2015: Global economic growth is now more reliant on three countries: China, USA and India, two of these Pakistan’s neighbours: The Economist
By Wali Zahid
For over two decades, I have been conference-speaking on Pakistan of 2050, writing about it or teaching MBA subjects in leadership readiness at places like CBM and Zabist Karachi.
I also had the opportunity to share my strangely optimistic views on Pakistan of future at the first Pakistan Vision 2025 planning committee meeting in 2013 at Planning Commission Islamabad, which the Planning Minister Ahsan Iqbal had called.
29 November 2016: General Qamar Javed Bajwa assumes command of Pakistan Army. Military and civilian leadership need to resolve these 13 challenges through a combined thrust and capabilities. Challenges are highlighted in my piece: Back to the future: Pakistan in 2050
Since, our top two narratives revolve around ties with India, externally, and lack of economic political agenda at home, this is what I predicted in my The News piece:
Towards Economic Push: ‘In the 2050 world, China is world’s No 1 economy and India No 3. Pakistan is the only large country that borders both. Once the two-way trade eases with India, and the China-Pakistan Economic Corridor (CPEC) is built linking Xinjiang with Gwadar, imagine the game-changing prospects for people and businesses in this country.’
Ties with neighbours: ‘My feeling is that with increasing social media attention and a global push for ‘behaving’ in an ecosystem of peace-loving and economic-development-driven nations, we will mend our ways. We will become selective in choosing our battles – whether internal or external. Our election agendas are likely to become economic reform than political point scoring.’
2014 was the year when China left USA behind on the basis of GDP PPP. IMF WEO 2014. Check this link for 2016 GDP.
Today, Wall Street Journal, a newspaper I have always respected for its foresightedness and uncountable inconvenient truths over my lifespan, has published a thought-provoking piece titled: South Asia Bets on Prosperity.
Written by WSJ’s Sadanand Dhume, it headlines: As India steps up its economic diplomacy in the neighborhood, Pakistan risks falling further behind.
Sadanand Dhume is a resident fellow at the American Enterprise Institute (AEI) , and a columnist for WSJ.com.
The piece highlights how India has mended ways with Bangladesh and Sri Lanka and how India’s focus is now moving towards trade. Comparing South Asia with Southeast Asia, Sadanand also points out to dangers Pakistan may face by ignoring the economic potential of this region.
According to WSJ, the UN estimates Pakistan’s official trade with India in 2013 at a measly $2.5 billion. Some economists estimate that it would be closer to $20 billion if not for artificial restrictions. Now, that’s colossal 10X difference.
One thing I just loved in this piece was Sadanand’s these words: ‘What’s more, Pakistani elites don’t appear overly bothered. The country’s leading English-language newspapers barely touch upon economic matters.’
This is the core ailment in our country.
In 30 years of journalistic association with the likes of Dawn, The Nation and The News and now blogging for walizahid.com, I have failed to understand this phenomenon: How on earth our English-language newspapers are 180 degree different from every other broadsheet on earth. Economy and future don’t belong to our Front Pages.
Even now when I write about justice, education, economy, health, parenting, even corruption as a phenomenon, there are seldom any views. Aren’t these the VERY issues that elites in a developing country like Pakistan need to focus? Why aren’t they asking: What do we need to do to achieve double-digit growth in Pakistan? As they say: It’s the economy, stupid 😛.
And to give you perspective, my blog readers are all elite: The CEOs and senior executives from most MNCs and large Pakistani firms whom I have trained or coached over these 20 years. I am an analytics man. Will be happy to share the website analytics with anyone who can pick patterns what people read or don’t read online.
See some other indices on Pakistan:
I also moan about lack of long-term orientation (LTO) and global ambition in Pakistani enterprises. According to 2014 report of Geert-Hofstede Centre, Pakistan’s LTO is ZERO (yes, 0). Compare it with China’s 118 or India’s 72.
In the three conferences that I gave keynotes at during May 2015, my main thrust in each was:
1. To a questioner at Pakistan Institute of Management (PIM) annual conference at Karachi PC on what Pakistani businesses need to do, I said:
They need to get some global ambition and develop a niche skillset. These are different times (see BBC chart below). They need to get rid of the fear of success because of baggage from the previous governments and must run full throttle.
Have you seen CPEC & OBOR stories on this blog?
2. While debating whether workplace training needs to be serious or mere fun (In Pakistan, the latter is the case) at Pakistan Society for Training and Development‘s 3rd annual learning conference at Karachi Movenpick, I favoured the serious side.
My standpoint: If as an economy Pakistan needs to develop and produce products like iPhones and Hondas, they need to invest in serious skill development because product innovation requires long, mundane hours, days and years. You cannot come to training courses, burst a few bubbles, do random energisers and become world-class.
3. In Rifah University’s annual career fair at Rawalpindi PC, while talking about industry-academia link, I said: the linkage is just a lip service. Neither industry knows what economic potential lies ahead, nor are universities bothered to talk to businesses.
I quoted an OPEN session on this topic which I moderated earlier at KSBL (formerly Cambridge University campus in Pakistan) last year attended by MNC CEOs and Deans of top business schools.
When I asked a point-blank question if academia bothered, Dean of KSBL, who was previously Dean at LUMS, confessed: Not in my four years, I went to a business, trying to find out what their needs were. I loved his confession. Because that IS the ailment!
The bight side of Pakistan economy
The rise of Pakistan: In this year’s version of Goldman Sachs forecast, Pakistan will be 18th largest economy in the world. BBC chart. My TV clip.
With usual disclaimers, the WSJ piece is reproduced below. To give visual perspective to data, I have inserted a few infographics.
