Ayesha Saba

Pakistan’s transition from a factor-driven to an efficiency-driven economy requires a comprehensive approach that encompasses value addition, technological upgradation, diversification, skill development, and an improved business environment. “By implementing targeted policies and initiatives, Pakistan can create an environment conducive to economic transformation, and achieve sustainable and inclusive growth,” Majid Shabbir, Secretary General Islamabad Chamber of Commerce and Industry (ICCI), stressed while talking to WealthPK. “There is a great deal of talk these days about how to grow and energise the economy of Pakistan. We must understand that no one sector is likely to make that happen. There is no magic bullet.” He said Pakistan’s classification as a factor-driven economy is indeed accurate, considering its reliance on basic agricultural products, processed goods, and labour-intensive industries.

“The country’s economy is primarily driven by factors such as natural resources, particularly in the agriculture sector, and its relatively low-cost labour force,” he added. Majid Shabbir maintained: “Pakistan has often provided support to traditional sectors, such as agriculture and textiles, through unconditional cash subsidies. Instead of promoting entrepreneurship and rewarding innovation, successive governments have focused on giving unconditional cash support to the traditional sectors, sticking to the traditional ways of doing business.”

“The fact is that not all industries can be protected, and not all industries should be protected,” he noted, adding that regardless of how long the government has invested in a particular industry, if it still needs tariff protection from foreign competition or subsidies to compete in foreign markets, it has clearly lost its way. “The government should carefully choose which sectors have the potential to grow and compete in the global market. These industries should be identified based on factors such as comparative advantage, technological potential, and market demand,” the ICCI secretary general opined. He mentioned that domestically, Sialkot was a successful model as the country could export 100% of its products without subsidies and protection. He suggested that reducing dependence on a few sectors could make the economy more resilient and efficient.

“Pakistan should explore new sectors and industries with high growth potential, such as information technology, renewable energy, tourism, and manufacturing. Diversification can help mitigate risks associated with fluctuations in commodity prices and promote sustainable economic development.” “By fostering a culture of innovation and diversifying the economy, Pakistan can reduce its vulnerability to external shocks, such as fluctuations in commodity prices, and create a more sustainable and resilient economic foundation,” he stated.

Credit: INP-WealthPk