This article, dear readers, is not about the Pakistan International Airlines, as some of you may have been misled into believing after glancing at the title. It is about something else. Let me start by asking: what are some of the words or sentences that you have repeatedly heard over your lifetime in Pakistan?
I am talking about the words and sentences of the people who have ruled this country and have been in the driving seat at one time or the other. I don’t know about you, but I can recall a few statements from the rulers like ‘the welfare of masses is our top priority’, ‘the country stands at a crossroads’ and ‘the rise in prices will not affect the common man’ etc.
Our economic managers are not immune to this trend, and a few of their oft-repeated catch-phrases can be identified. My favourite is: ‘Pakistan’s economy is ready for take-off’. It has been repeated so many times that it’s almost boring to hear it now. But we are again hearing that the economy is ready for ‘take-off’.
Is that true? The term ‘take-off’, in the context of economy, was given credence by economist Walt Rostow. He hypothesised five stages of economic development, one of them being the take-off stage.
Rostow explains that “take-off is an industrial revolution, tied directly to radical changes in the methods of production, having their decisive consequences over a relatively short period of time”. One of the distinguishing features of this growth phase is that it is self-reliant, with little or no assistance from outside, and leads to sustained economic growth in the future. There are other conditions (like the use of domestic saving for investment), but this should suffice for an understanding of the take-off concept.
Let’s go by Rostow’s words: he mentioned an industrial revolution, tied to radical changes in methods of production, having decisive consequences in a short time. Can anybody please enlighten me where this is happening in Pakistan? Am I missing something that only Pakistan’s economic czars know of? What radical change has occurred to propagate an industrial revolution? What decisive consequences are coming about in a short span of time? The only radical change that we are witnessing (if it can be called that) is the piling up of tonnes of fiscal debt that we will not be able to pay off.
It is pretty obvious that we are not in a position to make this ‘take-off’ happen. So what gives our economic managers the confidence to sing this melodious but overused tune? To understand this overconfident mind-set, we need to have a good understanding of Pakistan’s economic history, especially those years in which the growth rates were high. The tune of ‘take-off’ in those times came in the context of the free flow of American dollars for being an ally in their designs and not because of any drastic changes in the economic setup of Pakistan. Not only did it create the much needed fiscal space, but it helped drive the fiscal expenditures that propped up the economy. But these spurts were short lived and the air flew out of the bubble as soon as the dollars stopped coming in.
This time around, American generosity is not what it used to be and the dollars are hard to come by. But in comes China with the China-Pakistan Economic Corridor (CPEC) and the (assumed) promise of more than 40 billion dollars. This was enough to propel the PML-N’s economic wizards to dance to the tune of the take-off song. Yet, the Chinese dollars have yet to materialise and there are already many question marks over the (assumed) inflow of Chinese money.
Even the pliant State Bank of Pakistan, now reduced to a mere sub-division of the finance ministry, could not hide its concerns and its governor questioned the transparency of the deals of CPEC. And don’t forget the price that we had to pay for the generous flow of American dollars. Jihadi groups, the Taliban and the war on terror are just a few of the gifts that their generous donation left us with. Don’t be surprised if something similar happens again.
For example, all the Chinese investment in the energy sector is in large coal-powered plants, and coal is one of the most polluting materials in the world. Just imagine the damage that these coal-fired power plants will cause to the environment and to our future generations. But who cares? Money is coming in and that can never be bad.
Economic management is about more than just filling accounts with borrowed money, playing a bit of accounting gimmickry and proclaiming wonders at the sight of money coming in. It is about creating a base and conditions that can keep the economy on a sustained path of growth. I have yet to see any such step being taken by the PML-N economic wizards. So readers, the captain of the plane called Pakistan (in which we are all travelling) may announce to you to tighten your seatbelts because we are ready for ‘take-off’. But hold still, it’s just a tug machine that is pulling the plane on the runway, giving the pilot the false impression that we will soon take off.
The trouble is that the tug machine can only go so far, and the plane doesn’t have engines installed. After running for a bit, the plane will come to a standstill again.
The writer is a freelance contributor.
Email: shahid.mohmand@gmail.com
Twitter: @ShahidMohmand79
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