Framework for Economic Growth, Pakistan - Planning Commission

International Conference on “Framework for Economic Growth, Pakistan”3FRAMEWORK FOR ECONOMICGROWTH PAKISTANInternational conference on “Framework for EconomicGrowth, Pakistan” Hosted by Planning Commission,Government of Pakistanin collaboration with UNDP13-14 July, 2011Islamabadwww.planningcommission.gov.pk

International conference on “Framework for Economic Growth, Pakistan”Copyright © 2011 International conference on “Framework for Economic Growth, Pakistan”Planning CommissionGovernment of PakistanMaterial in this publication may be freely quoted or reprinted,but acknowledgement is requested, together with a copy of the publicationcontaining the quotation or reprint.This publication is available from:Government of PakistanPlanning CommissionPak Secretariat, Block – PIslamabad, PakistanTel: + 92 51 921 4464memst@mopd.gov.pkwww.planningcommission.gov.pk_____________________________________________________________________________Conference Moderators:Ayaz AmirMohammed MallickMoeed PirzadaSyed Talat HussainFarrukh Khan PitafiCoordinator/ Advisor editing - “Framework for Economic Growth, Pakistan”:Imran Ghaznavi (Advisor)Dr. Haroon Sarwar (Assistant Chief)Dr. M. Sabir Afridi (Assistant Chief)Amna Khalid (National Institutional Officer)Editor – “Framework for Economic Growth, Pakistan”:Zahid Ali (Consultant-UNDP)2

International conference on “Framework for Economic Growth, Pakistan”Planning Commissionis pleased to presentThe Framework for Economic GrowthApproved by the National Economic Councilin its meeting held on 28 th May, 2011under the Chairmanship ofthe Prime Minister of Pakistan3

International conference on “Framework for Economic Growth, Pakistan”lack strategic direction and coherence that isrequired for sustained high growth and thedelivery of sustainable developmentbenefits. We have a young and growingpopulation. Our calculations also suggestthat if we do not accelerate growth to over 7per cent per annum on a sustained basis, thecoming increases in labour force cannot beabsorbed. Past data suggests that our longrun growth on average is close to 5 per centper annum. At this rate of growth, a verylarge percentage of the youth bulge will notfind employment. The New DevelopmentApproach should now be based onendogenous growth, where the quantity ofinvestment should be complemented byefforts to improve the quality of investmentsi.e. their productivity and efficiency. Theprivate sector must drive economic growthwith timely implementation of marketreforms which should promotecompetitiveness.I would like to acknowledge and appreciatethe hard work of the growth team and staffof the Planning Commission and UNDPwhich was put in towards the preparation ofthis national document. I extend the sinceregratitude of the Planning Commission to ourpartners (donors, civil society organizations,and academia etc.) who have been a sourceof guidance through out this process.Implementing the growth strategy willrequire serious, sustained and disciplinedefforts. A process of reforms beginning withthe Planning Commission has been outlined.Reform is a continuing process and it needsto be institutionalized.Dr. Nadeem Ul HaqueDeputy ChairmanPlanning Commission5

International conference on “Framework for Economic Growth, Pakistan”AbbreviationsADBADPAIDSATMBMZBPRBRACCBRCDACDIACEOCFPR-TUPAERCETPFATAFDIFTAGCIGDPGHGGIZGLCGPAGTPHECHIVHRHRMICTITKPKLUMSMDGMNAMoUMPANADRANCGRNECNESFEGAsian Development BankAdolescent Development ProgramAcquired Immune Deficiency SyndromeAutomated Teller MachineBundesministerium Für Wirtschaftliche Zusammenarbeit(German Federal Ministry for Economic Development CooperationBusiness Process Re-engineeringBangladesh Rural Advancement CommitteeCentral Board of RevenueCapital Development AuthorityCities Development Initiative for AsiaChief Executive OfficerChallenging the Frontiers of Poverty Reduction and Targeting the Ultra PoorApplied Economic Research CouncilEconomic Transformation ProgrammeFederally Administered Tribal AreasForeign Direct InvestmentFree Trade AgreementGlobal Competitiveness IndexGross Domestic ProductGreenhouse GasGesellschaft für Internationale ZusammenarbeitGovernment Linked CompaniesGrade Point AverageGovernment Transformation PlanHigher Education CommissionHuman Immunodeficiency VirusHuman ResourceHuman Resource ManagementInformation & Communication TechnologyInformation TechnologyKhyber Pakhtoon KhawaLahore University of Management SciencesMedium Term Development GoalsMember of National AssemblyMemorandum of UnderstandingMember of Provincial AssemblyNational Database and Registration AuthorityNational Commission for Government ReformNational Economic CouncilNational Executive ServiceFramework for Economic Growth6

International conference on “Framework for Economic Growth, Pakistan”NGONGSNITNLCNUSTORICPASDECPhDPIAPPPPPRAPRAPSDPSAARCSBPSCEPSMESMSSoFEAUETUKUNUNDPUNESCOUSAUSAIDNon-Government OrganizationNew Growth StrategyNational Investment TrustNational Logistic CellNational University of Science and TechnologyOrganization for Research, Innovation and CommercializationPakistan Stone Development CompanyDoctor of PhilosophyPakistan International AirlinesPublic Private PartnershipPublic Procurement Regulatory AuthorityParticipatory Rural AppraisalPublic Sector Development ProgrammeSouth Asian Association for Regional CooperationState Bank of PakistanSecurities and Exchange Commission of PakistanSmall and Medium EnterprisesShort Message ServiceSocial and Financial Empowerment of Adolescents and YouthUniversity of Engineering & TechnologyUnited KingdomUnited NationsUnited Nations Development ProgrammeUnited Nations Educational, Scientific and Cultural OrganizationUnited States of AmericaUnited States Agency for International Development7

International conference on “Framework for Economic Growth, Pakistan”ContentsPage No.Introduction 11Welcome remarks by Dr. Nadeem Ul Haque, Deputy Chairman, Planning Commission 13Introductory remarks by Ajay Chhibber, Assistant Secretary General, UN and AssistantAdministrator and Regional Director for the Asia and the Pacific, UNDPSession 1: Implementing Governance ReformsSpeaker: Sulaiman B. Mahbob, Chairman, Malaysian Industrial Development AuthorityCivil Service Reforms:Speaker 1: Norma Binti Mansor, Secretary General, National Economic AdvisoryCouncil, MalaysiaSpeaker 2: Dr. Ishrat Hussain, Director, Institute of Business Administration, KarachiQuestion and AnswersSession 2: Openness and Competitive MarketsSpeaker 1: Muhammed Ali, Chairman, Securities & Exchange Commission of PakistanSpeaker 2: Philip Auerswald, Professor, George Mason UniversityDiscussion by discussants:i) Rahat Kaunain, Chairperson, Competition Commission of Pakistanii) Farhan Bokhari, Pakistan Correspondent & Country Manager, Financial Times UKQuestion and AnswersSession 3: Results based Management in Public SectorSpeakers 1: Heru Prasetyo, Deputy Chairman of the President’s Delivery Unit forDevelopment Monitoring and Oversight IndonesiaSpeakers 2: Nohman Ishtiaq, Advisor, Finance Division, PakistanDiscussion by discussants:i) Dr. Akmal Hussain, Professor, Beaconhouse National Universityii) Dr. Andrew, Rathmell, Coffey International Developmentiii) Vinaya Swaroop, Sector Manager of Economic Policy in South Asia, World Bankiv) Raza Rumi, Public Policy Advisor/EditorQuestion and AnswersSession 4: Creative Cities and Urban DevelopmentSpeaker 1: Emiel A. Wegelin, GIZ Program Coordinator, Cities Development Initiativefor Asia, PhilippinesSpeaker 2: Belinda Yuen, Urban Development Unit, World Bank1621212222242729293133333436363840404142444646488

International conference on “Framework for Economic Growth, Pakistan”Discussion by discussants:i) Tahir Shamshad, Member Planning, CDA, Islamabadii) Parvez Qureshi, Urban Planner and Architect, Lahoreiii) Philip Auerswald, Professor, George Mason Universityiv) Dr. Nuzhat Ahmad, Director AERCv) Special comments by Rafeh Alam (from Lahore)Question and AnswersSession 5: Human Capital, Productivity and InnovationIntroductory remarks by Javed Laghari, Chairman HECSpeaker: John Speakman, Private Sector Specialist, World BankSpeaker: Shaukat Hameed Khan, Former Member Planning CommissionDiscussion by discussants:i) Ali Arshad Hakeem, Chairman NADRAii) Dr. Sohail Naqvi, Executive Director, HECiii) Philip Auerswald, Professor, George Mason UniversityQuestion and AnswersSession 6: Connecting to CompeteSpeaker: Amer Z. Durrani, Sector Coordinator for Trade Logistics, Transport andCustoms, World BankDiscussion by discussants:i) Arshad Zuberi, Chief Executive, Business Recorderii) Shaukat Hameed Khan, Former Member Planning Commissioniii) Muhammad Saleem, Director General, Pakistan Telecommunication Authorityiv) Fatma Gul Senior Economist, UNDPQuestion and AnswersSession 7: Youth and Community EngagementSpeaker: Mahbub Hossain, Executive Director, Bangladesh Rural AdvancementCommittee (BRAC)Discussion by discussants:i) Ali Asghar Khan, Head of Omar Asghar Khan Development Foundationii) David Martin, Country Director, British Council, Pakistaniii) Faisal Mushtaq, Chief Executive, Roots School System, Pakistaniv) Shireen Naqvi, CEO, School of LeadershipQuestion and Answers51515253535558585961636364656868707071717375757878798081Interviews 84Special lecture over video conference by Professor Richard Florida 1159

International conference on “Framework for Economic Growth, Pakistan”Welcome remarks by Nadeem Ul Haque, Deputy Chairman, Planning CommissionLecture by Professor Richard FloridaQuestion and AnswersClosing Ceremony / Remarks by ParliamentariansRemarks by Nadeem Ul Haque, Deputy Chairman, Planning CommissionRemarks / Answers to questions by Parliamentarians:Palwasha Khan (MNA)Fauzia Wahab (MNA)115115119124124125125Closing remarks by Ajay Chhibber Assistant Secretary General, UN and AssistantAdministrator and Regional Director for the Asia and the Pacific, UNDPClosing Remarks and Vote of Thanks By Nadeem Ul Haque, Deputy Chairman,Planning Commission126127Conclusion and recommendations 12810

International conference on “Framework for Economic Growth, Pakistan”IntroductionPlanning Commission was charged withdeveloping growth strategy and managingthe Public Sector Development Program.The National Economic Council (NEC)headed by the Prime Minister has approvedthe Framework for Economic Growth (FEG)- a strategy that seeks accelerated andsustained growth and development based oneconomic reforms and an emphasis onproductivity.Following the NEC approval of the NGS,the Planning Commission, in collaborationwith UNDP hosted an internationalconference on “Framework for EconomicGrowth, Pakistan” on 13-14 July, 2011 inIslamabad. The Conference brought togetheraround 500 delegates includingparliamentarians, international and nationalexperts, federal and provincial policymakers, economists, development sectorleaders, academia, business community andofficials from UN agencies from acrossPakistan. “Framework for EconomicGrowth, Pakistan” is a new approach toaccelerating economic growth andsustaining it. It has been developed withworld renowned experts and all thestakeholders following extensive researchand consultation.The conference was inaugurated by Dr.Nadeem Ul Haque, Deputy ChairmanPlanning Commission and AssistantSecretary General of the UN, AjayChhibber. The FEG formulated at PlanningCommission through widespread local andinternational consultation focuses onbuilding strong local ownership for a qualitydevelopment strategy that is informed by thebest knowledge and analysis available.The consultations clearly identified the needto develop a coherent approach to growththat goes well beyond projects and targets inpublic service delivery, productivity,competitive markets, innovation andentrepreneurship. The strategy is based onsustained reforms that build efficient andknowledgeable governance structures; andmarkets in desirable, attractive and wellconnected locations. It recognizes the severeresource constraint that the country facesand therefore focuses on ‘productivity’ -improving the efficiency with which assetsare used. Global indicators such as‘competitiveness’ and ‘cost of doingbusiness’ also highlight factors such as‘management’, ‘innovation’, ‘quality ofregulation and governance’ and ‘researchand development’ as the more immediate11

International conference on “Framework for Economic Growth, Pakistan”constraints to growth. The thrust of thisstrategy, therefore, is to focus on the‘software’ of economic growth (issues ofeconomic governance, strengtheninginstitutions, incentives, human resources,etc.) so as to provide an environment inwhich the ‘hardware’ of growth (physicalinfrastructure) could be expanded and mademore productive at every level.The Deputy Chairman acknowledged theproblems being faced by the country andpresented a “new” and “fresh” approach forthe economic growth to follow and improve"Quality of Life" based on the four pillars ofthe FEG viz. quality governance, vibrantmarkets, energetic youth and communityand creative cities. The new approach placesthe growth and jobs at top of the agenda.The key areas of the new growth strategyincludes enhancing the role of the privatesector, entrepreneurship and innovation asmajor drivers of growth, enhancingproductivity, improving the quality ofgovernance through Civil Service reforms,making cities hubs of economic activities byrelaxing zoning and building regulations,minimizing the role of the government in theeconomy and restricting it to improvingregulation and policy environment. The newapproach takes cities as engines of growth inthe country. Strategy also focuses oninclusiveness for the development of ruralinfrastructure and markets for growth andpoverty reduction, enhancingcompetitiveness and productivity byinvesting in tertiary education, vocationaland technical training and development of aknowledge economy. Around 68% ofPakistan’s population is regarded as youth(under 30 years). Many of them are nowcoming into the labor force, increasing thesize of the workforce by over 3 per centannually. Human resource development istaken as one of the major objectives of thenew approach. The strategy urged for thedevelopment of financial markets andinstitutions, effective governance andmanagement through strengtheninginstitutions.The speakers presented their ideas papers onvarious themes which were discussed by theselected discussants. Open discussion wasfollowed by the question & answer sessionwhich served as a good source of knowledgesharing and to take views from all theparticipants. An important feature of theconference was interviews of theparliamentarians, national and internationalexperts who shared their views and gavewell thought recommendations on thesubject.At the conclusion of the conference, thePlanning Commission and UNDPexchanged a letter of intent for theestablishment of the proposed Centre forinclusive Growth and Development. Therevamped centre will contribute towardsbuilding institutional capacity to support theimplementation of the Framework forEconomic Growth. It will conduct research,advocacy and policy advice, promotelearning and exchange of solutions.***12

International conference on “Framework for Economic Growth, Pakistan”Welcome Remarks ByDr. Nadeem Ul HaqueDeputy Chairman, Planning CommissionLadies and gentlemen I welcome you to theconference on the Framework for EconomicGrowth. Let me announce here that Hon’bleFinance Minister couldn’t attend theconference as he had to go to Baluchistan toattend a meeting there. But Insha’Allah hewill be here with us in the closing meetingtomorrow.It surprises me that we had manyconferences here in Planning Commissionbut we discussed very little on the topic of‘growth’ and ‘jobs’. We have a hugepopulation and a large number of youth inour country. We have a low growth rate inthe country. There is a large number ofpopulation and especially the youth who arelooking for the jobs. Let us put growth andjobs to be at top of the agenda of thisconference.We have also taken a very new approach tothe subject which is the participation of alarge number of people and well knownspeakers in the conference. It is not theagenda of a person but rather a nationalagenda we are working on. The keyobjective of this conference is to challengeourselves to a fresh approach and placebefore you a new Framework for EconomicGrowth. It has taken more than a year inPlanning Commission to develop newframework for which we have talked to theacademia, chambers of commerce andindustry across country and people in all theprovinces. We have here with us in theconference UNDP, World Bank, ADB,USAID and many international donors withwhom we had been engaged in discussionand they have made valuable contribution inthe development of this fresh approach onthe agenda of ‘growth and jobs’ in Pakistan.We want to place before you this freshapproach and ask you to contribute in it. Wegot the Framework for Economic Growthapproved by the National EconomicCouncil, Cabinet and from Parliament andwe promised them to give implementationplan in next four to six months.We want to discuss everything here likereconstruction of the economy, povertyreduction etc. The first question I want toput before you is that why there is so littlediscussion on the growth in this country? Ifgrowth doesn’t take place at 7-8% in nextfew years there would be millions of peoplewho will not have jobs in the country. Let us13

International conference on “Framework for Economic Growth, Pakistan”also remember it that we have failed toprovide adequate education in the past. Withthis uneducated and unskilled population ourfuture doesn’t look to be good andpromising. I am also surprised that when Ilook at newspapers face book, twitter etc. Ifind very little material and discussions on‘growth’ and ‘jobs’ there. Media is also notdiscussing this important subject. We findmedia and experts discussing issues likeTax-to-GDP ratio and sovereign economywhereas there are many other importantissues to discuss like growth and creatingopportunities for the youth in the country.Ladies and gentlemen I invite you toexamine this new fresh growth approach andreform agenda and give your valued input.Without emphasizing an economic reform,productivity, using our resources andensuring that wastages are eliminated wecan't achieve higher economic growth.Government can't provide everything andengineer society. Government can onlymake policies and regulate. For educationquality we need to think that whetherresources being provided by the governmentare being properly utilized or not? Educationquality is not a funding issue but purely agovernance issue. Government can't pumpin money where there is a lot of wastage andinefficiency.Corruption is another issue which needsreforms and good public administration.Along with hard infrastructure we need tobuild soft infrastructure. It is softinfrastructure which would help inmanaging hard infrastructure, plan resourcesand help in increasing efficiency andproductivity. Poverty reduction is anotherimportant area which needs a strategy tomake it an opportunity for growth. We havemissed out our opportunity as we havemissed growth. Security is another importantchallenge for us and we can manage it bytaking certain measures like creating jobopportunities and engaging population ineconomic growth activities.Another important aspect of Framework forEconomic Growth is to reduce the role ofgovernment. Right now government is amajor stakeholder in many areas liketransport (PIA and Railway), energy,infrastructure, land, purchase of agriculturecommodities (like grains) etc. In cities thereis huge regulatory burden that governmentcarries and this role is to be reduced undernew strategy being presented here.Let us try something new and work on freshapproaches. Solutions which have failed towork in the past need to be refreshed and weneed to adopt correct approaches. To mymind this conference is about changingnarratives of growth, policies and wholeparadigm to place economic reforms upfronton the agenda. All the new literature in theworld suggests doing something new anddeveloping software of growth. We need todevelop good institutions for economicreforms. Growth is not a hardware which wecan buy from the market. We need todevelop it.Pakistan is a country of more than 170million people. Growth is a very complexsubject which is more difficult than therocket science. We need to work out thesolutions which require hard work andimplementation. All we need to do isimplementing the strategies. For growth weneed solutions which need to be worked out.It is the most complex subject one canimagine. It is not like an artwork.Implementation is the most importantchallenge in the new growth strategy whichwe have to develop and act upon.Let’s also think about constraints to theinvestment and growth. Investment rate hasfallen from 17% to 13% in Pakistan. Indiahas an investment of 30% whereas it isaround 40% in China. Pakistanis are making14

International conference on “Framework for Economic Growth, Pakistan”investments out of the country. Savings areat very low level in the country. People areputting their money overseas in real estate.We need to think about regulatory structurefor investment which is a binding constraintfor investment by the governments.Whatever we are saying here in theconference is not the old debate ofgovernment vs. markets but to work togetherfor socio-economic growth. We need to talkabout a professional, productive, efficientand quality government. Government usedto attract talent which is not being seen anymore. We need to think about Civil ServicesReforms in this country to face thechallenges of 21 st century. Civil Servicessystem is a system which is not usingtechnology, good practices and professionalapproaches in our country and we need totalk about this subject in the new approach.From education to energy, and legal systemto law & order we need to think aboutreforms. Civil Servants control everythingand there is centralization of power in thissystem for which we have to think in thenew framework. Role of the government isat the center of the economy. Government isimportant as it regulates and controlseverything. The first role of the governmentis to guarantee life and liberty. The pursuitof happiness is one of the things whichgovernment has to do and provide. We needa kind of regulations which is professional,not outdated and well informed.Growth will not happen in a vacuum.Growth happens in cities like history tells usthat it took place in cities like Baghdad,New York, London etc. Estimates tell usthat about 75% of the world output takesplace in 40 cities. Our cities are centers forgrowth and we have to think about it. A cityis a bunch of humans which has density,creativity, culture, high rising buildings,mobility, connectivity etc. Cities are placeswhere commerce takes place and industriesare developed. Cities must be commerce andindustry friendly. Economies can't growwithout the growth of the cities. Citiesprovide infrastructure and environment tothe youth for development. We have largenumber of youth in our country that needs tobe involved in growth. How do we providethem infrastructure, facilities andopportunities is an important question.Everyone is going for innovation,productivity and developingentrepreneurship where as we are stilllooking for protecting certain sectors of theeconomy. Why construction activities notgrowing and leading in our country?Building codes, zoning laws, regulations inthe real-estate sector are at heart of theproblem due to which construction activitiesnot taking place. Construction is youthfriendly as it provides opportunities toyouth, develop skills and helps youth toparticipate in creativity and help indeveloping social capital. Social capital isvery important for growth and we need tothink of youth while making growthstrategies. We need to adopt an inclusivegrowth agenda which speaks about all thesegments of the society.Growth strategy doesn’t require money but aclear headed reform agenda. It requiresbuilding institutions to meet requirements ofthe 21 st century and thinking solutions tocomplexities. Growth strategy is notsomething simple but more complex thanrocket science. We need to understand thisreality that things are changing now. We inPakistan can't stay with status quo and needto accept change, and the Framework forEconomic Growth is all about a new change.***15

International conference on “Framework for Economic Growth, Pakistan”Introductory Remarks ByMr. Ajay ChhibberAssistant Secretary General, UNand Assistant Administrator and Regional Director for the Asia and the Pacific, UNDPYour Excellency Dr. Nadeem Ul Haque,Deputy Chairman, Planning Commission ofPakistan, distinguished representatives ofcivil society, academia and media,Development partners and UN colleagues.Ladies and gentlemen!It is an honor to be able to address you alltoday on such an important issue. I wouldlike to thank Dr. Nadeem Ul Haque, DeputyChairman of the Planning Commission andTimo Pakkala, the UN Resident Coordinatorand Resident Representative of UNDP andtheir team and all our esteemed partners fortheir tireless efforts in organizing thisconference.This International conference on the NewGrowth Strategy organized as a high levelpolicy dialogue among the policy makers,international experts, developmentcommunity, business and civil societycomes at a very critical time in Pakistan. It isthe last link in the chain that has formed theparticipatory and transparent advisoryprocess through which the Framework forEconomic Growth has been formulated. It isa great privilege to be part of suchdiscussions which we think will affectPakistan’s future profoundly and positively.Pakistan sits in a region which has seen veryrapid growth over the past two decades withaverage growth in Asia at around 7.8% from1990-2010. Parts of Asia were hit hard bythe Asian financial crisis in 1997-98, butrebounded quickly. More recently, the AsiaPacific region has been least affected by theGlobal Financial Crisis of 2008, partlybecause many countries had become moreresilient after the Asian Financial Crisis andpartly because of effective stimuluspackages, high levels of competitiveness,flexible labor markets and less exposedfinancial systems . Rising food and fuelprices have increased vulnerability amongthe poor and now high inflation - notdeflation - is a major worry in many Asiancountries. But as Asia contends with theseproblems there is growing recognition thatthe global economic crisis has acceleratedthe balance of economic power towardsAsia.Both East Asia and South Asia havewitnessed a considerable acceleration of16

International conference on “Framework for Economic Growth, Pakistan”growth, more than any other region in theworld. In terms of per capita GDP growth,the acceleration has been from 5 percent inthe 1970s to 8 percent in the 2000s in EastAsia, and from 0.6 percent in the 1970s to 5percent in the 2000s in South Asia. Thisgrowth acceleration has happened as aconsequence of a series of economicreforms- which led to a stronger states, morevibrant markets, and better human capital.With rising prosperity poverty has declined.In Asia, the absolute number of poor peopleliving on less than $1.25 a day has declinedsignificantly from 1.7 billion in 1981 to 933million in 2005. Despite rising population,Asia lifted about 712 million people out ofpoverty in that 25 years period. But despitesignificant progress on poverty reduction,Asia still hosts about two-thirds of theglobal poor.Pakistan has not so far fully shared thesuccessful Asian growth story and I believethe Framework for Economic Growth forPakistan comes at a very important time andour conference today gives us anopportunity to better understand what ishappening in the region and in the world andto see how best Pakistan can join the rest ofAsia in achieving high, sustainable andinclusive growth.I am by no means an expert on Pakistan asmany of you gathered here are, but a veryquick overview of Pakistan‘s economichistory tells us that there have been periodswhen Pakistan achieved very high rates ofeconomic growth. Pakistan achievedimpressive rates of economic growth in the1960s and 1980s, but growth fell in the1970s and 1990s. Over a 40 year period thetrend growth rate in Pakistan is declining,whereas in most other countries in SouthAsia it has been rising. What has markedPakistan out from others in Asia is thatPakistan’s growth spurts have not beensustained over a sufficiently long period oftime which is needed in order to lift largesections of the population out of poverty.We hope that the new growth strategy willhelp Pakistan reverse this trend and yourdeliberations over the next two days willaddress the issue of how best to ensuresustained growth in the future in Pakistan.Until recently the economic literatureprovided little guidance on the 'recipe' forstrong economic growth. One interestingexercise is the work of the 'GrowthCommission’. The commission closelyexamined 13 cases of sustained high growth- those economies that had achieved sevenper cent or more for 25 years or more andfound that there is no 'magic bullet' toachieving growth - 'orthodoxies only applyso far'. There were, however, five commonelements to those economies that didachieve sustained high growth: 1) they fullyexploited the world economy; 2) theymaintained macroeconomic stability; 3) theymustered high rates of saving andinvestment; 4) they let markets allocateresources; and 5) they had committed,credible, and capable governments.The Commission noted a big role forinfrastructure in high growth economies.These economies had investment rates of atleast 25 percent of GDP. The Commissionobserved that high growth economies putsubstantial public investment at least 7-8 percent of GDP into their people. TheCommission found infrastructure spendingin low-growth countries, on the other hand,to be badly neglected. The Commissionhighlighted the importance of governance ina fast growing economy. To promotegrowth, governments should facilitate theentry and exit of firms and labor mobility.Governments should protect people, not jobpositions through social safety nets tocushion the 'blows of the market'.While growth is necessary for povertyreduction it is not sufficient. Asia’s rise has17

International conference on “Framework for Economic Growth, Pakistan”helped reduce global inequality but at thesame time we have seen rising in-countryinequalities across most of Asia. The recentAsian growth has not been sufficientlyinclusive. One important indication ofinadequate inclusive growth in Asia is thatinequality among rural-urban population andbetween regions is still not only high, butalso increased over the period. During thelast two decades, out of 14 Asian countriesfor which sufficient data are available,inequality measured by the Gini coefficientis found to have increased in 11 countries.Inequality increased by 6 to 9 Gini points inSri Lanka, China, and Cambodia and byabout 4 to5 Gini points in India, Indonesiaand Nepal. Rural-urban inequality is often alarge component of overall inequality,contributing about half of the overallinequality in country like China. The ratio ofurban to rural per capita income hasincreased from 2.2 in 1990 to 3.3 in 2007 inChina, and from 2.4 in 1971 to 2.8 in 2005in India.Growth in Asia has been less-inclusivebecause (i) growth has been uneven acrosssectors and locations, (2) demand for skilledand unskilled labor also uneven resultinghuge wage premium for skilled labor, (3)growth has been driven by capital-intensivesectors and (4) high disparities in assets andaccess to infrastructure impede the poorfrom fully participating in the growthprocess. Government policies in terms ofpublic spending on social sectors, socialprotection and agriculture, and financialinclusion, among others, have also not beensufficiently inclusive in Asia. Since the poorlack both human and financial capital,public policies that help poor to build theirhuman capital, better manage their risks, andimprove the access to credit are key formaking growth more inclusive.Lack of inclusive growth could underminepace of poverty reduction and achievementof the MDGs. Even in China which has animpressive record on poverty reduction hasinequality problems. There are alsocompelling reasons why high levels ofinequality could dampen growth prospects.High inequality could lead to adverseconsequences for social cohesion and thequality of institutions and policies, which, inturn, slow growth. The Growth Commissionalso strongly argued that growth strategiescannot succeed without a commitment toequality of opportunity, giving everyone afair chance to enjoy the fruits of growth.Healthy and well educated populations areessential not only for the sake of productivelabor force for economic growth but toachieve a healthy and well educated societyis a goal in itself. As the great Pakistanieconomist Mahbub Al Haque observed thatthe real wealth of the region are its people. Ifsufficient investment is made in these peoplethey can radically change the prospects ofthe region in the 21 st century. Instead SouthAsia in particular has been falling behind therest of the world in terms of its health andeducation spending but leads the world inmilitary spending as a share of GDP.Pakistan is no exception. Maternal mortalityrate is still very high in Pakistan with 276women die during birth out of every 100,000live births. Only 22 percent of Pakistaniwomen participate to the labor force, one ofthe lowest in the world. 45 percent of thepopulation in Pakistan is still illiterate and adisproportionate share of these is womenand girls. Providing high quality educationto young people is important for Pakistanwhich is one of the most valuable resources.Girls and children living in rural areas musthave equal access to high quality educationsame as their urban and male counterpartshave, and their human potential needs to berealized.One marked feature of Asia’s rise has beenits heavy focus on trade as an engine ofgrowth. Intra-Asian trade has also risen verymarkedly. For South-East Asia, for example,18

