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Pakistan’s troubled economy


Themes: Globalisation and international business

Dr Kamal MunirThe development of a clear industrial policy is key to reversing Pakistan’s economic decline

An advisor to the government of Pakistan on industrial policy says that the country must rid itself of its aid-fuelled, consumption-driven culture and rebuild its manufacturing base.

“Without a fresh impetus for industrialisation there is little chance of Pakistan re-emerging as a stable or prosperous country,” says Dr Kamal Munir, Reader in Strategy & Policy at Cambridge Judge Business School.

If Pakistan’s political troubles are to be resolved, the country must overcome five major hurdles blocking its industrial progress. These, according to Dr Munir, are inter-regional inequality brought about by the skewed allocation of development funds which led to deprivation in already poor regions. There is little incentive for entrepreneurs and many of these regions are becoming hotbeds of political and social strife.

Pakistan’s energy crisis must be resolved; interest rates must be reduced; the skilled labour shortage must be tackled and, lastly, a chronic lack of governance must be tackled.

Dr Munir warns that many of the initiatives currently being undertaken address the alleviation of poverty but these focus essentially on micro-level projects and will, as best, achieve only partial success. Industry is needed to create a foundation for development across economic, political and social levels.

“There is a need to create an environment that is conducive to large scale industrialisation. Cheaper gas, cheaper electricity and other forms of energy are required in a stable macroeconomic environment to provide a highly trained pool of labour for the domestic market.

“With a population of 170-180 million people, this market is huge but because so many are illiterate and poor it becomes a liability when it could easily be an asset. Human capital requires great investment.”

Dr Munir is part of the team mapping industrial policy for the Pakistan government.