Reviving Pakistan's economy requires a sustained and coordinated effort to direct investments into the productive sectors. Experts agree that the fundamental pillars of economic resurgence lie in adopting innovation, nurturing technological advancements, and updating traditional industries. Talking to WealthPK, Zafar-ul-Hassan, Joint Chief Economist at the Ministry of Planning, Development and Special Initiatives, said, "In 2023, Pakistan found itself at a crossroads as it grappled with a significant economic challenge — an investment-to-nominal GDP ratio that stood at the lowest in the region at 13.6%, down from 15.7% in 2022." Low investment, he said, is one of the core reasons why Pakistan's growth in exports has been negative over several years. Export diversification is essential for Pakistan to enhance its competitiveness in the global market and achieve sustainable economic growth.

"Specifically, this diversification entails a strategic focus on the productive sector, which encompasses industries such as technology and innovation-driven enterprises. Not only does it stimulate economic activity, it also serves as a catalyst for job creation, technological advancement, and heightened global competitiveness," he maintained. The chief economist stressed that in light of the escalating worldwide demand for software and IT solutions, Pakistan must recognize that establishing a software house presents a more accessible endeavour compared to setting up a manufacturing unit.

"Consequently, it is incumbent upon us to prioritize this type of investment. In formulating our strategic approach, careful consideration must be given to whether we should embrace a broad spectrum of investments or focus on targeted investments to propel our objectives forward." Zafar echoed this concern, saying, "Absence of a concerted effort in this regard leaves Pakistan trailing behind in terms of technological advancement and product innovation. The policymakers should consider a strategic allocation of funds, recognizing the importance of R&D as a driver of long-term economic growth." "Allocating a modest yet targeted portion of the budget, specifically for R&D, can yield significant returns in terms of innovation and competitiveness," he suggested.

Dr Ghulam Samad, trade economist and senior research specialist at the Central Asia Regional Economic Cooperation (CAREC) Institute, told WealthPK, "Pakistan, like many developing nations, faces challenges that demand innovative solutions. A comprehensive analysis of the current economic landscape reveals a pressing need for transformative measures. Historically, the country has relied on traditional sectors such as agriculture and textiles, but diversification and modernization are paramount to ensure sustained growth. "The government should carefully choose which sectors have the potential to grow and compete in the global market. These industries should be identified based on factors such as comparative advantage, technological potential, and market demand," he opined. "By fostering a culture of innovation and diversifying economy, Pakistan can reduce its vulnerability to external shocks, such as fluctuations in commodity prices, and create a more sustainable and resilient economic foundation," he stated.

Credit: Independent News Pakistan (INP)