International conference on “Framework for Economic Growth, Pakistan”intra-regional trade has been rising rapidlyand now accounts for more than half of tradein manufactured goods – up from 40 percent in 1994- 95 (ADB, 2009). In other subregions,such as South Asia and CentralAsia, the level of intra-regional trade is low.These are impressive potential gains waitingto be tapped. The recent experiences ofIndia-Sri Lanka FTA are striking since theyhighlight the potential of bilateral trade tostrengthen supply capabilities leading tocorrection of trade imbalances. Since theoperationalization of the FTA, Sri Lanka‘sexports to India have grown by 132 per cent.After the global crisis Asian countries havetried to re-balance their economicorientation towards more reliance ondomestic demand. This is a necessaryrebalancing for the larger Asian economies.But for the smaller and medium sized Asiancountries trade with developed countries andintra-regional trade still remains a veryimportant engine for growth. Pakistan, in myview, has huge unexploited potential formore trade both globally and regionally; andas outlined in the New Growth StrategyPakistan will need to become more open andbuild up its competitiveness to achieve thatpotential. The new growth strategy rightlypoints out that it‘s not an issue ofgovernment vs. markets but insteadgovernment and markets working together.The Asian state-led development successhas occurred because of a strong and smartstate not a large one. It has come because ofa partnership between state and market tobuild competitiveness and improveproductivity. It has not come by dismantlingthe state but by changing its role from directproducer to regulator and guide as anenabler. We need an active, smart, effectivestate for efficient and vibrant markets.Pakistan‘s New Growth Strategy points outin the right direction, highlighting the needfor public sector reform and the importanceof reducing the costs of doing business, inorder to develop more vibrant markets.Access to finance will play a key role in thiseffort, as well as reducing the timeit takes for business startups throughremoval of red-tape and artificialrestrictions. Pakistan‘s 18th amendmentbrings the state closer to the people but itnow requires building sufficient capacity atthe local level to carry out the newlyexpanded responsibilities and adequatecoordination between various levels ofgovernment.Pakistan‘s Framework for Economic Growthcorrectly highlights the role of vibrant cities.Well functioning cities are the engine ofdynamic innovation and efficient modernlife. They are the springboards for new ideasand a better life for Pakistan’s rapidlygrowing population. At the same time withsuch a large population still dependent onagriculture and living in rural areas it isimportant that the rural-urban divide doesnot become too large. Even by 2035 almosthalf of Pakistan‘s population will still beliving in rural areas and must feel includedin its growth processes. If the goal of highsustainable and robust growth is to berealized, there is urgent need for policiesthat not only would address how to increaseeconomic efficiency but also the differentconcerns of the rural poor and the urbanpoor. Failure to do so would make citiesuninhabitable, with pressures on water,transportation, fuel and power, and countriessusceptible to conflict, and growthmeaningless for a large majority of people.Like many other Asian countries Pakistan isvulnerable to natural disasters and conflict.In the last six years we have seen two hugedisasters; the 2005 Kashmir earthquake andmassive floods in 2010, which affected theentire country. In the last decade, Asiaaccounted for about three fourths of globalcasualties from natural disasters. Thesefactors reinforce the need to proactivelyconsider building resilience in countries likePakistan as a part of the sustainable19

International conference on “Framework for Economic Growth, Pakistan”development agenda. Building resiliencewill help households, societies, andcountries to withstand not only short-termeconomic and environmental shocks, butalso longer-term climate change threats.Therefore, spending on social protection andhelping build resilience from disasters is nota cost; it is an investment for nations. Asiahas done a lot to protect its people from suchvulnerabilities, but there is still a lot to bedone.The New Growth Strategy proposes to putthe dynamic sectors and the resources ofPakistan in front of the steering wheel. It is aforward looking strategy that will mobilizeresources from areas that have beenuntapped until now; from cities, youngbrains, and from communities. The Arabspring shows us that jobless growth,especially if it neglects the youth and createsa sense of despair, can easily lead to socialunrest. Pakistan can reap a hugedemographic dividend if the kind of visionlaid out in the New Growth Strategy ofengagement, empowerment and job creationis realized.The international community must stand byand support Pakistan in this formidable task.It is nevertheless vital that the Frameworkfor Economic Growth is fully owned andimplemented by Pakistan‘s own institutions.External support is vital but it must beembedded in Pakistan‘s own structures andsystems. We believe the new Growth Centerin the Planning Commission can be a veryuseful and valuable base for planning theimplementation.I wish you all great success in yourdiscussions and deliberations as you helpPakistan’s leaders prepare a new frameworkfor re-imagining Pakistan. Thank you.***20

International conference on “Framework for Economic Growth, Pakistan”Session 1: Implementing Governance ReformsSpeaker: Sulaiman B. MahbobChairman, Malaysian Industrial Development AuthorityI thank Dr. Nadeem Ul Haque, DeputyChairman Planning Commission fororganizing such a good conference andinviting me here to speak. There are two keyplayers to economic growth viz. thegovernment and the other is private sector.Both of these sectors can’t be separated asthey both complement each other foreconomic growth in the country.Rural development is one of the importantareas which need to be focused for theeconomic growth. Other important area isprivate investment in the country which willcreate opportunities for employment andhelp in reducing poverty. Investment inprivate sector helps in improvingproductivity and creating niche markets.Privatization is also important to bringefficiencies in the sector. Trade andinvestment are also important for privatesector growth in the country. List of publicgoods and services need to be developed sothat we can plan what we can do now andwhat can be done in the future.Deregulation is another important factor tobe reviewed. There are many bureaucraticprocedures and unnecessary requirementswhich need to be simplified or abolished.Public Private Partnership (PPP) is one ofthe important areas which can help in risksharing and filling the resource gap in thecountry. There are many areas where PPPcan work effectively like maintenance andmanagement of public goods and servicesetc.Governance should be focused to managethe private sector, ensure healthycompetition and to help build new marketsin the country. Provision of utilities is thegovernment’s responsibility. We need tobuild capacity of the public services to getdesired results. There is need to bringtransparency and accountability in thegovernance and all aspects of the economicactivities. There is need to build institutionsand strengthen institutions like anticorruptiondepartment etc. to eradicatecorruption, special commissions for lookingafter regulations, competition etc.The key to success lies in privatization andderegulation. Implementing governancereforms require strong political support, asotherwise things would fail to work. In ourcountry it was Mahathir Mohammad whoprovided us political support from the topfor brining reforms in the country. InMalaysia Chief Secretary is also there tooversee all the areas and monitor progress.The most important thing is that we focus onimplementing our policies and work onResult Based Management for outcomes.***21

International conference on “Framework for Economic Growth, Pakistan”dynamic capital markets in the country.Inclusiveness also means sustainability, andresponsiveness to the environmental issuessuch as sensitivity to climate change. Weneed to manage our renewable and nonrenewableresources. We can’t use oilresources to finance management of thecountry. Economic transformation programneeds to be focused. One of the importantprogrammes is focusing all the sectorswhere we have strength. Second importantprogramme is the cross cutting foundation ofissues which were divided into followingcategories:1. Creating a competitive investmentenvironment:• International standards &liberalization,• Government’s role in business, and• Enhancing the sources of growth.2. Developing quality workforce:• Human capital development.3. Transforming government:• Public service delivery, and• Public finance reform.4. Narrowing disparities:• Regional, ethnic and income levels.Some of the key policy measures are furtherexplained below:1. Public Finance:• Improve tax administration,• Rationalize corporate tax incentives,• Transparent procurement,• Control Expenditure,• Broad based Tax, and• Accrual accounting.2. Public service delivery.3. Human Capital Development:• Modernize labor laws,• Labor safety net,• Women’s Talent,• Strengthen HR Management,• Labor market analysis, and• Up skilling & re-skilling4. Government’s role in business:• Reduce crowding out privatesector- Divestment of GovernmentLinked Companies (GLCs)• Increase liquidity in capital markets- Pare-down & listing ofgovernment’s stake in companies• Improve governance for state-ownedcompanies- Anchored on performance.- Replicate the success ofKhazanah’s Putrajaya Committee onGLC high performance.5. International standards & liberalization:• Competition law - encouragecompetitiveness.- Implement Competition law by2012.• Liberalization: Healthcare, educationand business services.• Standards: Adopt internationalstandards, develop Malaysianstandards and raise Malaysianstandards as the benchmark.6. Narrowing disparities:• Improve social services andinfrastructure to all regions,• Improving capacity of the bottom40% of households,• Improving capacity of SMEs:- Entry point with 1,100 companies.- High Performance BumiputraScheme.- Performance based with clear entryand exit criteria.Until we work with all the sectors andpropose to the government that we work on23

International conference on “Framework for Economic Growth, Pakistan”above key areas for the transformationProgramme we can’t get out of the middleincome trap.Speaker: Dr. Ishrat HussainDirector, Institute of Business Administration, KarachiFirst of all let me thank Dr. Nadeem UlHaque for inviting here and to share mythoughts on this important subject. TheFramework for Economic Growth has takeninto consideration a very important elementof the governance structure. The overallgovernance structure is important because itis through this structure that economicpolicies are intermediated and translated intoeconomic and social benefits for the vastmajority of the population.I would like to focus on the governancestructure which consists of the executive,judiciary and legislature. The highest impacton day to day life is created by the executivebranch of the state. The present discussionwill, therefore, focus firstly on the executivebranch whose main pillar is the CivilService. The second important question I amgoing to ask is that if there is a need forchange then what different and new weshould do and present a package which willmake a difference to the lives of thecommon citizens of the Pakistan? The thirdimportant point is that if there is a consensuson the package then we should see that howit can be implemented.The present system of Civil Services hasbecome dysfunctional and is not doing thejob. The following extracts from the HumanDevelopment Reports on South Asia of 1999and 2005 depict a vivid picture of thegovernance in South Asia and which is evenmore applicable in case of Pakistan? HumanDevelopment South Asia Report 1999 and2005 presents the picture in followingwords:“South Asia presents a fascinatingcombination of many contradictions. It hasgovernments that are high in governing andlow in serving; it has parliaments that areelected by the poor but aid the rich; andsociety that asserts the rights of some butperpetuates exclusion for others. Despite amarked improvement in the lives of few,there are many in South Asia who have beenforgotten by formal institutions ofgovernance. These are the poor, thedowntrodden and the most vulnerable of thesociety, suffering from acute deprivation onaccount of their income, caste, creed, genderor religion. Their fortunes have not movedwith those of the privileged few and this initself is a deprivation of a depressingnature.” (Human Development South AsiaReport, 1999)“Governance constitutes for ordinarypeople, a daily struggle for survival anddignity. Ordinary people are too oftenhumiliated at the hands of publicinstitutions. For them, lack of goodgovernance means police brutality,corruption in accessing basic publicservices, ghost schools, teacher absenteeism,missing medicines, high cost and low accessto justice, criminalization of politics andlack of social justice. These are just fewmanifestations of the crisis of governance.”(Human Development South Asia Report,2005)A question that is often raised in Pakistan isthat why has India retained the same CivilService Structure as they had inherited fromthe British? Why is Pakistan moving to24

International conference on “Framework for Economic Growth, Pakistan”change the legacy, texture, and complexionof the Civil Service?I don’t think that after these very cogentreasons about the crisis of governanceanybody in this room would disagree withmy hypothesis that economic growth can'ttake place unless these policies aretranslated into the benefit of the longermajority of the population and is free ofcorrosion and fully functional. This can becompared to a water system whereby wateris gushing out of the tap but if the pipethrough which water is conveyed iscorroded, leaking or clogged then thoseexpecting water at the other end of the pipewould either only get a trickle or water ofunhygienic quality that is not usable fordrinking, cooking, bathing and other uses ofhuman consumption. This pipe is theinstitutions of governance which needs to befixed. Economic growth can't yield resultsunless it is backed by good governance. Inmy point of view main pillar of the goodgovernance is Civil Servants. Empiricalevidence across countries has nowconfirmed that economic performance notonly in terms of aggregate growth but alsothe distribution of income is determined bythe quality of institutions. These institutions,in turn, are manned by the Civil Servants.We have a history that clearly tells us thatfor the first two and half decades the countryhad Civil Servants who had the capacity andcompetency to take decisions in the largerpublic interest. They also enjoyed courageof conviction whereby they resistedextraneous pressures and influences whichcould disable them from taking the rightdecisions. Being wedded to the ColonialCivil Service their mindset and attitudebetrayed the tendency of guardianship andpaternalism. They were not responsive to theneeds of the population and lacked thecompassion to come to rescue the poor,marginalized and less well-to-do segmentsof the society. What is being proposed hereis that the first three attributes (3 Cs) ofCivil Servants – Capacity, Competency andCourage – have to be revived in themthrough these reforms while the compassionhas to be imbibed through greater exposure,awareness and incentives. The end result ofthe reform should therefore be a majority, ifnot all, Civil Servants displaying andpracticing these attributes. There is need torestore ‘3Cs’ in Civil Servants of the future.I was heading National Commission forGovernment Reform (NCGR) consisting ofboth senior serving Public Servants andindividuals from the private sector who haveexcelled in their professions. We spent twoyears and submitted a comprehensive reportto the Government of Pakistan in May, 2008with very detailed and specificrecommendations for the Civil ServicesReforms. The gist of these recommendationsis given below:1) Open, transparent merit-basedrecruitment to all levels and gradesof public services while protectingregional representation as laid downin the constitution.2) Performance evaluation to be basedon measurable objectives, andassessment of key performanceindicators.3) Promotions and career progression tobe based upon a combination of pastperformance and assessment ofpotential with mandatory training atpost-induction, mid-career and seniormanagement levels.4) Equality of opportunity for careeradvancement to all employeeswithout preferences or reservationsfor any particular class. A shiftshould take place in the mind setfrom “Entitlement” to “Eligibility”.5) Replacement of the concept ofSuperior Services by equality amongall cadres and non-cadres of publicservants, federal and provincial CivilServices, professionals andgeneralists. Suitability for the job25

International conference on “Framework for Economic Growth, Pakistan”should be the governing principlerather than the origination of theappointment.6) Grant of a living wage andcompensation package includingdecent retirement benefits to all CivilServants.7) Strict observance of security oftenure of office for a specified periodof time.8) Separate cadre of regular CivilServices at the federal, provincialand district levels co-existing withcontractual appointments and lateralmovement.9) Creation of a National ExecutiveService (NES) for seniormanagement positions open to allfederal, provincial and district CivilServants through a competitiveprocess.10) Induction of three specialized cadresunder the NES for EconomicManagement, Social SectorManagement, and General cadre.11) Citizens’ Survey and Score Cards tojudge the responsiveness.To implement above recommendations weneed to focus on some key reforms andinstitutions first. We need to adopt aselective approach to go ahead. It hastherefore to be phased over a period of 5-10years with adjustments and fine tuning tomeet the exigencies of circumstances.population. They are not updated and havetherefore become a major source ofharassment and extortion. There areconflicting rules on the same subject coexistingin the rule book or manual becausethe old ones and those superseded have notbeen weeded out. Some of the rules are sooutdated that they have become a nuisance.If all the government rules, regulations,instructions, circulars are continuouslyupdated and only the most current versionsare posted on the website of each ministry alot of good will be done to make the lives ofcommon citizen easy. The transparencyachieved through automation will minimizethe discretionary powers of the governmentfunctionaries and provide convenience to thecitizens who are actually the voters inultimate analysis. The posting of updatedForeign Exchange Manual on the website ofthe State Bank of Pakistan (SBP) whichcould be accessed by anyone from his homeor office created a lot of trust in theorganization. Computerized land recordswill substantially bring down the volume oflitigation that is clogging our courts andprovide a lot of relief to those engaged inprotracted and expensive court cases.Good governance reforms are necessary forimproving economic performance andreducing income inequalities and regionaldisparities in Pakistan. The thrust of thesereforms lies in a dynamic and vibrant CivilService.Government rules, regulations and manualsare not widely available to the affected***26

International conference on “Framework for Economic Growth, Pakistan”QUESTIONS:Question: I would like to share my observation that best decision to empower local communitiesis by shifting power to the local governments. We talked about District Civil Service idea. Isthere any example of successful District Civil Servants in the world?Question: It is told here that we have 56% literacy rate in Pakistan. My question is that whetherthis figure is correct or not and what is the quantum of literacy in Pakistan, Malaysia andBangladesh? We have 70% population living in rural areas of Pakistan. I can’t understand thathow this literacy rate is established. Please comment.Question: We have a wonderful growth strategy but we see things going in different directions.We reviving 1861 Police Act again and my question is that what is happening in the country?Question: We had been using ‘5 Years Plans’ in the past in Pakistan and other countriesfollowing our model have progressed very well. Why we have failed to evolve ‘5 Years Plans’and why Planning Commission is not considering it for the growth in Pakistan?Question: Why a democratic government is hostile to local government structure whereasmilitary government implemented it?Question: New Framework for Economic Growth is presented by the Planning Commission.How would this new framework work with energy crises in the country? And why issue of TharCoal project is not being addressed by Planning Commission whereas there is so much delay inthis project?ANSWERS:Questions and AnswersAnswer by Dr. Ishrat Hussian (Director, Institute of Business Administration, Karachi):I think there is a lot of misinformation about the devolution of the local governments.Amendments which were made after 2002 in the Local Government Ordinance have deprivedthe local governments of the real power. It is the small plant which needs watering andnourishing over time. We have four experiments of local government. What we need is a verystrong local government institution in this country. So we can’t just uproot the plant and replaceit by a tree over time. I would submit that the empowerment of local communities leads tooutcome. I personally believe in empowering local communities to take decisions. For thedistrict Civil Service I would say that two third of the provincial government servants operate atthe district levels. To provide the real power we propose a district service. All the teachers,health workers etc. would be in district government and there would be no clash between district,and federal government.About literacy rate the definition is not invented by Pakistan. There is a definition for literacy byUNESCO which is followed by all the countries. Bangladesh has much more literacy rate thanPakistan. Malaysia’s literacy rate is also very high. Bangladesh’s female literacy rate is alsohigher than Pakistan. Even India has 63% literacy rate with the definition being the same.27

International conference on “Framework for Economic Growth, Pakistan”I can’t comment about reviving Police Reform 1861 as that decision was taken by particulargovernment and they must know what they are doing. Police Act of 2002 which was relativelygood act has been changed. I think there is always competition for political space. The MNAsand MPAs feel that Nazims had taken over all the powers and that is why there is power tussle inpolitical governments. The military is one man rule and they want to have the legitimacy andthey think that the local government can provide them the broad band democratic space.Answer by Norma Binti Mansor (Secretary General, National Economic Advisory Council,Malaysia):For improving quality of education in rural and urban population, one of our 6 key priority areasis education. In Malaysia women are much more educated as Malaysia has a small populationand we have to use all available citizen resources in the country. The Women enrolment in theuniversities is also very high and we have policy that higher level posts should also be occupiedby the women.We have a federal system with 30 states and we want the local governments to come there in thefederal system. We talk to the opposition parties, NGOs etc. about the framework that what is tobe done in the government. We start dialogues and take suggestions from the stakeholders. Usinge-government tools we also get suggestions from people and have made it interactive.Answer by Sulaiman B. Mahbob (Chairman, Malaysian Industrial DevelopmentAuthority):We involve the private sector in dialogues for policy making and take suggestions from them.Preparedness to change is the approach we follow in our country for which we always look forparticipation of the stakeholders and take their input for better implementation.Answer by Ayaz Amir (Columnist/ Journalist):Some of the best public relation experts in this country are confused with the fact that we areagain going to run our police force using 18 th century old Police Act. 1861 Police Act is a veryshort act of at the most two pages which is just an enabling umbrella sort piece of legislation justsaying that a police force would be setup. It doesn’t speak about a good police force. Even PoliceOrder 2002 didn’t lessen incidences of police brutality or corruption. Most important thing inPolice Act is that how we implement the things. There is no shortage of good intentions in thiscountry and a paper of few pages would not make our police force a good force. Good intentionsand implementation is required for a good police force to work.***28

International conference on “Framework for Economic Growth, Pakistan”Session 2: Openness and Competitive MarketsSpeaker: Muhammad AliChairman, Securities & Exchange Commission of PakistanI would like to start my presentation bysharing a story with you first. Mid last year Iwent to the office and found that one of mygood staff persons has resigned. My officestaff told that the person resigned because hewants to start his own business and he isinterested to meet me. The gentleman cameto me and I asked him that how could I helphim? He requested me for a loan of hundredthousand rupees for two years period to starta grocery business. After listening to hislogic I provided him the required money.Today that gentleman is running his ownshop successfully, employing two peopleand paying back the loan every month.Twelve hundred dollars were needed by thatgentleman and he was not able to get thatmoney and start his own business in thiscountry.Entrepreneurship and human capital is thebasis we need for competition in ourcountry. In my presentation I would like tofocus on two important areas viz. opennessand competition. The theme is that we as anation for the last so many years have onlyrewarded the financial capital in Pakistan.Because of short sightedness we valuedfinancial capital and failed to value humancapital and talent. We have not been able todevelop a competitive environment in ourcountry.Pakistan’s economic growth since 1972shows a volatile growth with boom and bust.I would like you to note that Pakistan havehad high economic growth rate only in timeswhen there was financial assistance from theoutside world. In 1979, after the Afghanwar, we saw an economic boom in thecountry. After 1990 when sanctions wereimposed on Pakistan there was only oneyear in which we saw real economic growth.In 2001, after the incident of 9/11, westarted receiving financial assistance and wewere able to achieve economic growth.Government’s reliance on borrowings andforeign resources has undermined theeconomic growth in the country.We have not been able to develop acompetitive environment in this countrywhereby businesses and manufacturingsector can lead us to growth. Foreignassistance has played a major role in ourgrowth and that can’t go on in future. Wehave under developed markets. We havefinancial markets in our country. We can’tbe competitive without creatingentrepreneurship in our country. We can’tcreate entrepreneurship without financialcapital. We have developed only equitymarket in the country which is less than 25%of our GDP. Debt market is non- existent inour country. Commodity markets are also ininfancy stages yet and we need to promoteit.We are a banking centric nation. Withoutbeing financially strong we can’t havefinancial capital. If someone needs financialcapital it is almost difficult to get it unlesshe is already financially strong. Our savingsare lying in the banks and the banks havebeen lending only to the government orlarge size corporate sector. We have notbeen able to develop an effective SMEsector. For the last 20 years I keep hearingtwo words – debt market and SME sector. Ihave not seen any of these two developed inour country. Unless we create a competitivedebt market where people can borrow from29

International conference on “Framework for Economic Growth, Pakistan”debt markets, from mid-size financialinstitutions which are not banks rather nonbankingfinancial sector, merchant banks orinvestment banks we would not be able todevelop entrepreneurship in the country. Nonation in the history of mankind has grownby keeping their money in banks. Today wehave an environment where without anyeffort we can earn 10-14% interest rate onour savings and the economic growth rate is3 to 4 %. There is no incentive to take therisk to go into business. Unless interest ratecomes down and we have high growth ratewe will not be able to create a competitiveenvironment.Ease of access to credit is very important.Financial market sophistication and ease toaccess to credit is very poor in Pakistan.Lack of governance and transparency is alsovery important. Without transparency andproper government structure we would notbe able to create a competitive market. PIA,insurance sector, NIT, mutual funds etc. arestill controlled by the government. We needto privatize these sectors sooner or later.Table -1CountriesIntensity of LocalCompetitionPrevalence ofTrade BarriersGlobal Competitiveness(rank/125)Pakistan 87 106 101Indonesia 54 58 54India 30 96 49China 19 69 29Malaysia 38 88 24Source: Global Competitiveness Report 2009-2010As per Global Competitiveness Report2010-2011 Pakistan’s rank is 101 in theworld. In GCI rank (Table -1) Indonesia is at54, India’s rank is 49 whereas rank of Chinais 29, and Malaysia’s rank is 24. Pakistan isvery low in ‘Comparative CompetitivenessPosition’ in the region. In ‘Intensity of LocalCompetition” Pakistan’s position is 87 thwhich is lowest in the region. For“Prevalence of Trade Barriers” Pakistan’sposition is 106 th which is again lowestamongst countries compared.Openness will lead to competitive marketsand economic growth. We need to thinkabout trade in the region especially in theSAARC countries. Regional trade will leadto higher competition and growth andcompetition will help bringing efficiency inthe sectors. Consistency of policies is alsoimportant for sustainable growth. Due tolack of consistency of policies people arenot investing in the country. We as a nationare losing our competitive position.Competition will increase efficiency,increase choices, lower the prices andincrease innovation.Achieving higher growth was not easy taskin the past. Today people sitting in China areserving people in Japan. People sitting inBangalore are serving companies in Europeand USA. We have failed to capitalize theopportunity. Today the world is muchsmaller. Internet, e-commerce, technologicaladvancements are tools giving usopportunity to create competition and toachieve higher growth rate. Regional trade,macro economic and political stability,consistency in policies and sound legal andinstitutional infrastructure can leveragecompetitive advantage.30

International conference on “Framework for Economic Growth, Pakistan”Speaker: Philip AuserwaldProfessor, George Mason UniversityI appreciate the process led by the PlanningCommission. I am honored to be the part ofthis event.One of the things working in Pakistan todayis mobile firms. In telecom sector there are 5major providers in Pakistan with 100 millionsubscribers and lowest SMS and call rates inthe world. It is a very highly competitiveindustry which is providing the neededservice in the country and we can celebratethat. We discussed about the bankingindustry where service area is seriouslydeficient. Currently banks serve only 15 percent of Pakistan's population. Creditavailability to SME is inadequate. Only 7per cent of bank lending is to the ruralpopulation. House financing facilities arenot available through the banking service inPakistan. An almost identical case pertainsto housing finance, in particular the totaldenial of funding for low cost housing(construction, purchase or renovation). Ineach of the three product markets -agricultural credit, SME financing andhousing finance - there is neglect in thepolicies. I want to point out the dots betweenentrepreneurship, competition and growth.Given the number of banks in the country,banking should be the most competitivesector in the economy.I want you to think about the economy asone sector. The sector I am interested todiscuss an example is the forest sector.Forest sector has a number of large treeswhich form the canopy and all we see fromthe outside is just the large trees or thecanopy. In the forest there is also largenumber of underbrush we can’t see from thetop. In between the trees there is the growthsector. The growth sector of the forest is thesame as of the growth sector of theeconomy. It is those trees which are smallbut are growing and are not visible from thetop. There is the middle range which isdeficient in many countries and not meetingthe economic potential.Immortality is an ugly thing from a socialpoint of view as there is no place for new todevelop. But this is not the case with regardto the countries which have not achievedmaturity through competition. These are theimmature competitive economies. So Iwould focus on new and growing enterpriseswhich is the SME sector or the ‘MissingMiddle’ of the economy. The new andgrowing firms may have a small share of theGDP but both in poor and high incomeeconomies they have a substantial share bothin terms of GDP and employment. Exit ofthe firms create opportunities in theeconomy. In a forest some old trees die andgive place to some new tress to take place.Firms’ failure is an opportunity toreconfigure economy. Exit of the firms thatfail to utilize the resources of the firm isimportant for a new entry. So an enablingcompetition enables both exit and entry ofthe firms. The growth of economies is thegrowth of firms 1 . One of the importantfactors in the growth of the economy is the‘Missing Middle’. For doing business theexit and entry of firms both are important forthe economy. We need private sector to beengaged and provide them a favorablebusiness climate.Dr. Nadeem Ul Haque said in his speechthat growth is a very complex subject whichis more difficult than the rocket science. Iagree with his statement. We need private1 Schumpeter,1911; Shell ,1962, 1966; Lucas ,1978;Baumol, Litan, Schramm, 2007.31

International conference on “Framework for Economic Growth, Pakistan”sector to be engaged. A good example of thedevelopment made in a country is Korea.What do we learn from the Korean model isexplained by one of my colleague atKennedy School. He has worked in Koreaand in his paper, presented in 1995, heexplained it in following words:“What was required was acompetent, honest and efficientbureaucracy to administer theinterventions, and a clear-sightedpolitical leadership that consistentlyplaced high priority on economicperformance [along with] anexceptionally high degree of equalityin income and wealth. Wealthdistribution played an important rolein shaping the political landscape inboth countries. This is probably thesingle most important reason whyextensive government interventioncould be carried out effectively,without giving rise to rampant rentseeking.”The circumstances which made South Koreato develop and move forward fromdevastation is very important. We also needto look at the development in China,Rwanda, Sri Lanka, and Israel etc. Animportant challenge of the growth strategy isthe sense of determination to change andtransform the economy without going to theconditions of devastation. People will comein Pakistan and invest when we will havegood governance. This country in my viewhas globally the number one businessopportunity in the world because it is thecountry which is still far from its potential.For an entrepreneur there are three choicesviz. to immigrate, compete or rent seek.Society needs to create opportunities for itsmost talented people to compete and create,and not to leave. To foster entrepreneurshipthere is need to make trust affordable.Pakistan needs to join rest of the Asia on theturn pike of growth.***32

International conference on “Framework for Economic Growth, Pakistan”DiscussionDiscussant: Rahat KunainChairperson, Competition Commission of PakistanFirst of all I would like to thank PlanningCommission to give me an opportunity to behere. We are the Competition Commissionagency to ensure a competitive and healthyenvironment for doing business. In telecomsector we went for an inquiry forcartelization. What happens here is that aperson goes to court and takes a stay. Sameis with edible oils and many other sectors. Areport made by Competition Commissiontells that in banking sector 95% of the profitmade was concentrated in just top five bankswhereas there are 51 banks operating in thecountry. The banking sector needs to beclosely monitored and regulated to improveefficiency and increase healthy competition.Another important issue to be addressed inour society is cartelization. Cartelization istaken as something normal in our societyand we need determination to address thisissue. Penalties of 7.3 billion rupees weremade by Competition Commission onvarious firms and sectors but the cases arepending in the courts. There are 140 cases inthe courts with decisions pending. Peopleare making profits in our country due tounhealthy business competition practices.What these regulatory bodies doing ifdecisions are not being taken there?To have an impact on the economy we arefocusing now on two areas in CompetitionCommission. One is public procurementsand the other is concessions being given.PPRA rules are not being followed in publicprocurements. Companies are makingprofits and still taking concessions. So thereare many areas which we need to look at tocreate a healthy competition in the country.***Discussant: Farhan BokhariPakistan Correspondent & Country Manager,Financial Times UKIt is not much difficult to come up with asuccess story as in many years Pakistan hasgone forward. It is very important to discussabout the issue of institutions andgovernance in Pakistan. The role of theinstitutions is very central to the economicdevelopment of the country. It is the time tocome up and take Pakistan towardseconomic growth. It was 2008 whenPakistan celebrated one of the largestinflows of US $ 8.4 billion, including FDIetc. We need to focus on many aspects tomove forward. Collapse of the democracymay result in collapse of the economy. If wewant to be a democracy, democraticaspiration should not collapse. Regionaltrade is also one of the important factors weneed to look at.33

