Macro obsessions

Despite the increasingly powerful reign of chicken in Pakistan, the country is unable to competitively export chicken to the region or anywhere else. Rafiq Rangoonwala, the CEO of Quick Foods, recently told BR Research that Pakistan can neither compete in poultry nor in ethnic foods segments, as the country struggles with poor regulation and high of costs of labour, technology and processing. (See yesterday’s brief recording for interview transcript)

This is not breaking news. Such sector specific stories are aplenty. If high real estate costs are the main problem in one sector, shallow pool of talented artisans and skilled labour is the key problem in another. If phytosanitary barriers to trade, lack of certifications/standards or high tariffs is the problem in one line of business, poor property right and contract enforcement or IPR is the key issue in another. And if informality and fragmentation is the major stumbling block in one sector, government price control is the biggest barrier to sectoral growth in another.

Yet in every conference, donor funded reports, assorted books on Pakistan’s economy, media discourse, and government sloganeering, obsession with macro economy is omnipresent. The roots of this obsession are not very clear.

Is it because macro numbers are easy to dissect and analyse, whereas armchair analysts are easier to find in this country compared to serious field researchers? Or is it because sectoral affairs require subject matter specialists that this country clearly lacks?

Or perhaps addressing sector-specific issues require a great deal of coordination among the provinces and between provinces and federal government, which neither the present ruling party nor the ones before can boast about. Or perhaps because the private sector is still to learn how to effectively organize itself both for lobbying and advocacy, and for combining resources and faculties to explore overseas markets, as does the private sector in many other countries.

Perhaps all of the above would be the right answer. But know this: the obsession with macro economy and the obsession with short term-ish price signals (tax cuts, subsidies, cheaper loans etc) cannot significantly expand the production possibility curve. Nor can the ongoing drive towards formalization led by Shabbar Zaidi and others will bear the full crop of fruits unless the very structural issues of sectoral affairs are addressed. (See also BR Research’s Doing business: beyond World Bank rankings, Oct 28, 2019).