Agenda for young economists

How do stakeholders view the PM’s Kamyab Jawan programme and how can young economists contribute to Pakistan’s growth and development are some of the questions that were discussed at the University of Karachi’s ‘Young Economists’ Conference 2020’ held yesterday.

Both are important questions to be asked, and there is not enough space to answer either of them in detail in this small section. But here are some thoughts in itemised form.

Sticking to the subsidised loan aspect of Kamyab Jawan programme, the question to ask is whether access to finance is really the biggest problem in this country. This question may ruffle a few feathers especially those who have made a career out of promoting SME finance. But several surveys have shown that access to loan is not as big a problem as is often touted. The last round of World Bank enterprise survey showed that percentage of SMEs ‘not needing a loan’ was almost 60 percent. (Read BR Research’s ‘Ants, elephants, and SME finance’ Oct 22, 2019)  

Another difficult question to ask is whether unemployment is Pakistan’s biggest problem. Contrary to all the pollical and economic rhetoric, unemployment numbers reported by Pakistan Bureau of Statistics have in fact come down in recent years – landing at 5.7 percent in FY18. How can the government whose data says unemployment is not a big problem, be harping about unemployment and launch programmes such as Kamyab Jawan as a solution to kill unemployment?

To this some quip that the data is wrong, whereas others respond by saying unemployment rate is low because of high ratio of unpaid family workers and low labour participation rate. If the data is flawed then the government needs to fix it, and academic circles should hold conferences on data flaws. (See also ‘Is unemployment really Pakistan’s big issue?’, Sep 5, 2019)

In the case of latter, be sure that policy solutions to fix high unemployment do not hold the same medicinal value as do policy solutions for unpaid family workers and low labour participation rate. Different problems call for different solutions.

Lastly, the notion that access to loans is prohibiting economic growth is a misnomer. Subsidized loans and other forms of price signals can only achieve so much in a country that has serious structural and infrastructural, and regulatory walls between businesses (big or small) and growth. Just ask red meat and poultry players, for example, who struggle to grow despite everyone being blinded by the optimism over Pakistan’s livestock’s potential.

As for the question ‘how can young economists contribute to growth’, perhaps the important advice to offer is to engage with the society. It is understandably very tempting to work on readily available data and calculate the determinants of FDI (or other macro indicator) in Pakistan using one model or another as it is easy to criticise the government on World Bank’s Ease of Doing business rankings.

But as much useful these models and rankings may be, young economists would also do well to observe, research, and document local problems and offer locally applicable unique solutions – even if it is as simple as studying the comparative market (and economics thereof) of growing rickshaws/Qinchis that seem to be replacing buses in Karachi. On that note, ease of doing business problems posed by the private sector is another ignored research area. But more on that later!