Steps for Betterment of Economic Growth of Pakistan
Introduction:
Pakistan has the potential to develop into a key economic center for the region thanks to its population of almost 220 million and advantageous location at the intersection of South, Central, and West Asia. To reach this potential, Pakistan must have the economic stability and steady growth that can be fostered.
Creating economic corridors—defined geographic areas with cutting-edge trade and transportation infrastructure, amenities, and regulations—is one method to get there. These corridors will promote economic activity both within the nation and with its neighbors. Infrastructure, industrial, and urban developments are all a part of economic corridors. If done right, these can be a rich source of possibilities and investments that will boost the economy, create jobs, and speed up the movement of people and things.
An article from the Asian Development Bank looked at how developing economic corridors could help Pakistan achieve sustainable growth. It concluded that unleashing the nation’s economic growth requires fundamental reforms in several critical areas, including simplifying corporate laws and taxes and enhancing trade facilitation and logistics.
1. Improvement of infrastructure:
The foundation for the development of economic corridors is strong infrastructure. Effective multimodal transport networks, which connect metropolitan centers to domestic and international markets, promote mobility, and boost trade. These networks include highways, trains, and ports. Through connectivity and economic integration with other Central Asia Regional Economic Cooperation (CAREC) Program participants, Pakistan may make the most of its strategic location and help standardize regional standards to boost cross-border trade.
2. Industrial Development:
The concentration of industries in critical locations is an essential component of economic corridors. Industry needs more than just being close to highways or railroads to prosper; it also needs an environment that encourages investment and a trained workforce.
The government may use tax breaks or other incentives to promote such growth. And it is crucial that whatever is developed inside an economic corridor may spread outside of it, connecting the nation’s exports to the global supply chain, not only to the rest of Pakistan but also to the rest of the world.
3. Increasing Exports:
In order to finance imports, fulfil debt obligations, stabilize its currency, and address the enduring issue of the balance of payment deficit, Pakistan’s economy depends on its exports. A nation’s exports should be certified by internationally approved standards, be in line with market trends and quality, and be competitive. The investments that Pakistan needs to increase its exports are few. Uncertainty is the root cause of Pakistan’s unfavorable investment environment. The unpredictability of demand is indicated by the volatility of output growth, while macroeconomic uncertainty is indicated by the volatility of inflation. It has been discovered that these indicators have a negative effect on investments, particularly private investments.
For the creation of policies, trade experts must be hired. A public-private cooperation can be advantageous to both parties in implementing reforms, policies, or frameworks that can holistically focus on exports, priorities the services sector, implement simple, understandable incentive programs, and diversify the products available. Additionally, the Cell plans organized trade missions to particular markets that let businesses meet with buyers and go to pertinent events.
4. Real Estate Investments:
Higher returns and a growing population depend on economic stabilization. The economy is able to talk about homes because of real estate. It provides space for enterprises while also promoting the image of a prosperous nation. Additionally, it creates more job prospects in the construction sector.
There has a long history that contributes to a distinct market demand. Due to its potential to lower house appreciation, the housing market has rebounded in the past. Prices have been changed back to daily. However, real estate investors continue to be the best-performing market since it has a positive appreciation where people can make millions over time to stop flipping. Real estate is also renowned for being a pioneer in creating jobs for numerous people. Construction, development, and utilization all include additional processes that lead to professions. Engineers, workers, and architects are just a few of the several occupations involved in real estate-related activities. These employment opportunities also address other issues associated with unemployment.
The country’s biggest development engine could be the real estate industry. Real estate is directly tied to the production of glass, wood, furniture, steel, plastics, paint, power cables, cement, electronics, and other products. Therefore, a rise in construction would certainly lead to additional employment and economic activity.
