US Think Tanks Focus on Pakistan
By Elaine Pasquini
Washington, DC: On the eve of US Deputy Secretary of State Wendy Sherman’s trip to meet with senior Pakistani officials in Islamabad, American think tanks spotlighted the longtime US ally in their online programs.
On October 6, Atif Mian, professor of economics, public policy and finance at Princeton University, spoke with Shuja Nawaz of the Atlantic Council’s South Asia Center on the current challenges Pakistan’s economy is facing and prospects for future growth.
Pakistan must address its problem of “productivity stagnation,” Mian began, noting the country has lagged behind its neighbors, India and Bangladesh, in this regard over the last three decades. This weakening of the economy “is not about the numbers, it’s about the people,” he stressed. “Pakistan has been failing relatively over the last thirty years.” Most troubling as a result of this failure is that “400,000 children under five years of age die in Pakistan every year.”
On the future of Pakistan’s economy, Mian noted he had not seen a shift in the trajectory. “I am not seeing any movement that really addresses the structural problems,” he said. “It is very important to understand the implications of bad and poor decision-making that has gone on for a long time now. People suffer when we don’t make the right decisions.”
Mian suggested that to improve long-term growth emphasis must be placed on boosting domestic productive capacity while spending responsibly, which includes spending that promotes “the expansion of productive capacity in the country.”
The government, Mian argued, must be an active player in this regard as the private sector cannot financially support this alone. “You cannot grow without understanding the importance of this key element of spending.” Pakistan has resources for “expanding productive capacity,” he said. “They can build the right decision-making structure to monitor and follow through with the decisions.”
On Pakistan’s tax policy, Mian emphasized that the middle class cannot bear the largest share of taxes. “You have to make a more comprehensive tax policy. It has to be progressive in nature.”
According to Mian, the most money made in Pakistan is on urban land which is completely unproductive. “Those people are doing nothing, just sitting on land and making tremendous amounts of money,” he stated. “We should be taxing those capital gains.”
One important issue, the professor stressed, is the participation of women in Pakistan’s economy. “The best story coming out of Pakistan over the last two or three decades is what women have been doing in education in Pakistan,” he enthused. “You can see the test scores for girls and women are beating boys and men hands down when you look at how they are performing and so on. But look at how we are absorbing them into the economy and that’s a consequence of serious issues of how women are treated and what kind of avenues are open to them to rise within the ranks of corporate and government hierarchies,” he said.
Shahid Yusuf, the chief economist of the Growth Dialogue at George Washington University School of Business, asked Mian how the situation could be turned around. “Pakistan is facing great uncertainty because of the Covid pandemic, the situation in Afghanistan, headwinds from climate change and because the world economy is probably going to grow more slowly and trade will grow more slowly,” he pointed out.
“We need to have a plan of building resources,” Mian responded. “We have to invest in our people and set the incentives right. You have to build domestic institutions. You have to support the universities and link them to the corporate sector and encourage the young, smart people to stay in the country.”
Additionally, on October 6, Lt Gen H.R. McMaster (ret.), former US national security advisor, currently a senior fellow at the Hoover Institution, engaged Husain Haqqani, former Pakistani ambassador to the United States, now Director for South and Central Asia at the Hudson Institute, in a conversation wherein Haqqani weighed in on the Pakistani economy. Noting that, while the Pakistani military had at times been in control of the country, it “has never had a handle on the economy,” he opined. “A functioning economy needs real advances in human capital.”
On future relations between the US and Pakistan, Haqqani said: “We must realize that Afghanistan has been a disaster in depriving the US of a military presence in the region that could actually have been a stabilizing factor keeping an eye on counterterrorism, intelligence reconnaissance and surveillance missions.”
Pakistan needs a mix of relationships, including with the Chinese and the West, but also “needs to open up relations with India,” he argued, even though India now has a Hindu nationalist government “which has some elements that are extreme in their views, especially in opposition to Muslims.”
“The United States needs to have a broader policy for South Central Asia in which it reworks its relationships and its partnerships,” Haqqani concluded. “Getting Afghanistan right will be important. Getting Pakistan right will be important.”
(Elaine Pasquini is a freelance journalist. Her reports appear in the Washington Report on Middle East Affairs and Nuze.Ink.)
