Move away from agriculture, Chinese economist advises

Published: April 5, 2017
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ISLAMABAD: Pakistan can double its annual economic growth rate to 10% by moving away from being an agriculture-based economy, and dying Chinese industries can become an instrument to achieve this objective, professor Justin Yifu Lin, a Counselor at the influential State Council of China, said on Tuesday.

Sectors where China is losing its competitive advantage can become Pakistan’s latent advantage, said the professor, also a former vice-president of the World Bank and author of 24 books. He said that light manufacturing industries that have been declared “sunset industries” in China can be relocated to Pakistan.

Boosting agriculture: Experts call for collaborative efforts

Pakistan has maintained a decent economic growth rate but it is still relatively poor, said professor Lin, while highlighting flaws of Pakistan’s economic structure and the way forward for the economy of 200 million people.

His economic development theory gives a centre stage to the government as a facilitator aimed at overcoming externality and coordination challenges during the transformation phase.

China will move from labour-intensive to capital-intensive industry and this will free 85 million jobs that will relocate to other countries, said the professor. “China’s upgrading to higher industries will leave a huge space for Pakistan to enter a labour-intensive industrialisation development phase”, he added.

“Poverty is not the destiny of Pakistan,” said Professor Lin while delivering a lecture on how to achieve dynamic growth at the Planning Commission.

“If Pakistan can capture this opportunity, it will be able to grow at 10% annually for 30 or more years and become a high middle income or even high income country,” said Professor Lin, one of China’s foremost economists.

Pakistan’s advantage

According to Pakistani thinkers, the country’s current economic structure is highly flawed, as more than half of the total national output is coming from the services sector that is not labour intensive.

Pakistan grew at 4.7% in the last fiscal year, which was not sufficient to create enough jobs to absorb the youth bulge. Its growth is job exclusive and has widened the gap between the rich and poor, according to independent economists.

The Chinese professor said that the two types of Chinese investments could come to Pakistan -infrastructure and export-oriented sectors. He said that Pakistan’s businesspersons could enter into joint ventures with Chinese partners.

The private sector of Pakistan has to change its mindset as days of protectionism are over, said Ahsan Iqbal, Federal Minister for Planning, Development and Reform. Iqbal said that if Pakistan remains unable to take advantage from 85 million dying jobs in China, these jobs would shift to other countries like Vietnam and Bangladesh.

Pakistan’s journey to success

Professor Lin suggested six steps for Pakistan to indentify sectors of latent competitive advantage. The first step is to find fast growing countries with up to 200% higher per capita income or about 30 years ago had similar per capita income. He said in 1979 China’s per capita income was 30% less than that of Pakistan but today Beijing’s per capita income was 550% more than of Pakistan.

He said that in the next step, the government should see if some private sector firms are already in these industries and should then facilitate them by removing constraints. In step three, the government should invite foreign firms to invest in sectors where the local firms are not working.

Problems riddle agriculture sector, say experts

In step four, the government should also pay attention to spontaneous self-discovery by private enterprises and give support to scale up successful private innovations in new industries.

In the second last step, Pakistan with poor infrastructure and bad business environment should set up special economic zones or industrial parks to overcome barriers to firm entry, attract foreign direct investment and encourage industrial clusters.

In the last step, the government may compensate pioneer firms identified above with tax incentive for a limited period, direct credits for investments and give access to foreign exchange.

The long-term development of China-Pakistan Economic Corridor also revolves around development of special economic zones.

Chinese industries willing to relocate to Pakistan provide excellent opportunity for Pakistan to grow at a faster pace, said Dr Ashfaque Hasan Khan, one of the leading economists of the country.

Use of new technologies to help reduce agri cost

Professor Lin said that for reducing transaction cost in the infrastructure sector Pakistan needs to improve customs, roads and rail networks. He also advised that the federal and provincial authorities should listen to the foreign investors in order to address their concerns.

Published in The Express Tribune, April 5th, 2017.

