De novo push for BRI: rethinking growth prospects for Pakistan

Pakistan should rethink and re-evaluate its economic growth policy approach towards BRI in general and CPEC

Recently China organised third Belt and Road Forum (BRF) in Beijing to mark ten years of the strategic Belt and Road Initiative (BRI). Its purpose was to provide a de novo push for the multi-trillion dollar project for broader global partnership. Some analysts argue that China is gradually expanding the scope of BRI by shifting its strategy of addressing reservations of fickle critics and the partner countries. Clearly, China is fast changing the BRI strategic framework with a view to optimising its economic utility in China’s favour by bringing majority of finicky stakeholders in the strategic framework of regional development. This is the right time for Pakistan to rethink, re-strategise and re-evaluate its economic growth policy approach towards BRI in general and CPEC in particular. For this purpose, a rudimentary appraisal of regional economic growth prospects suggests that the economic priorities of China and Pakistan are strategically different. It is because China is at an advanced stage of development while Pakistan is facing serious economic problems. In other words, China and Pakistan are at two different stages of development which require a different local and contextual approach to harmonise the strategic and regional growth priorities of each other.

Back in 1949, EM Hoover and JL Fisher presented an eclectic framework of regional development. They argued that countries undergo a five-stage economic development process. In the first stage, trade and investment volumes are small and the populations locate themselves according to natural resources. In the second stage, the regions focus on the advancement of transport by building roads and railways network. At this stage, the countries advance in trade and local specialisation. In the third stage, agricultural modernisation takes place. The fourth stage witnesses a diminishing return to agriculture, thus forcing a region to industrialise. And finally, at the fifth stage, a country specialises in tertiary industry and exports to less developed regions. Despite seemingly dumbfounded opprobrium, this development framework is still logical and applicable while planning regional economic growth prospects in a developing country like Pakistan. According to Hoover and Fisher’s framework, as mentioned earlier, China is at the last stage of development while Pakistan is at the second stage of regional economic development. However, Pakistan can still grab massive economic opportunities in the wake of China’s recent push to re-energise its multi-trillion dollar BRI programme. For this purpose, Pakistan needs to clearly delineate its second stage priorities of regional growth and look for the crisscrossing areas where Pakistan could complement China’s strategic economic priorities.

China’s fifth stage priorities are clearly mentioned in eight major steps announced by President Xi Jinping: 1) promoting a multidimensional belt and road connectivity network; 2) encouraging an open world economy; 3) ensuring practical cooperation; 4) promoting scientific and technological innovation; 5) advancing green development; 6) supporting people-to-people exchanges; 7) ensuring integrity in the BRI projects; and 8) promoting institutional development for the BRI cooperation. A micro level anatomy of the above-mentioned eight-step framework clearly shows that all of them are aimed at specialising in China’s tertiary industry and promoting exports to less developed countries or regions in line with the fifth stage of Hoover and Fisher’s regional development model. While designing the eight steps above, China has deeply researched the multidimensional requirements of different regions it is aiming to connect. According to Hoover and Fisher, a region is an area in which a high degree of interdependence exists among individual incomes.

Pakistan, at this stage, however, needs to focus on advancement of transport by building roads and expanding railways network which is the second stage of regional development. Pakistan’s economic growth strategy needs to realise that China and Pakistan are two different regions in which the long-term determinants of economic growth are way different. These include, but are not limited to, culture, religion and geography. For China, these long-run determinants of economic growth are not very important because it is at fifth stage of development. However, Pakistan needs to focus on modernisation of transport infrastructure and pay special attention to local specialisation. Local specialisation of products is the right strategy to exponentially enhance the trade volume and promote exports in the long run. The strategy needs to be linked with the roads expansion under the CPEC investment.

For the purposes of local specialisation in Pakistan, there is a need to first identify the local regional units which are districts. There are more or less 170 districts in Pakistan including the districts in G-B, AJK and the Capital Territory. Each district needs to determine its area of specialisation in terms of industry, agriculture and/or tourism. The district Deputy Commissioner could be assigned the job of carrying out necessary homework in this regard. Although, most district development plans mention the agricultural and industrial potential of the district, the same needs to be presented in a detailed coherent report issued by the Deputy Commissioner. The Planning Commission may issue necessary guidelines for this purpose following the argument that economic growth is not uniform over the entire region, rather it takes place around particular poles or clusters. Within each district, a cluster of local industries or productive agricultural lands or tourism spots, no matter how feeble they are, be mapped so that the same could be treated as local pole of economic growth in that district. Once, these poles are identified and mapped, it will provide a basic data set necessary for linking the modernisation of transport, such as roads and railways expansion, with the clusters of local specialisation all over Pakistan.

This strategy is part of second phase development which could be exponentially aggrandised under China’s fresh push for the BRI. Naturally, the strategy will prepare Pakistan for the third stage development aimed at modernising agriculture. After identifying the growth poles at the district levels, these poles are to be connected through roads and/or railways not only with each other but also with CPEC so as to maximise the benefits of agglomeration at the macroeconomic level. After necessary homework, a detailed presentation could be given to the Chinese authorities showcasing Pakistan’s industrial and agricultural potential to complement President Xi’s eight steps mentioned earlier. Arguably, Pakistan has to align its second stage economic interests with fifth stage interests of China. The job requires smart thinking and prompt action.

Published in The Express Tribune, November 19^th, 2023.

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