5. Tourism:
The success of many economies throughout the world depends on tourism. Tourism has a number of advantages for host locations. A country’s infrastructure is developed, its revenue is increased, and a sense of cultural interaction between locals and visitors is shown thanks to tourism. In numerous locations, tourism generates a sizable number of jobs. These positions may be found in the agricultural, communication, health, or educational sectors in addition to the tourism industry. Many tourists come to enjoy the culinary, culture, and other aspects of the host country. Local retailers, malls, and restaurants all profit greatly from this. The population of Melbourne, Australia, is significantly impacted by tourism. Foreigners can learn a lot about different cultures through tourism, but locals can also benefit greatly from it. It enables young business owners to launch novel goods and services that would not be viable if just offered to the neighborhood’s residents. Additionally, locals reap the rewards of tourism that occurs within their own nation.
Because inbound tourism is contributing more and more to long-term economic growth, its significance has increased dramatically. It promotes industrial development creates jobs and thereby increases income inbound tourism also generates positive externalities and finally, as the economy expands, one can argue that growth in GDP could lead to further increase in international tourism. All of these factors contribute to economic growth.
6. Small Business:
According to a statement written by Stephan Goetz, director of the Northeast Regional Center for Rural Development and professor of agricultural and regional economics at Penn State, “Small, locally owned businesses and startups tend to generate higher incomes for people in a community than big, nonlocal firms, which can actually depress local economies.” According to Goetz, his research demonstrates that small enterprises have a significantly greater positive impact on local economies than do huge corporations. This is due to the internal systems that big box stores and major organizations have for services like accounting, legal, supply, and maintenance, which are not always situated in the county or state.
In smaller geographic areas, small enterprises fuel the nation’s economic growth and produce jobs. They increase market competition. A local farmer, for instance, might be able to provide less expensive goods since he doesn’t have to pay for shipping. Similar to how an agile start-up may be able to develop new technologies more quickly than its heavy-handed bureaucratic rival, demanding adjustments in thought and behavior.
Second, small local companies are also present. Because of this, they strongly favor hiring locals. Large firms frequently send a team into uncharted territory. This may increase a city’s population, but small enterprises are what spur new job creation in a region.
Third, small businesses are more adaptable. Anyone can launch a new company. In comparison to giant organizations, this improves their potential and gives them a greater diversity of shape, function, and culture. The more diverse an economy is, the more equipped it is to endure adverse circumstances.
7. Agriculture:
“The process of cultivating land or soil for agricultural purposes is known as agriculture.” For Pakistan’s economy and its development, agriculture is extremely important. A direct 48 percent of the labor force is employed in agriculture. As a result, it provides the majority of the population with their primary means of subsistence or income. Rough 70% of the population is related to agriculture in some way. The bulk of Pakistan’s enormous population’s food supply comes from agriculture. The primary source of raw materials for Pakistan’s industrial sector is also agriculture. Its contribution to GDP is approximately 25%, which is greater than any other sector’s contribution.
Food needs: Pakistan’s population is growing at an accelerated rate. According to a UNDP assessment on human development, Pakistan’s population is growing at a pace of 2% annually. Consequently, as the population grows quickly, so does the demand for food. In this regard, the only significant industry providing the growing demand for food is agriculture. Additionally, less food from foreign economies is imported. Therefore, we can conclude that the agriculture sector is essential to Pakistan’s development because it feeds a large population while also fostering economic expansion.
Contribution to exports: Cotton, wheat, and rice are Pakistan’s three main cash crops and exports. The annual production of cotton is 9.8 billion bales. Each year, 4.3 million tons of rice are produced. These agricultural products are exported to different nations in exchange for foreign currency. This foreign currency is used to import machinery or other technological or industrial equipment, such as cars. Additionally, this foreign cash is used to enhance the economy’s infrastructure or to enhance other economic sectors including investments, health care, and education.