International conference on “Framework for Economic Growth, Pakistan”QUESTIONS:Questions and AnswersQuestion: The gap between the actual and potential productivity in our country can be seen as agreat opportunity. Power structure in this country is restricting competition as a small coalitionof elites can generate risk. With this power structure the development of a new institutionalframework is very problematic. What is the nature of power structure that has preventedfundamental institutional changes which was required for sustainable economic growth andefficient markets to operate? What specific strategy you suggest to address this issue?Question: SECP is one of the important organizations in Pakistan to regulate the markets. Whatchallenges SCEP see in the implementation of the Framework for Economic Growth andregulating the markets?Question: Laws governing economic sector are ambiguous. There are many agriculture relateddisputes unsettled for the last many years. Resources are not being utilized due to poor lawsgoverning various sectors of the economy. Please comment on above referred issues.Question: We can see cities burning in Pakistan and shipments stuck in cities and at ports. Thereis severe shortage of electricity, gas, furnace oil etc. Offices and factories are being forced toshut down in cities due to strikes. How can we compete with other countries globally with cost ofdoing business going high and investment not coming in Pakistan?Question: As we heard the panelists that there is a gap between the potential productivity andactual productivity in Pakistan, how FEG can help in filling this gap and avail this opportunity?ANSWERS:Answer by Dr. Nadeem Ul Haque, Deputy Chairman Planning Commission:There are many issues to answer like whystock markets not working properly? Whystock markets not encouragingentrepreneurship in the country? Whycompetition not unleashing the competition?We need regional trade to promote. Ourindustrial competition practices need to belooked at. We are offering answers to all theissues through our new growth strategy forthe markets to be competitive andproductivity to increase to createopportunities.Answer by Professor Philip Auerswald, George Mason University:There should be a coalition of industrialgiants who can come forward and work forPakistan. They need to work with PlanningCommission, SECP, and CompetitionCommission etc. and take Pakistan where itshould be. It is their country and country oftheir children. Now is the time to make acoalition and come forward to developPakistan.Government needs to give a competitiveenvironment to create a space for the future.There is need to promote entrepreneurship.Investors are even working in countries like34

International conference on “Framework for Economic Growth, Pakistan”Afghanistan. The local entrepreneursunderstand the local markets better thenforeign investors and they need to comeahead. There is need to develop a healthyenvironment for the business.Answer by Rahat Kunain, Chairperson Competition Commission of Pakistan:Mandi system should also be taken intoaccount to make the markets competitive.Informal sector should also be developedand regulated. It requires a lot of researchand documentation for these markets tobring in formal network and regulate them.There is a need to meet compliance tominimum standards for increasingcompetitiveness. We also need to be veryclear about openness, free trade andliberalization policies. There is need for ourdomestic markets to be competitive,compete globally, and protection of thedomestic markets should not be the policy.Answer by Muhammad Ali, Chairman SECP:Companies go to stock markets to raisecapital. The moment a company startsbusiness as a private or public limitedcompany the regulation starts. Along withpromoting equity market SECP is alsoworking for the development of debt andcommodity markets in the country. We arean agriculture based economy and we needto develop mandi system in this country. Weneed pricing of the agricultural marketswhich mandis can develop.***35

International conference on “Framework for Economic Growth, Pakistan”Session 3: Result Based Management in Public SectorSpeaker: Heru PrasetyoDeputy Chairman of the President’s Delivery Unit for Development Monitoring andOversight, IndonesiaWhile coming to this room in the morningthe first emotion I have is that I feel amazed.There are forty universities connected in thisconference which is something really good.While listening to the discussion I feel morehumble as all this intellectual work is alsobeing done in my country as well, but notwith so many universities connected throughthe internet. I find similarities in theapproaches. I would not try to be moreintellectual here but just to present what myPresident asked me to be.We need to make a strategy with a bias forthe implementation as otherwise it is notworkable. Let me start with somebackground of Indonesia. Indonesia has 1.9million /km 2 land with 6 million /km 2 at thewater. We have population of 235 millionpeople. Pakistan is going to face the samechallenges in 2020 which we are facingnow. We have 33 provinces, 400 districtsand 43000 villages. We have blessing ofmany natural resources such as coal, oil andwood. We were formerly a Dutch colonyand we fought our independence in 1945.Wehave experienced three governance stages inour country which is as follows:1. 1945 – 1966 (The Soekarno Era –Nation Building),2. 1966 – 1998 (The Soeharto Era –Economic Growth), and3. 1999 – Now (The Reform Era –Democratic Balance).Now we are working in reform era. We needto remember one thing that “solution to aproblem has the potential to be a newproblem”. In 1998 we faced economic crisesand riots etc. in the country and thecondition was very disheartening. That wasthe time when president Soeharto steppeddown and handed over the government toPresident Dr. B.J. Habibie and reforms erastarted. Before 1998 we had only twopresidents, but in the last twelve years wehave seen four presidents. We reformed thegovernment from provincial level to thedistrict level. We activated a system to takepresidential and parliament campaigns’promises as key performance indicators ofthe government. We started monitoringpresidential campaign. I am of the opinionthat Framework for Economic Growth forPakistan should also be implemented andmonitored in the same manner.In year 2020 the per capita income inIndonesia would be approximately US $4800. With new reforms poverty is goingdown, unemployment reducing and growthof investment also looking good. JakartaGlobe 2 writes about the ambitions of thegovernment in following words:“There is no denying that the country ison the right path. But speed is of theessence so that 2011 will be an evenbetter year than 2010.”Our economy is growing fast and issue withus is that how can we grow faster in future?We are looking for money from publicprivatepartnership. For the growth in thecountry it is estimated that 80% of the fundsmust come from private sector. Indonesiangovernment’s current budget is about US$2 Jakarta Globe, 31 December, 201036

International conference on “Framework for Economic Growth, Pakistan”130 billion. To achieve the growth targetswe need three times the current budget. Weare looking for money from public-privatepartnership. US$ 150 billion are planned forinfrastructure and US$ 50 billion areplanned for community development. Afterdecentralization under new reforms we arefacing new problems as districts are nowmore in control than the centre andprovinces. Bureaucracy is still bad anddecision making is poor.Indonesian government has set up 11national priority areas for reforms, whichare:1. Bureaucratic Reform andGovernance,2. Education,3. Health,4. Poverty Reduction,5. Food Security,6. Infrastructure,7. Investment and Business Climate,8. Energy,9. Environmental and Post DisasterManagement,10. Disadvantaged, Isolated, and Post-Conflict Area, and11. Culture, Creativity andTechnological Innovation.Problem of our government is lack ofconsistency, synchronization withinministries, and poor coordination atcommunity as well as village level. There islack of inter-ministerial coordination. Weplanned a methodology and a ‘5 yearprogram’ in the government. We plannedabout 369 action plans from 11 priority areafor which challenge foreseen wasmonitoring i.e. how to and what areas tomonitor. These 369 action plans of strategicimportance were identified out of 6000action plans which were identified by ourPlanning Department. We have placed allthese action plans in our monitoring system.If one ministry was not coordinating withthe other ministry it was being reported incabinet meetings. We have set up targets onevery 3 months basis. Presidential DeliveryUnit started reporting actual performance onan eight column (standard) form. Wemonitor them, check on ground physicalachievement, score them and report to thecabinet. Whatever target achievement isreported by the ministries we send a team onto physically verify that. We are alsofocusing on debottlenecking problem areas.Based on the feedback from the field weremove bottlenecks. For infrastructuredevelopment the land is not available forwhich we find solutions through publicprivatepartnership (PPP). In PPP we arefacing many problems. We are trying to findthat who is responsible for the failures inPPP and why it is not working?Coordination between Ministry and localgovernment is another problem.We place everything in front of thePresident in his ‘Situation Room’. Presidenthimself monitors progress of all thedevelopment and priority areas of the wholecountry. We also have web-based onlinereporting system and anybody can reportprogress of a program to the President’sDelivery Unit.Moving forward the lessons and challengesare as follows:1. Managing bureaucracy, without abureaucratic mindset,2. Coordination is a challenge: Notonly central-local, but also amongcentral government agencies,3. Non-partisan working unit: In themidst of a ‘noisy’ democracy, and4. Courage for breakthroughs: ‘fail intrying’ is better than ‘failing to try’In my point of view “proof of a strategy tobe successful is its implementation”***37

International conference on “Framework for Economic Growth, Pakistan”Speaker: Nohman IshtiaqAdvisor, Finance Division, PakistanAn ordinary strategy well executed is betterthan a brilliant strategy that for one or theother reason is never implemented.Importance of the implementation of thestrategy has already been highlighted by thespeakers and my presentation is also aboutimplementing the Framework for EconomicGrowth.The FEG speaks about two importantconstraints to the economic growth inPakistan which are given as follows:1) Inadequate market development: Itincludes following important factors tobe considered:- Lack of competition,- Tax, tariff and policy distortions,- Poor regulation,- Entry barriers, and- Government involvement.2) Lack of efficient public sectormanagement: It includes the followingareas to be focused:- To provide core governancegoods,- To facilitate markets andinvestment, and- To promote deepening ofphysical, human and socialinfrastructure.Growth strategy basically needs animplementation strategy. Governmentshould provide a framework for nongovernmentaction rather than operateinstitutions. Reforming Public Sector inPakistan requires ‘New Public SectorManagement” which include following areasto be considered:1. Government should steer rather thanrow (provide a framework for nongovernmentaction rather thanoperate institutions),2. Government should focus onoutcomes (desired results) and needsof customers (service recipients),rather than inputs (rupees and jobs)and needs of bureaucracies (rules),3. Government should decentralize andaddress problems from the lowestlevel of government possible(subsidiary),4. Public agencies should compete withprivate agencies, and should adopt amarket orientation, and5. Government which works better alsocosts less.The core of whole Public SectorManagement is the Result BasedManagement (RBM) which focuses mainlyon the customer or people. The inputs arehuman, financial and material resourceswhich give output in form of servicedelivery. In Pakistan public sector currentlylooks at only inputs i.e. economy factors.We in Pakistan don’t have system wherebywe can measure efficiency by looking atservice delivery performance in publicsector. As effectiveness of the public sectoris also not being properly looked in Pakistanwe don’t have a comprehensive mechanismwhere we can monitor, budget and planoutcomes.Results Based Management system focuseson service delivery and this should have anorientation at planning, budgeting andmonitoring stages. Monitoring results shouldback the planning process in the form offeedback. The overall working should bealigned with the individual performanceassessment mechanism of the Civil Service38

International conference on “Framework for Economic Growth, Pakistan”and reward and penalty should be attachedwith the achievement of the results.My first recommendation for the wholesystem would be to put at one side differentgovernment actors and political setup. Onthe other side there would be planning andbudgeting, whereas monitoring would be atthe top. It would all be about a fiscalframework approved by the cabinet withexpenditure limits for each of the ministry toform basis for ministerial planning.Ministerial planning should also be based onthe results with an over sighting body fromPlanning Commission and Finance Ministrytogether to look at the performance. Thisfiscal framework should at the end beapproved by the parliament and a cabinetsub-committee for monitoring governmentperformance, same as President’s DeliveryUnit doing in Indonesia or like PrimeMinister’s Delivery Unit in UK.With regards to this medium term fiscalframework government already has aprocess whereby a macro economic situationis analyzed, revenue and fiscal policies aredebated, and results and expenditure ceilingsare given to all ministries, which is alsoendorsed by the cabinet. We also have aprocess whereby the budget in the federalgovernment is made based on inputs andoutputs along with performance indicatorsgiven for each of the ministry. The system isthere but there is need to look at this overallholistic picture whereby plans, budgets andmonitoring and evaluation is focused forresults.Important question here is to overlook theperformance. In case of Indonesia it is thePresident’s Delivery Unit which monitorsthe implementation process. In UK thePrime Minister’s Delivery Unit performsthis job. In case of Pakistan Prime Minister’sOffice or cabinet can answer, but thesequestions require further deliberations.Linkages between federal and provincialgovernment are also important for the wholesystem to effectively work. One lastimportant thing I want to say before closingremarks is that our constitution allowsgovernment to approve and spendsupplementary budgets along with reappropriationswithout prior approval by thelegislator. This article within the constitutionundermines our planning, budgeting andmonitoring. It requires considerable thinkingso that ex- ante approval by the legislator ismade mandatory before spending anyamount.***39

International conference on “Framework for Economic Growth, Pakistan”DiscussionDiscussant: Dr. Akmal HussainProfessor, Beaconhouse National UniversityLet me start this with a note of appreciation.Link between public sector management andeconomic growth is very important. Let mestart with the question that what is the linkbetween Result Based Management inpublic sector and the macro economics? Ithink the link precisely is the institutionalframework. Institutional framework,whether for a public sector organization oreconomy as a whole, consist of a set of rulesand norms and incentive structure embodiedwithin it to shape different kind of behaviorby the economic actors.The growth framework should unleash theproductivity, quality of life and growthpotential of various actors. At the same atmicro economic level it should beconsidered that what kind of institutionalframework we need to build so that they canset incentive structure, rules and norms thatcan be built in public sector organizations.An important challenge in front of us is togenerate a growth which is sustainable andequitable. It should be inclusive to involvelarge number of people both in middle classand the poor in the process of investmentand high wage employment. When a largenumber of people are involved in the growthprocess where there is competition,efficiency, innovation etc. it can besustainable.If we look at micro level public sectormanagement system we can have a systemwhich build new rules and performanceevaluation system to enable them to do theirjobs. Government should focus on providinga minimum set of key services such asquality education, quality health, sanitationetc. which are to be delivered by the publicsector. Internal performance and evaluationmechanism can also bring results. RBM isan important element. It should be customerat the other end to monitor the results andperformance. In Pakistan we need to enableorganizations of the poor to beinstitutionally linked with every part of thegovernment at provincial level, district andvillage level. We need to enable localgovernment with institutional network tobring results. Poor should be systematicallyinvolved in the process of performanceevaluation and results.***Discussant: Dr. Andrew RathmellCoffey International DevelopmentThank you very much for inviting me here. Iwill talk about four observations based onUK experience and other in a number ofdifferent environments around the world. InUK they are using target selectionapproaches using flexible managementframework for helping public sectororganization and civil society in gettingoutcomes. Pakistan has a complex politicaland economic environment with wholerange of issues. How can we improveorganizations in Pakistan to RBM40

International conference on “Framework for Economic Growth, Pakistan”programs? There are following three ways tomake public sector more effective andresponsive to the service delivery:1) Process of agreeing and settingoutcomes across federal and provincialbureaucracy i.e. forcing decision makersand stakeholders to really think that howtheir interventions may lead to giveoutcomes. Using outcome and results insetting process forces decision makers tolook at actual outcomes rather than justlooking at inputs.2) How to use monitoring andevaluation once budgets and programshave been set to build capability forresponsiveness. In Pakistan directfeedback mechanism don’t exist formany areas of service delivery,especially for the citizens at federal,provincial and district levels. If acombination of product and servicedelivery monitoring and evaluationmechanism may be developed in PrimeMinister’s Office, involving focusgroups to take feedback, it can help inimproving public responsiveness. Soflexible management framework alongwith public participation would beimportant in improving public sectorresponsiveness and results.3) Improving planning including evenmedium term budget planning for thedevelopment programs in public sector.We need a very flexible and responsivemanagement framework to get desiredresults in the public sector. For Pakistan weneed to also include stakeholders and to takepublic opinion for getting better results,improving overall planning process, publicservice delivery capability andresponsiveness and making budget planningmore adaptive.***Discussant: Vinaya SwaroopSector Manager of Economic Policy in South Asia, World BankI need the attention of Deputy ChairmanPlanning Commission and would like to talkabout the things which should not be done.Back in 1990’s I first time heard aboutResult Based Management System (RBM),also known as Performance BasedManagement. We must collect informationon performance indicators for improvingperformance in public sector. We heardabout the experience of New Zealand andAustralia where it turned on the economies.In New Zealand performance and pay of thehead of a financial institution working undera contractual agreement was linked toinflation. The head was asked to manage andbring down the inflation and hisperformance was linked to controllinginflation. When I told this example to one ofmy counterparts in the country he juststarted laughing and said that you want myperformance to be judged based on inflationin my country? You must be kidding as I ama Civil Servant. It was 1995 and we knewthat this thing couldn’t go forward.Pakistan needs to collect information todevelop performance indicators. We haveworked on medium term expenditureframework in over hundred countries and wemust admit that this was not a successfulexperience as we have found thatinfrastructure spending in developingcountries is not associated with highereconomic growth. We have worked onexplaining this fact and also developedworking papers on the issue. To explainhere, I share Uganda’s experience wheretheir bank started Public Expenditure41

International conference on “Framework for Economic Growth, Pakistan”Tracking Surveys (PETS). PETS startedlooking at the amount of resources budgetedin ministry of finance and the actual moneywhich reached the school. It was found thatin terms of actual expenditure only 30 %amount was actually spent on the sector andthe rest leaked out.If we talk about the productivity of publicexpenditure and just look at infrastructurespending we are not going to get the rightanswers. We did a working paper forlooking at the impact of public sectorspending on education outcomes and healthoutcomes and we also looked at governancematters. We found that the publicexpenditure is closely associated with theeducation sector outcomes and health sectoroutcomes when we controlled governance.In other words the countries wheregovernance is good the outcome was alsofound to be good.We have a growth strategy here and lookingat the implementation plan. Suppose we takeone indicator of Tax-to-GDP. This indicatoris easy to monitor. But what happened inmany countries is that they over achievedthe targets by specifying lower targets andusing unlawful measures. We should be veryconscious while using incentive framework.One such example is of South Asiancountries where they used one such indicatorfor improving performance of doctors inpublic sector. They developed an indicatorin which doctor’s performance was linkedwith the condition that “how many patients adoctor saw in a day”. But this experience tobring efficiency in checking maximumnumber of patients became a nightmare.Same is the problem with setting too manytargets and collection of information whichis inversely related to the effectiveness of anRBM system. Simply collectingperformance information also does notnecessarily lead to service deliveryimprovement. The key to success is what todo with that information and how to use iteffectively to change behavior andoutcomes.We in World Bank have come a long way.While lending we have disbursed money onthe basis of expenditures. But we have justcoined a new instrument which is called‘P4R’ i.e. Program for Results in which wedisburse money based on actual resultsachieved and outcomes. Concept is not easyas we can’t look at the end result. But we arein the process of putting things together todevelop a mechanism.***Discussant: Raza RumiPublic Policy Advisor/EditorFirst of all I would thank Dr. Nadeem UlHaque for having me here in this conferenceon Framework for Economic Growth.Planning Commission is holding a goodconference for the change and let us hopethat this momentum is carried through andsustain to help the government in developingand implementing programmes andstrategies.Pakistan’s governance has been an issue asour inability to focus on results has resultedinto decline in social indicators. Nothingbetter illustrates this that what happenedwith the Social Action Programme whichwas started in 1990s. A large amount wasgiven to the program from various donorsand international organizations and at theend of 1990s our social services wereworsened. Whether it was child or mothermortality all indicators had gone down. It42

International conference on “Framework for Economic Growth, Pakistan”was institutional failure that we neverfocused on the results from the federal to thelocal levels. In Pakistan institutions areunfortunately not delivering results whichhave led to successive erosion of public trustand legitimacy in the state. Due toinstitutional failure we also find manystateless regions in the country like inBaluchistan, FATA, even Karachi and SouthPunjab where land mafia, terrorist and nonstateactors are operating. One of themissing part of the growth strategy is thathow do we tackle informal sectors and blackeconomy, mafias and many other issuesbeing faced in this country?Unfortunately in Pakistan we take one stepforward and ten steps back. Currentgovernment has moved to a better structurefor defining powers of the Centre and theprovinces. But at the same time in Sindh1861 Police Order has been restored. So itis almost a joke that in the year 2011 wewant 1861’s police model to work again.I would sum up with few key points that theFEG has talked about very useful steps forthe Civil Service reforms. It talked aboutmonetization of perks and to have rightpeople at the right jobs. We are gettingfunds from World Bank etc. for the trainingof Civil Servants but when they come backthey are not being placed in the ministrieswhere they ought to be. A person trainedwith investment of sixty thousand ponds inLondon Business School comes back andwork in Ministry of Minorities. Importantpoint here is that nobody in Pakistan is heldaccountable. Accountability is all imaginaryand just on papers. Moreover, withouthaving local governance system in place wecan’t have feedback mechanism, stateengagement and results in a heavilypopulated country like Pakistan. Use ofbenchmarking techniques, report card tools,introduction of e-government etc. can be theway forward for a Result BasedManagement system.***43

International conference on “Framework for Economic Growth, Pakistan”Questions and AnswersQUESTION:Question: We discussed about RBM and public-private partnership. Why is this not working inPakistan?Question: We have Prime Minister’s Inspection Commission in Pakistan. Why that commissionis not doing the job to effectively monitor and evaluate the results in the country?Question: We are talking about growth in the country. In a country where we have load sheddinghow can we go for the growth?Question: Economic growth comes with the introduction of new products and processes in theeconomy. My question is that how government is monitoring actions in term of innovation inproducts and processes, innovation in society and institutions etc?Question: In RBM we heard about disbursement of budgets against outcomes. I was justwondering that it takes long time to know about the results then how this tool would work in thereal world?Question: What is our strategy to make public and private sector accountable? And how peopleare going to be the part of this strategy in context of role of local government?ANSWERS:Answer by Dr. Akmal Hussain, Professor, Beaconhouse National University:In Pakistan decision are being made at topdownbasis in. The Prime Minister or theChief Ministers forget taking feedback fromthe inspection team or the feedback is vagueand doesn’t work as it should. We talkedabout two kinds of institutional mechanismsfor ensuring that public sector servicedelivery becomes questionable. Oneimportant thing is to identify clearly timeboundobjectives. Second important thing isthe evaluation of performance inmeasureable terms. My point is that insteadof internal performance based efficiency andcontrols we also need to have a system ofexternal evaluation where we can linkservice delivery with community basedorganizations. There are many communitybased organizations working at district,tehsil and village level which can be linkedup with the local government deliverysystem.I would also like to say that new productsand processes are essential for sustainedeconomic growth of the country. It is theduty of the government to provide a setup tohave such impacts for the development ofnew products and processes. But theproblem is that how we measure thatimpact? I think that Dr. Nadeem and histeam has tried to bring together what all newliterature in the last three decades oneconomics suggest. It tells that new productsand processes and innovation occur as aresult of opening up of the economy forprivate sector competition where a largenumber of economic actors outsidegovernment compete and their survival44

International conference on “Framework for Economic Growth, Pakistan”depends on increasing efficiencies andinnovation and merit based selection.Inefficient firms in the process die and thereis fresh entry of the efficient firms whocompete to survive.Answer from Heru Prasetyo, Deputy Chairman of the President’s Delivery Unit forDevelopment Monitoring and Oversight, Indonesia:Let me share with you Indonesia’sexperience that we have very large tropicalforest in our country. Different ministriesgive licenses for cutting forests, mining etc.There are 20,000 villages in these forests.To protect marginalized people living inforests we try to decide boundary lines ofthe forests and involve local communityliving in these forests in the process ofplanning and monitoring and to decide theuse of that land. We don’t just follow topdownapproach in monitoring but it goesboth ways. So involving local community atthe stages of planning, implementing andmonitoring has been very useful.Answer by Dr. Andrew Rathmell, Coffey International Development:Based on lessons in UK for targetmonitoring mechanism I am of the view thatthere should be some formal mechanism tomake the reports public.***45

International conference on “Framework for Economic Growth, Pakistan”Session 4: Creative Cities and the Urban DevelopmentSpeaker: Emiel A. WegelinGIZ Program Coordinator, Cities Development Initiative for Asia, PhilippinesBefore I start my presentation let me expressmy gratitude to the Planning Commission toopen up discussion on such an interestingand important planning document with citiesbeing at the heart of the agenda. Let me alsothank Planning Commission and UNDP forinviting me here. In the course of thepresentation I would discuss that why it is agood idea to focus cities for economicgrowth of the country.I first visited Pakistan in 1977 when I startedmy work with Karachi MetropolitanCorporation as a member of team of Dutchexperts to help the city in implementing aprogram of regularization of katchi abadiswhich was at that time a policy decision ofthe city government. Let me explain youbriefly a series of running commentary,documents and regional statistics. Theworld’s urban population in 2009 wasestimated at 3.4 billion. Asia’s urbanpopulation in 2009 was estimated at 1.72billion and between 2010 and 2020 therewould be 411 million people added to Asiancities. 60% of the growth in the world takesplace in the urban areas. By 2020 urbanpopulation of the world will increase to 4.2billion out of which approximately 2.2billion people will be in Asia. Cities provide80% of the economic base, but generatesignificant environmental footprints,including contamination of air and water, aswell as 75% of the GHG emissions.Developing Asia’s projected global share ofCO 2 emissions for energy consumption willincrease from 30% in 2006 to 43% by 2030.The economic potential of the cities is clearbut we need to be careful about handling ofthe environmental issues as well. Cityregions serve as magnets for people,enterprise and culture, but with urbanization,poverty also urbanizes. The Asia-Pacificregion remains host to about 60% of theworld’s slum population which in 2010amounted to an estimated 505.5 millionpeople. The world slum population in 2010is 828 million people. It is estimated thaturban environmental infrastructureinvestment requirement in Asia Pacificregion is about $100 billion/year. Urbanenvironmental infrastructure investmentmeans development of various facilitiessuch as water and sanitation, drainage,transport, flood protection etc. Cities oftenhave macro development strategies andspatial plans, but city infrastructure projectsto implement are often not adequatelydefined and prepared for financing.Particularly there is issue for the 1,400+medium sized cities in Asia’s developingcountries with populations of 250,000 to5,000,000.The CDIA is assisting medium sized Asiancities to bridge the gap between theirdevelopment plans and financing of theirinfrastructure investments, with emphasison:- Urban environmental improvement,- Urban poverty reduction,- Climate change mitigation oradaptation, and- Improved governance.The CDIA partnership was established in2007 jointly managed by ADB and GIZ andfinancially supported by ADB, BMZ,government of Austria and the ShanghaiMunicipal Government etc. CDIA has a core46

International conference on “Framework for Economic Growth, Pakistan”budget of $ 35.3 million (2007-2012) andnon-core resources of $ 19.3 million. CDIAassists cities to implement their developmentstrategies through the following measuresfor demand-driven support approach toprovide:- Advisory support to infrastructureinvestment programming &prioritization,- Consultancy support to prepare prefeasibilitystudies for high priorityprojects,- Local institutional capacitystrengthening in infrastructureinvestment planning,- Identification of potential privatesector involvement, and- Linking cities and their infrastructureinvestment proposals to investmentfinanciers (local/international).CDIA in Pakistan is working on cityinterventions in Faisalabad and Chiniot. Thefocus areas include water supply, drainageand waste management and improving urbantransport & industrial waste management. AMoU with Infrastructure ProjectDevelopment Facility, Ministry of Financewas also signed in 2011 for developmentand transfer of knowledge and to provideexpertise in the field of municipalinfrastructure financing and PPPs throughexchange programs, seminars, conferencesand material dissemination in Pakistan andthe region.Urbanization is the spatial translation ofeconomic growth and restructuring. Theframework recognizes urban development asa driver of economic growth. Overalldirection of deregulation and retreatinggovernment is required. Let government andthe private sector do what they are bestplaced to do, but do not throw out essentialprovision of public services with theprivatization. The Planning (compactdevelopment, more attention to mixed landuse zoning) and housing (low incomehousing space standards; incentives forprivate sector rental housing) directions areby and large supported.Let us also recognize the diversity of urbanplaces. Islamabad is a totally different placeand not a typical of Pakistan’s cities such asHyderabad, Karachi etc. The main problemshave been plan implementation andenforcement, rather than planning itself. InIslamabad regulations are more dominantthen other cities. Katchi abadis are thedynamic growth areas of the cities, whichare affordable to the poor, as they are theworld over. Small scale entrepreneurs andsmall home/cottage industries flourish insuch areas, unless they are repressed by thewrong government actions. Creativity takesplace in such areas and should be supportedby the government. The policy towardskatchi abadis should be supportive andshould be supported to make themparticipate in the development of the overallcity.Public transport is the most seriousbottleneck within the cities, particularlyimpinging on the poor’s ability to connect towork which must be addressed as a corepriority area for action. Public housing isnot a doable option at scale in Pakistan,given the public sector capacity constraints.There is need for public-private partnershipwhich requires strong government supportand reliable government partner to workalong with a clear regulatory framework.Urbanization is essentially a localgovernment activity and should besupported. Government support mustprimarily be through provision of localinfrastructure and services (roads, publictransport, electricity, water and sanitation),and ensuring security of land tenure. Localgovernment must come into its own as thedriver of urban management – a third tier ofgovernment with legally/constitutionallydefined functions and resources. Cluster city47

International conference on “Framework for Economic Growth, Pakistan”development also needs to be supported, butthe institutional ramifications must becarefully considered. There is need to lookat organizational programmes andimplementation and it should be seen asinvestment. Deputy Chairman PlanningCommission has also said earlier thatinstitutional reforms and capacity buildingare essential for local governments. Capacitydoesn’t mean to just provide training or sendpeople abroad. Government authorities, suchas development authorities should beintegrated into the local government systemfor better functioning.At the end I would like to wish best of luckto Planning Commission and Dr. Nadeem UlHaque for this ambitious plan.***Speaker: Belinda YuenUrban Development & Local Government Unit, World BankOver the next fifteen minutes or so I wouldtalk about three topics which are cities,urban markets and growth. Cities are thecenters of economic progress. By the year2050 it is estimated that 75% of the totalpopulation is expected to live in cities withtotal world population to be 9 billion. Nocountry has achieved advance levels ofdevelopment without urbanization 3 and thesame trend is observed in last many years inPakistan. In year 1900 there were only 16cities in the world with population over onemillion. In year 2007 cities with populationover one million have increased to 450 andwould increase to 600 cities by the year2050. Same trend of population growth istaking place in Pakistan. By year 2030 about50% of the Pakistanis would be living inurban areas with more than 17 cities livingwith a population of more than one million.As urbanization is expanding the cities arebecoming incubators of innovation,technology, and creativity. Cities aregenerating more than 80% of the globalGDP. In Pakistan this figure isapproximately 78% of the country’s nationalwealth. Firms seek to locate at places where3 World Development Report, 2009they have access to markets, goodinfrastructure and connectivity. Besides,cities are also important places for humanhealth and wellbeing where they grow up,grow old and spend much of the leisuretime. 75% of the GHG emissions aregenerated by cities. We need to balanceeconomic growth and ecologicalsustainability.What makes the cities successful theexperience may vary from city to city. Butin successful cities we find three commonfactors (3 Is) working for developmentwhich are:1. Institutions: Promote institutions thatenhance functioning of land marketsand provide basic services,2. Infrastructure: Strategically placeinfrastructure to connect the citywith external markets and ensurelocal mobility, and3. Investment: Invest into localeconomy to create jobs and improveliving conditions for the public.If we look at successful cities in Asia likeSeoul it has focused on strong institutions,connective infrastructure and targetedinterventions to enable transformation of48

