- The consultant has got it wrong
They ask me to give ideas for increasing employment in Pakistan. The answer they are expecting is build more industry, more industrial parks, build SEZs and seek more FDI. And of course, don’t forget to give everybody a low-quality education and then pray graduates get a job!
Policy in Pakistan has danced to the music of these clichés emanating from donor consulting jobs. The results are there for all to see, galloping debt, declining productivity and repeated IMF programmes.
The only real employment and poverty reduction opportunity that our poor have got is from migration and sending remittances back to their families.
The Pakistan economy has grown on average at about 5 per cent annually not because of government policy but despite it. The sectors that policy has favoured, agriculture and education, have shrunk despite subsidies. Growth of the economy and jobs has happened in the services sector: education, finance, telephony and media.
We can learn something from these facts.
- Policy and our thinkers have been stuck in a groove. Despite mounting evidence, they lack originality and innovation.
- Growth does not follow government, policy or the consultant.
- Jobs are mostly being created in places that policy and consultants don’t expect.
- Growth happens and jobs are created where there is demand even if government is trying to move the economy in another direction.
What few understand is that jobs are created in markets, and not sectors or other fanciful thoughts of clever speakers.
What then can policy and government do?
Create competitive markets with proper regulation based on monitoring and evaluation. Such markets must seek to reward innovation and entrepreneurship. This will require thoughtful and well researched policies and regulation. It will require a reinvention of our government procedures that currently are very suspicious of the market.
To see this, consider the growth drivers of the last two decades: education, telephones and TV. Growth and entrepreneurship opened up in these areas as they were opened up.
History has shown us that jobs open up in vibrant cities. For this reason, rural populations flow into cities. If cities are unfriendly to migration and development, there is no space for markets, entrepreneurship and innovation. We have seen badly regulated cities deny space to poor housing, offices, commerce, trade, entertainment and other city spaces.
deep reform in the areas of governance, market and city reform will generate sustained growth rates north of eight per cent for over 20 years and which will quite likely meet the employment needs of our youthful population
Historically markets have situated in cities to host innovation and entrepreneurship. Such cities are a hotbed of commerce, trade and ideas. Such dynamic cites are an everchanging amalgam of tower cranes signalling the continued construction of fresh space that economic activity wants.
It is immediately obvious that what is holding back both market development as well as vibrant city development is the centralised hold of the persisting colonial administration, judicial and legal system.
The consultant approach is to draw up long to-do lists, ranging from rearranging the room to a laundry list of large expensive projects. But our systemic view here shows that deep reform in the areas of governance, market and city reform will generate sustained growth rates north of eight per cent for over 20 years and which will quite likely meet the employment needs of our youthful population.