Rise in GDP: The agricultural sector is a major contributor to Pakistan’s GDP. Its contribution to GDP is greater than that of Pakistan’s other sectors at roughly 25%. The growth in GDP demonstrates the economy’s progress. It has been crucial to Pakistan’s GDP ever since the country gained its freedom. Currently, agriculture is the third-largest contributor to GDP. The largest portion of agriculture that creates jobs is livestock and fishing. Employment contributes to GDP because as employment rises, per capita income rises as well, increasing the GDP rate of the economy.
Growth of the Banking Sector: Agriculture has made significant contributions to the growth of the banking sector as well. When the government realized how important agriculture was, it took action to increase crop yield by giving farmers access to low-interest finance. Farmers are able to grow an increasing number of crops by using these credits. The ZTBL and other financial institutions were founded by the government for this reason in order to provide loan facilities. So, the banking industry develops in this manner.
Utilization of Nanotechnology: The employment of contemporary technology, such as nanotechnology, in the agriculture sector has been extremely important to the growth of the economy. Utilizing this method, high yielding varieties of high-quality items can be produced. High-quality products generate high rates of return for the farmers, increasing their per-capita revenue. The rise in per capita income is evidence of the economy’s development.
Textile industry Role: The textile industry is very vital to economic development. The production of agriculture in its raw form is wholly dependent on these industries. The main crop used in these sectors as a raw resource for manufacturing purposes is cotton. Additionally, these products are exported to several markets in exchange for foreign currency. Therefore, cotton as a raw material from the agricultural side helps to improve NI (National Income). The employment level provided by the textile industries also raises the average person’s income per capita. Therefore, we may conclude that the textile industries have made a significant contribution to the growth of the economy.
Role of Sugar industries: One of the important economic sectors that is vital to the growth of the economy is the sugar industry. This industry is entirely reliant on agriculture. Many regions of Pakistan grow sugar cane on a massive scale. The manufacture of sugar and other byproducts, which have a sizable market, is further supplied to the sugar industry. These large-scale industries contribute to the public’s level of employment. This raises the per capita income and raises living standards as a result.
8.Economic Transparency:
By making governments more accountable, reducing the influence of special interests, and improving resource allocation efficiency, more transparency can enhance institutions and policies. Additionally, “increased transparency has the ability to increase growth since it increases efficiency” Additionally, it lowers a state’s or a firm’s cost of capital. On the subject of emerging market investing behavior, research has been done. Investors withdrew their assets from the entire market when there was insufficient transparency and bad information arose because they were unable to distinguish between specific companies and borrowers. This justification also applies to the world financial crisis of 2008. The interbank market collapsed because banks lacked adequate data on the solvency of their partners.
In conclusion, nations and businesses with open rules attract more investment, have lower borrowing costs, and are less prone to financial crises. As was already mentioned, increasing openness has many advantages but also numerous drawbacks. The supplier’s or sender’s expenses are based on production and distribution. The indirect costs of disclosing key information are equally significant. On the one hand, this gives businesses access to the know-how of their rivals, boosting industry efficiency and expansion. On the other hand, it implies a loss of negotiating power and competitive advantage, which deters businesses from investing in research.
Conclusion:
To make significant changes, it is necessary to address a number of policy issues, including the law-and-order situation, good governance, and port improvements. Services, privatization, modernizing business law, enhancing the nation’s reputation abroad, engaging in economic and commercial diplomacy, fostering mutual trust with neighbors, developing infrastructure and human resources, and ensuring technology transfer.
This will stimulate regional economic activity, generate thousands of new employments nationwide, and turn Gwadar into a regional center for business and trade. Establishing economic zones that provide full industrial facilitation is necessary. In order to entice multinational corporations to invest in Pakistan, the government would play the role of a facilitator rather than an entrepreneur. Modern teaching and training facilities must also be established, as part of a comprehensive plan for infrastructure development that will undoubtedly draw foreign direct investment. The Board of Investment and the Ministry of Commerce need to make better preparations in order to create a global chain system in the nation, which will lower business costs and draw investors.