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Reader Comments (43)

  • omar
    Apr 5, 2017 - 9:21AM

    what a stupid idea, our natural advantage of agriculture independent of all foreign constraint and sanctions should be given up and become dependent on foreign countries for export, look what they did to our cotton and textile industry by imposing sanctions.
    there is plenty of room for such industries in non-agriculture producing areas, like Baluchistan, Sind and southern Punjab.Recommend

  • S Hassan
    Apr 5, 2017 - 9:33AM

    @omar: Sind and Southern Punjab are non-agriculture areas?? Do you have any idea, what you are talking about?Recommend

  • FAZ
    Apr 5, 2017 - 9:37AM

    Corruption is the root cause of all evils as in this case too. Why would an investor invest in a country where red tapes are created with loopholes to cash in money from the investor on illegal basis? Ask anyone from Industrial sector how many bribes they have to pay from the grass root level to the top of the tree!Recommend

  • salman
    Apr 5, 2017 - 9:46AM

    @omar:

    Man he is an author of 24 books and ex Vice President of World Bank in short one the great economist world has ever produced and that’s why China has progressed astronomical in the last few decades so when people like him say something world’s listen not ignored it by people like you. Unfortunately Pakistan has many ignorants which can be seen from country’s economic growth. India is going for Make in India initiative in everything from commercial purpose to defense and here we are terming it as ‘stupid idea’.

    Anyways thinktanks here in Pakistan should not adopt wait and watch policy rather than move ahead on priority basis and for that you just need to have good PR which Chinese companies which we have it, all thanks to CPEC,Recommend

  • Haroon Rashid
    Apr 5, 2017 - 10:16AM

    And what do we eat ? Go ask India for food ?Recommend

  • Feroz
    Apr 5, 2017 - 10:24AM

    I think the Chinese want to dump their obsolescent capital equipment which is scrap on Pakistani businessmen. You can modernize agricultural practices to increase yield and brings reforms in the sector which will prove far more useful.Recommend

  • Zuhair
    Apr 5, 2017 - 10:25AM

    LOL @Omer. Pakistan is one of the most intensive users of ground water in the world. What happens to that natural advantage when the groundwater runs out? By producing Rice, Sugarcane and other water intensive crops, you are essentially wasting/exporting your precious water resource. If Pakistan has to be an agricultural producer, it should focus on other areas – olives, citrus fruits, etc are am option. Secondly, there should be a limit to how much of rice and other water intensive crops that can be exported. Professor Justin Yifu Lin is right – Pakistan needs to take advantage of the declining industries in China and promote their installation here. That is essentially what China did when Japanese light industrial production became less cost competiitve in the 1980s.Providing an enabling environemnt would result in an influx of FDI. Taking the example of Mexico’s car industry, even a country with law and order situation can witness FDI inflows – all you need to do is is to provide an enabling environment. Recommend

  • Khurram
    Apr 5, 2017 - 10:29AM

    May God protect us from such wise professors who are looking at the next 10 years onlyRecommend

  • Zain
    Apr 5, 2017 - 11:03AM

    Having lived in a multicultural metropolitan city and having dealt with nearly all nationalities of the world I can state without hesitation that Chinese r the most money minded people who keep a sharp focus on their own monetary gain first n foremost.. Nothing wrong with that ..But selling their product in the name of good for Pakistan , is absolute fraud…..Recommend

  • Oommen
    Apr 5, 2017 - 11:10AM

    bring some real experts (not copycats)Recommend

  • rajesh
    Apr 5, 2017 - 11:21AM

    China has already got a bite of Pakistan’s flesh. Now they want every drop of blood and the bones too.Recommend

  • Jameel ur Rasheed
    Apr 5, 2017 - 11:40AM

    May be we should stop living. This will bring the cost of living to zero.Recommend

  • Suhas
    Apr 5, 2017 - 12:38PM

    @salman:
    George Bush also studied in Harvard as did Condoleeza Rice (UND) and a host of advisors who wrote books and held top positions. Pakistan should what is good for the people.Recommend

  • Saeed Masood
    Apr 5, 2017 - 12:45PM

    This news item provides an excellent opportunity news and ways, Shifting from Agriculture only means that the Industrialist should come forward and take the challenge, the government also has a very important role to play by redoing its policies, our business delegation should immediately visit China and relocate each and every such industry in Pakistan, all political parties should stop pointing fingers at each other and give attention to the National Economy, if we achieve fifty percent of this it will defeat every cause of the enemy and Pakistan will take a very big step forward, the media should push Mr. Ahsan Iqbal on daily basis to let us know that how much industry based business has moved to Pakistan from China…
    Good Luck Pakistan, Long live Pakistan China friendship/Recommend

  • Hamid Mir
    Apr 5, 2017 - 12:48PM

    Then, the chinese will demand the genetic changes in pakistan, by promoting people with small & squinty eyes, and so forth!Recommend

