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Impact of globalisation on Pakistan

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Globalisation is here to stay whether we like it or not — Shaukat Aziz

Jul 24 - 30, 2000

All the main speakers at the seminar on "Impact of globalisation on Pakistan with special reference to South Asia" including Finance Minister Shaukat Aziz, Dr. Ishrat Hussain, Governor State Bank of Pakistan and Dr. A.R. Kamal, Director, Pakistan Institute of Development Economics (PIDE) were unanimous that Pakistan should benefit from globalisation but it needs proper preparation to meet the challenges of the globalised economy. India and China have benefited immensely from globalisation after doing their homework properly, they maintained.

The Seminar was arranged by Dr. Mehboob-ul-Haq Human Development Research Centre on the occasion of the second death anniversary of the world famed economist Dr. Haq.

The audience which comprised former minister, Mr Sartaj Aziz, retired senior bureaucrats, economists and research scholars and senior journalists apparently did not share the views of the speakers as was amply manifested from their highly critical and probing questions. They seemed to be of the view that with its little industrial base Pakistan was not in a position to compete in the international market for a variety of reasons. It will prove disastrous for the country's economy if trade was opened without proper home work. Pakistani manufacturers need various concessions in the form of reduced input cost and a long time to develop the expertise to compete in the highly advanced and sophisticated world of international trade. Federal Minister for Information Javed Jabbar, who summed up the second session of the seminar, obviously influenced by the mood of audience, stressed more on Pakistanisation than globalisation.

Finance Minister Shaukat Aziz underlined the need for safeguarding our identity and cultural values to successfully participate in the globalisation process and avoid being marginalised. "Globalisation is here to stay whether we like it or not. We have to embrace it, not fear it. We, however, must not compromise on our principles and safeguard our identity and cultural values. This will make Pakistan a more robust country in the comity of nations," Shaukat Aziz said.

He said the process of globalisation has started and it cannot be stopped, so those countries which would oppose it or try to escape it would get marginalised themselves. Realising this fact, Pakistan has to strive for a level-playing field and fight for a better place in the process. As a result of this process, trade, investment and human capitals will flow freely across the international borders. In view of these unavoidable developments, foreign policy would also have to be tuned up accordingly with special focus on economy and attracting foreign investment.

Referring to the possibility of brain drain due to globalisation he admitted this has also become a reality and cannot be stopped even if any country want to. Anyhow, he said the government has given some concessions to professionals and other individuals in the budget to stay in the country. One way to escape from this brain drain is to educate such people and make them aware of its fallouts on the country. The government on its part has started large-scale training and other programmes to develop the skilled manpower and providing them better wages to discourage them from going abroad. This programme has been initiated to prepare professionals to meet the future challenges.

Dr. Ishrat Hussain, Governor State Bank of Pakistan said Pakistan should immediately address to the issues of growing international trade, short-term and long-term capital investment and flow of labour to other countries to benefit from globalisation as India and China have done. In his keynote address, the governor said that it is important to watch how nations look after their interests in the globalised world. Pakistan has allowed more liberalized regime much earlier in 1960s but fallen behind in last ten years to get benefits of globalisation, he said.

There are five dimensions of the issue regarding Pakistan in which its growth rate has slipped from six per cent to three per cent with high population growth rate of 2.9 per cent and stagnant per capita income.

This indicates that there is a proportional relationship between high growth and incidence of poverty. This has created unequal growth producing greater social pressures and reducing benefits to larger part of population. Regional gender and other social inequalities have increased a lot in recent years".

Public policy is also an element, which substantially suffered from absence of globalisation benefits. Fiscal deficit increased gradually which left a small space for public expenditures. Pakistan could have achieved eight per cent GDP growth if it has efficiently invested public expenditures. Poor governance decreased access of common man to public services that gave rise to intense pressure on public services."

Pakistan's exports remained stagnant and foreign investment registered insignificant improvement over the years. Showing greater leaning towards acceptance of globalisation and developing measures to face it, Ishrat said it could generate employment if labour-intensive export industry expands." Consumer gets cheaper goods. Long-term capital investment contributes a lot to economic growth.

While summing up at the conclusion of questions and answers session Mr. Shaukat Aziz agreed that achieving higher growth, competitive industry, development of human capital, better economic management, spread of information technology, no compromise on country's sovereignty and replacing political diplomacy with economics are the basic tools to tackle the issues of globalisation.

Explaining these features, the finance minister said the industry should produce superior quality products and carve out a niche for domestically produced goods. Pakistan should focus on the specialisation of output operations in the manufacturing sector. He also agreed that a lot of ground work was needed to achieve this position for Pakistan manufacturing sector.

As a participant in the seminar this correspondent was reminded of the visit of a delegation of Indian Chamber of Commerce and Industry which visited Pakistan in the wake of Indian Prime Minister Vajpayee's visit to Pakistan in February 98 and held extensive discussions with their Pakistan counterparts. This correspondent was invited as an observer to attend one of such meetings in Islamabad where the Indian manufacturers offered to supply Reilegh Bycle at Rs1100 against Pakistani price of Rs. 3000, Vaspa Scooter at Rs.35000 against Pakistani price of about 68000/- and Maruti car (our Suzuki Mehran) at Rs.250,000/- against Rs.375,000/- in Pakistan. They also offered steel and steel product at about 66 per cent of the prices being charged by the Pakistan steel mill. One wonders what would happen to what ever little industrial base we have in Pakistan if we enter into the race of globalisation without any preparations to meet the global challenges. We will obviously be faced with numerous economic pulls and strings within the process of globalisation, if we failed to prepare ourselves to face the emerging world scenario. We will, therefore, have to take tangible steps to safeguard our social, cultural and economic interests to resist the forces of pressure in the globalisation process.