Transforming Punjab’s economy

Earlier this month, the government of Punjab released Punjab Economic Report 2017 after a gap of a decade. The publishing of the report is appreciable due to various reasons mentioned later in this article. However, it is equally pertinent to emphasise that such reports should be published annually to capture rapidly changing policy and economic environment both in our society and across the globe. We need to analyse why such works are not a regular feature within provincial governments of the country.

Let me first share why I appreciate publishing of this report and then will turn to key gaps in the report and strategies. First, the publication of reports demonstrates that the provincial government is willing to take a greater responsibility to steer economic development. Second, the report is based on an extensive consultative process and engagement with eminent economists. Third, the report explains both achievements and failures in different social and economic sectors. Fourth, the analysis can inform the political leadership about the need of policy response in various sectors as political parties are heading towards developing manifestos for general elections in 2018. Fifth, the report was led by the Punjab government’s Economic Research Institute instead of an international agency’s work. This demonstrates domestic capacity of the government of Punjab to coordinate and sponsor such a research work.

However, a fundamental question needs to be posed here: Is Punjab ready to transform its economy from traditional sectors to production and trading of more value added and globally competitive products and services as envisaged in the report? It may be hard to answer this question based on this report alone. But it is important to point out some gaps in the report and areas for further improvement in Punjab’s strategies for growth and transformation.

First, the report has mainly documented initiatives by the public sector. There is so much happening in the province which is being steered by the private sector, social entrepreneurs, non-profit organisations and various collaborative arrangements. The public sector alone may not achieve many of the goals without an active collaboration of other stakeholders. Many efforts for providing clean drinking water, for example, are failing in Punjab. More than 50% water supply schemes are either dysfunctional or incomplete. Numerous scandals of Punjab Saaf Pani Company have been reported in the media. The previous economic report of Punjab highlighted achievements of a community-government partnership for clean drinking water—called ‘Changa Pani’—in Lahore by a social entrepreneur. The same model has now been replicated in Bhalwal. There are many other such initiatives which should have been added as a compendium in the report. Similarly, if we have to transform Punjab’s economy to embrace the fourth industrial revolution, the province will have to invest in science instead of a focus only on information technology. This dream cannot be achieved without multi-level governance that will engage academia, the federal government’s many institutions, private sector and international firms and research centres. Further deliberations are needed to undertake and report such work in the province.



Second, there are a few gaps in the sections on industrial growth and investment climate. The chapter on industrial growth only mentions word entrepreneurship once and that too in the case of the Vision 2025 of the government of Pakistan. Policymakers still undermine the importance of entrepreneurship—business dynamism and discovery of opportunities—in our society. How can we achieve industrial competitiveness without entrepreneurship? There is a need to deliberate why Pakistan could not benefit from trade globalisation and labour outsourcing revolution in the world from 1990s-2015. Besides envying for Chinese investors, we need to channelise our domestic potential by especially diverting the investment from real estate to productive sectors of economy. However, the chapter on information technology does talk about entrepreneurship. Thanks to the efforts of Punjab Information Technology Board and Information Technology University that we are witnessing a wave of young entrepreneurs in Punjab. Chief minister of Punjab also deserves a credit for nurturing and patronising such initiatives. But, young entrepreneurs should not remain restricted to the information technology field. We need progressive entrepreneurs in agriculture and mainstream industrial and services sectors too. The report has mentioned establishment of various units for investment climate reforms to steer regulatory reforms. But, why do people still prefer to invest either in speculative real estate market in Pakistan or Dubai? Indeed, the answer is: there are many other fundamental barriers to investment such as legal disputes and credit bottlenecks which need attention.

Third, the report does highlight the importance of making cities as engines of growth. But it does not provide a sufficient analysis and rationale why Punjab is worst in terms of devolving powers and resources to local governments. Cities cannot prosper with the colonial administration. Punjab’s Urban Unit is developing a spatial strategy which is appreciable, however, a greater emphasises is needed on empowering and professionalising local governments in Pakistan if we want to make cities as engines of growth. A lot of work on governance and urban design is needed to make cities more competitive.

Fourth, the report has outlined various initiatives for transforming Punjab’s economy. However, the basic ingredient for this task will be the improvement of state capacity. Except e-governance the report does not talk about improving the capacity of state machinery in the Punjab province. The current structure of bureaucracy and other state organs are unable to transform Punjab’s economy in the 21^st century. In order to transform the economy, the transformation of state capacity is needed!

Fifth, the report only gave passing remarks on inequalities in the education sector. However, it could not provide a comprehensive commentary on institutionalised inequalities in the education sector in Punjab. Lastly, such reports should also include the impact evaluation of the government’s initiatives in terms of their success and failures with an aim to disseminate lessons for further planning.

Published in The Express Tribune, December 31^st, 2017.

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