International conference on “Framework for Economic Growth, Pakistan”slums to improve their environment andmake part of a bigger economic growthagenda. Change in Seoul’s planningconcepts involved a change from growthorientedmodel (quantitative growth) togrowth-management model (quality of life)having a focus on following factors:Growth-oriented model:- Expansion of urban space,- Model based on car transport,- Large-scale investment,- Model based on facilitiesdevelopment,- Strategic point development.Growth-management model:- Balanced development,- Model based on public transport,- Improvement of life quality,- Model Based onbenefit/management,- Based on network system.Cities in China managed to develop specialeconomic zones. Shenzhen is also one of thesuccessful model cities in China. Shenzhenserved as a pilot project for implementingpolicies, bring change, and it is working on acarbon free environment. Developmentgives these zones special economic policiesand flexible measures. The institutions ofreform and special policies allowed to usemore market oriented economicmanagement system which is especiallyconducive for doing business.Good connectivity improves productivity.Mobility and public transport system such as‘tube station’ improved passenger comfort,boarding time and accessibility in successfulcities. There are many cities in the worldwhich are not working on the agenda ofcarbon-free green cities. Successful citiesneed to work for equally providing thebasics of urban development and ensuringbasic services such as water, electricity,security, waste management and necessaryinterventions which are important toimprove urban growth and investment.Preparing to a livable and prosperous city isvery important. There is a need to make thecities livable and prosperous places bysetting higher benchmarks. World Bankurban strategy has a focus on the followingimportant areas to make the cities livableand prosperous:- A system of cities – driving growth,reducing poverty,- Focusing on the core elements of thecity system,- Making pro-poor policies a citypriority,- Supporting city economies,- Encouraging progressive urban landand housing markets, and- Promoting a safe and sustainable urbanenvironment.One of the tools developed under urbanstrategy by World Bank is ‘Eco2City’approach. The ‘Eco2City’ programcomprises methodologies, studies, bestpractices, as well as multiple financialsystems. Managing urban development isimportant for city development, job creationand asset utilization. The stock of land andproperty is often an overloaded resource inmost of the cities. Non utilized andunderutilized land and property assets canprovide major opportunities for developmentand re-development. Raising capital tofinance urban infrastructure is a bigchallenge. One solution is to use land basedfinancing to unlock urban land value. Agood example of raising money fromunutilized resources is of Cairo where morethan 3 billion US dollars were raised fromthe auction of desert land. Levy on land isanother tool to collect funds. All suchactivities require a clear regulatoryframework. Land use regulations aresignificant in determining the pattern of49

International conference on “Framework for Economic Growth, Pakistan”population and urban development. There isalso need for long term planning to makelivable cities. When city improves it attractsbusiness and skilled workers. But it alsorequires protecting natural environment.Efficient cities have service and landpolicies to support urbanization andconnectivity for markets. Livability attractspeople from various areas to migratetowards cities. Integrated land use andtransport planning improve the options forefficient communities to grow.Singapore in 1960s faced acute urbanproblems. Its city centres were overcrowdedand there was shortage of proper housingfacilities. More than half of the populationwas living in slums. There was also veryhigh unemployment and lack of urbaninfrastructure. Much has changed over nowin Singapore’s urban land structure withcareful planning. Singapore has become aviable and livable green city. Successfulcities demonstrate a viability of social,economic and environmental systems.Livable and prosperous cities are not adream but a reality to happen. However theyneed good local government, and to ensurethat visioning, planning and actions takeplace in the cities.Here World Bank would like to join ourcolleagues at UN to help Pakistan inprogressing and implementing the NewGrowth Strategy because I think you(Pakistan) are at a very exciting threshold ofdevelopment time.***50

International conference on “Framework for Economic Growth, Pakistan”DiscussionDiscussant: Tahir ShamshadMember Planning, Capital Development Authority, IslamabadIslamabad is considered to be one of the bestdeveloped cities in Pakistan but, because ofslums coming up and informal developmenttaken place around in recent past; it is notthat Islamabad which was dreamed at thetime of planning. Instead of going into thetheories about cities I would like to gostraight to what we have planned forimproving Islamabad in future.Islamabad was planned in 1960 and at thattime there was very little concept of publicparticipation particularly in the decisionmaking and infrastructure development.CDA Ordinance 1960 didn’t includesufficient provisions for public participationand investment in infrastructure. We haveidentified basic requirements now that whatwe need in today’s scenario to ensure thatthe city is at par with other imaginative andcreative cities. Recently we have preparedan amendment of the ordinance to bring thecity at fast track again.In master plan of the Islamabad there weremany green and distinct areas planned forthe city to cater for the food needs and otherbasic requirements of the city. With shortageof space and rapid growth in population wehave come up with a new plan forIslamabad. In new plan Islamabad has beendivided into five zones, with each zonehaving provisions for basic facilities. Veryrecently we have once again studied theissue of slum and informal development inthe city. In Zone No. 4 we have opened75,000 acres of land for public to come up,invest and make all kind of recreationalfacilities in that area.I told earlier that public participation had notbeen there as part of policy in the citydevelopment we are inviting architects,planners along with public to participate inthe city development. Islamabad hasdiversified cultural assets. People fromvarious countries and various places ofPakistan come and live here. Culturalplanning is one of the important challengesfor us to plan and we are taking care of thesediversified resources while planning. Veryrecently we have seen opening of Pak-Chinafriendship centre in Islamabad. Art & craftvillage has also been added to the city. Verysoon a cultural complex is being developedin Shakkarparian. A proper thought outcultural planning is being made to ensurethat diversified cultural asset is taken carewhile planning the city.I would take benefit of this audience andrequest this august forum to give somesuggestions.***Discussant: Parvez QureshiUrban Planner and Architect, LahoreI am thankful to Deputy Chairman PlanningCommission for inviting me in theconference. It is heartening to hear Mr.Tahir Shamshad (Member Planning, CDA,Islamabad) speaking about urban issues.People have been talking about issuespertaining to development, expansion; issuesrelated to traffic, pollution, environment,51

International conference on “Framework for Economic Growth, Pakistan”housing, katchi abadis etc. All these issueshave been recurring over a long period oftime in Pakistan. But I would like to focushere on an important area which isinstitutional framework under which allabove referred areas have been working.Institutional development framework issuesare very old. Director Generals of thedevelopment authorities are the persons whohave no understanding of the urbanproblems. They come from federal andprovincial Civil Services and they don’thave understanding of the problems relatedto city development like road, traffic,pedestrian traffic, pollution, bicycle lanesetc. In Lahore about 10 to 15 % of thepopulation is utilizing 85% of the cityresources such as roads, electricity, landspace etc. Majority of the population don’thave adequate resources available withthem. In terms of space utilization there is amajor disparity.We need to bring reforms in institutionalframework and urban management. Thesetwo important areas need to be addressed toeffectively respond to urban planning issues.We need to clearly define that who are oururban development managers? One of thepotential solutions is that along with CivilService we need to have another specializedcadre of experts, i.e. urban managers. Thesepeople would serve as urban managers withcontinuity to better understand the problemsof the city.Key solution to urban development is theinstitutional reforms. People from CivilServices come for 10 to 18 months and thengo to some other place. Our friend Mr. TahirShamshad has seen two to three bosses inlast two to three years. We need to recognizethat our institutions need strengthening. Weneed people who have understanding of theproblems and are trained in the areas of citydevelopment.***Discussant: Philip Auerswald,Professor, George Mason UniversityI share Richard Florida’s sense whodiscussed about Pakistani cities like Karachiand Lahore and other cities in Asia asShanghai, Singapore. I take city planninglike holding a party for 18 million peoplethat would last for four years. Holding aparty for 200 people that would last threedays requires a lot of work to do that wherethey would stay, what would they eat etc.?To arrange a party for 18 million people fornext thirty years need a lot of work to do. Tohave good time both party organizers andparticipants need to have a sense ofparticipation. Party planning involves topicslike engineering, planning details andthinking in advance. It is not possible tohave a successful party without having aparty planning. City planning, transport,governance etc. all are boring topics whichneed a lot of work and general public don’thave interest and inspiration in such work.When we talk about the violence in cities wetalk about security issues related to thecities. Washington D.C. is the capital of theUnited States and a prosperous city. If welook at violence in Washington D.C. we findthat in 1991 there were 482 murders whichcome to 68 murders per hundred thousand.In 1996 in Karachi there were 1782 murdercases which come to 17 murders perhundred thousand which means thatWashington D.C. is four times more violentplace in terms of murders than Karachi52

International conference on “Framework for Economic Growth, Pakistan”which is a reality. But in fact the case is notthe same as it look like.Prosperous markets create prosperous firms.We don’t develop prosperity in the ruralareas. Connection of prosperity betweencities and rural areas is very simple. A proruralpolicy is required for a growingcountry like Pakistan to bring prosperity.***Discussant: Dr. Nuzhat AhmadDirector, AERCI want to discuss about public housing inwhich the role of the government can be tosubsidize development in the housing sector.In terms of financial decentralizationchanges are made in the 18 th Amendment.Capacity development in city managementis another important area to focus.For cities like Lahore and Islamabad wehave the data available but the data is notavailable about most of the cities, especiallysmall and medium sized cities. Whilemaking the growth strategy the federalgovernment need to consult the cities thatwhat priorities they have in their mind fortheir city. Major stakeholders should beconsulted for the feedback for the urbandevelopment strategies. For countries likePakistan an important question comes tomind is that what we are going to do for therural areas in strategy development? Citiesshould be taken as clusters with surroundingareas included into it. Clusters need to bestudied while making city planning. In alatest research project we are studyingcomparative advantages of various cities,their competitiveness, supportinginfrastructure, overall environment, skills insurroundings etc. Important question to beasked is that why cities are different fromeach other. Why Sialkot, Karachi andIslamabad are different. We have startedconsultation with industry focus groups,business leaders etc. to know about specificclusters there, their competitive advantagesand make development plans for specificcity clusters.ADB has conducted studies in Delhi, Dhakaand Colombo to identify special industrialclusters. They found what is lacking inspecific clusters in various cities. We arestudying the important areas identified inADB’s study and trying to apply thatknowledge in some of the selected cities inPakistan.***Special Comments FromRafeh Alam (from Lahore)First of all I want to congratulate DeputyChairman Planning Commission forarranging such a successful conference. Iwant to read out five short points which Ihave prepared about our cities.I would like to react first to the commentmade about Islamabad that indeed it is notthe best city in Pakistan. It has slums aroundbecause of the failure in urban planning,misallocation of resources and misalignmentof priorities. Islamabad has no water (like in53

International conference on “Framework for Economic Growth, Pakistan”G-10 sector) and high crime rate (like sectorG-13). There is no public transport inIslamabad for general public. It is difficult tomove unless you have a car. It is an antipoorcity with a segregated society.City economics stimulate people byencouraging entrepreneurship, using capitalin cities and providing opportunities. Citiesdon’t socially segregate people. If we look atcities like London and New York we findfew city blocks which gave culture to theentire world since World War II. Where isthat Pakistani culture in Islamabad? Thiscity has not produced writers, intellectualsand artists. This city kills theentrepreneurship spirit and creativity.Islamabad is running out of resources. Weneed to realign our priorities.I thank you and congratulate the DeputyChairman for organizing such a successfulconference.***54

International conference on “Framework for Economic Growth, Pakistan”Questions and AnswersQUESTION:Question: Most of the donors in Pakistan don’t have community development as one of theirpriority areas. How Planning Commission going to find resource gap and address this issues?Question: With respect to devolution there are many other challenges to be addressed likeencroachments, city mafias, capacity crises, urban migration, security threats etc. There is alsoover deterioration in public infrastructure. I think we need to undo some wrong things in our wayforward. Please comment.Question: How Planning Commission would implement strategies announced in FEG?Question: There is no local government in Pakistan. What you think is the goal of thedevelopment strategy in this regard?ANSWERS:Answer by Dr. Nadeem Ul Haque, Deputy Chairman Planning Commission:We have a resource gap in our country.Resource gaps are there everywhere aroundthe world. It is not question of resources butto reorganize ourselves and think differently.For example we have China Centre, JinnahCentre etc. in Islamabad.The main idea of this conference is also toadopt a fresh approach and rethinkdifferently for better utilization of ourresources. Our cities have tremendouspotential, but the real challenge is to changethe way we think. Implementation can’t takeplace in a room. It takes time and a lot ofwork to do. People, Civil Servants,universities, private sector etc. need to takeresponsibilities to address these issues, bringchange and play a proactive role.Answer by Parvez Qureshi, Urban Planner and Architect, Lahore:Whole focus in last forty to fifty years in ourpolicy development was like poor don’texist in this country. In Lahore there are nopedestrian lanes for more than 7 millionpeople. Vehicles have roads but over 2.5million people don’t have bicycle lanes. Weare widening roads but not thinking abouturban poor. Same is the issue withIslamabad and nine cities I have worked in.In housing there has been no plan for urbanpoor except some small projects. In lastfifteen years there has not been a singleurban focused project for the poor and as aresult poor go to marginalized lands. Whilewe talk about encroachments where weexpect the poor person to go? Where poorpeople will go to exist? There has been anabsolute failure of understanding of urbanpoor. In terms of urban development it is atotal failure. Same is with Islamabad,Lahore, Faisalabad, Multan and other cities.All these are administratively failed cities.We have cities run by incompetent peoplehaving power. Strategy needs to focus onthese issues.55

International conference on “Framework for Economic Growth, Pakistan”Answer by Emiel A. Wegelin, GIZ Program Coordinator, and Cities’ DevelopmentInitiative for Asia, Philippines:Before I answer the questions we need to bevery clear about the concept ofdecentralization. Good public service is theright of both rich and poor alike. It isimportant for us to ensure that poor peoplecan transform environment, reduce cost andcorruption to a small fraction through highquality technical support and innovation. Italso shows the importance of high qualitytechnical support capacity. There must be apartnership between the informal sector andthe local government. Innovativepartnerships between the government andagents involved can address the problem ofthe poor with participation. Shifting urbanpolicy from pure providers to sharingresponsibilities and mobilizing localresources for co-implementation isimportant.Answer by Belinda Yuen, Urban Development and Local Government Unit, World Bank:Yesterday Dr. Nadeem mentioned about theissue of change. Change is necessary indeed.At the same time we underscored a pointthat it is a complex issue and we need toplan it comprehensively. For example tounderstand the issue of law and order weneed to understand the factors and drivers ofthe issues. We need to identify factorsbefore going for solutions. All this requiresleadership, commitment and champions toplan urban development very differently.We need to plan differently to integrate theurban planning and agencies involved. Weneed to build livable and viable cities.Answer by Philip Auerswald, Professor, George Mason University:We talked about problems of housingmarkets and housing finance. Generallyspeaking whether it is issue of physicalspaces or marker spaces there needs to bephysical space in a city for investment tohappen. It is important to create mechanismsto promote and encourage the type ofdevelopment which will be beneficial to thecountry, and that’s the planning we shouldthink about. Violence and crimes are alsoimportant problems in cities. To deal withthe crimes we need to develop opportunitiesso that people participate in communities.Traffic accidents are another source ofviolence we need to look at.Answer by Dr. Nuzhat Ahmad, Director AERC:We need to create more job opportunities sothat people get diverted from violence. Roleof the state needs to be improved. Anotherimportant thing to look at is family ties. Wehave conducted a research on violence andfamily ties. I think family ties are breaking.Basics of family values are important andwe need to look at that.Answer by Tahir Shamshad, Member Planning, CDA, Islamabad:We have a big gap in social and culturalplanning of the city. Social and culturalplanning is being focused by CDA in futureplans. Physical planning actually causedsocial segregation. We have adopted abusiness management system and a systemto deal with paper-less public managementsystem. Now we coming up with a phasewisemass transit system and purchasingnew busses for Islamabad. Within next six56

International conference on “Framework for Economic Growth, Pakistan”months buses will be on the road. We havealso planned tourism system to take touristsin surrounding areas such as Rawat andTaxila. We are making pedestrian zones invarious areas. We have planned a project forwater supply. Physical and social planningshall go side by side. We are also making abylaw to collect rain water in houses toovercome water shortage problem in thecity.Comments by Vice Chancellor, UET Peshawar:With the help of Planning Commission andHEC we have developed first nationalinstitute of urban infrastructure in ouruniversity. I agree with the things discussedhere in this conference. We need to designcities by focusing on roads, transport, slumsetc. There is need to put creativity intodesign, as Deputy Chairman PlanningCommission has also emphasized upon.Comments by Tallat Hussain, media person:We are grateful to all of you for givingremarkable remarks. I would just commentthat “Cities are what our politics is”. “Statesand cities rise and fall together”. We havenot been able to plan our cities as politics isinvolved in cities. Cities are designed by therich and for the rich. When we talk aboutKarachi we need to talk about land mafiaand city politics as well.***57

International conference on “Framework for Economic Growth, Pakistan”Session 5: Human Capital, Productivity and InnovationINTRODUCTORY REMARKS BYDr. Javed LaghariChairman Higher Education Commission, PakistanIf we look at the report on Framework forEconomic Growth it states that:“Countries that have attained sustainedeconomic growth show that they haveinvested in their people”.“One can’t have developed countrieswith under developed people”.Report further says that Pakistan is one ofthe twelve countries where public spendingon education is less than 2% of the GDPand actual numbers are even less than 1.3%of GDP.Last night we also had an opportunity tolisten to Richard Florida in video lectureand he also talked about 4 Ts i.e. Talent,Tolerance, Technology, and TerritorialAssets. He discussed about importance ofuniversities for a creative economy infollowing words:“Universities serve as an innovativeengine of economic development”.“Investment in academic researchyields significant returns to theeconomy and the society”.One of the entrepreneurs put it verycorrectly about the secret of silicon valley’ssuccess by saying that:“Take one research university andventure capitalism and shakevigorously, that is the recipe”.World Bank talks about three pillars ofknowledge economy which are:i) Education and skilled force,ii) Infrastructure and communicationtechnology, andiii) Innovation.If we look at World Economic Forum’sGlobal Competitiveness Report 2011 ittalks about some of the important pillars ofglobal competitiveness, among which someimportant are ‘higher education andtraining’, ‘technological readiness’, and‘innovation’.Table - 2: The Global Competitiveness Index 2010-2011 rankingsGCI 2010 GCI 2009Country/Economy Rank Score Rank Change 2009-2010Pakistan 123 3.48 101 -22India 51 4.33 49 -2Indonesia 44 4.43 54 10China 27 4.84 29 2Malaysia 26 4.88 24 -2World Economic Forum, 201058

International conference on “Framework for Economic Growth, Pakistan”As per GCI Report 2010-11 Pakistan’soverall competitiveness rank is 123 in theworld. In 2009 Pakistan’s GCI rank was 101which have further deteriorated in 2010-11.India’s ranking in GCI is 51, Indonesia at44, China at 26 whereas Malaysia’s rank is26. In “Information and Technology” ourrank is 109, in “Education and Training” weare at 123, in “Technology Readiness” weare at 109, and in “University-IndustryLinkage” we are at 92. These are some ofthe aspects we need to focus on to increaseour competitiveness.There is another fact that comes out of U.S.Department of Commerce’s EconomicDevelopment Administration Report (2009)which says that 10,000 dollars investment inincubators created 45 jobs whereasinvestment in road and building with thesame amount created only 5 jobs. This is animportant thing for our planners to thinkabout as we are spending large amounts onbuilding roads and underpasses etc. and lesson incubation, innovation and capacitybuilding. Some facts about incubators arethat there are 1100 incubators in USA, 500in China, 270 in South Korea, 50 in Indiaand only 2 in Pakistan which are still atinfancy stage.We in HEC since the last year areencouraging innovation and creativeresearch and trying to convert it intotangible output i.e. commercialization ofresearch. We are also pursuing initiativeslike Competitive Support Program toestablish incubators at our universities.***Speaker: John SpeakmanPrivate Sector Specialist, World BankThank you very much Mr. Chairman and itis good to speak here about innovation. Ifwe look at the ideas of creative cities andquality of governance innovation is requiredin all these areas. My talk today is aboutinnovation policy. We don’t have aninnovation policy here in Pakistan, but weneed that. It needs to cover innovation,commercialization, research and competitionthat drive innovation, vibrant markets, andincubators for innovation.In Pakistan we see firms which are globallycompetitive. But at the same time we alsohave firms here which seem to be workingin stone ages and are even they are notmechanized. Adoption of existingtechnologies may also include usingaccounting systems. There are manycountries who have achieved highertechnological levels. A new drug developedby a pharmaceutical industry is a kind ofreal new innovation. Adoptation of existingtechnologies is another important thing weneed to look at. Upgraded technologicalcapabilities in a firm lead to productivityimprovements. These innovations can be:- New to the firm,- New to the market, or- New to the world.The channels by which this up-gradationoccurs can be in following forms:- Original research and development,- The adoption of existing technologiesthat have not yet been applied in a firm,and- Through inputs that embody theinnovation.The Pakistan Innovation Ecosystem consistsof the following factors and institutions:59

International conference on “Framework for Economic Growth, Pakistan”Knowledge providers:- Government ResearchInstitutions/Academia (e.g. LUMS),- Associations and Cooperatives (e.g.PASDEC),- Private Sector Suppliers (e.g. BusinessDevelopment Services – Business Edge),- International Technology Transferors(e.g. Foreign Investors).Government:- Policy Makers (e.g. PlanningCommission),- Resource Providers – financial andhuman (e.g. foundations, donors,associations, government),- Coordinators (e.g. NUST),- Regulators (e.g. Ministry of Commerce).If we look at the growth strategy I wouldlike to talk about the competition.Competition is the key driver for innovation.Moreover innovation doesn’t live in avacuum but it is dependent on manyimportant factors e.g. the level of humandevelopment, the strength of the regulatoryenvironment and levels of infrastructureparticularly the great innovation enabler viz.ICT. Culture for innovation is veryimportant that how we develop morecompetition to go for more innovation.Countries’ level of development is veryimportant. The distance a firm is from thefrontier of what is technologically possibleis a strong determinant of the effectivenessof research and development expenditures.Institutional capacity (monitoring andevaluation, coordination, policydevelopment and financing) is needed todrive innovation development.We need to encourage openness. How manytextile companies in Pakistan have foreignknow-how and capital coming in thecountry? Countries like Bangladesh, SriLanka and Ukraine etc. have more opennessin their country which makes others to helpand make things better. Foreign investorsbring technology to the country. Level ofdevelopment of a country also matters.Country should be very careful about R&Dfor the development. Pakistan needs to focuson middle income people.The institutional capacity is also importantfor innovation. Subsidies are very commonin Pakistan and the experience has been verymixed. There are some very clear do’s anddon’ts in this area. Countries can’t pourresources from the government. Countriesembrace technologies and they work veryactively. Koreans experience ofdevelopment in 1960s and 70s was verysuccessful. They focused on technology.Pakistan needs an innovation policy. DeputyChairman talked about many such areaswhich need to be focused and can work asaccelerating indicators for economic growth.Pakistan has a very huge domestic marketwhich they need to focus. Pakistan needs tofollow what Koreans did for their economy.Commercialization of research is also veryimportant. Firms need to think about newideas, the capital from where resources cancome in. Competition policies, capacitybuilding, encouraging knowledge,innovation financing and venture capital arealso important to encourage innovation.***60

International conference on “Framework for Economic Growth, Pakistan”Speaker: Shaukat Hameed KhanFormer Member Planning CommissionI am grateful to Dr. Nadeem Ul Haque forgiving this opportunity. I would like tocongratulate Dr. Nadeem and his team foropening up a bit of new pandora box in thisconference on important factors. A lot ofthings have to be done and implementationframework is still to be identified. I am gladthat this new Framework for EconomicGrowth is a natural extension and follow upof vision 2010.I would like to talk briefly about constraintsto Pakistan’s economy. I would like toparticularly highlight a particular aspect ofour labor force for our economy. I wouldlike to say something about globalenvironment, the competitive environmentin which we have to operate. Issues ofentering into 21 st century are changed andPakistan has to accept difficulties of thisnew world. The dispersion of informationand technology are the key profiles of newindustrial economy. Shifting of industries toAsia, South America etc. from developedcountries need to be taken into account. Weneed different and high skills. There isdispersion of skills, work and talent acrossnational boundaries which we need tounderstand in new paradigm for growth.Because of the change in information andcommunication technologies there are alsoorganizational and technological changestaking place. Induction of unskilledworkforce is also seen in developingcountries in the era of globalization and thistrend is being seen there since 1970s.National Science Foundation report of 2010found that China (9 Asian countries) hasovertaken Japan in components oftechnology and manufacturing. Changingprofile of the workforce and skills in last 20years require attention. China and India areat top in Asia and they have increased theirshare of skilled labor. In Pakistandiversification of our exports is also low asper world market demand. Still major shareof our exports is based on cotton basedproducts. There is a great demand forpharmaceutical and mechanical products etc.and we need to go for diversification.In vocational and technical educationperformance of Pakistan is poor. 70% of thetechnical institutions in Pakistan are run bythe private sector. 60% of the enrollment isin the private sector. When we talk of theknowledge economy, knowledge workersdon’t have to be necessarily Ph.D. or masterdegree holder. Persons working in a houseas electrician, a telephone operator, peopleworking in offices etc. are all knowledgeworkforce. There are a large number of dropouts in educational institutions. Internationaldata shows that nations with a largeproportion of student enrolling in uppersecondary vocational programs havesignificantly higher rate of schoolattendance, participation and completion andthere is very little drop out there. In USA90% of the students attendingcomprehensive school take at least oneoccupation specific course. In UK there areabout 45 to 50% of students who go for ‘O’level. Keeping this in mind we must reformsecondary education to improve lowproductivity, low skills, invoke secondaryschools into comprehensive schools of aspecific labor market for at least oneprogram. It will also help in reducing dropouts in non-metropolitan areas. Developingsoft skills will have a major impact onSMEs.At higher education level we need to bringhigher qualified people from abroad.Generally we are against importing talent.But we need to fill this gap from abroad. Weneed to focus on school teachers as well. Ifthere is shortage of teachers we need to61

International conference on “Framework for Economic Growth, Pakistan”bring good teachers from outside.International benchmarking is also importantfor every sector. Strategic alliances arerequired to match skills with what isrequired by the partners in other countries.Innovation is also important to developcollective competence.***62

International conference on “Framework for Economic Growth, Pakistan”DiscussionDiscussant: Ali Arshad HakeemChairman NADRAI am thankful to the Deputy ChairmanPlanning Commission for inviting me here.Core job of NADRA is to register NationalIdentity Cards. Our banking sector is nowconnected through ATM cards and onlinetransaction has become possible due totechnology. We were also able to use ourdatabase to make arrangements to makepayments to 1.7 million flood affectedpeople through cards. To make payments tosuch a large number was not possiblewithout having databases and technology.What we learnt from different programs isthat we can innovate to provide specificservices to people. We also have a challengein taxation. We are working with CBR andtrying to look at the patterns that how ourdatabases can be used to identify peoplepaying more taxes or the people who are notthere in the system.Pakistan is a large country with a biginternal economy. We need to be morecreative while looking at this economy.Percentage of educated persons is less butthe number is huge. We have good telecomconnectivity, a high growing banking sectorand a larger market size. What we need is tobe creative, see at positive side andinnovating new products.***Discussant: Dr. Sohail NaqviExecutive Director, Higher Education Commission of PakistanI would like to focus on three things i.e.institutions, implementation and applicationof idea. Universities are there to serve asengines of growth for the socio-economicdevelopment of Pakistan. Universities are tobe considered as one of the owners of thisidea of human capital development,innovation, and productivity. Universitiesneed to build economy, leadership andentrepreneurship across Pakistan.Curriculum reform is also important foreducation. It is important to know that howwe teach and what is the creative spirit ofindividual to do that. Third step isapplication of the ideas like building a newaircraft, a wind mill etc. Next step is tomove from technological domain to businessdomain where academia-private partnershipcan be focused. Ownership is very importantin all above domains. Community andindustry needs also need to be looked atwhile developing curriculum. Innovationand research based education is one the partto be looked at. We need to introduceapplication oriented programs based onspecific needs. For example subjects likeMathematics, Statistics, Economics orBotany are excellent to teach. But tointroduce such courses in an area likeChaman (in Baluchistan) may not be muchuseful based on geographical and industryrequirements. We need to look that whatkind of programs to be introduced based onspecific requirement for each ofgeographical area and institutions.63

International conference on “Framework for Economic Growth, Pakistan”Discussant: Philip Auerswald,Professor, George Mason UniversityWhen I came here last October I had anopportunity to travel around in Karachi,Lahore and Islamabad and met somePakistani entrepreneurs. I met with MonisRaheem, who is an engineer. He workedsuccessfully in his profession. He decided tocome back to Pakistan and started acompany. He is the CEO of ‘Rozee.pk’which is a good example of entrepreneurshipdevelopment. He is one of the many youngpeople in Pakistan who started business andthere would be many other examples ofentrepreneurship development. I also had achance to meet Seema Aziz of CareFoundation who has educated about1,50,000 students in Pakistan. Anotherexample of successful woman entrepreneursis Nasreen Kasori of Beacon House SchoolSystem. She in their schools has educatedabout 600,000 children which are about 2%of all the children being educated inPakistan today. If two women like SeemaAziz and Nasreen Kasori can educate morethan 0.7 million children then I am sure thatabout 50 women entrepreneurs can educatemore than 10 million people in this countryin next few years. This kind ofentrepreneurship experience is required inPakistan.***64

