Pakistan’s economy has always run in an ad-hoc manner – both in terms of its policies and the manner in which it sees growth. If one takes a look into its history, one thing is for certain — everyone has looked to secure their personal, short-term interests.
Right now, anyone and everyone with some disposable cash is looking to buy foreign exchange or gold because they have lost confidence in the local currency. Foreign direct investment has dropped and local businesses are also holding back.
But they are not to be blamed for this.
For businesses, making a long-term commitment in the country means capital expenditure or locked cash. But the state of the economy has remained largely unstable barring a few bouts of growth that have come on the back of measures that were not long-term in nature.
Such instances of (faux) stability have even done more harm than good to Pakistan’s economy. For instance, an artificially pumped up rupee made imports cheaper, thus making an import business more tenable than the industrial sector.
This can be seen across the board – industrialists in Pakistan trying to run their factories at the bare minimum.
The textile sector – previously a golden goose for Pakistan – is responsible for the highest export allocation at roughly 60%. However, it is still not among t the top textile exporters globally, despite being the top producers of cotton.
Other countries such as Bangladesh have surpassed them as exporters despite producing smaller quantities of cotton in their countries.
The same is the case with milk.
Despite being one of the biggest milk producers in the world, the country has largely failed to add value. In fact, Pakistan still imports cheese despite exchange rates reaching record highs every now and then.
One of the problems with these industries is that they have failed to leverage new technologies in their respective industries. Businesses are reluctant to invest and continue to work with the bare minimum.
In a related case, German company KiK – the largest textile discount chain in Germany – had previously advised Pakistan to follow Bangladesh in implementing safety requirements for the textile industry. However, implementing such safety requirements has a cost, which businesses in Pakistan avoid.
The markets for South Asian nations’ textile exports are mainly developed countries such as the United States where consumers are mindful of ethical standards of production, such as proper safety for workers, sweatshops, etc.
The export market will continue to squeeze Pakistan out if the country does not embrace contemporary technology along with international best practices.
And now there’s another change coming down the road. The world has steadily begun to embrace artificial intelligence (AI) in one form or another.
As far as the debate around the ethical use of AI is concerned, Pakistan does not need to worry about that yet, simple because it will take some time for the country to even grasp what it is actually about.
The only dilemma for Pakistan at the moment is whether the use of AI will make workers redundant.
This phenomenon has always been there. Any new technology does make some people redundant. Just a few decades ago, computers did the same as well as the industrial revolution before that. This will be the case for AI.
However, it will also bring efficiencies and benchmark accuracy in quality for businesses and those companies and countries that embrace it will have an advantage over their competitors.
Historically, those countries with a track record for adapting to new technologies have fared better than others.
Laggards such as Pakistan intermittently need foreign help such as the International Monetary Fund (IMF) programme and loans from friendly countries to even run the economy.
In agriculture, land-owners believe (though not in all cases) that introducing new technology and upgrading the supply chain may break their stranglehold over their holdings.
But the industries in urban societies should be given confidence to invest in technologies such as new machines as well as IT and AI. The government has a role to play.
For the government to do the needful, other stakeholders such as politicians should concur on at least one thing – to let the economy grow. It will only come with stable policies.
The country desperately needs change.
There is widespread hunger and malnutrition. Overall, 49.1% children are iron-deficient, according to UNICEF.
Meanwhile, lack of basic necessities and opportunities have taken such a toll on citizens that they are trying to leave Pakistan even if it costs them their lives as as demonstrated by the boatloads of migrants drowning in the Mediterranean sea.
The trajectory this country is following, especially economically, will eventually lead Pakistan to catastrophe.
Politicians, industrialists, businessmen and the people should come together on the same chapter at least on the economic front.
Making things viable for investment will also help in technology adoption.
It is the only way to compete internationally in terms of exports while giving something to hold on to the people of the fifth most populous country in the world.
The article does not necessarily reflect the opinion of Business Recorder or its owners