The endurance of economic system has started to diminish with the single stroke of COVID-19. Economic system was already under stress for many years. The factors of stress were from multiple fields and had introduce complicated challenges. Although it was feeling the pressure, but it was able to sustain. Though, COVID-19 has proved to be final straw on the back of system. It has shaken the basic fabric of global system with lasting effects. Although it has introduced multifaceted problems, but two problems are entirely new, 1) closure of economy and 2) restriction on mobility. These problems have frustrated the global leadership and common citizens alike, without any discrimination. It is expected that the frustration will be enhanced in post COVID-19 due to two specific reasons 1) a wave of new rule and regulations for business and 2) competition from technology for human.
It will compel global institutions and countries to work on new standards of production and trade. It will lead to create new laws, rule and regulations to ensure COVID-19 free world. The process of developing rules and regulations will be very complicated and complex, as it will engage multiple actors and stakeholders e.g. government, business, industry, civil society and common people etc. It will have severe implications for economic revival and will alter the course of economic activities and factors of production. Although all countries would be impacted ,but the developing and least developed countries will suffer the most, as these countries do not have capacity and resources. We already have witnessed this in the case of prevailing standards, rules and regulations like child labor, ISO 9000, ISO 14000 and hygiene etc.
Opportunities are available. Though to exploit these opportunities Pakistan needs leadership with power of imagination and capabilities to devise and implement long-term policies and strategies
The implementation of COVID-19 related new rules and regulations would be a humongous task. It would be required huge resources and skills to implement. The introduction of new measures will certainly introduce the higher cost of production, difficulty to maintain healthy labor force and devising tools to sustain the supply chains. Therefore, it is will be easier for private sector to employ machines than to invest on people to maintain COVID-19 free environment. The worst hit section would be labor, as private sector would prefer to move towards machines than investing on people.
The greater role of machines and technology will lead to competition between human and machines. The competition would be at all levels starting from production, mining to most sophisticated process like thinking or analyzing. Owing to greater role of machines the fourth industrial revolution will get impetus. It would be worrisome situation for developing and least developed countries. These countries are very backward and does not have tools, instrument and capacity to meet the basic demands of fourth industrial revolution. The fourth industrial revolution concept revolve around the big data, robotics, AI, Information technology etc. and these countries are way behind from developed countries. The situation will further be complicated by the ruthless competition among developed countries. As we are already witnessing a furious competition between USA and China.
Besides, the new rules and regulation and enhanced role of technology will also have negative impact on national revenues. Private sector will ask for support in the form of tax relaxation to implement the rules or install the new machinery. We also know that machines will un-employ the human which will be burden on state on two fronts, 1) government loss revenue in the form of income tax and 2) state will have to take care of un-employ people from state’s resources. In this scenario the role of state will be become important. Hence, it will force world to look new models of economy, as present liberal system limits the role of state. Although it will impact all countries but the worst impact would be on developing and least developed countries.
The situation would be not different for Pakistan. Rather, it will be more complicated, as Pakistan is already going through a worst economic crisis. Thus, Pakistan needs to start working on these dimensions and look for options to minimize the impact. Although the development status, low capacity and scarce financial resources will hinder the work but there is no alternative. The state of problem compels Pakistan to work on short term to long term strategy and implement it.
The starting point can be agriculture sector and rural economy. Agriculture will help Pakistan on two fronts. First, it will help to engage un-skilled labor, people who lost jobs from low skill sectors and sustain food production and supply chain. Sustainability of food production and supply chain will minimize the chances of outrage among masses and help government to maintain law and order. Second, it would be source of foreign earning by exporting food. It has been estimated by different reports that Pakistan can export products up to US$ 5-6 billion annually. Pakistan can increase the revenue by investing on processing and supply chain of sector. We can easily find clients in Middle East and China. Owning to Halal food production in Pakistan, we can tap Middle Eastern market with least efforts.
The other area for intervention would be to invest on elements of fourth industrial revelation. Pakistan needs to devise a strategy to work on big data, quantum computing, artificial intelligence and robotics etc. Pakistan will have to invest not only soft skills but also on hardware production. Hardware, as important as soft skills. Presently, Pakistan is more focused on soft skills, which needs to be accompanied by production of hardware. Hardware production will also help to increase its foreign reserves through export. It will also help reduce the dependence on out world. However, we need to understand it would-be long-term project, therefore, it would require a long-term policy and strategy. Moreover, people will have to show the patience.
Third, Pakistan needs to start working on COVID-19 related rules, regulations and standards by anticipating the needs in post COVID-19 scenario. It would be very difficult job, as it requires imagination power and skills to deal with complicated issues. Hence, Pakistan will have to engage experts with highly quality skills and power of imagination. It would be key area for revival economy, especially for the sectors of economy which are dependent on export.
Lastly, Pakistan have to realize the urgency of the work. It must start working right now. It is well understood that Pakistan does not have financial resources and deficient in skills, but Pakistan can look to forge partnership with other countries to fill this gap. Opportunities are available. Though to exploit these opportunities Pakistan needs leadership with power of imagination and capabilities to devise and implement long-term policies and strategies. The long-term nature of policy and strategy will also require the consensus among political class and other actors of governance and decision making.
This article was originally published at: https://dailytimes.com.pk/610258/re-imagining-economy/
Approved By SDPI