Saturday, June 11, 2005

Where will Pakistan be (if and) when it turns 100?

Envisioning Pakistan in 2047
Ahmad Faruqui

In the mid-nineties, Yale historian Paul Kennedy called Pakistan one of nine pivotal states in the developing world, since its collapse would create mayhem in the surrounding areas while its steady economic progress and stability would bolster its region’s economic vitality and political soundness.

In the year 2000, the US National Intelligence Council (NIC), which advises the US Central Intelligence Agency, offered a grim prognosis for Pakistan in the year 2015. It said that Pakistan would experience continuing domestic turmoil that would see the central government’s control being reduced to the Punjabi heartland and the economic hub of Karachi. The latest report from the NIC, Mapping Global Futures, does not dwell much on Pakistan’s misfortunes, focusing instead on the rise of China and India.

Given the lawlessness that prevails in Pakistan today, it is hard to envision a positive future for Pakistan in the near term or even the medium term. However, it is possible to imagine such an outcome over the long term, when the current oligarchic leadership of generals, feudal lords and corrupt politicians would have turned over. There is a chance that they will have taken Pakistan down with them but there is an equally good chance that Pakistan would have survived their self-serving agendas. It is probable that their departure will create the conditions when Pakistan as envisioned by Allama Iqbal and the Quaid-e-Azam would finally come into being, thus fulfilling its Pakistan’s destiny.

Let us focus on the year 2047, when Pakistan would be observing its first centennial. It is reasonably close to 2050, the focus of two recent global economic and demographic projections.

The economic projection is by the investment-banking firm of Goldman Sachs in New York. It says the U.S. domination of the world would have come to an end by then. In 1950, the U.S. accounted for half of the world’s economic output. Today, it accounts for a fifth. By 2050, it may account for just a tenth. The Chinese economy will become larger than the U.S. economy around 2040 and by 2047 it would be some 25 percent larger. India’s economy would exceed Japan’s by 2030. However, by 2047 neither China nor India would be the richest nations in the globe, as measured by per capita income. China’s per capita income would be less than half of the U.S.’s while India’s would be about a fifth.

The Goldman Sachs report does not say anything about Pakistan but its approach can be applied to Pakistan. The projections are based on a widely used economic model, which forecasts economic growth as a function of three variables: growth in the labor force, the rate of investment and growth in labor productivity (managerial ingenuity and technological progress).

The demographic projection is by the U.N., and says that by 2050, Pakistan will be the fourth largest nation in the world. It would have a population of some 350 million, up from 141 million in 2000 and from 40 million in 1950. India would be the world’s most populous country but there would be one Pakistani for every four-and-a-half Indians, compared with one Pakistani today for every seven Indians. Pakistan would have a very large labor force, one of the conditions for rapid economic growth.

The second condition is that Pakistan sustains a high investment rate in the range of 20-25 percent of GDP. This rate is similar to India’s but much lower than China’s 35 percent. It is within the realm of feasibility but would require substantial foreign direct investment. This will only flow to Pakistan if a strong civil society takes root there and stamps out the current culture of intolerance between diverse ethnic and sectarian groups. There would be respect for law and property rights. Anarchy, kidnappings, rapes and tortures would become a thing of the past. Mosques would not be guarded by guns. Sardars, zamindars, waderas and siyasi faujis would give way to a new entrepreneurial class.

In addition, Pakistan’s economic managers would have to exercise fiscal discipline and ensure a budget surplus of two percent of GDP, brought about by expansion of the tax base and reduction in unproductive government expenditures such as those on the military. Foreign debt payments would be small and genuine economic reforms that provide significant incentives for private enterprise would have been implemented.

Pakistan’s global economic competitiveness would have risen from its current ranking of 91st out of 104 countries, as compiled by the World Economic Forum based on quantitative economic data and subjective information gleaned from a survey of business executives. Pakistan was ranked 67th on the quality of its macroeconomic environment, 83rd on the quality of its business environment, 87th on its technological capabilities and 102nd on the quality of its public institutions. Pakistan’s aggregate ranking is down from a value of 73 in 2003, largely because of a fall in the softer factors. India is ranked 55 and China ranked 46. Both countries have held their rankings between 2003 and 2004.

The final condition is productivity growth. This requires a commitment to education, science and technology. Pakistani universities would have to become centers of learning in both the sciences and the arts and attract the best talent from around the globe. The current drift toward extremism and militarism would have been replaced with a bias for invention, innovation and commercialization of new technologies.

If this begins to sound unrealistic, let us keep in mind that Japan, which has the world’s second largest economy today, was a developing country in the late fifties. Malaysia and Thailand did not become the powerhouses they are today until the seventies.

The 2047 vision will require inspired political leadership that represents the people and translates words into action. It will require the institution of checks and balances between the three branches of government and the establishment of democracy. And, most importantly, it would require the complete transformation of the adversarial relationship with India.

Gone would be the congenital insecurity and dread of being reabsorbed into the “mother country.” Something akin to the Canada-U.S. model would have settled in, allowing defense spending to be lowered to 2 percent of GDP. India would emerge as Pakistan’s largest trading partner and investor with many cultural affinities.

This scenario calls for a radical change in Pakistan’s strategic culture. Without such a change, the future is bleak. As Singapore’s Lee Kuan Yew put it in his memoirs, “The Pakistanis are a hardy people with enough of the talented and well-educated to build a modern nation. But unending strife with India has drained Pakistan’s resources and stunted its potential.”

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Anonymous Sadat said...

MY PREDICTIONS:

By 2047, federation of Hind would have been dissolved and replaced by 500 city states.

By 2010, Pakistani per capita incomes would reach twice the level of Hind.

By 2015, Pakistani GDP would be twice the level of Hind. Kashmir would have finally tasted freedom from oppression of monkey worshippers.

By 2020, Pakistan would have set up a space station and landed on the moon.

By 2030, two-thirds of Pakistani population would be living in urban agglomerations.

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