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Building a knowledge-based economy in Pakistan?

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Some of the contents of the approach paper for Pakistan’s tenth 5-year plan were recently published by a Lahore based newspaper. The approach paper recognises the key role of “knowledge” in economic growth and prosperity of Pakistan and will help set the direction for the country’s Planning Commission. It emphasises on building a “knowledge economy” by investing in education, vocational, technical and scientific training.

It also emphasises investments in R&D and communication infrastructure in Pakistan. The afore-mentioned, indisputably, are some of the essential elements of building a knowledge economy. But this list is by no means complete. A host of economists have come out with their views on how such an economy can come about. Almost all are agreed that a high literacy rate, internet connectivity, R&D spending, an effective judicial system and an entrepreneurial environment are important pre-requisites of a knowledge economy.

Twenty years ago the economies of Ireland and Australia were showing weak growth and were unexciting. Then we saw the emergence of both these countries as economic powerhouses. This was principally, on the back of a strong knowledge foundation that was laid by their respective governments.

According tothe World Bank, the four pillars of a knowledge economy are as follows: 1. Education and training: Producing a steady flow of skilled workers capable of creating, using and sharing knowledge.

2. Information infrastructure: Communication is the life blood of a knowledge economy. A well developed information infrastructure makes it possible for innovation to spread rapidly.This in turn leads to business growth.

3. Economic incentive and institutional regime: Presence of commercial law, patents, and a fair judiciary give entrepreneurs the incentive to create innovative technologies.

4. Innovative systems: Knowledge is a public good because all society stands to benefit from it. But economic theory holds that societies tend to underinvest in public goods. Therefore, an innovative system is required to direct societies resources to the creation and sharing of knowledge. A network of universities and research centers is a pre-requisite. Private enterprise and the government has to invest in R&D.

It is clear that building a knowledge economy is a tall order. A major re-allocation of resources has to take place. Pakistans economic problems are serious and our resources scarce. Our priorities have to be somewhat different. Our level of poverty is over 40%; direct economic intervention is required to subsidise food for the very poor. Secondly, our budgetary allocation for health and education is 3 % of the GDP.

These ratios have to be brought up to a respectable level to provide the basic necessities to the people. Other expenditures of the government have to be rationalised. PSDP’s allocation of Rs 646 billion in the current budget is a big improvement over last year. What remains to be seen is if this amount actually gets spent. Usually as the budgetary deficit increases the development budget becomes one of the first casualities.

For some strange reason, Pakistan’s population of 160 million is projected as an asset by our leaders and policy-makers.Half of our population is under the age of 25 years and our literacy rate, according to international standards is not even 60%.

We have to improve our literacy rate on a war footing. If we are not able to educate and train our workforce and provide employment opportunities, our huge population of young people will become a liability. This can lead to severe socio-economic problems and a political upheaval can ensue. The issue of literacy needs a lot of planning and a lot of time before we see any progress.

Only when these very serious issues relating to poverty and literacy have been addressed, can we start talking about making Pakistan a knowledge-based economy. At that point we will have to give priority to developing our communication infrastructure and increasing our R&D spending. And of course, a very important pre-requisite of a knowledge-based economy is an effective judicial system for which a lot needs to be done.

In the first instance there has to be an agreement amongst all political parties to make our judiciary independent. To start a public debate, at this juncture, as to how we can become a knowledge economy is somewhat premature. The Planning Commission’s efforts need to be directed at more immediate and pressing issues.

Courtesy: Business Recorder

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