International conference on “Framework for Economic Growth, Pakistan”Questions and AnswersQUESTION:Question: I am Chairman of IT department of University of Sargodha. My question is that whiletalking about creative ideas we see that government has invested billions of rupees in publicschool buildings. Some other countries like India are using their buildings in evening. Buildingscan be used for software houses and call centres in the evening. Is that idea applicable or not touse these buildings twenty four hours for classes in evening in Pakistan?Question: I am Professor of Political Science Department in Karachi University. I would like torefer to the issues like we facing here in Karachi. If we talk about USA, Canada and Japan wefind that their political environment is absolutely perfect. We have both domestic and foreignstudies on political economy of Pakistan. My question is that how can we make concrete andpractical recommendations for the political stability of Pakistan?Question: If in our education system universities are designing courses in relevance to thedifferent area requirements then when this system is going to be implemented?Question: I am from Lasbela University and I teach entrepreneurship subject. We talked aboutbusiness plans and developing linkages with the industry for their development. Researchersneed research facilities for their work. We have a very limited job market and we need tomotivate our graduates to develop their own businesses. My question is that how researchers canhave facilities to apply entrepreneurship skills in the industry?Question: In the presentation the speakers discussed about universities as centres for knowledgecreation. Industry-academia linkage was highlighted for innovation. Is the role of the universitiesconfined to knowledge creation or to develop industry-academia linkages?Question: I am from University of Sargodha. My question is that how can we develop humancapital for productivity and development. There are political problems in universities with fightfor titles, devolution, and lack of academic leadership etc. There is absence of senior facultymembers.. How can we develop human capital for being competitive and to meet globalizationchallenges?Question: Based on my experience of serving in universities I feel that universities should beacademically, administratively and financially autonomous. Boards in universities should havethe powers to take decisions. I invite the comments of the speakers and discussants.Question: I am Akbar Khawaja, former Senator and World Bank official. I would like toappreciate Dr. Nadeem Ul Haque, Dr. Leghari and the sponsors here for having such a largeaudience in this conference. In my opinion determination and implementation are very importantto make things possible. FEG is an excellent framework and I have gone through the document. Iwould like to ask one line message to integrate all the things discussed here.Question: We have discussed about human capital development. There are so many ghostschools in rural areas in Pakistan. Schools are there in papers but don’t physically exist. My pointis that we have universities, HEC etc. but don’t have focus on school education. Please comment.65

International conference on “Framework for Economic Growth, Pakistan”Question: We have many traditional skills already available there in the country. India and othercountries have also worked on this important area and these traditional skills can easily bemarketed all over the world. My point is that we need to harness this potential and universitiesneed to do research on it. Please comment.ANSWERS:Answer by Dr. Nadeem Ul Haque, Deputy Chairman Planning Commission:My one liner message is that:“It is innovation and competing inglobal economy on global standards”.We need to accept global standards wholeheartedly. Innovation is to get a new idea inbusiness. For human capital developmentgovernment needs to do it, but not directly.For higher education PSDP funding isalready there. It would be HEC’s choice thatwhether they need more buildings or moreprofessors. There are international standardsavailable. Education is the only way forwardand change will take time. In globaleconomy we are not doing well. Money is amajor problem but main issue is howefficiently and effectively we use ourresources.Innovation is something which dependspurely on education. Uneducated people canalso be innovative. Universities should bemost innovative and creative part in theworld and should be taken as part of thecommunity. Universities should be placesfor youngsters to take risks and takeinitiatives. It is a global market place fortalent. We need to understand talent which isalready there with us.Answer by Shaukat Hameed Khan, Former Member, Planning Commission:If we talk about innovation in businesses itis all about management, financing,strategies. But innovation is likedevelopment of Chinese bureaucracy systemwhich was a great innovative idea at thattime. Chinese did it thousands of years ago.Google was a different and innovative idea.Along with innovation harnessing theinnovation is also important. I see manychallenges in Pakistan. Whenever there arechallenges, we find there innovation takingplace. I don’t see problems in innovation.Harnessing innovation in a structuredmanner to make it productive is important. Iwould say that in running business we needto build collective competence in astructured manner. It is important tounderstand that this is our world and weneed to change it for us.Answer by Sohail Naqvi, Executive Director, Higher Education Commission:Innovation and entrepreneurship is also tounderstand that when we will wake up nextday we will still have load shedding;political problems etc. and we have to dealwith this reality. This is our country andentrepreneurship needs to accept thesechallenges to turn these into opportunities.To talk about shortage of professors it isimportant to note that we can’t createprofessors as it takes thirty years in theirdevelopment. We can import them to fill thegap. So our emphasis is on the facultydevelopment. For allowing universities to66

International conference on “Framework for Economic Growth, Pakistan”take decision at local level it can be done byremaining within the legal framework. Asfar as standards are concerned internationalstandards are already available and we haveto meet those standards. About question ofKarachi and political role I would say that itis the political sanity and the strategy todecide that whether universities developleadership or play a leadership role. There isa leadership vacuum. Let the intellectualsget together and present a solution.For industry-academia linkages we need todo that immediately. We need toimmediately start work on theimplementation of the strategy. For thecomment about the teaching standards wecertainly need working at higher standardsand we need to work on that. Education isthe only way forward to keep going.Answer by John Speakman, Private Sector Specialist, World Bank:We need linkages between universities andprivate sector for innovation. We need tobuild incubators in universities and provideventure capitals for entrepreneurshipdevelopment.Answer by Philip Auerswald, Professor, George Mason University:First of all I agree with the point thatinnovation is mostly not all aboutuniversities. The whole functions of theuniversities are changing globally like wealso have virtual universities there in theworld and also in Pakistan. Universitiesshould be places where young people go andmake experiments, take risks and come outto apply knowledge.***67

International conference on “Framework for Economic Growth, Pakistan”Session 6: Connecting to CompeteSpeaker: Amer Z. DurraniSector Coordinator for Trade Logistics, Transport, and Customs, World BankBefore I start on the topic of connectivity tocompete I was thinking that what was thething in this conference which impressedme? What would be my answer if someoneasks me that how was the conference?Before I answer these questions allow me togive you a Romanian quote that “In today’sfree market nothing seems visible until it isscandalous, and nothing is scandalousenough to be memorable”. So I hope that itwill be a very scandalous growth workshopand would remain in our national andcollective memories.Before I start I would like to explain thatwhat actually connectivity means in the waythe growth strategy presents it. We talkedabout connectivity in term of transport. Wealso talked about connectivity in physicalterms i.e. to take people and goods from oneplace to another. Transport actually providesconnectivity as a utility of place. In realterms connectivity can be physical orvirtual. In case of connectivity it isimportant that whether it is virtual orphysical connectivity it should have accessand mobility.Connectivity is linked with utilization andprovision of services. Like road is there butwe are not using that. In urban and crossborder terms connectivity is also important.It is also important in cross border andinternational border context. Just ten tofifteen years ago it required to physically goto banks to deposit utility bills which nowrequire less than thirty seconds doing thesame job. To think of virtual connectivity isfast replacing the need to physically move.While talking of connectivity we also talkabout internet and mobile revolution.Internet contributes about 4% to GDP.Connecting people and goods behind theborders (internal) is also very important. 70million tonnes of goods move across ourborders every year out of which 98% movesthrough two ports in Karachi. In terms ofcargo the given volumes move five timesinside Pakistan.Impediments to connectivity includetechnology and we have not been able to useit properly. Affordability is also important -like use of taxi is expensive. Externalconnectivity is something that not onlycontributes to trade but also to regionalstability. We are working basically intraditional textile goods and with themarkets which are far way. It takes 27 dayslonger to take citrus to Spain from the pointof production to the point of use. We need toexplore new markets which have value bothin terms of distance and value for us.Transport and logistics system is performingpoorly and costing economy 3% of GDPannually which is about 480 – 550 billionrupees a year, and cause direct and indirectlosses to occur in the following ways:- Highways, trucking and railways sectorcontribute a loss of Rs. 254-323billion/year,- The ports and shipping sector contributelosses of Rs. 60 billion/year, and- Poor trade facilitation and logistics costsRs. 167 billion/year.There is 30% loss of the farm produce totake to another area. Container dwell timesat Pakistani ports are back to 9-11 dayswhich is 4 times that of developed countriesand 3 times that of East Asia. Customs68

International conference on “Framework for Economic Growth, Pakistan”clearance alone takes 4-5 days which is 1.25hours in Singapore. In trucking sector ratesfor high value commodity traders are higherthan India and Brazil. Rail carries less than 5% of freight in Pakistan and again taking14–28 days to deliver up country (1800 km)which is 4 to 7 times slower than in Chinaand United States. There was a studyconducted in 2006 by a Swedish firm onlogistic sector efficiency. The studybenchmarked Pakistan against Korea andMalaysia and compared public logisticsector efficiency with private sector. Thestudy pointed out that by bringing efficiencyin public sector logistic we can bring about14 rupees of efficiency.Major internal logistics challenges inPakistan are:- Domestic Transport,- IT Development, and- Contemporary in-house logistics.Pakistani firms are very inefficient in manyareas and still go to the government forsubsidies. While talking about internalconnectivity we find that half of the ruralPakistan is not ‘mobile’. Women carry thetransport burden. Following is the positionof access and mobility in the country:- 15% communities still lack basicmotorable access,- 53% communities have paved access,- 48% communities served by regularpublic transport services,- 45% of communities with basic accessstill lack regular public transport,- Un-served village communities have totravel 4 km (30 minutes) on an averageto reach public transport.Looking at cities we find that 21 millionpedestrian trips are generated in Lahore andyet we have not heard that government ismaking anything special for them. Coverageof broadband is a good story in Pakistan, butit is not being delivered to the wider public.Key to competitiveness is not easy. AsDeputy Chairman said earlier that everyonesays that solutions are out there and it is notrocket science. I challenge that it is far moredifficult than the rocket science and alsodifficult than what nuclear scientists doingin Pakistan. With cost of fossil fuel goinghigh internal connectivity is getting difficult.We need to talk about key institutions.Increasing effectiveness and fixinginefficiencies means handling multiplestakeholders and processes. We shouldallow other people to run Railways and giveautonomy to provinces. Connectivity withGawadar needs to be developed. Why can’twe do an experiment like metro cab?Internet connectivity is another challengeand government needs to start serving usinginternet.***69

International conference on “Framework for Economic Growth, Pakistan”DiscussionDiscussant: Arshad ZuberiChief Executive, Business RecorderThe topic is connecting to compete and Iwould like to start by telling you that thereused to be tea houses and restaurants nearthe ministerial and Civil Servant enclave inKarachi and Lahore where poets, writers,journalists and government functionariesused to sit and share ideas on a variety ofnational issues. Communication of conceptsand ideas can be regarded as diffusionsimilarly as particles of perfume are spreadin a room. Pakistan needs an incrementalintellectual growth. Social connectivitybetween the middle class and the decisionmakers has suffered in Pakistan in the past.Civil Servants, khaki and white collars thatused to come from middle class are now partof the upper elite. With this change thegovernment funds are shifted from socialsector to the defense and infrastructure asdesired by the elite. The British were veryproud of their services as they introducedpostal services, railways and connectedmany states of the British India. In Pakistanwe have NLC which has containerized cargoservices whereas train cargo share hasdecreased to less than 5% in Pakistan.Pakistan Railways last year carried the samenumber of passengers and less freight whichit did in 1955; while Pakistan’s populationhas increased seven folds. In public sectororganization we would find many otherexamples of inefficiency due to whichconnectivity has suffered.There is need to develop national tradecorridor to connect people and goods forservicing business efficiency. We also needto ease the visa processes with our neighborsand other countries for easy movement.There is need to improve rail and roadconnectivity along with connectivity fromfarm to market. We also need to improveinter and intra-city connectivity. We alsoneed to connect both physically and socially.***Discussant: Shaukat Hameed KhanFormer Member Planning CommissionMr. Amer Durrani (Sector coordinator forTrade Logistics, Transport, and Customs;World Bank) did an excellent job andcovered a wide spectrum of things and weneeded some more time from him to expandsome other themes. I would like to tell thatmangoes are being exported in large numberthese days and have become expensive.Such a large number of exports are becauseof another reason which is internaltechnology transfer and another type ofconnectivity to link with exports. WithHorticulture Development Board andPakistan Atomic Energy CommissionAuthority working together the shelve life ofmangoes has been increased to 80 days.We have example of USA before us. Theyworked on productivity, physicalconnectivity, and social connectivity. In1905, USA had only 3000 vehicles and 100kilometers paved roads. It took hundredyears to become an industrial giant. It isimportant that physical environment mustconform to the needs of the time. When wetalk about information technology we find70

International conference on “Framework for Economic Growth, Pakistan”that data storage capacity is a very importantfactor in that. Let me quote Bill Gates here.He said in 1981 that to have a personalcomputer 640 K data storage capacityshould be enough for anyone. He was happyto quote it at that time.In IT sector, Pakistan has a major constraintof electronic security. Infrastructure forelectronic data security is not in place. Wealso don’t have electronic commercedeveloped as it should have been. We alsohave a social responsibility of conservingour local languages. Linguistic heritage isnot being taken care in IT. Universities etc.should come ahead to promote locallanguages. Industry-academia connectivityshould also be encouraged. Connectivitywithin university environment is alsoimportant. We also need to connect withvarious mother institutions. There should becross discipline accessibility and access toworkshops etc.***Discussant: Muhammad SaleemDirector General Pakistan Telecommunication AuthorityI appreciate Mr. Amer Z. Durrani as he hasgiven very informative and analytical paperon connectivity. He has also discussed aboutthe access and disparity between rural andurban areas. He has also highlightedimpediments in the connectivity and issuesrelated to broadband connectivity.When we talk about connectivity, thingscan’t be completed unless we discuss somerevolutionary changes which have takenplace in ICT sector. If we compare ICTsector of 2003 with today, whenderegulation process was started, we findthat how much revolution has taken place. Ifwe look at number of telecom subscribersthere were only 0.2 million mobilesubscribers in 2003 and we crossed figure of1.7 million subscribers. Similarly when welook at government collection we find thattax collection in this sector was Rs. 30billion in 2003 and now government iscollecting more than Rs 100 billion a year.Looking at foreign direct investment it wasUS $ 6.4 billion between 2006 and 2010which had opened up about one million jobsin the country. There are still many issuesabout connectivity but I want to bring toyour notice that at present about every tehsilheadquarter in each province is connectedthrough fiber optic. We are looking forwardfor ‘3G’ technological revolution now. Withthe introduction of 3G the scenario will betotally changed as we would be havinganother telecommunication revolution inPakistan.***Discussant: Fatma GulSenior Economist, UNDPFirst of all I am thankful to the governmentof Pakistan and UNDP, Pakistan office fororganizing such a profound conference. Lasttwo days of conference have exceeded myexpectations and I was surprised byparticipation, the criticism made andinformation of the people of this country.71

International conference on “Framework for Economic Growth, Pakistan”We have been listening to the ideas like thisis the time of knowledge society. In differentperiods of time we had different modes ofproduction. This is the knowledge era, andan era of Information technology andinternet. As an economist we try to justifyuse and importance of such technologies forefficiency purposes and resource allocation.Internet access is also important to provide.As per UN document, access to informationand internet is human right. Theconnectivity through telecom technologyand internet is important thing forknowledge society. Information technologyis very important for connectivity thesedays. Internet access is important as a sourceof information. In Asia, internet users areapproximately 44 % of the population.There are approximately 5 billion peoplewaiting to join internet. IT is one of themajor engines of growth in economicdevelopment. Pakistani universities alsohave internet connectivity. Asia has 22%internet users and with many populouscountries there are tremendous opportunitiesto grow this sector and to use thistechnology to integrate the rural marketwhich will help in growth. Pakistan has verygood internet connectivity. Last night I alsoheard Richard Florida saying that it is notjust trading any more to make growth in acountry but there are other important factorsto it like technology and innovation, newproducts and processes etc. Logistics is alsovery important for connectivity which helpsin connectivity and increasing efficiency.Logistics is also important as part of supplychain. I would say here that Pakistaniuniversities should motivate their students toconduct research on the supply chain andgive recommendation to the industry in thisregard.Connectivity is very important for growthstrategy. We also need to connect societyand youth when we talk about theconnectivity in FEG. Uses of internet,telecom, logistics etc. are all important.Pakistani culture, legacy and marketenvironment are also important and we needto talk about it FEG.***72

International conference on “Framework for Economic Growth, Pakistan”Questions and AnswersQUESTION:Question: We talked about connectivity here. But we didn’t talk about connectivity of ministrieswhich is missing in our country. Connectivity within academia is also important. Pleasecomment.Question: What percentage of growth we trying to achieve after this conference?Question: One of the panelists mentioned here that UN has recognized right to internet as a basichuman right. Based on that statement what level of connectivity service and public informationshould be available to public from government about various departments under this framework?Question: What steps would be taken to follow up the points learnt from this conference and howparticipants would come to know that points discussed here would be translated into workableplans?Answer:Answer by Dr. Nadeem Ul Haque, Deputy Chairman Planning Commission:We have given recipe and way how to cook.Please don’t expect from us to be chefs. Goand try to understand this strategy.Universities need to debate on it and comeup with ideas to make implementationhappen.Answer by Muhammad Saleem, DG, PTA:After independence we have not added evena single rail track for connectivity. Weinherited railways from British. We builtmotorway. But nobody talks about masstransit in Karachi. We need to developconnectivity in all the areas discussed forgrowth.Answer by Amer Z. Durrani, World Bank:We need to develop and promote both hardand soft infrastructures for connectivity.What Dr. Nadeem Ul Haque said is that weneed to build architects in this country.Answer by Shaukat Hameed Khan, former member Planning Commission:When we talk about privatizing Railways weneed to be very careful. We need to learnfrom examples what a country should notdo. Privatization of water services, nationalhealth services etc. were disasters. We don’thave electricity and we need to work onelectricity connectivity.Answer by Fatma Gul, Senior Economist, UNDP:Pakistan has good technology baseespecially in terms of internet access. I thinkfor access to information and internetgovernment should play its role as it is alsothere in UN declaration to give access toeveryone being a fundamental right. Idealike making a web page and advertise in onedollar to one million companies can be an73

International conference on “Framework for Economic Growth, Pakistan”innovative idea and can helpentrepreneurship. People using internettechnology and using ideas are becomingentrepreneurs as well.***74

International conference on “Framework for Economic Growth, Pakistan”Session 7: Youth and Community EngagementSpeaker: Mahbub HossainExecutive Director, Bangladesh Rural Advancement Committee (BRAC)First of all I would like to thank PlanningCommission and UNDP for giving meopportunity to participate in this conferenceand to share our experience about civilsociety engagement, youth and communityengagement.I started my career in Karachi as staffeconomist of the Pakistan Institute ofDevelopment Economics. As an NGO weare working in Bangladesh. We have alsostarted work in Pakistan. Sinceindependence in 1971 we reducedpopulation growth from 3.0% in 1970s to1.3% in 2010. We have achieved selfsufficiencyin rice production from largeimport dependence. Under five years agemortality has reduced from 148 in 1990 to52 in 2009. Our net primary schoolenrolment has reached to 94 percent and wehave achieved gender parity in secondaryschool participation. Poverty rate has beenreduced from 76% in 1973 to 31% in 2010.A driver behind the progress is thegovernment giving space to civil societyorganizations as partners of development,particularly for inclusive growth.Bangladesh is a country of large NGOs suchas Grameen Bank and BRAC etc. NGOshave been working for reachingmicrofinance, education, health, hygiene,nutrition and community empowermentservices to marginalized people, especiallywomen.BRAC was established in 1972 as a relieforganization to resettle refugees returningfrom India. Later it turned into a “not forprofit” development organization whichoperates in 9 countries outside Bangladeshto share knowledge and experience with abudget of US $ 495 million in Bangladeshand US $130 million in BRAC International.BRAC employs 54,000 core staff, 45,000teachers and health workers, and 89,000community health volunteers.Youth development is an important subjectfor socio-economic growth of any country.At 1.4 billion population in world (0.5billion in South Asia) youth in developingcountries constitute almost a quarter of thepopulation and growing at 1.8% per year.Investing in youth can accelerate the fightagainst poverty, socio-economic disparityand gender discrimination. Opportunitieslike access to education, gainfulemployment, or financial services remainslimited in many countries in the region.Youth must be equipped with appropriateskills, capacities and knowledge toeffectively deal with the present daydevelopment challenges – urbanization,migration, ethnic conflicts, HIV and AIDS,etc. Marginalized youth are at risk of beingengaged in crime, armed conflict andterrorism. Increased youth unemploymentthreatens civil unrest, safety and security ofpeople.In Bangladesh, civil society organizationsjoin hands with the Government for socialand economic empowerment of the youth.BRAC reaches over 1 million adolescentsand youth in Bangladesh to empower themthrough multiple interventions. BRAC istraining 260,000 adolescent girls onlivelihood skills and opens space for socialengagement with peers through AdolescentDevelopment Program. We are helpinggenerate employment and livelihood for240,000 adolescent girls and young women75

International conference on “Framework for Economic Growth, Pakistan”with financial education, training and microcredit.We also supporting multipurposecommunity library for continuing educationof 250,000 out of school youth.Adolescent Development Program (ADP) isone of the important programs inBangladesh focusing to improve the qualityof life of vulnerable adolescents and youth(14 to 21 years), especially girls withcoverage of 260,000 girls in 8,660 clubsorganized. We are providing life-skills basededucation and livelihood training,community participation through forums,rallies, adolescent fairs, organize culturalcompetition, cricket tournament, safeswimminginitiative etc. to identify andgroom talent. Another program being run byBRAC is “Social and FinancialEmpowerment of Adolescents and Youth”(SoFEA) to empower adolescents and youth(15-24 year) socially and economically sothat they can lead their lives with confidenceand dignity. Programme includes buildingcapacity through life-skills based education,livelihood training, financial education,microfinance, and community participationfor long-term sustainability of the clubs.Another important program is “CommunityEmpowerment Program” which forms socialcapital of marginalized people and assists instrengthening local governance throughcapacity enhancement of women unioncouncil members and builds up mechanismfor transparency and accountability at grassroot level. BRAC supports a network of12,000 people with 750,000 membershipsall over Bangladesh.Approach of the Community EmpowermentProgramme is as follows:- Making the marginalized people awareof their rights,- Empowering them to claim theirentitlements, and resist exploitation byfacilitating functioning of communitybased organizations,- Making the local government moreresponsive to the needs of themarginalized people,- Developing direct linkages between thepeople and different tiers of local govt.We are engaging communities to redressinsecurity and violence to ensureparticipation of all level of people in thecommunity (men, women, youth, adolescentboys and girls, local elites, localgovernment, police) activities. We havegiven consideration to ensure women’s andadolescent girls’ participation in planning,implementation and monitoring of projects.The community safety and security concernsare identified and prioritized for actions bythe community themselves by followingparticipatory approaches. The communitythemselves develop action plans to addressthe concerning issues identified. Communitymobilization for effective utilization ofsanitary latrines involves formal andinformal community and religious leaders,seeks participation of educationalinstitutions and engages media and otherlocal civil society groups.BRAC is also working for the extreme poorunder the program entitled “Challenging theFrontiers of Poverty Reduction andTargeting the Ultra Poor” (CFPR-TUP)”. Itis a unique case of community participationand contribution in combating extremepoverty in rural Bangladesh which hasespecially targeted ultra poor householdswho are provided:a) Grants of small assets,b) Intensive training on management ofassets, andc) Free medical care, for a period of twoyears to graduate them out of extremepoverty.It costs US $ 320 per households to providethis facility. A total of 400,000 householdsalready graduated through the programme.76

International conference on “Framework for Economic Growth, Pakistan”The Program ensures intensive communityinvolvement in two major programactivities:i) Targeting program participants,ii) Mobilizing community supportthrough formation of VillagePoverty Reduction Committees.The program participants are selectedthrough Participatory Rural Appraisal (PRA)method. The two major steps in PRA are:i) Social Mapping,ii) Wealth Ranking.Villagers draw the map of their village andfollow a wealth ranking exercise to identifyhouseholds as non-poor, poor, very poor andultra poor. Through various activities,BRAC encourages the village elites to workfor the development of their own village.Lessons learnt from above programmesinclude the following:- For inclusive growth communityengagement is essential.- Community proactively identifiesproblems, suggests solutions andparticipates in implementation.- Multi-stakeholder participation (people,local government officials, religiousleaders) ensures greater ownership andaccountability.- Youth and adolescents can be invaluableassets to improve community safety, andfor voluntary social work, if guidedproperly.- Equal participation of women and men isnecessary to ensure positive outcomeand sustainability.***77

International conference on “Framework for Economic Growth, Pakistan”DiscussionDiscussant: Dr. Ali Asghar KhanHead of Omar Asghar Khan Development FoundationWe are here to talk about youth andcommunity engagement. As Dr. Nadeemsaid that FEG is a recipe, I agree with hispoint that we need to add spices in it forimplementation. Connecting people is veryimportant because we as a nation need toconnect with others in this region. If we talkabout people in Baluchistan or KPK weknow that what is happening over there.Connectivity of people in these areas shouldbe prime objective of the government to leadthem to improving things. Youth in oursociety feels that their voices are not beingheard and they are looking for space forthem. Organizing citizens and particularlythe youth in society is the way forward andthe government needs to play its role fortheir development and engagement in socioeconomicdevelopment.If we look at the institutions we find that allour institutions have suffered due to militaryrules in the past. Trade unions, labor unionsand student unions are not active as theywere also affected in these regimes. Weneed to give youth space to organizethemselves, and provide them opportunity tocollectively work for them. Access toinformation is also important. Students arebeing used as instruments by many to holdtheir rallies in the streets. But unfortunatelyin decision making process the youth areseldom seen.Access to information has also become verydifficult in the country and even budgetaryinformation is not correctly available. If welook at KPK budget we find that out of 85billion rupees about 56 billion were notallocated. So if we can’t ascertain that wheremoney is to be used how can we holdinstitutions accountable? Without holdinginstitutions accountable no change willcome and that requires political will. Lastyear KPK government allocated 4.5 millionrupees for educational budget for Mardancity. But at the end of the year in the revisedbudget 576 million rupees were spent.Unless, we as a nation, including state don’traise the questions we would not be able tosolve the problems. We need to give youthchance to be heard and strategies need togive importance to youth to empower them.***Discussant: David MartinCountry Director, British Council, PakistanThank you very much for inviting me here.It was fascinating for me to hear aboutNGOs working in Bangladesh. In Pakistanmany NGOs are doing fascinating job. Lastnight I was talking to a number ofrepresentatives of organizations that howthey can achieve networks and worktogether to avoid stepping over each other’stoes and being rivals, but instead becomingtrade partners and allies in work activities.British Council is running a programme foractive citizens for youth engagement andempowerment in community. We had setupa program in 2009 to train young people to78

International conference on “Framework for Economic Growth, Pakistan”enable them to engage in social actionprogrammes in communities. We havetrained facilitators all over the country. Weare working on training more facilitators ofsome new partner organizations. We havedone a lot of work across Pakistan underactive citizenship programme. We plan toexpand that network to mobilize youth towork for society.***Discussant: Faisal MushtaqExecutive Director, Roots School System, PakistanFirst of all I would like to thank Dr. NadeemUl Haque and congratulate and complimenthim for sponsoring the change that wewanted to see serve. Inviting young peopleat this forum discussing and debating thegrowth strategy is by itself a testament to thecommitment of the Planning Commission.To me the single problem to help and sustainthe youth and community engagement isthrough education. Without a viable,relevant and public education system wecan’t implicate the values of the communityeducation, civic education and citizenshipeducation. Without sponsoring community,civic and citizenship values we can’t createa viable society which has both the desireand determination for sustainable socialimpact. Process of education starts from thecurriculum. The gap between public andprivate education system also needs to belooked after. To create opportunities weneed citizen based programmes- like BritishCouncil and Ibrar Ul Haque’s foundation isdoing in Pakistan. Such forums create aninert-generation engagement, civicengagement; and democratic and socialdevelopment planning. Through educationwe can create employment for theengagement of youth.Engagement means connectivity to helpengage the youth in value added activities sothat they can create and help sponsoring thechange in their provinces, districts, tehsilsetc. Without a viable and progressivenational public education system it would bevery difficult to create social andentrepreneurship values to help masses,provide them skills, and understand theirpotential. If we want to have citizens inaction then the debate is that how state isgoing to provide them opportunities to servethe state, especially the youth? It can workboth ways. It is duty of the state to engageyouth and communities in their personaldevelopment and create opportunities forthem. Thus education, employment,engagement, empowerment andentrepreneurship will create a viable andscalable socio-economic impact. We need todevelop a new education system to meetchallenges of 21 st century and promote thevalue of community education. 68.8% of thePakistan’s population is under the age of 30,63.3% is under the age of 25 and 28% are inage group of 15 to 25. 50% of the economyis service economy and 8.3% is the level ofentrepreneurship outside agriculture sector.We need workable and sustainable solutionsfor youth connectivity and engagement.***79

International conference on “Framework for Economic Growth, Pakistan”Discussant: Shireen NaqviCEO, School of leadershipThank you for inviting me in the conference.School of leadership has been working forthe last ten years in country. Sadlycommunity service is a subject which is notbeing taught at all. The first university forany child in the world is the mother’s lap.For the growth of children we need to buildcommunity spirit. Community developmentis a mindset. My organization is working tochange that mindset towards communityservice. Youth come with a very low selfesteemfrom their homes and that can’t beeasily changed. To change low self-esteemfrom “I Can’t” to “I can” and “I will” wehave worked hard in our organization andtrained more than twenty thousand people.When we started school of leadership wehad a vision that we will change Pakistan.We believe that every human being hassome potential and the important thing is therealization of that potential. We also need tochange our mind set from blaming thegovernment, America and others and insteadtake the charge of the things. We have cometogether with one mandate which is youth.We need to be creative to find solutions tothe problems.Pakistan is a land of opportunities. Everyhuman being is born with a potential andmain thing is the realization of that potential.Fortunately we have here with us public andprivate sectors, social and education sectorsalong with media to support us in thisendeavor to work together for youth. We canimpact 7.2 million in one year andinvestment can be paid back in seven years.With public and private sectors comingahead together we can change Pakistan innext four to five years. Let us join hand tobring this revolution.***80