  • Aziz
    Apr 5, 2017 - 12:51PM

    Maybe India will avail these opportunitiesRecommend

  • rich
    Apr 5, 2017 - 1:01PM

    i am an india but i will say this

    if pakistan listens to this idea, pakistan is doomed, agriculture is the back bone of rural pakistan and india too

    pakistan has to develop both agriculture and industries togather, and not depent on the so called sunset industries, this will doom u,

    this is one of the reason chinese are serting up coal power plant in pakistan and these are phased out all over even in china

    pakistn should omprove agricultural method, isreal is a leader in this, drip irrigation, growing in the desert, growing vegetable without soil ect

    these tech pakistn should learn as india is doing

    pakistan is fertile country in terms of percentage of land availabe for cultivation

    chinese say move away from agriculture bec remmeber china is huge but less the 11% of the land is cultivatable

    tibet icy desest, gobi sandy desert. ect this areas are over 70% of chinese land mass

    dan shibara, ur comment abot japan, remmeber japan is self sufficient on food, they refue to inport rice in any meaningful way, bec they want to protect rice grower, their staple diet

    evey developes country are self sufficiet in food, us, france, usa, canada, australia, italy spain ect ect even tiny swiss are self sufficent

    pakistan bewareRecommend

  • scotchpak
    Apr 5, 2017 - 1:05PM

    the idea is good but the nation is stupid so thanks for the unearned rents let it rideRecommend

  • SNKN
    Apr 5, 2017 - 1:11PM

    We do not have to move away from agriculture but should look at the opportunity that the Article is referring to… It’s a very natural Economic Cycle which the article refers to… China will move up into high tech industries as it progresses thus leaving basic manufacturing since they will not have the competitive advantage due to high cost of labourers etc.

    Pakistan must capture this opportunity while still building on agriculture which needs to step up and adopt modern technologies.Recommend

  • razi
    Apr 5, 2017 - 1:24PM

    Professor is putting Chinese interest first no sir thanks but no thanks with the massive bulge of population Pakistan can’t even afford to think of ignoring agriculture let alone leaving it. Pakistan just need to modernise its agriculture sector. We can earn more by exporting our agricultural goods than wasting times in useless avenues.Recommend

  • Parvez
    Apr 5, 2017 - 2:05PM

    Academics and highly qualified people are known to be wrong on many occasions ….. this looks like short term thinking because in the long term ignoring agriculture is certainly a mistake. There is absolutely no reason why both can’t go together…..absolutely none.Recommend

  • Umair
    Apr 5, 2017 - 2:07PM

    @omar:
    you are living proof that knowing and understanding the English language does not mean one is an educated person. Recommend

  • Ali
    Apr 5, 2017 - 3:05PM

    @Umair
    what you said for @omar is much truer for you Recommend

  • Saad ali khan
    Apr 5, 2017 - 3:21PM

    For God Sake! working for world bank only doesn’t prove his credibility, Pakistan is blessed with Agricultural Land and instead of scrapping it, these economists should have had suggested modern agricultural techniques and other potential fields within agricultural industry like olive or any other food suitable for our country’s environment. As most of the people are moving to cities from villages, it is very much certain that demand for food growers will be a lot after 50 years or so. Furthermore, Industrialization at massive level will impact environment as well, specially when our environmental agencies are politicized and powerless. Long Live my beautiful land of Pakistan, May you see the better days soon enough INSHALLAHRecommend

  • Chhota Shikoh
    Apr 5, 2017 - 3:29PM

    There are so many dummies on this thread, its amazing. What the Chinese are recommending is that we don’t put all our eggs in one basket but instead diversify our economy and restructure our productive (goods and services) base. Just focusing on low-value added agrarian-based development will keep us stuck in a rut, forever vulnerable to the vagaries of the weather and the environment. Sure the Chinese may well dump some of their obsolescent industries our way, but look at that as an opportunity to learn and move up the value-added ladder rather than being a low-tier commodity driven economy.Recommend

  • hzrr
    Apr 5, 2017 - 8:31PM

    @Chhota Shikoh:
    Just focusing on low-value added agrarian-based development will keep us stuck in a rut……….wrong, instead what the prof is offering..discarded low value Chinese machinery and technology and how does that help in modernising the economy…Recommend

  • k
    Apr 5, 2017 - 8:50PM

    worked as a Tech Professional in 5 countries, its my dream to get retirement as a Farmer.
    and whoever agrees with this kind of advice is shortsighted.
    The day cargo stops coming with food in Singapore, it will die with all of its skyscrapers.Recommend

  • Naeem
    Apr 5, 2017 - 8:57PM

    Since Pakistan’s existence our leaders and policy maker under the influence of IMF and World Bank are telling us to stay agricultural country. No government tried honestly to improve the industrial sector and today we have cannot feed our people and we are far behind in industrial sector. Promoting Industrial sector is the only option if we want to prosper and provide jobs to the millions of unemployed youths. It does not mean that we have to ditch the Agriculture sector it will grow too.Recommend

