Unfortunately, Pakistan is stuck in the retrogressive phase, showing a divergent path from equilibrium and development, an international trade deficit, a decrease in FDI, inflation, and fiscal and budget deficit
How does Economics work? What are the forces that determine it? And how does it relate to other social syntheses? Chanakya (321- 286 BC) defines Economics as “the most important aspect as it provides the basis for human existence and survival.” The beginning of economics is as old as the human itself. it started from prophet Adam P.B.U.H as he tasted the fruit from the forbidden tree, wishing to reach the saturation point.
Throughout the process of historical development, there has solely been one way of labour distribution, i.e., according to their ability and skills. The distribution of work has been based on physical trials and mental efforts. There is always well-formed philosophy behind the distribution of work and its economics. As Karl Marx had said, “There is only one way of exploitation to the other class of society from the Neolithic revolution that is the class who possess the investment surplus.” Every society has managed its economic system that determines the forces of production and relation of production, and this system could not be absolute. It would change into another form after reaching a point of no development.
After the great leap forward, China has achieved higher growth in exports. It has been taking bold steps like protection of infant industries, introducing free will in business activities, and consumption of domestic goods and services. According to the United Nations Conference on Trade & Development (UNCTAD) 2021 report, the Share of China in global exports of goods is 14.7% which is the staunchest amount of contribution to global exports.
Unfortunately, Pakistan is stuck in the retrogressive phase, showing a divergent path from equilibrium and development, an international trade deficit, a decrease in FDI, inflation, fiscal and budget deficit, external and domestic debt, and nefarious politics. The trade deficit currently stands at $-3.261 billion as of July 2021. Whereas, in June 2021 trade deficit was $-3.624 billion. As per the external trade figures, Pakistan has achieved surplus only twice in its trade since 1947.
P.M Imran Khan initiated the kamyab nojawan program & allocated Rs 25 billion, hoping the figures would reach Rs.1 trillion by the end of the upcoming two years. Growth through public expenditure could affect the external sector, which needs to import goods and raw materials for economic growth. Hereby, It creates an imbalance in the external sector.
UNCTAD 2021 press release report shows that Global E-Commerce jumped to $26.7 Trillion in 2019. The US is on the top, and the total E-commerce sale stands at $9.58 trillion, followed by Japan securing $3.14 trillion while China is on the 3rd position with total E-commerce sales worth $2.60 trillion. China has secured 1st position & India is on 9th position in Business to Consumer (B2C) E-commerce. Surprisingly, Korea (rep) has contributed 79%, Japan has 67%, U.S has 45% and China has an 18% share of total E-commerce sales in GDP.
The main purpose of these facts and analysis is that the tactics have changed, as now economics works on “Ideas” and “Innovations.” China is promptly working on Business-to-Business (B2B) E-commerce. thereby, Pakistan should be focusing on E-commerce and induce those policies which can open doors to brand-new ideas and innovation in the E-commerce business.
Notwithstanding the twenty years of Vietnam s war(1954-1975), Vietnam exports reached $287 billion in 2020, which is more than Pakistan’s total Gross Domestic Product (GDP). 2020 Human Development Report shows, Vietnam’s HDI (Human Development Index) ranking is 117th, and Pakistan’s ranking is 154th in HDI. It authenticates that Pakistan has disdained the education, health, and manufacture sectors.
India is now competing with developed countries in every aspect, and is leading while Pakistan is far behind. It has continued working on economic growth through developmental projects like MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act), 4407 Dams, technological advancement and Information Technology.
In the last fiscal year that ended in June 2021, Pakistan’s total Foreign Direct Investment stood at $1.87 billion. Together, the six sectors (power sector, oil and gas exploration, financial sector, Trade, electrical machinery and Information technology) attracted a little more than $1.74 billion or 92.4% of the total net FDI of $1.85 billion, according to the SBP statistics. While at the end of 2018 FY, total net FDI stood at $2.18 billion. Jan 2020 UNCTAD report, The United States remained the largest recipient of FDI, attracting $251 billion in inflows, followed by China with flows of $140 billion and Singapore with $110 billion. Pakistan’s neighbor and rival India also mad $49 billion worth of inflow in terms of FDI.
John Maynard Keynes, the father of modern economics had said, “Successful investing is anticipating the anticipations of others. Markets can remain irrational longer than you can remain solvent.” These words aptly sum up the discourse of this article. Pakistan should be converting its economic policies to digitalization by using new ideas, innovation and fully utilizing the potential of its information technology sector to achieve long-term and sustainable growth.
About The Author
Asif Khan Nasar is graduate in Economics from Quaid-i-Azam University, Islamabad.
The views expressed in this article are solely those of the original author and do not necessarily reflect or represent the views of Rationale-47.