International conference on “Framework for Economic Growth, Pakistan”Questions and AnswersQUESTION:Question: To convert youth in productive assets education is the key. We have three systems ofeducation in Pakistan viz. public schools, English medium schools and madrisas. Until andunless we reform our education system how can we address inequality issues in education systemin Pakistan under education reforms?Question: Under 18 th amendment provincial ministries have a very important role to play. HowPlanning Commission is planning to involve Youth Ministry in the implementation of thestrategy? It took twenty years for government to come up with a national youth policy. Whatmechanism Planning Commission has to implement this new strategy?Question: In this youth conference we didn’t heard about the role our religions has set for oursociety. Moreover, no one in this gathering talked about tolerance space. When we talk aboutconnectivity it is basically connecting different tolerance spaces. Panel is requested to pleasecomment as it is an important issue for educational institutions as well.Question: There is a divide between English and Urdu medium school systems and job markethas a bias towards English medium schools which is a double standard. Is this system not aconstraint for the youth of Pakistan?Question: Universities and colleges are producing the knowledge but attitude is not beingdeveloped in educational institutions. Child is told from the start that after getting seventeenyears of education he will get a 17 grade job or a maximum salary. But we don’t developattitudes in them. Please comment.Question: For the last 64 years we are confused about our education system in Pakistan. We mustlearn from India as they have one system for their country. Can we do that in Pakistan?Question: Role of music, theatre and their revival should also be recognized. Where youth willgo, the youth is taking a leadership role in reviving music, including Sufi music etc. Pleasecomment.ANSWERS:Answer by Shireen Naqvi, CEO, School of leadership:If I ask you to make list of role modelswhich you have in your mind, or a personwho have made a great difference in thehistory to whom you would like to admire?Just think that what made them to do allthose fantastic things? I promise you thatnone of the lists would have a degree,school, university or GPA mentioned on thatlist. You would find name of Mr. AbdulSattar Edhi in Guinness Book Record and heis just class eight pass. I work for ruralcommunities and public schools. Pleasedon’t say that they are giving bad educationas there are many fantastic teachers andstudents there in public schools in ruralareas. The thing lacking is the propertraining of the youth.81

International conference on “Framework for Economic Growth, Pakistan”Answer by Ali Asghar, Head of Omar Asghar Khan Development Foundation:I think religious extremism comes whenthere is anger and frustration. So it isimportant to organize youth and look at theirpositive energies. Young people need to beencouraged as they have been ignored ondifferent occasions. Youth has made greatsacrifices at many occasions for the countrylike floods and earthquake etc. So energy isthere in our youth but we are wasting that bynot providing them opportunities.Answer by Mahbub Hossain, Executive Director BRAC, Bangladesh:The discussion we are having is oneducation and opportunities available. Youthis going to schools and there are a largenumber of drop outs. We need to dosomething for that also. We need to putsome skills in them to place them intoformal industrial sector and developentrepreneurship etc. to enable them todevelop their own businesses. We need togive them opportunity as well.Answer by David Martin, Country director, British Council, PakistanWe need education reforms to move towardsthe right direction. There is a largepopulation which is to be taken on board.We need to do something good as othercountries have done it and they have movedto near a perfect education system. Look atBrazil and China that what they haveachieved in last few years. Second importantthing to focus is attitude and behavior of theyoung people. I agree with the panelists herethat we need to focus on the training of theyouth.At the end I would like to comment that weneed to take English language as a mediumof education. Being an educationist I wouldlike to say that the solution is not there inEnglish medium education. I have seeneducation systems around the world movingtowards English medium for their educationsystem and a decline is seen there in qualityof education. Education system in mothertongue in early age allows children o learnin a language which they speak at home.They can afterwards move to anotherlanguage which can be Urdu or English.There are many countries in Europe wherepeople speak good quality English such asNetherlands. People in country likeSwitzerland managed to learn English,French, German and Italian. Problem here inPakistan is that English is taught here inschools as a subject. Better way to learnEnglish is by communicating with studentswhile teaching.Answer by Faisal Mushtaq, Chief Executive, Roots School system:We talked about uniformity and equalitywithin education system. Private educationin Pakistan is no more an urban elitephenomena. There is a recent study byHarvard Business School that education inPakistan is now a rural-urban phenomenon.There are private schools which start with afee of 50 rupees a month and go up to 15000rupees a month. It’s a matter of choice.It is the responsibility of the state to promotequality, relevant, accessible and oneeducation system. Since denationalization ofeducation in 1979 there has been asuccessive vacuum which is filled by theprivate sector. Our national education isworld class and nothing is wrong with theeducation system. But the problem is withthe implementation. Now under 18 thamendment education is a provincialsubject. Even in Germany and Indiaeducation is a state subject. So while going82

International conference on “Framework for Economic Growth, Pakistan”into 21 st century we can’t limit the choicesfor quality education.***83

International conference on “Framework for Economic Growth, Pakistan”InterviewsREMARKES BYDr. Nadeem Ul HaqueDeputy Chairman Planning CommissionBasically we are here to discuss the growthstrategy. The growth strategy has beenapproved by the National Economic Counciland the Parliament. The growth strategy isabout increasing the productivity in thegovernment, reforming the government inmain stream, reforming the markets andabove all reforming the cities to make themthe beacon of investment and unleash theirpotential for growth. Finally growth strategyis about including the youth as theycomprise the largest segment of thepopulation. Unless youth start looking afterthemselves there is no security for the rest ofus.REMARKES BYAjay ChhibberAssistant Secretary General, UN and Assistant Administrator and Regional Director forthe Asia and the Pacific, UNDPIt is an honor to be here. It is a greatdiscussion today on the Framework forEconomic Growth. I think FEG reallyhighlights key forces that must be unleashed.for Pakistan to get on a turn pike of growthlike the rest of Asia. I think this is a verypositive development and we are so happyto be a small part of it.***84

International conference on “Framework for Economic Growth, Pakistan”InterviewFatma GulSenior Economist, UNDPQuestion: First of all I request you to give some initial comments on FEG please.Answer: The Framework for EconomicGrowth which we also discussed in UNDPis a brand new framework which is utilizingdifferent and dynamic parts of the societylooking forward into 21 st century. It is quitenew to look at youth as a major resource forthe Pakistan and creative cities and marketsas engines of growth. It is looking promisingand dynamic, but at the same time alsochallenging while looking at the existinginstitutions and the structure.…it is brand new framework which is utilizing different and dynamicparts of the society looking forward into 21st century.Question: Do you agree with the priorities laid down in the FEG like emphasis on cities, CivilServices reforms, youth etc.?Answer: I do agree with the priorities, butwith some reservations. There is significantpopulation of Pakistan living in rural areason which the Planning Commission’sstrategy don't emphasize. It also doesn’telaborate the rural dynamism and role of therural young people into the economy tointegrate. Being an Economist I believe thatgovernment and markets can’t be discussedseparated. I see government and marketsworking together rather we talk aboutgovernment vs. markets. I think that if it wasmy strategy I would promote a moreefficient government because now in thisworld, especially with large size countrieslike Pakistan, there would be no otheragency which can reach such a large area interms of the provision of the services andbringing economic growth.Question: In terms of way forward, what do you see in the FEG?Answer: Probably one of the biggestchallenges in rural areas is land zoning andinequality problem. The production structurein such areas would be a major challengewhich government has to face. It would bevery difficult to change the status quo. Onepromising thing about Pakistan is theopenness of the Planning Commission andof the government of Pakistan to be criticabout themselves. Another important andpromising thing about Pakistan is dynamismfrom the youth and the media. In terms of85

International conference on “Framework for Economic Growth, Pakistan”opportunities to move forward we can seethat China is moving on higher wage scalewhich can be taken as an opportunity forPakistan as it has cheap labor and a largepopulation. So Pakistan, Bangladesh andIndonesia can take the empty space made byChina. But another challenge comes to mindfor Pakistan is quality of education. Onceeducated and armed with the skills it willalso become a major opportunity forPakistan. There are so many people hungryfor the opportunities and interested inmaking things happen.***InterviewSuleiman B. MahbobChairman, Malaysian Industrial Development AuthorityQuestion: I would invite some initial comments from you on FEG. How would you comparePakistan’s experience with the Malaysian experience and compare our growth experience? Whatyou think that where we have gone wrong?Answer: I have gone through the report onthe FEG in Pakistan prepared by thePlanning Commission. I must congratulatethat it is a very good long term path towardsthe economic growth of Pakistan.Comparing Pakistan and Malaysia, Malaysiahas achieved a very high economic growththrough liberalization and deregulation,particularly in terms of promoting industrialdevelopment and private investments.Pakistan needs to put measures and policiesto enhance private investment includingforeign investment. Pakistan needs toliberalize its investment climate. Pakistanalso needs to analyze its administrativeprocedures and bottlenecks and shouldderegulate some of the areas which may beobstruction to the commercial developmentof the country. Some of the regulations wereneeded in the past but those are not requirednow as competitiveness of the country hascome down. There are many administrativehurdles which need to be reduced to makePakistan more attractive for privateinvestment.There are many administrative hurdles which need to be reduced tomake Pakistan more attractive for private investment.Question: In context of law and order situation and administrative control how would you makea sharp comparison between Malaysia and Pakistan?Answer: Pakistan needs to improve law and order situation, especially of the foreign86

International conference on “Framework for Economic Growth, Pakistan”workers for investments. Law and orderproblems need to be reduced at earliest forprivate investors. Support from politicalleadership is very important in this regard.In our country President MahathirMohammad was very supportive ofeconomic growth and private sectordevelopment. I appreciate that top leadershipin Pakistan is addressing the same thingwhich is important ultimately for economicgrowth as well as job creation.Question: Going forward what challenges you see for Pakistan?Answer: The real challenge is theimplementation of the reform measureswhich have been identified in FEG. It isvery good report which is even very relevantto the Malaysia as well. We need to put amechanism for implementation and buysupport from the society, Civil Servants, andmost importantly by the top leadership in thecountry. There should be a synergy ofsupport from various sections of thecommunity like businessmen, politicalleadership, administrators and general publicto make a very attractive businessenvironment in the country.***InterviewEmiel A. WegelinGIZ Program Coordinator, Cities Development Initiative for Asia, PhilippinesQuestion: I would like to invite some initial comments on FEG. In your opinion what would bethe challenges to this new approach?Answer: FEG is good attempt and breaksnew grounds. It is innovative, daring, butrequires a lot of work to be done. The mainchallenge is to think out of the box and bringall the constituents on board which is not aneasy task as people are used to doing thethings they have always done in the past.The Framework for Economic Growthsuggests to try to move on and not to behampered. New ways should be found tobetter harness the resources that exist in thecountry, especially human resources. At theend of the day nothing will work unlesshuman resources are devoted to what wewant to achieve.At end of the day nothing will work unless human resources aredevoted to what we want to achieve.Question: Do you agree with the four priority areas and pillars identified in the FEG?87

International conference on “Framework for Economic Growth, Pakistan”Answer: Four priority areas are not onlyexcellent but also inevitable. Urbandevelopment is an essential ingredient foreconomic growth. One of the reports byMcKenzie Global Institute says that asIndia's urban infrastructure is in a poor stateit misses about 20% of its annual growthrate. So we can say that some of theimportant economic growth challenges arein the middle of the urban areas.Question: With respect to Pakistan do you have some suggestions for going forward?Answer: In Pakistan I see two particularchallenges which must be addressed. One isthe recognition that these are the citieswhere all economic activities need to bereinforced. A city consists of two partswhich is formal city and informal city. Theinformal city needs to be recognized as whatit is, not encroachment, but as a part of thecity where people live, work, and createsomething. The challenge ahead is that howto bring informal part of the city into theoverall growth framework and make poorpeople participate in overall growth effort.Second important thing is the need forinstitutions particularly at local level tomake this happen which requires morecapacity at level of local bodies and sublocal levels and a capacity to recognize themas a legal part of the society, deal with thecommunities and engage them in positiveactivities.The informal city needs to be recognized as what it is, notencroachment, but as a part of the city where people live, work, andcreate something.***InterviewDr. Norma Binti MansorSecretary General, National Economic Advisory Council, MalaysiaQuestion: I would like some initial comments on the Framework for Economic Growth? Do youfind it new, ambitious and challenging?Answer: I was struck by how similar isPakistan’s Growth Framework withMalaysia’s new economic model. InMalaysia we analyzed the issues andchallenges being faced by the country.Before Pakistan moves forward you need toidentify the challenges and issues beingfaced. Pakistan in FEG document has88

International conference on “Framework for Economic Growth, Pakistan”identified all the issues and hindrances.Main issues are covered comprehensivelyand honestly in the document but the realchallenge is the implementation.Question: Do you agree with the four priority areas highlighted in the framework?Answer: The four main areas identified inFEG are important. The issues Pakistan isfacing are identified in four priority areas.To go on high growth trajectory would bethe way forward the economy should befocusing on. The intelligent way of goingforward is to focus on some of the importantareas instead of looking at all the thingsaltogether.Question: In similarities with Malaysia what would you suggest for implementation? And haveyou chalked out Civil Service Reforms for your Civil Servants?Answer: In Malaysia the implementationframework was slightly different as weworking closely with the Prime Minister andwe brief him about our analysis and findingswhich he understands. We don't have hungerin our country and unemployment is verylow. We established a Program ManagementOffice as a corporation being run by anindependent council comprising of tenpersons who are economists, socialists,bankers etc. The close relationship betweenthe Prime Minister, the Council, ProgramManagement Office and the Chief Secretary(number one Civil Servant position inMalaysia) were part of the team.Engagement of all the stakeholders from allthe government agencies and stakeholdersfrom private sector was important forimplementation and ownership. To addressthe whole Civil Service Reform was too bigto address for us. We worked on CivilService Reforms with an approach tofacilitate economic plans and transformationof the country.Question: Do you have incentive structure in monetary terms? Was there a challenge to monetizethe perks in Malaysia?Answer: We proposed incentive structurebased on performance. All of the perks inMalaysia are monetized. Everything isquantified in incentives which are in practicefor more than ten years.To monetize, in my point of view, was not aquestion of choice as there were not enoughhousing facilities, cars etc. for the CivilServants in our country.The Political will is the main challenge that how government acceptsand willing to support reform initiatives. In case of Malaysia thewhole Cabinet and Prime Minister was with us.Question: Going forward how do you view the challenges for Pakistani growth?Answer: The political will is the mainchallenge that how government accepts andwilling to support reform initiatives. In caseof Malaysia the whole Cabinet and PrimeMinister was with us. It requires selling theideas and consultations for theimplementation. Crisis gives bothopportunity and challenges. In case of89

International conference on “Framework for Economic Growth, Pakistan”Malaysia we engaged the Chief Secretary,Chief Justice and judiciary to support theeconomic transformation reforms.***InterviewDr. Parvez TahirEx. Chief Economist, Planning Commission of PakistanQuestion: I invite some initial comments on the Framework for Economic Growth.amendment has devolved many powers andAnswer: Framework for Economic GrowthThis country is devolving as 18 thof the Planning Commission is very goodinitiative as people have started thinking,which is an important thing before anychange to take place. Areas identified arenot new as economists have alreadydiscussed these areas in the past. But thequestion is why didn’t it happen? CivilService Reform is an important area to talkabout in FEG. Civil Servants are of the viewresources to the provinces. The wish of theprovinces is to have autonomy which hasbeen fulfilled to a great extent, but provincesare refusing to devolve powers to the localgovernments. Local government systems areimportant everywhere. A centralized CivilService system is going along with localsystem reforms in Pakistan. There are samepeople managing central, provincial and alsothat they can do anything which is not a the local governments. Commissionarygood idea as nobody can do everything inthis world.system and 18 th century old Police Act 1861are back and we are talking about thereforms.Things don’t happen as political constituency for reforms is weak inour countryThings do not happen here as politicalconstituency for reforms is weak in ourcountry. We heard about Malaysia thatPrime Minister himself was involved in thereform process, but it is not the case withPakistan. For education I am of the firmview that unless we have good elementaryeducation system we would not be able tomove ahead. There should be qualityuniversities for higher education and poorshould be given scholarships. Public moneyshould be used for elementary education90

International conference on “Framework for Economic Growth, Pakistan”with a skill bias to make people ready forinnovation and do something good for thecountry. We need to convince politicalpersons and political parties to ask theireconomic committees to debate importantissues and tell everyone about this importantthing for the country. Political will andbuilding the economic capacity of thepolitical parties is very important forcountry’s growth.***InterviewDr. Mahbub HossainExecutive Director, Bangladesh Rural Advancement Committee (BRAC)Question: I invite your initial comments on the Framework for Economic Growth.Answer: Framework is good analytical workwith innovative ideas for moving forward.But real issue is of implementation. We haveseen many plans in the past but most of theplans remained in shelves because of theissues in implementation.The conference is very innovative to share the experience of othercountries. Pakistan can take benefit from the experience of othercountries to move forwardI think Planning Commission has done atedious and excellent work with new ideasand way forward for the growth. Theconference is very innovative to share theexperience of other countries. Pakistan cantake benefit from the experience of othercountries to move forward. But the real testwould be the real outcome and how the planis implemented.Question: According to you the main challenge is the implementation. Would you please specifysome more about implementation?Answer: In Pakistan the Civil Service is oneof the important actors in implementation.There are also many other actors in privatesector to be taken on board. How wemobilize society and involve marginalizedpeople at grass root level is the mainchallenge. Community mobilization andgood governance at local level is veryimportant for inclusive growth.Government needs to give space to otheractors of the society in the economy forinclusive growth. In Pakistan government iscontrolling infrastructure, information,91

International conference on “Framework for Economic Growth, Pakistan”planning and regulations. Involving the civilsociety as partner of the developmentprocess is very important. In Bangladeshcivil society has worked with thegovernment in the development ofeducation, health etc.***InterviewHeru PrasetyoDeputy Chairman of the President’s Delivery Unit for Development Monitoring andOversight IndonesiaQuestion: Please give some initial comments on the Framework for Economic Growth.Answer: The growth strategy presented inthis conference is very comprehensivewhich talks about the youth, cities, marketsas well as governance. In developingcountries this is something which needs tobe done with a multi-stakeholder approach.The approach adopted in the conference toconnect more than twenty universities isexcellent. But the key work to be done is theimplementation. Having a very goodstrategy requires at very next level thereview of the existing regulations and thechanges required. It is important to considerthe inputs of everyone in the strategydevelopment process and theirimplementation which is a big challenge.But I believe that government of Pakistanwould be able to meet this challenge.The Growth strategy presented in this conference is verycomprehensive which talks about the youth, cities, markets as well asgovernanceQuestion: How do you compare Indonesia’s reform strategy with Pakistan?Answer: In terms of approach and processthere is similarity between both the countriesas in this conference you are getting inputfrom academia, NGOs and community atlarge. Development stages in both thecountries are different but I believe that youhave the same vision which you really wantto achieve for the people.92

International conference on “Framework for Economic Growth, Pakistan”InterviewParvez QureshiUrban Planner and Architect, LahoreQuestion: What are your initial comments on the Framework for Economic Growth?Answer: It is an extraordinary conferencetaking place here. A lot of credit goes to thePlanning Commission to put all the thingstogether. Thrust of the framework related tocities, urbanization, matters pertaining to theurbanization, and having cities as engines ofgrowth for the economy in the agenda topicsis very useful.Question: With respect to creative cities what major challenges you see for Pakistani cities toface?Answer: If we look 40 to 50 years backPakistan was one of the few countries whichhad extraordinary experience in buildingnew things and innovations in urbandevelopment. We developed a new city‘Islamabad’; developed projects in Karachi,Kotlakhpat project in Lahore, public housingschemes and katchi abadis etc. People camefrom other parts of the world came to us andlearnt from our experience.For the last few years we have lost track ofour institutional history and we are makingsame sort of mistakes now. This morning wediscussed about a number of cities inPakistan having population of more than onemillion. There would be about 17 cities inthe next 5 to 10 years in Pakistan withpopulation more than one million. Nobodytalks about the secondary cities growingwith population of over half a million. Innext 5 to 10 years there would be about 35to 40 cities in Pakistan with population overhalf million. All these cities need planning,urban management and institutionalframework to manage and rum them.Unfortunately we have lost our ability towork out an appropriate mechanism to runour cities. We need to look into our past andrevise our policies.There would be about 17 cities in next 5 to 10 years with populationmore than one million. Nobody talks about the secondary citiesgrowing with population of over half a millionWe also need to focus on divide of the poorand rich in the country. With respect tourban housing very little work has beendone in Pakistan for the urban poor. Fortransportation of urban poor very little workis done yet. For example millions of people93

International conference on “Framework for Economic Growth, Pakistan”ride bicycles for which we don’t have planfor routes and lanes. There are no conceptand plans for pedestrians. Other major issuesinclude pollution, water supply systems andsewerage networks, land use planning,municipal services, land banking andenvironment etc. Unfortunately our urbaninstitutions are not structures even to talkabout these important issues. Institutionsthat run the cities are very weak and the topmanagement keeps on changing. Topmanagement lacks background of urbanplanning and issues related to urbanization.The bosses of the development authoritiesserve in a city for very short time, learn thesubject at the cost of the tax payers andmove to some other place. There is a need tomake a dramatic change in the system toguarantee appointment of the people withproper background and with some continuityto manage the cities.With respect to urban housing very little work has been done inPakistan for urban poor***InterviewSohail NaqviExecutive Director, HECQuestion: I would like to invite your initial comments on the Framework for Economic Growth.Do you think that it’s a new strategy or a re-hatched strategy, and what challenges you see in it?Answer: The growth strategy builds uponprevious thinking, previous initiatives andwork done in the past in Pakistan, as itshould be. It also brings in new ideas andhighlights the critical and important itemsthat are necessary for the economic growthof this country. In Pakistan it is focusing onconnectivity, youth, entrepreneurship,human capital, and cities which are all verycore items on which we have to pay greatattention if we want this country to grow.Question: When we talk about ideas, the youth and harnessing our young population universitiesplay an important role. What do you foresee that in what direction our universities are going?Answer: It is indeed heartening to see thisgrowth strategy which comes after thesecond phase of HEC’s medium termdevelopment framework. HEC mission was94

International conference on “Framework for Economic Growth, Pakistan”defined to facilitate universities to serve asengines of growth for socio-economicdevelopment of Pakistan. So there is a clearlink between the development of universitiesand the economic growth. Secondly we arefocusing on three strategies which are thatuniversities are playing role in buildingeconomies, communities and the leadership.All our focus is that universities work asautonomous entities to look at where theyare located, look at their surroundings, assetsthey have and the industry around to play apositive and leadership role in taking theopportunities that are there and making thebest out of them for the socio-economicdevelopment of the country. For growthstrategy of any country to work theuniversities have to play an important role.Today we have, for the first time, five universities ranked among thetop 500 in the world; and our universities ranked amongst top 100universities in Asia.Question: What role HEC is playing in reforming universities?Answer: We looking at the entireenvironment as an ecosystem of highereducation which includes students, faculties,curriculum, facilities, interconnectivity,trainings, research and their application,innovation, entrepreneurship etc. We startedprogrammes for improving universities withentirely focusing on faculty development.We started working on infrastructure andfocused first on improving digitalinfrastructure of the universities. We can seethis conference being televised widelyacross Pakistan through Pakistan educationalnetwork of the universities. We are buildingphysical infrastructure and expanding theuniversities. We also focusing on the qualitystandards and building the capacity of theuniversities to implement these standards.All above acts together have served toreform the higher education sector inPakistan. Today we have, for the first time,five universities ranked among the top 500in the world; and our universities rankedamongst top 100 universities in Asia whichis a very positive development in the highereducation sector.Question: Last night we heard Dr. Richard Florida and he talked about ‘4 Ts’ viz. ‘Technology’,‘Talent’, ‘Tolerance’ and ‘Territorial Assets’. We find many youngsters going abroad to find anenvironment which they think is better and stimulating to harness mental powers. In such asituation how can we harness Pakistani talent?Answer: We recognize a phenomenallytalented young population of Pakistan to bea great resource. We talked about thedemographic dividend that is to come fromPakistan. We have a lot of young brightpeople here. Unless we provide themopportunities to recognize and harness theirtalent we would not be able to convert thisresource into capital. Here the role ofeducation system is crucial - staring fromvery lowest level of education building up tothe higher education. We are focusing on thehigher education as an output which isdirectly going into the economy and makinga direct impact.We have to handle both the issues of socialand technical nature for better understandingand solutions. We are focusing on ouruniversities to build on a capacity to look95

International conference on “Framework for Economic Growth, Pakistan”around them and have an impact on the localcommunity, the local environment and theeconomy.Question: As a Pakistani citizen what would be your comment about our primary education.Answer: We have a real problem with ourprimary education system. One of thefundamental issues universallyacknowledged is that a child learns early inthe mother tongue. We are binding ourpeople and putting chains around their necksto learn in a language which is not theirmother tongue. English is a very importantlanguage, but can be learnt only as alanguage. English doesn't have to be amedium of instruction and education. Use ofEnglish as a medium of education can’t beconducive to the development of thiscountry. Second important issue is that if weare one country we should have oneeducation system everywhere. In Pakistanwe have English medium, Urdu medium,Madrisa education, ‘O’ level, ‘A’ level etc.There is no problem with high school(matriculation) or intermediate (FA/F.Sc.)system but the problem is that how we teachthem. In primary education we need tofocus on the fundamental problems that howinnovatively we are teaching, a focus on theteacher, and provision of training to theteachers. We have an idea in Pakistan thatlower is the education level, lower thequalification required. In my point of viewwe should use Ph.D. psychologists for preschoolingfor their early age education andgrowth. We should reward the teachers bothfinancially as well in status as teacher is themost important element in this newdevelopment paradigm.One of the fundamental issues universally acknowledged is that achild learns early in the mother tongue. We are binding our peopleand putting chains around their necks to learn in a language which isnot their mother tongue.Question: Moving forward what do you see a major challenge for economic growth?Answers: The major challenge is theimplementation of FEG. We have crises ofgovernance in Pakistan. At the political andinstitutional levels nothing can beimplemented until there is some institutionalownership and agreement at the highestlevel. Just few days back we changed thelocal government system in a province. Ifyou have heard the debate on the creativecities the fundamental part was that if thereis no local government there is no creativecity. Ownership of institutional frameworkfor implementation would be a realchallenge for the government and the role ofthe leadership is important in this regard.***96

International conference on “Framework for Economic Growth, Pakistan”InterviewJohn SpeakmanPrivate Sector Specialist, World BankQuestion: Please give your initial comments on FEG.Answers: Growth happens in firms locatedin cities. Particularly in South Asia we seevery little emphasis on these three points.First point is that very little emphasis isgiven on the importance of the cities andthat the cities being the drivers and placeswhere growth will happen. My point is thatthe growth takes place in the firms, not inthe government. Second big driver of thegrowth strategy is the need to get thegovernment out and to do the right job.Thirdly firms need the space to breathe andgrow on their own. They need supportiveregulations, not the regulations that aregoing to destroy that and refrain fromcompeting.… growth takes place in the firms, not in the government.Question: In terms of the emphasis on the cities in Pakistan what do you see as the majorchallenge? Why have not our cities been able to evolve?Answer: Cities don’t have the money. Ipreviously visited Middle East and seen verysuccessful cities there. The reason for thesecities to be successful was their earningsources, revenue generation and taxcollection. But here the cities, generally andspecifically in Pakistan, have cashconstraints. What I feel that once the citieshave proper resources then they would beable to see the things happening.Question: Would you recommend revisiting the devolution plan and perhaps the decentralizationas well?Answer: I don’t know much about that inPakistan but I understand devolution hasstarted here. Some of the speakers today hada very strong suggestion that to be anauthority of the government, as it is there incase of India also, it must be very muchsupportive of encouraging not only fiscaldevolution but allowing cities to raise theirown revenues. To raise the revenues andengage proper partnership some of the citiesin Middle East make the money by engagingin commercial real estate, using the spaceand involving in corporate businesses etc.Once city governments have resourcesavailable they should be accountable to thepeople. If city governments fail to perform,97

International conference on “Framework for Economic Growth, Pakistan”people can throw them out. The institutionsin cities are naturally going to be heldaccountable to provide services to thepeople, as otherwise people will not stayaround.Question: What main challenge you see for the growth strategy?Answer: Major challenge for the growthstrategy is to recognize that Pakistan needsto improve the governance. I think it isincredible that the Deputy Chairman has puton the table a very brave and courageousthing to do. It is a big challenge goingforward that how to get the governmentbehave in a way which would enable thekind of ideas which are happening here. Thegovernment has a strong vested interest tokeep status quo. To change that status quothis conference would mobilize publicopinion and allow them to exchange theirideas.***InterviewPhilip AuerswaldProfessor, George Mason UniversityQuestion: Please give your initial comments on FEG.Answer: It is a very exciting initiative and Ihave followed it from inception. I wasinvolved in drafting one of the numerouspapers that served an imprint into thisgrowth strategy. So I have seen itdeveloping since then. I can say, from anoutsider perspective, that this is a quiteunique initiative. I am not aware of anyinitiative that has taken specific ideas whichare embedded in the growth strategy. I thinkFEG is a leading initiative that a countrywould be looking towards in terms ofeconomic growth in 21 st century.I think FEG is a leading initiative that a country would be lookingtowards in terms of economic growth in 21 st century.Question: Please describe a little about your background paper for the growth strategy.Answer: My paper is about theentrepreneurship in the markets. The title ofthis paper is “Creating a Place for theFuture”. I think it is one way of thinking98

International conference on “Framework for Economic Growth, Pakistan”about what the growth strategy is trying todo. In any environment in combinedactivities the exciting successful businessesare a little bit like a canopy in a rain forest.This is what an outsider from a distancewould see it in totality of an economy. Butunderneath the canopy of the rain forestthere is all the life of the forest including theunderbrush etc. And importantly thoserapidly growing new trees in terms ofmetaphor are the firms and businesses in aneconomy. It is a process by which largeentities succeed and prosper, but eventuallythey leave and make room for the newbusinesses which create economicdynamism and ultimately long term growthand economic success. That was the natureof our paper that how firstly we can createmarkets for Pakistan and government toprovide level playing field... underneath the canopy of the rain forest there is all the life of theforest including the underbrush.Question: With respect to growth framework do you agree with the four priorities identified?Answer: I absolutely agree with the fourpriorities. People can find differentapproaches to articulate that what isfundamentally same idea and connection. Interms of markets, competition, andentrepreneurship what I just described wasthe dimension that I also emphasized in mywork. Certainly the dimension ofgovernance is important in which people inpublic service need to be effective publicservants to contribute to national well-being.Another important dimension is of cities. Incontext of urbanization I thinkunderstanding the role of cities is veryimportant in 21 st century. The growthstrategy is inventing the concept relating tolarge scale urbanization. What I thinkPlanning Commission is articulating byemphasizing cities in growth strategy is thatthis process is happening now and it shouldbe focused towards the objective ofadvancing Pakistan’s economy and helpingto realize its potential for 21 st century.Question: Do you think that given the current power structure we would be able to think aboutthis reform?Answer: All I know is that every country hasits own politics. Every country has its wayof organizing existing interests. Whether itis USA or Pakistan, or any other part of theworld political parties tend to reflect existingeconomic power. So in that sense the changewill be required in Pakistan, and similarlychange also happening in USA. I look at thedifficulties that are faced politically here interms of liberating markets, encouragingentrepreneurship, creating future markets,opportunity for youth and these are similarlyimportant elsewhere in the world. I believethat people in Pakistan are very much patriotand they love their country. That sense ofnational pride will lead them to make thechoices which will really help this countryreach its potential not only in 21 st centurybut also in the future.***99

