US should invest, spur Pakistan trade in face of terror-related losses: Economist

WASHINGTON: Ten years after Pakistan joined the fight against terrorism, its economy has been severely hurt by unrest emanating from the Afghan border and the US should now bolster American investment and trade access to help its partner regain growth momentum, a Pakistani-American economic expert said.

At the same time, Pakistan needs to reform various sectors of the economy boldy to attract greater inflows of international investment, Dr. Shahzad Latif, a Chicago-based economist, said.

"The United States continues to call Pakistan an important ally in the war on terror. For the US to prove that point, it is imperative that it does something concrete (economically) in return (for Pakistan's anti-terror efforts)," added the economist.

Islamabad announced last week that economic losses the country has suffered in the decade - since 9/11 attacks on the US and subsequent American invasion of Afghanistan - have now climbed to $ 68 billion.

Dr Latif particularly wants Washington to open up its markets for Pakistani goods, especially agro-based products such as textiles - the mainstay of Pakistani exports.

The economist says he cannot fathom the lack of progress towards a preferrential trade initiative for Pakistan during the last ten years while some other countries in the region have had generous access to the US market for a long time.

Pakistan has not only served as the key route for Afghanistan-bound NATO and US supplies but also suffered immensely in the face of retaliatory terrorist bombings for its anti-militant campaigns, with 35000 deaths and resultant shrinking investment in several sectors.

Islamabad has captured and eliminated hundreds of al-Qaeda linked militants, who fled into its tribal areas from Afghanistan after the US-led forces toppled the Taliban government in Kabul in late 2001.

A study unveiled last week by Carnegie Endowment Fund for International Peace in Washington made a similar case for easing access for Pakistani textiles, reminding policy makers that employment generation cancels out appeal of violent extremists.

"Pakistani goods suffer from extremely high tariffs that make it difficult for Pakistan to compete with other low-income, textile-producing nations ----- protectionist interests in Congress have kept the United States from reducing tariffs---- lowering tariffs on Pakistani apparel and textiles would not be a panacea but it would help attract investments and spur economic growth in Pakistan," stresses the study entitled Stop Enabling Pakistan's Dangerous Dysfunction.

Dr Latif, for his part, notes that 80% of the political and social problems stem from economic issues.

"The US needs to target these economic problems of Pakistan and invest in industries through private companies such as guaranteed loans by US Import Export bank --- when people have jobs, they do not come under influence of miscreants," he said in reference to Washington's avowed commitment to assist economic uplift of Pakistanis.

On Pakistan putting its economic house in order, Latif says steps must be taken to curb inflation, develop human resource, encourage value added products, enhance production, and overcome energy crisis.

Copyright APP (Associated Press of Pakistan), 2011