Even the most patriotic amongst us, especially those who have never been shipped across the border, would in the heart of hearts admit that Incredible India has managed to imprint itself as a glamorous destination with values and culture acquired from the rajas and maharajas of yester centuries. And much to the dismay of those who value prosperity in material terms, the ‘Hindu Growth Rate’ is now the epitomical way to go although skeptics would gladly point out that the fruits of Indian growth are distributed among many and that too unevenly!
Coming back to the mess on board, if Pakistan were to follow the Indian example, it wouldn’t need much tutoring. Growth in the services sector has already proven to be the economy’s talisman in the previous bout of ‘high’ growth years while currently, in 2011, contributing more than 50 per cent to the GDP. And much to economists’ glee, correlations could be drawn between high growth rate and FDI in the services sector trickling down on the manufacturing sector, which grew by rates as high as nine per cent in the midst of the decade ending in 2010.
The paradox, however, arises when the economy registers a mere $5.5 billion of exports in services, and an overall deficit of more than $2 billion. Why has Pakistan not been able to positively brand itself, one may ask. Did it wish to? And did Pakistanis internationally ever possess faith enough to deploy resources and invest back home?
Dissecting numbers and highlighting positives first, exports from the computer and information services (ICT) industry have grown by more than an impressive 200 per cent over since FY06, registering an average annual growth rate of 25 per cent. The total value of exports from this segment stood at $217 million in 2011. While this may be considered laudable, the $50 billion Indian counterpart does little to soothe one’s little heart. And this excludes BPO exports!
Moving onto other less mainstream components, the economy earned about $350 million through travel and tourism in FY11. Globally, the tourism industry generated about $500 billion during the same period with an average annual growth rate of nine per cent. Of this, about $70-90 billion is attributed to mountain tourism. Only if the land of the pure had been projected as the land of scenic purity, there would have been lots of beneficiaries, some of them who live today without a chance to persist beyond subsistence.
On the services import front, as opposed to what we earn through tourism, Pakistanis spend thrice the amount or $971 million traveling abroad. Moreover, once ICT imports ($177m in FY11) are taken in to account, the net amount indicates an almost zero net benefit to the economy, further reinstating its lows in comparison to the neighbour.
At this point, there just might be very little for the economy to fall back on and it is definitely too late to start over. There is little hope of jumping on the industrialisation bandwagon with China boasting of economies of scale and scope, and a labour force that is at a 96 per cent discount to the cost of labour in the US; it may not possible to go lower.
It is hopeless to blame policy makers for not thinking about trade in services, when they could not care about ensuring consistent availability of power! One can only imagine that if provinces other than Punjab were given a chance to endorse themselves and their culture to the world at large, may be this war of egos would never have started!
The writer is an economic researcher and freelance financial journalist. She can be reached at [email protected]