There are two fundamental elements that are necessary for a nation to exist: The first one is the nation’s ability to defend itself and continue to exist. The second is its economic well-being and development.
The Pakistani Armed Forces are the ninth-most powerful force in the world, according to Global Firepower. A sizable budget is spent on the institution. These facts demonstrate our superior defence capabilities, which prevent any nation from directly attacking us. But economically, our country is weak and could be an easy victim of developed countries. We must strengthen our economy in order to survive in the contemporary world. The world is currently engaged in an economic war.
Pakistan’s economic growth is dependent on its exports and foreign remittances. The income generated from these sources is used to pay import bills, service debt, stabilize currency, and overcome the persistent problem of the balance of payments. crisis. In addition to being competitive, a country’s exports should be in line with market trends and quality, and be certified to internationally acceptable standards.
Lack of investment is one of the core reasons why Pakistan’s growth in exports has been negative over the past 10-year period. Other reasons include a higher tariff structure, erratic growth trends, and low penetration in global markets. A lack of infrastructure, and technological advancement are also two of the core reasons. Furthermore, exports are also handicapped by the government’s irrational policies and complex incentives offered to industry. Other Competing Asian countries have managed growth by pursuing export led growth strategies with high savings and investment rates, specialising in areas of competitive advantage, and resulting in rapid industrialization.
Pakistan needs to capitalize on exportable services and products requiring minimal infrastructure and investments. For example, there is a growing global demand for software and IT solutions. It is easier to establish a software house than to set up a manufacturing unit. Analysts predict a global software engineering market to develop at an 11.72% CAGR between 2016 and 2022. We accredit the vigorous growth of the software market to the growing demand for automation from different industries to enhance their program manufacturing processes and design quality.
Improving export competitiveness in the global market is essential for increasing Pakistan’s exports. Exports are a victim of protectionist tendencies that incentivize production for the domestic market rather than global markets. A paradigm shift to provide incentives to industries to move their production from low to high value products are needed. For instance, the global ratio for MMF to cotton is 70:30, whereas, Pakistan’s composition ratio is 30:70 owing to a lack of prioritisation.
According to Global Fire, we should concentrate on the quality of the goods being produced within our nation. if we take a look at Pakistan, we typically export raw materials and then import finished goods at a price that is twice or treble of our own exports. For instance, we send cheap animal fur to China, where it goes through the process of value addition in the form of finished goods like bags, shoes, and jackets. Pakistan purchases the same products at the exorbitant rate .Islamabad should make raw processing industries at home to get maximum economic benefits.
Pakistan needs to raise more revenue to have resources for critical investments. Low domestic savings, below 10% of GDP for the past five years, do not support higher investment levels. The government’s limited resources, partly caused by low tax collection, restrict its ability to invest in public projects. To make up for this resource gap, the government borrows from commercial banks, limiting financing for the private sector to invest in projects that create jobs. The financial sector has limited long term financing, which constrains domestic financing for large investment projects.
For many years, Pakistan has struggled with corruption, political unrest, and poor governance. These problems have stymied the nation’s economic advancement and discouraged international investors. Pakistan must pursue reforms to strengthen the rule of law, reduce bureaucratic red tape, and combat corruption in order to improve government. This might contribute to the development of a more secure and predictable economic climate, which might draw foreign capital and encourage domestic entrepreneurship.
Given the shortage of domestic savings, there is an urgent need to attract foreign resources to meet Pakistan’s investment needs. Foreign Direct Investment (FDI) has been declining over a number of years and remains extremely low, even at a time when many of Pakistan’s peers were attracting large FDI inflows. This poor performance in attracting FDI is partly explained by Pakistan’s cumbersome investment climate, as evidenced by international rankings such as the Doing Business Indicators. FDI is also highly concentrated in a small number of sectors and countries of origin. Any adverse shock in these sectors or geographical areas can have a disproportionate impact on overall FDI inflows.
One of Pakistan’s biggest assets is its large and young labour force. But this young population will contribute to higher and more sustainable growth only if it’s healthy and well educated. After the 18th Constitutional Amendment and the 7th NFC Award, these functions were devolved to the provinces. It will be important for the federal government and provinces to continue working together to improve the decentralisation framework and ensure improved service delivery to achieve desired outcomes.
In conclusion, Pakistan’s capacity for self-defence is essential to its survival, but the country’s economic growth is also vital to its continued existence globally. Pakistan must focus its attention on two essential components if it is to boost its economy and reach its potential. In order to fund crucial projects, the The government must first increase revenue. Next, reforms must be pursued to improve governance. To access foreign resources and boost competitiveness, it will also be required to decentralise service delivery and strengthen the business environment. Pakistan may achieve economic growth and establish itself as a major player in the world market by focusing on exports of software and IT solutions and making the most of its young and skilled labour force. It is time for Pakistan to take decisive action and make the necessary changes to unlock its true potential.