International conference on “Framework for Economic Growth, Pakistan”InterviewFauzia WahabMember National AssemblyQuestion: Please give your initial comments about the FEG.Answer: FEG is a very valuable documentfor the country. If somebody really goesthrough this document he will find answersof many questions. This new framework isgiving certain new directions to follow.There are solutions to many problems in thisdocument which we had been looking forthe last many years. This document shouldnot be confined to the Planning Commissionbut to be distributed at all levels likeuniversities and government offices etc. Dr.Nadeem Ul Haque along with his teamshould go and have interactive sessions inthe universities. Boys and girls in the age of14 to 20 should also be involved in thediscussions on this framework.There are solutions to many problems in this document which we hadbeen looking for the last many years.Question: Do you think that this New Growth Strategy needs to be discussed in the NationalAssembly as well?Answer: Yes it should also be discussed inNational Assembly. It can be discussed inQuestion & Answer session and in StandingCommittee. We can pass a resolution aswell. Deputy Chairman and his team shouldencourage members of the NationalAssembly to talk about this growth strategy.I agree with the reforms which thisdocument is proposing.I agree with various suggestions and reformsregarding creating a vibrant market. I agreewith the concept of creation and creativity.We need to encourage moreentrepreneurship among our people, tradingcommunity as well as youth. Why USA isgrowing very fast is because of theinnovation and creativity which has madethem a leading nation in the world. InPakistan when “Khadi” started first time Ithought that it would not work. But now ithas become a well known brand name inPakistan. Same is with the “Bareeze” whichis mainly due to creativity and their businessis growing rapidly both locally and abroad.So our focus should be on creativity andencouraging new ideas. I agree with all thefour points which can bring change in ourlife style.Question: In governance issues we talked about Civil Services Reforms. Do you agree with the100

International conference on “Framework for Economic Growth, Pakistan”idea of such reforms? And there has been a lot of discussion about local body structure in thisconference. FEG gives very much importance to it as well. Please give your comments on thelocal body structure.Answer: Civil Services need to be reformedand restructured. Bureaucratic structure inPakistan is very stale and outdated and itneeds to be reformed. I have always heardthat local body structure is an instrument indelivering services. Actually in Pakistanlocal body structure has been high jacked bythe non-democratic forces. The democraticforces have not been able to adopt this toolof governance. We find the gap becausewhenever a military adventurer takes overthe country he compensates the wrongs andgive the people a new voice in shape of localgovernment. So we have seen the growth oflocal government during the militarygovernment regime. If you want localgovernment to be adopted in genuine way ithas to come through the parliament.Question: During the time of elected governments we have seen the Commissionary systemwhich has come back right now. Do you think that it is a good setup?Answer: Commissionary system is the timetested system. It has been with us for the lastmore than 125 years. It was introduced in1882 and since then the subcontinent hasseen many changes. This system has beenable to sustain all the pressures andremained intact.Other important challenge would be that this document sustains anykind of regime change. It needs to be discussed and made morepublic.Question: What major challenges you see for this New Growth Strategy?Answer: The challenge is that everyoneshould read this document and it shouldbecome a focus of our people. Otherimportant challenge would be that thisdocument sustains any kind of regimechange. It needs to be discussed and mademore public. Mr. Ajay Chhibber has veryrightly pointed out that there has to be aconsensus on this document. Somethingwhich is created by the bureaucracy mostlyremains confined to them. But if it isdiscussed at the parliament level it will alsobe discussed in electronic and print media.Once discussed at media and at the level ofpolitician people will own it. So this growthstrategy should be discussed at the floor ofthe assembly.***101

International conference on “Framework for Economic Growth, Pakistan”InterviewDr. Aliya KhanDepartment of Economics, QAUQuestion: In your opinion what are the key pillars of this growth strategy?Answer: The key pillars which I understandis that we need to have a more efficientgovernment and efficient markets. The citiesneed to be made dynamic to provideopportunities and spaces for businesses andcommerce. As university teachers have dueemphasis on the youth it is important toanswer that how we prepare the youth andharness their potential to make them partnerin the process of growth and development ofPakistan.Q: Do you think that our system is efficient enough to deliver when we look at the strategy?Answer: I think that it is going to be thebiggest challenge in terms of implementingNGS. I think we should at least open debateon it. Everything would not be possible inthe short term but if we haveimplementation plans we can goaccordingly. I think many institutions are inthe process of reforming themselves becausethey have to fight hard in this globaleconomic environment with the kind ofdecade’s old structures. Pakistani society isawakening and it is going through a kind oftransition and change.Dr. Nadeem very well said that this is a fresh approach and freshapproaches are always difficult to start, propagate and to takeforwardQ: How do you see the entire concept of the growth strategy in the current environment?Answer: I think the New Growth Strategyneeds to be widely debated and consulted.As far as the whole concept is concerned Dr.Nadeem very well said that this is a freshapproach and fresh approaches are alwaysdifficult to start, propagate and to takeforward. So it is important that the PlanningCommission and its partners try to makeconsensus around different issues and I thinkthey might get views they had not thoughtabout. There is wisdom outside in civilsociety organizations as they are working infields and they are well aware of the grassroot level issues. So let us hear them and letus see what opinion they have about theimplementation challenges and about theideological components of this strategy.Q: Do you think that there is a need for selling plan for this growth strategy? And do you think102

International conference on “Framework for Economic Growth, Pakistan”that other key stakeholders would be engaged in the process?Answer: I think that this NGS is more a sortof communication strategy. Now this is theframework for the whole Pakistan so itneeds very effective communicationstrategy. You have to make everyone awareof the role of provincial governments alsowhich are now more empowered and theyhave to decide that how they want toimplement this growth framework. Most ofthe implementation of this strategy will be atthe provincial level. There is private sector,academia, civil society and workers etc. tobe engaged in the process. How does factoryworkers, vendors etc. connect with thisgrowth strategy is an important question.What does a working woman of Pakistanthink about this growth strategy is alsoimportant. So you have to connect withdifferent segments.***InterviewDr. Akmal HussainProfessor, Department of EconomicsBNU, LahoreQuestion: Please give your initial comments on FEG. Do you think that it is a new approach andnot re-hatched approach of old ideas?Answer: The new economics has emerged inthe last three decades and hopefully whatthis conference is trying to do is to bring thenew economic literature broadly under theroof of institutional economics to develop afresh perspective and fresh growth strategyfor economic growth of Pakistan. Basicallywhat this literature is telling is that thecentral challenge for the policy making isnot just resource allocation but to setup aninstitutional framework, set of rules,incentives and disincentives which canshape the behavior of individuals and theorganizations. Objective is that theindividual actors and organizations becomemore efficient, productive and leaders forthe process of economic growth.With reference to the shift of a paradigm andperspective we can say that the conferencehas redefined it and provided a broader, butabstract, outline of new thinking. There isstill long way to put nuts and bolts together.I believe that the future of Pakistan and theprocess of growth lie in the inclusivenesswhere a large number of people includingpoor and middle class get economiccitizenship in terms of processes, savings,productivity and investments. Weakness ofthis conference is that it is not takingaccount of the central challenge that wedon’t just want high growth but an inclusivegrowth in which poor and deprived peoplecan become subject of this new growth103

International conference on “Framework for Economic Growth, Pakistan”process. That requires much work to bedone.The new economics has emerged in the last three decades andhopefully what this conference is trying to do is to bring the neweconomic literature broadly under the roof of institutional economicsto develop a fresh perspective and fresh growth strategy….Question: Do you think that the potential of large number of young people has been included andaddressed in the strategy?Answer: I don’t call it a new strategy. Butone of the new points of this conference isparticipation of youth and focus on them.The strategy is more a set of questionswhich have been raised. It is an abstractoutline and a fresh terrain of thinking of neweconomies. Thus the conference alsorecognizes the demographic structure i.e.young people. Any strategy being givenmust give direction to the youth as well asopportunities and to undertake them in theprocess having high wage employment,productivity etc. Youth must be given aleadership role in the strategy presented.***InterviewParticipantQ: Would you say that it is a new strategy or a revised growth strategy?Answer: I would say that the part of thisstrategy is revised and rest is a very newstrategy presented, especially the part of thedocument referred about youth andemployment. We need to visualize economyin such a way that the youth are madeparticipative in whole economic activity.That is the new thing or I would say a newparadigm in FEG.Q: Are you looking at the strong potential of the youth, and you think that they have beeninvolved in conceiving such strategy and being involved in the thinking process?Answer: Honestly speaking if the new ideasabout youth are implemented we can bringsomething good for them, apart from givinggood education. I think that the youth havetremendous potential, much more than us. Ifyouth are given the due importance which isthe requirement of the 21 st century then I amsure whole economy, system andgovernance would be changed. Our youthshould be given a chance to outwardly think104

International conference on “Framework for Economic Growth, Pakistan”and they should not be restricted to primitiveideas. Their focus and vision is muchbroader. Youth has streams of continuousinformation available to them which was notavailable to us.Question: Do you think that the strategy needs a good selling plan to sell it to key stakeholders?Answer: Yes it requires very concentrativeeffort, not a halfhearted. It requiresinvolvement of all the stakeholders. It is nota strategy to be ignored if we want to shinein this particular region. We mustconcentrate on the strategy inclusive ofyouth. It would automatically involvestakeholders because they know it is goodfor the future of their children. Now it is thetime to change our choices. The change inour choices would come when there will bechange in the mind set and the mindsetchange come only when we come up withnew ideas and fresh blood.The change in our choices would come when there will be change inthe mind set, and the mindset change comes only when we come upwith new ideas and fresh blood.Question: How do you look at the implementation process especially after the 18 th amendment inwhich provinces are more empowered to cater to the needs of the population? Will thosestakeholders being involved to implement such strategies?Answer: I am from Ministry of Defense.Even the Ministry of Defense is contributingin economic growth in many ways. We runthe cantonments, give civic facilities throughcantonment boards and those cantonmentsare better living places as they have betterplanning and implementation. Theirimplementation is monitored all the time.There are checks and balances in the system.Such check and balances are unfortunatelynot available in the civil sector. You bringhundred devolution, they will not bringthose affects until you put some personaleffort in that.***Interview105

International conference on “Framework for Economic Growth, Pakistan”Dr. Samar MubarakmandMember Science and Technology, Planning CommissionQ: The people who have knowledge are powerless and those who have power don’t have muchknowledge. What strategy you devise to turn Pakistan into a knowledge base society?Answer: I don’t say that the people whohave power don’t have knowledge. Some ofthe people have the power and haveknowledge too. Devising growth strategy inthe Planning Commission was a very hecticprocess. We did emphasize in the strategythat we have to make sure that thetechnology and education play a veryleading role in the development and growthof the economy.What we have done in this regard is that theuniversities which cater the education andresearch have been guided to conductresearch in the areas which are relevant tothe growth of the economy. We are fundinguniversities to a larger extent in researchprogrammes. We have leveraged those ideaswhich have to be done on priority for thegrowth of our energy sector, industrialsector, development of new materials,technologies, software, automation etc.Industries are really looking hard to work onthe relevance of it.Planning Commission is serious about thetechnical people, the technologists, scientistsand engineers as they would lead theadvancement of this nation. This nation hasto be modernized and has to advance itsindustrial growth to achieve GDP growthbeyond 3%. The products we produceshould be exportable and of good qualitywhich requires engineers and scientists.Deputy Chairman said very well that rocketscience is easier and this job is moredifficult. I am a person of science and in myopinion optimization theory needs to beadopted to prioritize things within economy,as told also by the Deputy Chairman. 95%of our wealth lies in our mineral resources.Pakistan has third largest coal deposits in theworld which in terms of energy is biggerthan the oil reserves of Middle East, SaudiArabia and Iraq combined. Pakistan hasthird largest deposit of gold and silver in theworld in Baluchistan and FATA. We canproduce cheap energy using our coalresources and I propose PlanningCommission to work on two large projectson priority viz. coal gasification project inThar (Sindh), and copper and gold project inRiko dek. Both projects will giveemployment opportunities and will help inboosting economic growth.***Interview106

International conference on “Framework for Economic Growth, Pakistan”Dr. Masoom YasinzaiVice Chancellor, QAU, IslamabadQuestion: While conceiving the new growth strategy was you looking at strategy for aknowledge driven economy?Answer: I believe that we have a role to playin higher education institutions. Pakistanneeds to move from resource basedeconomy to the knowledge based economyand we, being a university, have startedplaying our role. First thing we started inQAU is that we are giving access to thestudents on merit from all over the country.We have strategically planned things even atdepartmental level to make it moreinternationalized and we are moving tointroduce internationally compatibleprogrammes. We are targeting markets forour graduates across the border. As part ofthe agenda we have changed our olddepartments’ structure to the schoolstructures. Recently we have introducedSchool of Economics and introduced fouryears programme and Ph.D. programme. Ihave also injected fresh blood in form ofPh.D. from North America. We have alsostarted School of Politics and IntentionalRelations. Another important thing is thatwhatever we do in university it should berelevant to the country needs. We have alsointroduced ‘Office of the Research,Innovation and Commercialization” (ORIC).We believe that whatever we produce itshould be of quality and national agenda.We have established a “QualityEnhancement Cell” in the campus to ensurethe quality of intake of students, teachers;quality of teaching and research etc. So weare in line with the national strategy which isbeing devised for building Pakistan for 21 stcentury.Q: Pakistani society is passing through an awakening phase. Do you see any role ofacademicians, intellectuals and scientists as leaders of this country in future agenda?Answer: We heard here that Malaysiangovernment has developed a strategy inwhich General Secretary of a national forumis a professor of a university. Unfortunatelyin our country everybody believes that weare purely bookish as we are not as useful aswe should be. We need to involve ourselvesin all kinds of national affairs. Everywherein the world academicians are consulted fordeveloping strategies. In Pakistanunfortunately this role is missing. To make adifference we need to involve academia.***Interview107

International conference on “Framework for Economic Growth, Pakistan”Saqib MohiuddinBusiness Support FundQuestion: What role of SMEs you see in FEG for the development of Pakistan?Answer: We all understand that SMEs playan important role in the economicdevelopment of the country. In Pakistan wehave 96% of SMEs being the businessentities which are serving as engine ofgrowth for the country. We need to developentrepreneurship, innovation and growthstrategies in SME sector. An important factabout our SMEs is that 25% of our SMEs gobeyond 15 years of survival. Reason is thatthey are not able to face global competition.Entrepreneurship skills are lacking and theyhave failed to bring innovation strategies.Good governance is also lacking.I think that this conference will go a longway in introducing new models in SMEsector development and sustainability.***InterviewAyaz AmirColumnist/ JournalistQ: Please give some initial comments on FEG. Do you agree with the growth strategy and will itwork?Answer: Good ideas are presented in theconference. Whatever the growth strategy is,it will not work unless we have politicalconsensus and support behind which shouldcut across all the political lines. It isimportant that this strategy should become apart of all government policies and thinkingto make it work.Whatever the growth strategy is, it will not work unless we havepolitical consensus and support behind which should cut across allthe political lines.Q: What is the most binding constraint you see in this growth strategy?108

International conference on “Framework for Economic Growth, Pakistan”Answer: The situation through which thecountry is passing the government is caughtup in short-termism which is not conducivefor long term thinking and can’t servePakistan over a period of next twenty tothirty years. We should concentrate andemphasize mainly on key factors and keysectors. It is due to our short-term planningapproaches that we are facing crises aftercrises. We need to rise above everydayproblems and to think of larger and longterm things. So our task is to sell this ideanot just to the people but also to thegovernment. Planning Commission shouldbe a part of decision making team withpowers. The ideas generated by the PlanningCommission should be sold to theparliament so that representatives of thepeople get educated. There should begeneral economic discussions in the arena ofall political parties, party leadership and inthe parliament.InterviewDr. Ishrat HussainDirector, IBA KarachiQuestion: To begin with please give some initial comments on new growth framework.Answer: I think that it is a very goodbeginning to start thinking about challengeswe would be facing in 21 st century such asglobalization, information explosion,urbanization, demographic transition etc.which are realities of today. At least wehave started thinking of implications ofthese global trends. Particularly our youthpopulation is important. 50% of our youthpopulation is going to be in job market andlooking for opportunities. If we fail to createopportunities there can be a risk of socialexplosion. This is the reason we need atleast 7% to 8% growth rate in Pakistan.Implementation is very important whichrequires will of the successive governments.Desirability of reforms and implementationis a real challenge ahead.About Civil Services Reform I would like tosay that the capacity to translate this visionand policies resides in the capacity ofinstitutions which further depends oncapacity of the Civil Servants. If we don’thave high caliber Civil Servants who areresponsible to the needs of the poorsegments of the population then whatevergood policies we may have will not gettranslated into real benefits. About revival ofCommissionary system we think that wehave to make a distinction between differentjobs such as law and order, revenue anddisaster management etc. which mycommission has also recommended in CivilServices Reform document. There should beneutral administrators in districts. Sanitation,109

International conference on “Framework for Economic Growth, Pakistan”education, health etc. should beadministered by the local governments. Ihave also written a chapter on devolutionplan for monetization and presented acomplete Performance Management Systembased on integrated value chain systemincluding recruitment, training, performancemanagement, career progression,compensation and retirement. If we don’tpay well nobody will come to CivilServices. So there is a need for an integratedsystem.50% of our youth population is going to be in job market and lookingfor opportunities. If we fail to create opportunities there can be a riskof social explosion.Q: Do you think that it is a new growth strategy or re-hatched from the old one?Answer: It is a new growth strategy in thesense that it gives a thinking to address theproblems of 21 st century. We need to thinkthat where the world is going to be andwhere we have to position ourselves. Toposition ourselves we need to think that howwe have to reform our institutions, policiesetc. so that living standards are improvedand poverty is reduced in the country.***InterviewParticipantQuestion: To begin with please give some initial comments on Framework for EconomicGrowth.Answer: Thank you for having me here atPlanning Commission and I am pleased tosee all the efforts. We were also involved ingiving inputs on the FEG to PlanningCommission together with our partner‘Economic Freedom Network Pakistan’. Iam pleased to see efforts going to largepublic, students, and universities and todifferent parts of the Pakistan. FEG is reallya big step forward. The contents and ideasexpressed here are phenomenal. Pakistan hassuch a good youth, dynamic knowledgeassembled here which all we guarantee apositive development. Pakistan falls behindjust for not reforming things. Populationgrowth will eat up all the efforts. Howsuccessful are policies we can see at Indiawhich is transforming from socialist ideas toa free market economy. Free marketeconomies will improve quality of life.Ideas of giving subsidies harm economy andbenefit few people. Pakistan needs to takeinto account knowledge which is alreadyhere and implemented. I agree with thesequencing of four pillars of FEG. It hasstructures and patterns from all over the110

International conference on “Framework for Economic Growth, Pakistan”world which are also experienced byMalaysia, Indonesia and other neighboringcountries.falling back in Economic Freedom Index bynot doing things and delaying reforms. Theprocess of FEG needs to be continued.Implementation is the real challenge forNGS. Implementation must go on and itshould be a constant reform. Pakistan isPakistan has such a good youth, dynamic knowledge assembled herewhich all we guarantee a positive development. Pakistan falls behindjust for not reforming thingsQuestion: Is aid good for Pakistan or it is crippling our economy?Answer: Even Western countries have mademistakes in the way of giving aid. The maincase study was conducted in Africa, but theprinciples remain the same. Now we areshifting towards a free market economy. Intraditional aid system countries remainbeggars. In new strategy the focus is oncreating structures to enable people to earntheir own living with dignity which is amuch better approach to provide aid.***InterviewMuhammad AliChairman, SECPQuestion: How do you find this conference on Framework for Economic Growth? Please alsocomment that how can we develop entrepreneurship in our country?Answer: I fully agree with the timing andthe approach of this conference and we needa new growth strategy in the country. It iseasier said than done. In my session Ipointed out that we have seen the period ofhigh growth when we were receiving foreignassistance. We have to look at the internalflaws and need to identify the weaknesses ofthe system.One thing which is identified by everyone isentrepreneurship. We need to encourage thebusinesses and entrepreneurship in thiscountry for that we need vibrant financialmarkets which can provide financial capitalto the people who have talented ideas. Withfinancial gap it is not possible to bringentrepreneurship. Secondly we need to111

International conference on “Framework for Economic Growth, Pakistan”reduce the interest rate in this country. Wehave very high interest rate regime becauseof which there is no motivation to take theextra risk in the investment in businesses.Legal infrastructure also needs to beimproved and policies have to be consistentacross the board. We need to come up withthe ways by which trade can be promotedwith the neighboring countries and to takebenefit of the competitive advantage. Weneed to improve the education level of thiscountry. All these factors need to worktogether to achieve high growth rate.We need to encourage the businesses and entrepreneurship in thiscountry for that we need vibrant financial markets which can providefinancial capital to the people who have talented ideas.Question: Talking about competitive advantage and trade with India our industrialists seem to bepetrified from Indians. Please give your comments.Answer: In terms of talent our businessmenare not less than Indian businessmen. Whatwe are getting is a market of billion peopleand what India is getting it is a market of170 million people. So we have a lot ofbenefit to get and we have to encouragepeople for competition. Being petrified andscared of the competition we would not beable to become efficient and effective inlonger term. Pakistan has a lot to benefitfrom the region within the neighboringcountries and there is no reason to bepetrified and scared of Indian businessgroups at all.Question: Initially you talked about entrepreneurship and developing entrepreneurship skills. Butan environment where people like Malik Riaz are very successful by just being in real estate whywould someone go and setup a business while it is more profitable to invest in property.Answer: We have been a trading nationprimarily. We have promoted financialcapital as I said earlier. So many people withbrilliant ideas are there but they are not ableto raise the national capital. For example toopen a small restaurant would require fiftythousand dollars. Where from the personwould get that money? So we are notproviding the infrastructure or theenvironment where businesses arepromoted. The purpose of capital market isto channelize savings of common man andwe have failed in doing that. Capitalizationis discouraged in this country because if youare a capital entity a regulator is watchingyou and regulating you. If you are not acapital entity your tax rate is low and thereis no regulation. We need to create anenvironment where competition andbusinesses are promoted and we as a nationneed to work very hard. Number of investorsin the market is low. Over the last few yearsSECP has taken few steps to encourageinvestors promote capital market. We havetaken the responsibility to educate theinvestors. We have separate teams for that inSECP and trying to regulate the stockmarket.Q: have you been able to implement the capital gain tax?Answer: Capital gain tax was imposed last submitting returns. It falls within the domainyear. It is the first year that they are of FBR and is implemented.Interview112

International conference on “Framework for Economic Growth, Pakistan”Maqsood Ahmad BasraChief Executive, Atlas Power LimitedQuestion: Please give your initial comments on NGS. What do you think that is it a new strategyor an old growth plan you have seen?Answer: Whatever we have gone throughsince this morning is definitely a better latestconcept. We have seen many plans in thepast and all ended due to implementationand governance problems. Communicationand understanding of this growth strategy isvery important.Question: Do you think that private sector is with us on NGS? Please comment on trade withIndia. Are you in favor of trade with India?Answer: If the role of the government islimited to provide facilities, infrastructureand give competition and openness thenbusinesses will grow rapidly.When you talk about trade you have to lookat the equation on both sides of the borders.We are facing shortage of electricity, wehave bomb blasts, severe law and order andsecurity problems, no foreign investment;while on the other side there is a totallyfavored market from the world. So we can’tsay that we can compete with an economywhich has all the support available from theworld whereas in our country we don’t havemoney to invest or even don’t haveelectricity. Most of our resources are beingused in meeting the expenses of thegovernment. We don’t have proper facilitieslike public transport, proper railway etc.***InterviewIqbal Anwar KidwaiGeneral Manager SMEDAQuestion: What is your general opinion about economic growth?Answer: We are getting very fresh ideas byattending this conference. We have alsogiven our comments on this document andwe own it. The dynamics of this growth likegovernance, openness of markets, cities andyouth need to be integrated. Action plans113

International conference on “Framework for Economic Growth, Pakistan”should be defined that which sector wouldplay a role to lead this strategy. If we leaveit open ended the targets would not beachieved unless all the sectors in public andprivate will not work together.Question: Please give some initial comments regarding the FEG. Do you think that it is a newstrategy with the fresh ideas or it is re-hatched?Answer: The FEG is neither a strategy nor aframework. It is a set of new questions andthese are drawn from the new economicliterature emerged in last three decades. Inother words it is a set of rules on the basis ofwhich the economic growth andperformance can be shaped and influenced.The questions which are posed are quite newwhich would open up a new terrain of policyanalysis and actions as a result.We The intellectual challenge in devising a NGS is that we have toidentify the new kind of institutional reforms which require a lot ofnew research, a look at the history of Pakistan, systems ofgovernance, and its institutionsQuestion: Do you agree with the sequencing of the priority areas proposed in the FEG?Answer: The priorities that have beenproposed in NGS are very important. Butthat doesn’t constitute either a framework ora strategy because a strategy requires twokinds of serious efforts viz. to give greaterand concrete approach to improve thequality of life, productivity and liberalizemarkets etc.; and secondly theimplementation mechanism. The intellectualchallenge in devising a NGS is that we haveto identify the new kind of institutionalreforms which require a lot of new research,a look at the history of Pakistan, systems ofgovernance, and its institutions. Whether themarkets work efficiently or inefficientlydepend upon the institutional frameworkwithin which these markets operate. Simplyderegulating the markets is not a good idea.World economic crises happened as themarkets were not self regulating. So we needa regulating mechanism and institutionalframework for markets.The kind of power structure we have inPakistan is that we have a coalition of eliteswhich has the power and strong stake inmaintaining the status quo. Such coalitionshave created institutional structures whichexclude common people from economicgrowth, and restrict open and faircompetition in the country. Opening up themarkets requires engaging power structuresand regulating open and fair competition inthe markets. Fruits of the growth shouldreach not only to the rich but also to peoplein middle and poor class.***114

International conference on “Framework for Economic Growth, Pakistan”Special Lecture over Video ConferenceBY PROFESSOR RICHARD FLORIDAWELCOME REMARKS BYDr. Nadeem Ul HaqueDeputy Chairman Planning CommissionMr. Richard Florida is a well known namearound the world. There are too many factsto read out about him. But let me tell yousomething about his books “The Rise of theCreative Class”, “Who is Your City” and thelatest one “The Great Reset” which are veryinteresting and look at the global crises andtheir ramifications as well. Richard Floridais a well known academic and a popularwriter. He is writing for The Atlantic, NewYork Times, Wall Street Journal, TheEconomist and Harvard Business Review.He has also been featured on every majornews channel. He has also been appointedto the business Innovation Factories’Advisory Research Council and alsorecently named European Ambassador forCreativity and Innovation. I hope that hewill give us a good lesson on cities andcreativity. He has some very innovativeideas. The thing which attracts me is the factthat he is talking about creativity.We have put forward a NGS and urbandevelopment is at the heart of it. I would saythat the ideas from your work would help usto harness energy of our cities and reallyreconfigure them. Our cities are exactly theopposite of what Richard told us. Our citiesare sub-urban sprawls with no city centres,no culture and no creativity. This is what Iwant you to talk about and challenge us torethink on notions of urban growth.Currently we have 90 million kids under theage of twenty and many of them areuneducated and probably not going to getthe jobs. Our growth rate is 2%, almost sameas our population growth which means thatour per capita income would remain thesame. So I want you to educate us thatwhere we are going to find the jobs for ourkids? And if we don’t find that then who issafe in this world?Thank you very much Richard and we lookforward to hear from you.***LECTURE BYProfessor Richard FloridaThank you for that kind introduction. I wishwe can be with you personally for thiswonderful programme and magnificentdinner for both celebrating your incredibleaccomplishments on the NGS and helpingyou chart a course for the future of Pakistan.I applause what you do Nadeem and yourentire team, the conference attendees and theparticipants. I know what you doing is veryimportant for Pakistan’s cities in emergingand developing world. More generally myhope is that you can chart path that others115

International conference on “Framework for Economic Growth, Pakistan”can begin to emulate.First of all I would discuss my ideas oncreativity, the creative class, cities at urbanareas and anything more applicable to thecontext of Pakistan and the emergingeconomies. Main motivation behind all mywork is that people talk about trade ingrowth strategy, exporting as a growthstrategy, attracting investments, innovationand technology as a growth strategy; but Iwant to focus my attention on the mostfundamental quality which is shared by allhuman beings. A nice intellectual lead Imade in my research is that it is not simplytechnology, or trade, or FDI, or eveninnovation that drives economic growth butthe basic human quality of creativity whichis there in all six billion people around theworld. I think we had forgotten that. If youask me what lies behind the economic andfinancial crises is the fact that it began inUnited States and spread across the world.We tried to build an economy on trading,financial instruments, banking and onspeculations and tried to make wealth formaking money in an easy way instead ofbuilding real economy based on humantalent, creativity and human capability. Thatis why I called my book not the greatestcrises, or the great crash, or the greatdepression but called it “A Great Reset”.What I was able to find by looking back atthe periods of contemporary history is that ittook twenty to thirty years to resolve theissues of the economic crises and depressionof 1930s and 1870s. But in new economiesand new economic systems it is raised basedon knowledge and creativity.So challenge today before us in Pakistan andacross the world is to build new andendeavoring structures, new institutions andmodels, polices and frameworks which aregeared to harness the most fundamental andmost essential key economic measure wehave which is creativity of our people. Weare living in this world of the greatesteconomic revolution of human history. Thisis greater than the shift from agriculturesociety to an industrial society. Agriculturesociety was quite disruptive because of twomassive worldwide depressions and WorldWars and it took about 100 years to build apublic policy regime called the new deal.The shift we are going today is deeper andmore elemental because for the first time inhuman history the nature that how wealth iscreated has changed. In the past we couldcreate wealth from a combination ofphysical resources i.e. raw materials,massive factories in urban industrial areascombined with labor, capital, and land toproduce things and increase our standard ofliving. But that is no longer a recipe forcreating wealth now. So the key to createwealth and improve living standards lies inharnessing intellectual labor and knowledgebased production and more importantlyhuman creativity. Now this creative resourcehas become the main thrust of economicgrowth.When some people hear about my notion ofcreative economy and a creative class theybelieve that it is a latest notion. Only theadvanced cities like Silicon Valley inCalifornia or the great cities of the West,like emerging cities in China, have thatcapability. But this is a misreading. In fact inmy book I pointed out that the key economicsuccess lies not in 20% or 30% of us whohave the great fortune to be members ofcreative class working in science,technology, innovation, business, arts,culture or the entertainment but the keysuccess in 21 st century lies in harnessingcapability and creativity of everyone. Ilearnt this as a young boy by going with myfather to the factory where he used to work.My dad had education only up to gradeseven. He dropped out from school duringperiod of great depression to help andsupport his family. He worked in a factoryin industrial sector of North New Jersey.116

