adoption – that is the monetary, fiscal, investment and governance policy frame-work – which drives the economy.

The first session of the moot focused on ensuring macroeconomic stability with micro firm level dynamism. Dr Rashid Amjad (professor of economics) began the session with his presentation on ‘Pakistan: How macro-micro interaction has resulted in an undervalued, underperforming economy’. He emphasised the need to analyse the macro-micro interaction in the economy to fully understand the dynamics of growth and recommended that such an analysis was necessary to frame appropriate policies.

Dr Ahmed Khalid (professor of economics at the University Brunei Darussalam) discussed the importance of financial integration and stability for sustainable economic growth. He used data on key financial and real sector indicators from 130 countries in the Asia Pacific over 1989-2013 to establish the link between finance and sustainable growth.

Carrying forward the discussion on macro and micro dynamism, Dr Matthew McCartney (associate professor at the University of Oxford, UK) explored the ‘middle income trap’ under which growth and development indicators stagnate. He cited the example of Bangladesh, where exports seem to be stuck in a low cost, low productivity cycle. He challenged the orthodox view of encouraging growth via competition and technology adoption. “For a developing country, technological transfers may perpetuate dependence on imports and may inadvertently transfer resources back to developed countries in the form of patents and royalty payments. He argued that attempts to boost productivity would be met with limited success unless they are supplemented with old-fashioned efforts to induce structure change, breaking away from the dependence on agriculture and low-tech manufacturing.

Dr Sirimal Abeyratne (professor in economics at University of Colombo) drew attention to the rapid expansion in network trade based on the formation of regional supply chains in South Asia.

The second session of the conference focused on monetary policy, external capital and exchange rate management. The first presentation, by Dr InayatMangla (professor of finance) and senior economist Dr Kalim Haider used quarterly data to explore the role that monetary policy can have in the presence of macro-level uncertainties such as volatile capital flows, falling remittances and declining exports.

Dr GhulamSaghir of the Punjab University presented a research on external debt management and capital flows.

The second session concluded with a presentation by Dr Naved Hamid of the LSE on his co-authored work with Azka Mir (research assistant at the LSE) on exchange rate management, structural change and economic growth.

The last session of the day discussed the role of fiscal policy in economic growth. Shabbar Zaidi (CA and senior partner, A F Ferguson and Co Karachi) contended that the role of fiscal policy in Pakistan was largely of a revenue collection measure only.

The session was concluded with a presentation by Dr Nasir Iqbal, director of research, Benazir Income Support Programme, in which he draw attention of the audience to the fiscal deficit target set under the Vision-2025 and discuss if this arbitrary target is sustainable in the macroeconomic and institutional environment in Pakistan.

The conference will continue today (Thursday), where experts would present their recommendations for CPEC-related industrial initiatives.