Shifting towards high-tech to spur growth

LAHORE: Pakistan with low-tech economy is in the grip of persistent poverty, and if we do not shift our focus towards high-tech with higher paid job opportunities, the purpose to alleviate poverty through development would not be met.

Industrialists did spur several opportunities for growth, but, factually, industrial employment has been greatly affected by the frequent bust and boon in the economy. Currently, we need to create highest employment opportunities to absorb millions that are out of work. The planners should strive for and encourage investment in sectors that are labour intensive.

The data available in 50 years of Pakistan Statistics (1947/97) and subsequent labour force surveys reveal that the share of agriculture in GDP was 50.3 percent in 1950 and it provided 60.4 percent of the total employment. It has now declined to 18.9 percent, while it still provides 42 percent of employment in the country. The jobs in agriculture sector are dwindling because of the use of better agricultural implants such as tractors and harvesters.

The share of industry in GDP was 15.5 percent in 1950 and it provided employment to 15.39 percent of the workforce. Its share in GDP has increased to 20.9 percent and it now provides employment to 35.75 percent of the workforce.

The share of industry has shrunk from 24 percent to 20.9 percent in a decade. The ability of the economy to provide jobs has also declined correspondingly. The services sector being 38.7 percent of GDP in 1960 provided employment to 24.14 percent of the total workforce. Now with the share of 60.2 percent of the GDP, it is the source of employment to 35.25 percent of the labour force in Pakistan.

Apart from construction workforce, the services sector creates a fewer jobs.

Service sector providers mostly are skilled technicians, doctors, engineers and accountants. They are comparatively efficient and require a fewer workforces.

To create more jobs in the economy, we need to focus on industrialisation. Our regional economies are flourishing on the strength of manufacturing. China has emerged as the hub of global manufacturing activities.

Among the five highest growing global economies, the Economist Intelligent Units has placed three subcontinent economies in the list. These include Bangladesh that is expected to grow at 7.9 percent in 2019. Its strength is apparel manufacturing. Bhutan is also expected to post a GDP growth of 7.8 percent and India is expected to grow at 7.4 percent. Major growth in these economies would come from the industrial sector.

Pakistan’s GDP growth in 2019 is predicted by many institutions to range between three to four percent. Its manufacturing sector is posting no growth at all so the dream of job may not become a reality.

The manufacturing during the tenure of the previous regime was not robust, but still it averages five percent. The construction boom during that period created millions of jobs in the services sector.

The construction sector, unfortunately, also remained under stress during the past 150 days.

The stubbornness with which the poverty is staying in Pakistan points to flaws in our growth strategy.

If we look at our GDP growth or per capita income, things does not look so gloomy. But the per capita GDP is, in fact, an average of our total GDP calculated after dividing it with the total population of the country.

This average includes yearly income of persons such as Mian Mansha or Razzak Dawood that earn fortune every year and income of a worker earning minimum wage of $105/month. This wage is divided among 6.5 persons (one bread earner with an average family size of 6.5 human beings).

Each individual in the family gets a share of $16.15 that on a yearly basis comes out to be $193.84. This amount is seven times less than the seven times the $1,550/capita income of the country.

We design our growth strategy on the basis of our total GDP or per capita income. According to Nobel Laureate Joseph Stiltz what we measure effects was we do.

If we focus only on material wellbeing like production of goods rather than health, education and environment we become distorted in the same way as these measures are distorted – we become materialistic.

Distortions in real development on the basis of GDP are also evident in United States where the life expectancy of blacks is much less than the average life span of white Americans.