Is South Asia beginning to look more like Southeast Asia? If this means an evolution toward a region marked more by shared economic promise than by unending political conflict, then the answer is a qualified yes.
First the good news: Political elites in India, Bangladesh and Sri Lanka are showing an increasing ability to put aside the fraught identity politics that has marred their relations and instead pursue mutually beneficial economic goals.
The bad news: The region’s two largest countries, India and Pakistan, remain at odds with each other. As long as Pakistan’s military continues to dominate the country, the odds of an economic breakthrough between New Delhi and Islamabad remain slim.
As a result, Pakistan risks being frozen out of an increasingly integrated region. Since India accounts for about 80% of South Asia’s economic output, Pakistan cannot deepen its economic ties with the neighborhood without engaging with India.
The promise of billions of dollars in infrastructure investment from “all weather friend” China does not change this.
By 2020, while China, USA and India will be Usain Bolts of this world, we will have the company of Turkeys and UKs of this world. If we change the narrative, we could do better. IMF WEO Chart June 2015.
The best example of South Asia’s turn from conflict toward cooperation is the thriving India-Bangladesh relationship. Ahead of Prime Minister Narendra Modi’s visit to Dhaka earlier this month, the two countries resolved a tricky border dispute that for decades placed thousands of their citizens in isolated enclaves in each other’s territory.
India and Bangladesh have also pledged to strengthen transportation links—by rail, road and river—and boost their modest $6.5 billion in bilateral trade.
Two Indian firms, Reliance Power and Adani Power,will build power plants in Bangladesh to ease its chronic electricity shortages. India also unfurled a $2 billion soft loan to upgrade Bangladeshi infrastructure.
India’s relations with Sri Lanka have followed a similar trajectory. Between 2003 and 2013, bilateral trade quadrupled to $5.2 billion, helped in part by a free-trade agreement.
On a visit to Sri Lanka in March, the first by an Indian prime minister since 1987, Mr. Modi pushed for a deeper trade agreement spanning goods, services and investment.
These numbers merely reflect a modest start. India needs to do more to address its lopsided trade balance—it exports far more than it imports from Bangladesh and Sri Lanka.
Meanwhile, the World Bank estimates that intraregional trade accounts for a piffling 5% of total trade for the eight-member South Asian Association for Regional Cooperation. For the Association of Southeast Asian nations, that figure is 25%.
Nonetheless, most of South Asia indeed appears headed down a Southeast Asian path. The advent of economic reforms in India in 1991 may not have erased emotive problems of language, caste and faith. But over time national political discourse has tilted toward economic development.
Similarly, Bangladesh may continue to struggle with radical Islam—secular bloggers can be butchered in broad daylight for questioning the faith. But when it comes to dealing with its neighbors and the world, Dhaka chooses to export garments, not jihad.
Even at the height of its bloody civil war from 1983 to 2009, Sri Lanka, blessed with a strategic location, high literacy rates and relatively good infrastructure, did not allow tensions with India over the island nation’s treatment of its ethnic Tamil minority to derail economic ties.
In a nutshell, most of South Asia has broadly embraced democracy, markets and trade. Politicians seek power by promising their citizens a better life.
Influential business lobbies—software services in India or apparel manufacturing in Sri Lanka and Bangladesh—infuse diplomacy with economic common sense.
In each of these countries, the trade-to-GDP ratio is about 50%, modest compared with Southeast Asia’s export powerhouses, but nonetheless reflecting openness to trade.
Contrast this with Pakistan, where the military chokehold on policy stunts economic prospects. According to the World Bank, Pakistan’s trade-to-GDP ratio remained unchanged at 33% between 2003 and 2013.
The United Nations estimates Pakistan’s official trade with India in 2013 at a measly $2.5 billion. Some economists estimate that it would be closer to $20 billion if not for artificial restrictions.
What’s more, Pakistani elites don’t appear overly bothered. The country’s leading English-language newspapers barely touch upon economic matters. The opinion pages are filled with treatises on the jihadist threat to the Shia minority, or the Taliban’s exploits in Afghanistan.
Pakistani trade policy can be frozen by mindless debates on the Urdu translation of the standard term “most favored nation status.” Nearly two decades after India granted MFN status to Pakistan, Islamabad has yet to reciprocate.
Since generals rather than politicians run relations with India, Pakistan has failed to crack down on jihadist groups such as Lashkar-e-Taiba, responsible for the 2008 Mumbai massacre.
With the election last year of Mr. Modi, eager to deepen trade, but less inclined than his predecessor to turn the other cheek to terrorism, the odds of an economic breakthrough appear exceedingly slim.
In the end, both India and Pakistan lose from this standoff, but Pakistan loses more. India is slowly stitching together the rudiments of a South Asian common market.
Unless Pakistan switches tack, it risks remaining stuck in a demented South Asian time warp while the rest of region begins, at last, to look more like sensible Southeast Asia.
Pakistan’s travel infrastructure
The question is: What stops our elite and our English-language dailies spearheading this debate: What do we need to do to achieve double-digit growth in Pakistan?
I am not sure how many visitors this post finds, but if it does – a few 100’s or a few 1,000’s, this could be a good-enough for start of a dialogue of taking Pakistan into the future.
In a Future Orientation Index ranking of 45 economies of the world by The Guardian, where Germany was No 1, Pakistan came last (45). I trust we could do better.
As CEO of SkillCity, he coaches several Fortune-500 CEOs on leadership.
He’s founder of a global movement for humanizing medical education and practice.
He can be reached on Twitter @walizahid
Our Understanding Pakistan Series