International conference on “Framework for Economic Growth, Pakistan”When I was a young boy I asked my fatherto take me to the factory. When I entered thefactory it was an old industrial buildingmaking eye glasses and I was fascinated bythe machines and technology. My dadcorrected me that Richard it is not themachines that make this factory great but itis knowledge, intelligence and creativity ofpeople who work here. Whether it is atransformation of inputs to products, or toservice sector, it is not simply quality ofproduction or reducing cost, but it isaddition of creativity in design. It is humanknowledge and capability that creates value.Rise of creative economies in context of oldinstitutions is very powerful which isorganized around massive production, bigcompanies, sub-urban sprawl and that iswhere adjustment comes in.Cities that can realign and reset themselvescan build new institutions, new public policyregimes, structure and urban norms thatenable them to adjust capturing thiscreativity which will give enormous boost.These great adjustment periods and resetsare openings for upwards and converselydownwards movement. The great economistMancun Oslon and his great book “The Riseand Decline of Nations” argued that theseresetting periods often shift geographiclocus of economic power, economicdevelopment and technological innovationin growth. The reason he argued is becauseincumbent countries and leader countries/regions get trapped by the older institutions,frameworks and models that spur theirsuccess which he called it trapped byscleroses of arteries - an institutional andorganizational scleroses trapped by the oldorder which doesn’t allow a country orregion to go into new order. By adopting anew growth strategy and focusing onharnessing creativity Pakistan has enormouspotential and opportunities to insertthemselves in global economy in a morepowerful and productive way.Dr. Nadeem mentioned in his openingremarks about focus on cities and creativity.If 21 st century is the century of creativitythen the rise of cities and creativity areeconomic forces and main driver forharnessing human potential as wealthgenerator across science, technology,manufacturing, service and agricultureacross the board. The rise of the modernscorporations and industrial firms hasbecome the mechanism for exploitingnatural resources combing with capital,labor and building wealth. The agriculturaleconomy in the past was organized aroundfarms and small trading centres. Humanproductive power, new material and soil wastransformed to wealth in and around anorganizing system of farms. But in theindustrial era the modern industrial firmsbecame mechanism of exploiting resources.The system of mass industrialism andcorporations had a geographical analogue –suburban sprawl when companies couldbreak production and in fact moveproduction in different parts of their homecountry and then all over the globe. Theycould create industrial parks, areas and largehorizontal factories that required roads,production and consumptions, energy etc.The rise of creative and knowledge driveneconomy has brought us to a new social andorganizing unit. Whether you look at theinnovative sectors of Silicon Valley whichare creating new companies or you look atthe clusters in Europe and throughout theworld, as Professor Michael Porter alsoidentifies as driving growth andspecialization, what you find is that the cityor community itself has become a social andeconomic organizing unit of our time. Cityis the place where innovation occurs andhuman beings can combine their talents.Robert Locus at university of Chicago, whoafter winning his Noble Prize in economics,pointed out to Jane Jacobs that I believe thatJane Jacobs has discovered the verymechanism of economic development whichoccurs not by building giant firms, ports,117

International conference on “Framework for Economic Growth, Pakistan”firms, roads or not through trade but bymobilizing people in cities where wecombine them to harness their creativeenergy that is the spur to the birth of greatcreative destruction and innovation thatdrive growth.In my work I am coming to the conclusionthat the world is not just flat but theknowledge drives economies which are veryspiky. In our research we were able toidentify mega regions of the world likeBoston, New York, London, Shanghai andmany others; and forty largest of whichproduce more than two third of oureconomic output and nine in ten of ourinnovations. In fact the 21 st century is thecentury of creativity and great cities whichwill harness human capability.I have developed four ‘Ts’ of economicdevelopment. First ‘T’ is “Technology”. Forgrowth a country or a city needs to invest intechnology and harness it. It needs to createtechnology in homes, firms, in businesses,colleges and universities. Second ‘T’ is“Talent” which requires investing in talentand attracting talent. Talent doesn’t mean tohave a degree. It can come from any cornerof the society. A city needs to be vibrant toattract talent and technology. There is aglobal competition for talent. A city needs tobe “Tolerant” which is the third ‘T’. Manypeople say that we want to go to WashingtonD.C. as it has openness and tolerance. Aperson’s choice for openness and toleranceis a motivator and a pre-condition to attracttalent in a city. Inclusiveness is veryimportant and everyone should have anopportunity to live a life with excitement.Finally the fourth ‘T’ is “Territorial Assets”.In a world where every city looks like thesame and has become generic; people arelooking for something unique about a placewhich is a community’s territorial asset. Oneimportant thing in this regard is the city’sown unique history, culture, artistic history,street food, street music and culture.The fusion of the new and the unique can bea driving force for a city. I am a professorand can speak for ever. But I stop here. Icongratulate you and looking forward forquestions to answer. I hope that in somesmall way my remarks help you on thisincredible path to a New Growth Strategybased on harnessing human assets andbuilding great cities in Pakistan.Thank you for the opportunity to be withyou.***118

International conference on “Framework for Economic Growth, Pakistan”QUESTION & ANSWER SESSOIONOpening Remarks and Question from the Deputy Chairman, Planning CommissionRichard thank you very much. It was really an interesting talk and I have enjoyed it enormously.Even though I have read all your books still I learnt something new. Let me also tell you aboutRichard that he is also a very good professor and encouraging. He has also encouraged my son,Umair Haque, to write a book and Richard has also written a blurb for that.Richard has told us a number of things and you would be pleased to know that we have includeda number of good ideas including 4 Ts in FEG. Before I open floor for discussion and questions Iwould like to ask you first that how do you think that being a thousand dollar per capitadeveloping country we need to follow the stages of growth, create industry first, things which areway beyond us or jump and start it?Answer by Dr. Richard Florida:This is a very fundamental question. Myhunch is that if you look at the traditionalladder model and tried it, it has not let yougo to great success. It seems to me that thesuccess of a country with great resources,like Pakistan, lies in its large population,rich history of creativity, andentrepreneurship. We need to enableentrepreneurship in Pakistan. Butentrepreneurs you have sent to America andother parts of the world. Every single daythey come to America from Pakistanbuilding great technology companies,service companies and call centres etc. Ithink the talent base is there and we need tofocus much on entrepreneurship spirit. Onceyou enable entrepreneurs and motivate themthey may come back, share their experiencehere and start businesses. Secondly you havea great number of cultural entrepreneurs inyour artistic world in music, food, art &craft etc. and they are ignored by thestrategies made by the government becauseyou focus mainly on building large scaleindustries. I think you need to make a newbargain with your people and tell them thatwe are going to invest in your talent,creativity, education etc. to harness talent.Bargain on the citizens should be that theyuse their talent and use capabilities in mostproductive way to not only try to get a betterjob for themselves but also create jobopportunities for others.***Questions to Professor Richard Florida from audienceQuestion: I have a question which looks at the link between agriculture and city’s development.In a country like Pakistan we see disparities between agriculture and urban sector. In this textwhen we talk about city to be inclusive of agriculture sector it becomes difficult to convincepeople. How do we do that? Please comment.Answer: I think it is a false distinction. Iwant to try to clear that this issue is alsothere in United States and Canada. Peopleask there as well that if we go to cities do weleave rural areas behind. Jane Jacobs saidthat our model typically means that119

International conference on “Framework for Economic Growth, Pakistan”agriculture gives us cities. Rise of trade inagriculture has given us cities. But what shehas said is that it happened other wayaround. The development of cities i.e.aggregation of human beings and division oflabor happened before the development ofmodern agriculture as it could only happenwhen urban population and dwellers werethere to demand those products. Theupgrading of agriculture and the rise of themore creative entrepreneurs transformingthe farming for sustainable and localingredients, or transforming simple productsinto value added businesses. Returns onbusinesses are much higher in urban areasdue to large population or so called spikyworld. So our growth strategy should notonly bridge the gap between agriculture andurban areas but also to develop a system inwhich agriculture and urbanization can fittogether in a more creative wealthgenerating pattern.Question: Cities are new and these are developed in thousands of years. But in context ofdeveloping economies, may be about ten years ago, cities were slums. In your analysis havethere been contents of creativity in these towns?Answer: A recent book by Professor EdwardGlazer at Harvard speaks about it thatgenerally the income level, wages and livingstandards across the globe are much higherin urban areas and surroundings than ruralareas. Improving city life and making itlivable, as you doing in FEG, requiresdealing with many problems in cities whichis a key path on the road to real economicgrowth.Question (by Emiel A. Wegelin, GIZ Program Coordinator): There is a recent book by aCanadian Journalist Duck Sandres titled “A Rival City”. It testifies vibrancy of informal areas ina city. It also told that settlements and informal sector over last forty years had been thedominant mode of generating wealth in our cities and we should not forget that. I would likeRichard to respond to that.Answer: Thank you for yourrecommendations. Duck Sandres is mycolleague and a good writer, reporter and Istrongly recommend that book. I think thereare two things we can do. One is that thereare a lot of public policies that impede theprocess of migration and resourcemobilization from rural to urban areas.Secondly we can engage public policies forthis and put in place incentives andinitiatives to enable the kind of resourcemobilization. Jane Jacobs already pointedout that what makes cities great is when youtake some person with some attitude andability; may be not a lot of formal education,but a lot of ambition and energy; and takethem from an isolated community and putthem in an affordable city around otherambitious and enterprising people who canwork with them and provide them a market.The key strategy for resource mobilization isto attract talent in cities and developentrepreneurship there.Question: You talked about the role of innovation, science and technology for particularlydeveloping less developed countries. My understanding is that if you look at the developmentexperience of the industrial nations like Japan, South Korea, even United States of 18 th century;they have been using the financial sector to socialize the risk involved in creativity andinnovations. How Pakistan’s growth strategy can really build innovation without having financialresources to socialize rest in the order?Answer: First of all it is a very good question and very well phrased. Let me120

International conference on “Framework for Economic Growth, Pakistan”answer by way of an example. I am going tosay something, perhaps controversial, that inan old economy model if you want to build atextile industry, car or steel industry wheremassive amount of new capital are required,that might have worked in past. But I don’tthink that it can work anymore. Thesituation I am going to give you from thecontext of United States is the birth of neweconomy in the Silicon Valley where nostate provisions of financial capital, noheavy arm of government was involved inthe venture capital. What happened was thatentrepreneurs built success for businessesand mobilized capital themselves.Somewhere they touched a New Yorkfinancier, not a big investment bank, for alittle flow of money. But the venture capitalindustry; the one that built inventivecompanies like Intel, Apple, Google theygrew indigenously. Going back to theprevious question what I encourage you isthat enabling the process of migration andlocal resource mobilization to occur cangrow those entrepreneurs into somethinglike venture financiers. I want you to look atthe model of growth oriented and innovativeindustries which might be a better model forgrowth than the previous model.Question (Fatma Gul, Senior Economist, UNDP): Cities are definitely platforms to energizecreativity. Do you have some suggestions that while such transitions from rural society to urbansociety take place, where cities are center of growth and dynamism with human beings havingknowledge; we don’t need to go through the same old painful experiences again? We saw painfulexperiences of transition in early industrial eras in our cities (like we saw in UK) in the past. Iwould be grateful if you share some best practices with us.Answer: I think your question is very apt. Ithink that any place anywhere in this worldhas not done this very well. Even theCanada which has done the best job to go upwith social inclusion, diversity, andencouraging migrants even with the bestprogrammes also has rising inequality andpolitical polarization problems. It seems tome that the only way around is to engageevery person in creativity to the fullestextent. But these problems ofmarginalization, exclusion, rising propertyvalue in cities are very real and will take alot of hard work. One important thing is thatthe people are going to acknowledge thepower of cities which is coincidental withthe rising of inequality. If we can increasethe power of cities and their capacity inwealth generation we can also begin toengage people’s creativity and startaddressing issues. But it requires very hardwork to do.Bottom line is that social contracts ofindustrial age like welfare support,government support in housing etc. are nowgone. We need a new social contract whichengages people and enables them to beproductive. We need to engage communitiesto use own resources. What I would love tosee you is to engage those best practices inPakistan. You developed FEG whichrecognizes the need for creative cities and itscommunities, neighborhood and informalgatherings where people live as a drivingforce of the economy. We also needenabling the places where we live to becomestronger and vibrant and deal with theproblems of marginalization andinequalities.Question (Moeed Pirzada, Journalist): I am a Journalist and my question is very Pakistanspecific. You clearly favor a dense urban atmosphere for creativity. You also talked abouttolerance, youth and talent. Karachi is one of our major cities which have become veryintolerant. It has problems like mafias, land grabbing, law and order etc. Would you comment on121

International conference on “Framework for Economic Growth, Pakistan”the issue of a city like Karachi which has communities with ethnic conflicts which has made itvirtually impossible for people to develop it? It is a city even where Pakistan’s economy is alsostuck. What would be your prescription for an urban city like Karachi?Answer: I am an Italian American. Mypeople were from Southern Italy. When mypeople moved to the United States they didthe same sort of things and went for ethnicclashes with Jews, Irish and other peopletypically over gaining power in informal citysectors and organized crime and mafias.This practice is very common and recurringin our cities. Only solution is to go forcreativity and engaging people. People Igrew up with as kid mostly turned intocriminals, thieves and were involved in drugdealing. As a kid, like me, they were alsovery creative but fell outside the channel asthey had no other way. Creatingmechanisms to mobilize energies is crucial.We need to channelize people and makethem more productive. One of theremarkable things happened in USA is thatwe saw our cities becoming remarkablysafer. We have immigrants from all the overthe world. But important thing is the waythis diversity is managed to handle issues.To give people hope and channelize theirenergies in more productive way is the realsolution which is good for them as well asfor the national growth. Periods oftransformation take time to have a drasticshift.Question (Dr. Nadeem Ul Haque): In this new strategy, or urban strategy, there are two to threecharges on us which I want you to tackle. People label this charge at us that this strategy is notpoor friendly as we have a focus on urban areas. Second charge is that we are ignoring ruralareas. We saw earthquake in 2005 and floods last year. There is an underline narrative that let usbuild these villages first. My question is that should we encourage mobility into the cities? Or isurban dimension way forward for poverty eradication?Answer: It is a mistake to say that somethingis urban focused and not rural friendly. Igive you an example. Many years ago I wasa part of a group between USA and Korea.There was a big debate in Seoul that it hasgrown too big and consuming all theresources. How do we reallocate andredistribute the resources in rest of Korea? Ijust said something very simple to them thatlook at Shanghai, Singapore, Hong Kongand all the cities around you. If you areweak at Seoul you are gone. It doesn’tmatter what you try to do to the little cities ifyou are weak in your big cities. If you areweak in big cities and you don’t have strongcity in this spiky world your cities areunable to compete.I ask to my students that should we makehuman migration to urban areas a humanright. Should the ability to migrate andimprove yourself and your family be ahuman right? I asked them to leave theirhomes and go to some village in Africa or indeveloping countries and read theirexperiences when they come back.Everybody when came back to me afterlooking at the conditions of these villagessaid that ‘Richard you are right’. Peoplemust have the right to migrate to urbanareas. Urbanization creates the pocketswhere people come and do more, becomemore productive and innovative. Anywhereif you make these adjustments simpler andfluid it is going to improve the conditions oftheir lives, community’s life and of thecountry.Question (Dr. Nadeem Ul Haque): People also level a charge at us that we have forgotten export-122

International conference on “Framework for Economic Growth, Pakistan”led growth. I would like you to comment.Answer: Has export-led growth worked?Have there any shining examples of exportledgrowth? Is export-led growthsustainable? Is it a way to develop acountry? I must say that it was a time boundstrategy. In order to develop a country itmust develop its own resources, partly Godgiven, partly natural, and the most importantresource a country has is its people. Humanresources and creativity leave the farm (ruralarea) and Pakistan and go to London, NewYork, Washington D.C., Silicon Valley andToronto. Make sure that people don’t jumpto other countries but jump to cities withinPakistan. For example in Taiwan innovatorsfirst moved to Silicon Valley but then theycame back and started enterprises at theirhome. So we need to build such cities inPakistan where we can mobilize resourcesand develop businesses. That strategy ofhuman capital development and humancreativity is more appropriate andsustainable.Question: Richard please give us some insight of your book “The Great Reset” and tell us aboutthe issue of “Institutional Scleroses” because we seem to have institutional problems here too. Inyour opinion how reset is going to happen here?Answer: In every crisis what happens is thatmost countries are trapped by institutionalscleroses. Institutions when become sofailed, bank corrupted, have corruption, andso ineffective then finally someone wakesup and says that there is another way to do itbetter. I think this is what propelled USAover past resets. Idea is that there are somany pockets of the world that haveresources to build capability and can harnesshuman capability. Advantage to Pakistan isthat it has large number of young people.Young people are coming looking at worldin a new way and they are connected to theworld. My hunch is that by harnessinguseful energy and giving people ability tolive their dreams, mobilize resources andmake adjustments in institutions you havegreat chances to lead them to growth. It isgreat that you are leading this effort that thisdiscussion started and I encourage you tomove as quickly as possible in the frontier ofthis new urban growth strategy.***123

International conference on “Framework for Economic Growth, Pakistan”Closing Ceremony / Remarks by ParliamentariansRemarks ByDr. Nadeem Ul HaqueDeputy Chairman Planning CommissionWe have here in the panel Mr. AjayChhibber (Assistant Secretary General, UNand Assistant Administrator and RegionalDirector for the Asia and the Pacific,UNDP), Mr. Timo Pakkala (UN PakistanResident Coordinator/UNDP ResidentRepresentative); and two importantmembers of the Parliament Dr. FauziaWahab (MNA) and Palwasha Khan (MNA).We are here with the panel to discuss thesubject of growth and to respond to yourquestions.Questions from the audience:Questions and answers by ParliamentariansAnd their special remarksQuestion: I must congratulate Deputy Chairman particularly and Planning Commission generallyfor organizing an outstanding event and such a large gathering in this room. Particularly after18 th Amendment when Planning Commission needs to convert sub-national governments I don’tknow why the provinces are absent in this conference on FEG. They should be here and part ofthis conference as they are the main players in implementation.Question: Political will and commitment is fundamental to reforms, and particularly the reformswe have been talking for the last two days. Under the devolution powers and resources would betransferred from the federal government to the provinces. Do you think that the political willwork to make the things happen?Question: We talked about urban development earlier. Do we have necessary resources available,like energy etc., to have that perceived level of urbanization in Pakistan? Should we go for urbandevelopment while knowing that the coefficient of correlation between poverty alleviation andagricultural development is very high especially in sub-continent, as opposed to urban sector?Question: We can see a lot of brain drain in Pakistan especially in educated people. Do we haveany plan to create opportunities for the people of Pakistan?Question: We heard about what Indonesia and Malaysia is doing for the growth of the country.One thing common in success of both the countries was high political will. Are Parliamentariansserious to bring change? And second question is that if the government changes, will thisstrategy document sustain?Question (Amer Durrani, World Bank): I have one question to ask from the parliamentarians thatwhen the parliament is going to think about the Pakistan?124

International conference on “Framework for Economic Growth, Pakistan”Question: I was persuaded last night by Richard Florida’s lecture. Framework for EconomicGrowth focuses primarily on urban development. I would say that if we take example ofCalifornia in USA they first developed their agriculture sector, created surpluses from agriculturesector, invested in required infrastructure and at the end they have the Silicon Valley. Is thereany short cut without going through that route to the growth? I would like your comment on theFEG.Question: We are making policies for the poor people here but all the people sitting in this roomare from elite class. Is there any plan to bring poor people here and listen to them?Question: After this conference we would make certain decisions and points to follow on. Myquestion is that would we be able to say “No” or “Yes” at our own to certain projects and pointsand would not be compelled to do that in Planning Commission?***Special remarks and answers to questionsBy Palwasha KhanMNALet me thank Planning Commission andyou for producing this document. Aboutpolitical will, which has repeatedly beenmentioned here, my view is that politicalwill eventually come from the people ofPakistan. If you felling we are not doingthe right things then change us. What we canguarantee is political will for the rest of thetenure for which we have been elected.Political will is not something which I thinkguarantee sitting here. I can guarantee youpolitical will for the next tenure as I don’tknow what happens in the next poll. So it isup to you people and youth which havepower of the ballot. I would say that theenergetic youth and community who havebeen mentioned here also are moreimportant.We have a tradition of scrapping of what haspreviously been done and to start somethingnew. So by the time project a start deliveringthere comes a change in government. Do wehave magnanimity to own something whichis started by someone else? No. Let us behonest to the people and do what they askfrom us. We can’t ignore them. so politicalwill is a two way thing and directlyconnected to the people.Special remarks and answers to questionsBy Fauzia WahabMNAI would like to say that FEG is a valuabledocument. If anybody goes through thisdocument I am sure that he will find that it isnot something political and has nothing to125

International conference on “Framework for Economic Growth, Pakistan”do with the political manifesto. Some factsthat this document is addressing are the keyissues we are facing today in Pakistan. Forinstance chapter on vibrant markets gives uscertain points which are new and we aregoing to implement it in next two years. Ithink that no government will disown it. Forinstance this document talks about ‘Transferof Property Act 1882’. Who is going to denythat it needs to be addressed and changed?This document also talks aboutcomputerization of land records whichnobody is going to deny. This documentsays to unify NTN and GST registration toone tax registration number and nobodywould disagree with it. This document isasking for the repeal of “AgricultureProduce Market Act, 1939” which is againsomething important and whoever is there inpower should look at it. So there are somany important areas identified in thisdocument which we can’t ignore.About ownership of this document I wouldsay that the biggest problem this book hashighlighted is lack of continuity. If there iscontinuity and political stability we hopethat the system we have evolved would notbe disrupted. If political system hascontinuity the system here will also move.You have given the example of Indonesiaand Malaysia. I think from mid-seventiesonwards there has been a continuity andstability in their political system. Everygovernment has owned what the parliamentand collective wisdom have decided there.***Closing Remarks ByAjay ChhibberAssistant Secretary General, UN and Assistant Administrator andRegional Director for the Asia and the Pacific, UNDPThank you very much Dr. Nadeem and Ireally add my concurrence to what the twoesteemed members of parliament have justsaid. What has to happen is the consensusaround the direction of change which isneeded here. The real question here is thatwhatever government comes, as you rightlysaid, that must own it. There is a need tocarry on this document and I think it is veryimportant. I think there is a consensusamong your thoughtful people - like thepeople we have here in this room. Of courseyou must keep widening the circle. I can tellyou that I have never attended anything likethis in any other country. I must congratulateDr. Nadeem Ul Haque and the PlanningCommission the way this opening has cometogether and the way the energy of youthhave been involved into this discussion. Iknow this is coming after many events thatyou have already done in past. I think thatall those countries in Asia which aregrowing so fast developed a consensus onsuch issues over a period of time and thenwhichever person comes in the powerfollowed that direction more or less. Thatsort of consensus should also happen inPakistan and it should not be question of oneelection or the other.We would really support Pakistan inimplementation of FEG for which our‘Growth Centre’ would be a kind of placewhich will generate such kind of good ideasand discussions. It is a large agenda anddefinitely some sequencing would beneeded. Some low hanging fruits would beneeded to get started quickly. To start withthe work like Civil Services Reforms andderegulation are harder to start with. We126

International conference on “Framework for Economic Growth, Pakistan”need to start with some quicker things tokeep up the momentum.Youth and community need to be the centerof the strategy right from the beginning. Iwould say that the ‘Growth Centre’ idea is avery good idea. The progress which hasbeen made in last two days was such a richdiscussion and I feel that if you get theconsensus going on the political will has tobe there. If direction is there you can tacklethe issues.Thank you very much.***Closing Remarks and Vote of Thanks byDr. Nadeem Ul HaqueDeputy Chairman Planning CommissionI think that the issue of political will is inevery body’s head. But to remind you thatthis country has not invested in reform andchange. Universities and researchers arethere. Show me how many research youhave done on this subject? Show me thathow much media discussed the reformissue? How many of you have forcedparliamentarians to do this reform. Go tothem and ask for change. That is how youare going to get political will. Problem withus is that we need readymade cooked food.You take pain and get it. Youth must writepapers every day on public service delivery.Come up with research papers every day andprepare your own city plans and growthstrategy etc. When you go back touniversities discuss our plans and strategiesand force us to think differently.About risk management I would say that wealready had too much risk management. Wewant stability in our growth and need to getout of it. We all have to change and comeout of yesterday’s questions. Today’squestion is that how we are going to educatepeople and get political will? What we aregoing to do here is to ask youth anduniversities and communities etc. that areyou ready to change?tank type thing to the Planning Commissionwhich is our new “Growth Centre”. We aresetting up it in Planning Commission. So Iinvite Ajay Chhibber to sign MoU of new“Growth Centre”. It will be an inclusivegrowth centre for all kinds of research etc.and I also invite universities to participate init. If we have enough research and thinkingthe politicians will learn too and we willchange.I thank all the donors like ADB, DIFID,USAID, and World Bank for being goodpartners. I also appreciate and thank WajidRana, Asif Bajwa (Secretary StatisticsDivision), Vice-Chancellors of theuniversities, HEC, professors, media andfriendly youth of Pakistan. I also applausePlanning Commission’s team, Members,Chiefs and technical team here for their hardand outstanding work. Finally thank youAjay and international participants.UNDP has been very kind to offer a think127

International conference on “Framework for Economic Growth, Pakistan”CONCLUSIONCONCLUSION AND RECOMMENDATIONSThe Framework for Economic Growth (FEG) was based on widespread local andinternational consultations for developing strong local ownership for the strategy. TheFEG is well informed by the best knowledge and analysis available locally andinternationally. International conference on FEG for Pakistan has served as one of theeffective tools for the Planning Commission to share national and international collectivewisdom for devising an implementation plan for the future.The Conference brought together around 500 delegates including parliamentarians,international experts, federal and provincial policy makers, economists, developmentsector leaders, academia, business community and officials from UN agencies fromacross Pakistan who shared their ideas and helped Planning Commission to fine tune thestrategy. The conference was a remarkable experience where national and internationalexperts critically analyzed the document and endorsed the ideas. The conference alsohelped Planning Commission to prioritize most critical areas for the future growth anddevelop key performance indicators (KPIs) to monitor implementation process.Experience shared by the representatives of other countries has also helped the PlanningCommission to develop future roadmap and devise a mechanism to make the consultativeprocess continuing and inclusive.The strategy emphasized the need to improve, inter alia, the following:- Public service delivery based on sustained institutional reforms that build efficientand knowledgeable governance structures,- Improving the quality of governance through Civil Services Reforms,- Minimizing the role of the government in the economy and restricting it to improvingregulation and policy environment,- The need to reduce economic distortions,- Human resource development as one of the major objectives of the new approach,- Investing in youth and harnessing their potential,- Energizing youth; engaging communities and inducing investment in human andsocial capital,- Investing in tertiary education, vocational and technical training and development of aknowledge economy,- Investing in promoting entrepreneurship,- Enhancing physical and human connectivity,- Improving the investment climate and reducing cost of doing business,- Functioning of domestic markets; create space for the private sector;- Making cities hubs of economic activities by relaxing zoning and buildingregulations,128

International conference on “Framework for Economic Growth, Pakistan”- Developing vibrant cities by developing an enabling environment which will be thehotspot for promoting entrepreneurship and innovation, assuring better returnsthrough improved productivity on investments for all investors,- Inclusiveness of rural infrastructure and markets for growth and poverty reduction,- Recognition of informal sector,- Development of financial markets and institutions and mandi system,RECOMMENDATIOSNS:Following are some of the recommendations to effectively implement FEG:- Unless we have political consensus and support behind which should cut across allthe political lines, we can’t deliver the result,- To make this strategy become a part of all government policies and thinking to makeit work,- One of the important challenges for the FEG is to sell the idea to all the stakeholdersin public and private sector. We need to put a mechanism for implementation and buysupport from the society, Civil Servants, and most importantly from the topleadership in the country,- To equip youth with appropriate skills, capacities and knowledge to effectively dealwith the present day development challenges. Investing in youth which can acceleratethe fight against poverty, socio-economic disparity and gender discrimination,- There should be a synergy of support from various sections of the community likebusinessmen, political leadership, administrators and general public to make a veryattractive business environment in the country,- Sequencing of the do-ables would be needed. Some low hanging fruits would beneeded to get started quickly.- Recognition by federal, provincial and local governments to put the cities at thecenter of growth initiatives.- New Growth Centre should take benefit of the global knowledge and identify clustersacross the country.- To bring informal part of the city into the overall growth framework and make poorpeople participate in overall growth effort,- Greater accountability and better fiscal management are needed to achieve moreinclusive growth in developing,- Results Based Management system focusing on public service delivery should beintroduced at planning, budgeting and monitoring stages.- Development of KPIs for each of the policy initiative for federal, provincial and localgovernments, and approval from the cabinet to make it a part of monitoring andevaluation mechanism.- Development of a Performance Delivery Unit (same like as President’s Delivery Unitfor Development Monitoring and Oversight Indonesia)***129