  • Chhota Shikoh
    Apr 5, 2017 - 9:11PM

    @hzrr: Since Partition our so-called planners have been preoccupied with agriculture and produce from that sector, including textiles, garments, etc As one can see from the decline of the rupee vis-a-vis other major currencies over the decades the demand for our goods is hardly robust. The Chinese economist is not saying that we totally abandon agriculture (which of course would be foolhardy) but that we move towards a more diversified industrial base, albeit learning-by-using and learning-by-doing, Chinese technology and production processes which are no longer mainstay in China. In fact, we can serve the Chinese market in areas where their own industries have no competitive advantage and/or have moved ahead on the value-added ladder.Recommend

  • mad mamluk
    Apr 5, 2017 - 9:38PM

    @S Hassan:
    clearly not. prof lin is right, and its something i’ve personally been saying for atleast 10 years. time to move away from agriculture. let bangladesh do all of that. pakistan can be a manufacturing economy. it has the population advantage and resources available. need vision and leadership. Recommend

  • mad mamluk
    Apr 5, 2017 - 10:14PM

    @FAZ:
    not true..india’s corruption is probably more than pakistans but companies still invest. its a matter of returns for an investor. Recommend

  • mad mamluk
    Apr 5, 2017 - 10:16PM

    @Haroon Rashid:
    no thats not the point of this. the move away from agriculture is a statement to move unproductive aspects of agriculture, where there is no competitive advantage to higher performing manufacturing. read an economics book..Recommend

  • mad mamluk
    Apr 5, 2017 - 10:17PM

    @Zuhair:
    spot on. thank you!Recommend

  • M.Ali Marri
    Apr 5, 2017 - 10:27PM

    The advice is right in the sense that global trade scenario is changing and so is the various socio economic aspects. The result of CPEC will be eventually emergence of China as leading global player with more influence in the region. It will be beneficial for Pakistan in four ways, firstly the Pakistani raw materials will find good markets, secondly the monopoly of existing firms like automobiles will be eliminated thirdly, handsome job creation lastly our borders will become more secure from any massive external aggression.Recommend

  • hellodrsoul
    Apr 6, 2017 - 12:24AM

    Just thinking how many people in comments know about economy? On what basis we should doubt China? Should we trust these jealous Indians more than Chinese experts?Recommend

  • Faisal Afzal
    Apr 6, 2017 - 6:23AM

    Strongly Disagree. Pakistan should pursue agriculture and do it properly. There is currently a huge market for non-GMO and organic foods. With Pakistan’s climate, it’s foolish not to be banking the opportunity.Recommend

  • Zahid
    Apr 6, 2017 - 7:45AM

    What he says is brilliant but we should and can still continue with improvement in agriculture for basic food security. We could have best of both worlds. Recommend

  • Jamal
    Apr 6, 2017 - 9:24AM

    Move away from agriculture and become dependent on others to feed us. Ever saw the lines of people at charity stalls, seeking free meals? This is what we’re going to become as a nation if we don’t stop relying on others so much.Recommend

  • Afridi
    Apr 6, 2017 - 9:35AM

    Rid the country of corrupt politicians and we will increase the per capita income by 200 % within 5 years. Recommend

  • Chhota Shikoh
    Apr 6, 2017 - 1:36PM

    @Faisal Afzal:
    And how are you gonna grow and culivate those non-GMO crops with less and less water in our rivers and a rapidly sinking water table, Einstein ? If you are thinking of doing that in controlled environment settings, think again ! Those are basically boutique systems and very expensive for massive production geared towards an export market. Furthermore, Pakistan’s climate is becoming more and more adverse with each passing year for dependency on sustainable agriculture. If we are just self-sufficient for our own needs, that in itself would be a lot to ask for.Recommend

  • Ch. KA Nye
    Apr 6, 2017 - 3:35PM

    @Hamid Mir:

    This is stupid, racist comment. I’m ashamed to read such a comment in what is supposed to be an educated forum. Recommend

  • raashid
    Apr 7, 2017 - 2:36AM

    please be aware of chinese they are going to make pakistan their colony and our army as their patrolling agents which they did in cpecRecommend

  • Lilly
    Jul 24, 2017 - 5:00PM

    @rich: This will be disastrous. Might be a short term gain in industries. But a nation which is relatively poor cannot afford food insecurity. As China said, these are sunset industries which will keep going to different countries. China has a strong agricultural output and it cannot influence other nations to give up agriculture for it’s own interests.Recommend

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