Neither ‘new’ nor a strategy - Dr Ashfaque H Khan - Tuesday, April 05, 2011

On March 29, I commented on the “new” growth strategy, a document prepared by the Planning Commission. In my comments, I stated that the document is technically weak and lacks cohesion, and that some parts of it are based on incorrect facts. I also questioned the “newness” of this growth strategy and argued that it is nothing but old wine in a new bottle.

The salient features of the “new” growth strategy include a discussion on demographic dividend, the private sector as major driver of growth, the role of innovation and entrepreneurship in promotion of economic growth, the major constraints to growth, various indices of competitiveness, the role of mega-cities, quality of investment in physical and human capital, improvement in public-service delivery and governance, the inadequate transport and storage facilities, land titles, connectivity, and youth engagement.

Are these features “new” for the growth strategy propounded by the Planning Commission? Have these features not been part of the “old” growth model? There is nothing “new” to the new growth strategy. The second Poverty Reduction Strategy Paper (PRSP-II), under the title “Ensuring a Demographic Dividend: Unleashing Human Potential in a Globalised World” prepared by the ministry of finance in April 2007, and presented to the Pakistan Development Forum, has been renamed new growth strategy. The PRSP-II contains all the salient features of the new growth strategy described above. The same has been summarised in the Pakistan Economic Survey 2006-07 as well (pages xviii-xxii).

While the new growth strategy discusses demographic transition, it fails to discuss how the transition can be converted into dividend. On the other hand, the PRSP-II is centred on converting transition into dividend through seven pillars. The salient features of the new growth strategy have been enshrined in the seven pillars of the PRSP-II.

The new growth strategy regards the private sector as a growth driver. The second pillar of the PRSP-II rests on the role of the private sector and states that “the private sector will play an increasing role in driving growth and creating job opportunities. A strong Private Sector Development strategy will therefore be a key element in enhancing the competitiveness of the private sector.

The new strategy discusses the role of innovation and entrepreneurship in promoting economic growth. It is common knowledge that innovation and entrepreneurship development come only through the investment in human capital, particularly higher education. How can innovation and entrepreneurship be promoted in the midst of the systematic destruction of higher education in Pakistan? I leave it to the deputy chairman of the Planning Commission to explain.

The new strategy highlights major constraints to growth and compares Pakistan with other countries in terms of various indices of competitiveness. The second pillar of the PRSP-II deals with competitiveness issue. It states that “the government recognises improving competitiveness as a cornerstone of its economic growth strategy.” It is in this connection that the government and USAID established a Competitive Support Fund whose main task has been to prepare a State of Pakistan’s Competitiveness Report and assist the private sector in improving its competitiveness.

The new strategy discusses the role of mega-cities in promoting market and economic growth. This aspect has been covered in the first pillar of the PRSP-II. Under the subtitle of “mega-cities as engine of growth,” it states that “urban centres provide massive opportunities for overall economic development. Development of mega-cities has a multifaceted impact on the economy. Pakistan will see the rise of large urban centres and mega-cities which will propel the growth of national economy.”

The new strategy emphasises the quality of investment in physical and human capital. This issue is extensively covered in the fifth and the third pillars of the PRSP-II, respectively. Under the title of “World Class Infrastructure,” the fifth pillar states that “the government’s vision for economic growth and poverty reduction sets ambitious targets, which will require massive investment in quality and affordable infrastructure to sustain high rates of private sector-led growth that enhances the competitiveness of its economy.”

On the issue of quality of human capital, the third pillar of the PRSP-II, under the title of “Harnessing the Potential of the People,” states that “educational attainment has a positive impact not only on economic growth and poverty reduction but is also directly linked with technological adaptation, innovation, and increased productivity.” The entire chapter is devoted to improving the quality of primary, secondary and tertiary education as well as vocational and technical education.

The new strategy underscores the importance of improving public service delivery in particular and governance in general. This aspect has been covered extensively under sixth pillar of the PRSP-II. Under the subtitle of “Effective Social Service Delivery,” the sixth pillar states that “expanding inclusive service delivery is critical to achieving the Millennium Development Goals and maximising gains from the upcoming demographic dividend. Government’s efforts in the next three-five years will focus on better aligning, accountabilities and expenditures, improve social service delivery.” This chapter is yet another good reading for the deputy chairman to apprise himself about the work needed to be undertaken.

On the remaining salient features of new growth strategy such as inadequate transport and storage facilities, land titles and connectivity, I would urge the deputy chairman to read various pillars of the PRSP-II as these are well documented there.

It is now abundantly clear that the “new” growth strategy as propounded by the Planning Commission is nothing but the recycling of the PRSP-II, and therefore is old wine in a new bottle. The deputy chairman and his consultants have lived outside Pakistan for decades, and as such have little understanding of the ground realities and little knowledge of the work done in their absence. There is nothing wrong in carrying forward the strategy discussed in PRSP-II. It has worked in the past and will work in the future as well. There is no need to reinvent the wheel.

The writer is principal and dean at NUST Business School, Islamabad. Email: ahkhan@

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