In the preceding two articles we had examined some
of the main structural factors in the real economy that constrain GDP
growth. Let us now outline a possible economic strategy that could be
undertaken, to lay the basis for a sustainable pro poor growth.
A four-pronged growth strategy needs to be undertaken
in the light of the structural constraints to growth and poverty alleviation
specified in the earlier two articles.
Improving the Supply of Irrigation Water: The
first prong of the growth strategy should be a national campaign on a
war footing to rehabilitate Pakistan's irrigation system which is currently
in a state of acute disrepair due to decades of poor maintenance. Such
a campaign would involve organizing semi skilled labour for the desilting
of canals, strengthening the banks, organizing villagers for making "Pucca
Khaalas" (concrete lined water courses) and to improve the gradient
of water courses and farmlands in order to improve both the delivery and
application efficiencies of irrigation. Such a campaign being inherently
labour intensive would not only generate employment rapidly but also help
to improve water availability and yields per acre at the farm level. If
the campaign is professionally designed and managed, the funding for financing
wage payments to the newly employed labour force could be sought from
multilateral agencies, some of which have poverty alleviation and sustainable
agricultural growth as their priority concerns. The district level development
institutions in the local government system could coordinate with union
councils, village development councils and autonomous farmers associations
to implement such a campaign.
Infrastructure Development: In addition to
the campaign for improved maintenance of the irrigation system other labour
intensive infrastructure projects should also be undertaken to simultaneously
generate employment and stimulate aggregate demand in the economy. Such
projects could be the building of farm to market roads, national high
ways and ports, upgrading the railway system and enlarging its transport
capacity for bulk cargo together with an improved communication system
and increased production of cheaper energy through domestically available
coal rather than imported furnace oil.
Milk, Marine Fisheries and High Value Added Agriculture
Products: The third prong of the revival strategy is to rapidly develop
export led production capacity for milk, fisheries and high value added
agricultural products such as fruits, vegetables and flowers. Let us illustrate
this initiative by using the example of milk. At the moment Pakistan is
producing approximately 177 billion rupees worth of milk annually for
domestic consumption. This makes milk the largest agricultural product.
By comparison, wheat, Pakistan's largest crop has an annual production
value of approximately 111 billion rupees. Unlike wheat however, the output
of milk can be accelerated sharply within a couple of years. Currently
Pakistan's milch cattle have a yield per animal which is one-fifth of
the European average. Demonstrable experience in the field has shown that
the milk yields per animal in Pakistan can be doubled within two years
through scientific feeding, breeding and marketing. If the institutional
framework could be established for training the farmers in scientific
feeding and breeding and if the logistics could be set up to collect milk
from the farm door by means of refrigerated transport, milk output in
Pakistan could be doubled. This would have a dramatic impact not only
on the incomes of poor peasants, but also on exports and overall GDP growth.
Pakistan lies at the hub of milk deficit regions such
as Central Asia, West Asia and South East Asia. Hence it could be argued
that if milk out put in Pakistan could be doubled, exports earnings would
increase to such an extent that they would make a major contribution to
overcoming the balance of trade deficit. Such an initiative therefore
can lead to accelerated exports, higher GDP growth and improved income
distribution in Pakistan. A possible institutional framework for such
an initiative could be the establishment of dairy development boards at
the provincial level linked up with development institutions at the district
and union council levels in the local government structure.
Marine Fisheries, also provide a significant potential
for improving foreign exchange earnings although not as large as the potential
for milk. Here again what is required is improved institutional support
and better management rather than huge investments by the Government.
In the case of marine fisheries currently there are large losses and failure
to achieve significant exports due to the fact that the storage conditions
of fish during transportation are both unscientific and unhygienic by
international quality standards. Currently alternate layers of fish and
hard sharp edged ice are placed in containers on the boats. Under the
weight of upper layers of fish and the sharp edged ice, fish at the lower
layers are crushed, and the resultant bleeding causes putrefaction. To
avoid this, it is necessary to provide shelves for layered storage of
fish in boats, topped by dry ice, with fiberglass covers. Through such
measures it would be possible to bring back the fish at the European Union
standards of minus 7oC and thereby make it exportable. An export potential
of 300 million dollars exists over the next three years if such improved
management of the marine fisheries industry could be achieved.
The third element in increasing high value added production
and export in the agricultural sector would be to facilitate the production
of fruits, vegetables and flowers for exports. This would require institutional
support for improved quality of output, improved grading packaging, and
refrigerated transport right up to the cargo terminals for air freight
to the export market.
Rapid Growth of Small Scale Enterprises: The fourth prong of the
strategy would be to provide the institutional support necessary for the
rapid growth of small scale enterprises. These SSEs. include high value
added units in light engineering automotive parts, moulds, dyes, machine
tools and electronics and computer software.
Training of a large number of software experts with requisite support
in credit and marketing could quickly induce a significant increase in
software exports from Pakistan. Pakistan could build a pool of software
experts for a large increase in export earnings. This would of course
require a proactive government to establish joint ventures between large
software companies such as Microsoft and Pakistan's private sector institutions
such as LUMS and INFORMATICS. The Ministry of Science and Technology is
already moving rapidly ahead in facilitating the growth of information
technology in Pakistan.
Small scale industries in the construction, light engineering, and automotive
sectors have a low gestation period, are labour intensive, and can generate
a larger output per unit of investment compared to the large scale manufacturing
sector. Therefore the rapid growth of small scale enterprises would not
only accelerate economic growth in the medium term at relatively low levels
of investment, but would also increase employment and exports for given
levels of GDP growth. The key strategic issue in accelerating the growth
of SSEs is to enable them to shift to the high value added, high growth
end of the product market.
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