The future of our economy - Part II

Part II: The future of our economy 

The short-term measures described in Part I will not have the desired effects unless STEM (Science, Technology, Engineering, Creative Arts, and Mathematics) subjects are emphasized in our educational system. Under performance-linked contractual agreements, focus on these subjects, as well as content, hardware, network, software, and pedagogical tool selections, must be assigned to private service providers (PSP).

A significant increase in the amount of money allotted to education would be required for the establishment of computer labs, local area networks, data centers, and other similar facilities. However, this would be a worthwhile use of our limited resources, which are currently being wasted on paying indifferent, uninterested, incompetent, and work-shirking teachers higher salaries than the market (there are, of course, many exceptions to this observation, as many teachers exhibit a great deal of passion for teaching their students).

The government and private sectors will use the internet, cloud computing, Big Data and data analytics, artificial intelligence, and machine learning more to drive economic growth by deeply integrating the next generation of ICT technologies with the real economy. This will ensure the future.

Digital Pakistan's five future objectives ought to be: one, increased connectivity and accessibility; two, the electronic infrastructure; three, digital literacy, talent, and skills; four, online government; and five, entrepreneurship and innovation.

By 2030, it is anticipated that India's software-as-a-service (SAAS) industry will be worth $1 trillion. There are currently tens of thousands of such businesses, and more than a hundred of them are unicorns. It's possible that we won't ever achieve that objective, but we must work hard to reach the IT and ITES export target of at least $10 billion by 2025 and raise our Global Innovation Index ranking.

A McKinsey study found that, when compared to the global trend toward physical goods, data flows collectively contributed $2.8 trillion to annual trade and increased the world's GDP by approximately 10% over a decade. Nowadays, data can be used to improve supply chain efficiency, productivity, and innovation. Digital technology will become an enabler of fundamental innovation rather than a driver of marginal efficiency.

The dangers posed by climate change are already expanding like a hydra and are expected to have a devastating impact on our way of life. The recent floods in Pakistan, which destroyed and displaced nearly 33 million people and cost $30 billion, or 10% of GDP, are ample evidence that the harmful effects of global warming have already begun. Additionally, the evidence from other regions of the world is overwhelming. It is likely that the rapid melting of glaciers that are overflowing rivers will have an impact on food, water, and energy security as well as a serious threat to our current standard of living.

According to a recent World Bank study, Pakistan's GDP is likely to shrink by 18-20% annually by 2050; Climate change is likely to cost between 6.5% and 9.5% of GDP because of increased floods and heatwaves, which will hurt health, destroy infrastructure, reduce labor productivity, and reduce agricultural and livestock yields. Additionally, agricultural water scarcity and air pollution could both reduce GDP by more than 4.6%; To meet non-agricultural demands, 10% of all irrigation water will need to be repurposed.

By 2050, Pakistan will have 350 million people, all of whom will need to be fed, clothed, sheltered, and employed in an environment in which production of staple food crops, electricity generation, and water availability are likely to decrease. The increased population's overall food demand would rise by 50%, necessitating the cultivation of 56% more calories from crops than was produced in 2010.

The problem is how to meet future land needs without deforestation and by reforesting more land while stabilizing the climate, reducing poverty, and providing livelihoods. Due to rising incomes and larger populations, the demand for meat, milk, and poultry is expected to increase by 50% while the availability of water is likely to decrease to an extremely stressful level.

People are already leaving agriculture as a result of urbanization, and land is being used for housing, business, and industrial purposes. The urban population will soon make up 60% of the population, and their needs and preferences will be very different from what we currently observe. Pakistan may experience lost economic growth, worsening poverty, and a long-term threat to its human capital, infrastructure, assets, and means of subsistence if climate risks are not effectively addressed.

The following items should be included in Pakistan's climate change strategy: a) Development of drought- and pest-resistant cultivars; b) utilizing surface and ground water resources in the most effective manner possible; c) substituting renewable energy for fossil fuels; d) ongoing efforts to manage watersheds and forestation; and (e) utilizing the Green Climate Fund to construct infrastructure that is environmentally and climatically sustainable.

We now turn to the domestic economic foundations and initial conditions that, in conjunction with the global megatrends, would influence the outcomes of the economy in the future. If the country's political leaders can agree on the fundamental structural changes that must be made to change the course, the boom-and-bust cycle that has characterized our history can be broken. Ironically, despite a lot of agreement on these issues in their election manifestos, their actions once in opposition are completely at odds with what they said and promised the people. An ongoing source of economic distress has been this gap between words and actions. So, what exactly are the necessary structural changes?

First, young people in advanced nations must be incorporated into the domestic workforce and exported markets. The country's greatest challenge is to invest in human capital through education, not for the purpose of acquiring degrees and credentials but rather for the purpose of assimilating and putting knowledge and skills to use in solving problems. The business as usual strategy will not work because the Human Capital Index and social indicators are appallingly low in comparison to neighboring nations. The challenges that lie ahead include returning 20 million out-of-school children to formal or informal education, prioritizing STEAM subjects at universities and schools, and continuously reskilling and upskilling the workforce. If they are eliminated, gender disparities can also serve as a stimulus. Two, governance reforms by strengthening institutions and devolving powers and resources to elected local governments would improve the delivery of basic public goods and services and build the trust of citizens in the government, lowering the degree of dissatisfaction and helplessness. Past neglect has landed the country in the current position, and the gears must be shifted toward a more carefully designed action plan that is faithfully implemented by subsequent governments. After gaining experience managing affairs and finding solutions to problems, leaders of local governments will be able to address the issues when they reach the provincial and federal governments. As a result, the current unease felt by the electorate—that elected political leaders are unable to deal with the complex issues of policymaking and overseeing projects, programs, and policies—would be somewhat alleviated.

There has been a lot of work done to improve governance, but the political consensus is needed to keep it going. At some point, the political parties themselves will benefit because they will be able to meet the expectations of their electorate and the country will move forward.

More to come.