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LSE holds conference on management of Pakistan’s economy
* Speaker says macroeconomics stability and a favourable policy environment are likely to lead Pakistan towards economic growthLAHORE: The two-day 11th Conference on Management of Pakistan Economy titled ‘Regional Manufacturing Hub – Prospects and Challenges’, hosted by the Lahore School of Economics, opened here on Wednesday with the address of Dr Shahid Amjad Chaudhry.
Professor Dr Robert Wade of the London School of Economics gave the keynote address. He said that before 1980s, it was widely understood that development meant rising overall ‘prosperity’ and that heavy investment in infrastructure and in industry were key drivers. “After the mid 1980s, the content of development came to be ‘extreme poverty reduction’, ‘humanitarian assistance’, ‘primary school education’, ‘primary healthcare’ and ‘anti-corruption’. Why this change?”
He argued that it was due to several factors: the end of the Cold War, and the resulting change in the geopolitical strategy of western states led by the US. Secondly the increasing strength of post-materialist values in developed countries and their translation into the content of western development thinking (World Bank, USAID, DFID); thirdly business interests in the West; and continued western control of inter-state organisations that are meant to be organisations for the world like World Bank. The first session’s theme was Policy Environment and Manufacturing Performance. The first session was chaired by Dr Ishrat Hussain, the dean and director of the Institute of Business Administration. He emphasised the importance of Pakistan as a regional manufacturing hub and how industrial policy can cater to all vital sectors. Macroeconomics stability and a favourable policy environment are likely to lead Pakistan towards economic growth.
Dr Inayat Mangla, professor at the Western Michigan University, analysed the impact of macroeconomic environment on Pakistan’s manufacturing sector emphasising in particular the role of monetary and fiscal policies in shaping incentives for industrial investment.
Furthermore, he argued that macroeconomic stabilisation policies have often failed to produce the desired results owing to lack of coordination between monetary and fiscal policies. “Though recent macroeconomic indicators show some improvement, fundamental weaknesses remain. In particular, the recent improvement in the current account deficit is driven largely by high inflow of remittances coupled with financial engineering such as payments from the IMF, EU bond issue and Islamic Sukuk.”
Professor Emeritus Dr Hafiz Pasha of the Lahore School of Economics discussed the implications of varying incidence of taxes and subsidies on industries.
In doing so, it quantifies the effective levels of protection to different industries and the value of export incentives, he said.
University of Oxford South Asian Studies Director Dr Matthew McCartney established evidence that the exchange rate was managed in a way that should have helped a more liberalised trading regime contribute to economic growth. He explored wider evidence linking trade liberalisation to economic growth and argued that the positive relation is at best only a contingent one. Those contingent factors that have failed to support the positive link between trade liberalisation and economic growth in Pakistan are investment, tax revenue, and upgrading/learning.
The second session was on Pakistan’s manufacturing sector, in which Dr Naved Hamid of the Lahore School of Economics explained the trends in the share of manufacturing employment and value added over the last 50 years or more.
According to him, it seems that the turning point in Pakistan occurred in 2007. “To understand the factors underlying the slowdown of the manufacturing sector, he analysed the structural changes that occurred in the manufacturing sector over the last 30 years.
Professor Dr Azam Chaudhry of the Lahore School of Economics looked at how the establishment of different types of firms across the districts of Punjab has impacted district level socio-economic outcomes in Punjab. He explained that the entry of firms had a positive impact on economic outcomes like employment and enrolment, and this impact can vary by the scale of the firms that enter. Associate Professor Dr Theresa Chauhdry and Mahvish Faran of the Lahore School of Economics analysed the production, management, wage practices, and quality and discussed issues related to how reorganisation can spur future growth in the electrical fan and ready-made garments sector in Pakistan.
The last session of the day was on what makes manufacturing firms succeed or fail. Michells Fruit Farms Limited CEO Mujeeb Rashid reviewed the business operations at Michell’s Fruit Farms focusing on supply chain efficiency through a Rolling Sales Forecasting System supported by PDCA Concept among all operating units. He explained that together with these efforts, training and development of staff was undertaken to improve essential skills and attitudes. The resulting internally generated value enabled the company to make new investments that would strengthen both backward and forward linkages to growers and consumers. Dr Shahzad Khan, the director of marketing and sales at Getz Pharma Pvt Ltd, explained that Getz Pharma was the first and only manufacturing company in Pakistan and amongst few in the region to be certified by PIC/S. In the month of February 2015, Getz Pharma initiated a groundbreaking ceremony of its largest pharmaceutical plant to be constructed in South Asia at one site.
Courtesy www.dailytimes.com.pk