Outlining six major steps for maximising benefits of the China-Pakistan Economic Corridor (CPEC), visiting distinguished Chinese Economist Professor Justin Yifu Lin said that if Pakistan captures the opportunity, its economic growth could touch the range of 8 to 10 percent for the next 30 years or more for joining middle income or even higher income group of countries.
“Pakistan possesses a golden opportunity for doing industrialisation in the context of CPEC but the country will have to align its policies to attract light machine industry for relocation purposes from China as incentives on papers will not work. Islamabad will have to ensure comparative advantages and taking care of reducing the transaction cost for reaping benefits of industrial cooperation under the CPEC initiatives,” the visiting Chinese economist, Justin Yifu Lin, who is Councilor of State Council and Chairman of Federation of Industries, said here at the Planning Commission (PC) Auditorium on the special invitation of Minister of Planning Ahsan Iqbal on Tuesday.
The visiting professor who is author of 24 books and servesthe World Bank as Chief Economist delivered a lecture titled “How to deliver dynamic growth by Pakistan?” said that the political stability, continuity and consistency in policies were required for achieving higher growth momentum. He said Pakistan should focus on two factors, including import substitution and export diversification for increasing its benefits.
Pakistan, he said, would have to move from agro based economy to industrialisation for accelerating economic activities. However, he argued that this structural transformation would not happen spontaneously, so the government would have to ensure industrial upgradation for maximising benefits.
He said that a new industrial policy was required to transform the economy in order to ensure infrastructure of hardcore and softcore development. Most developing countries, he said, failed to achieve the desired results despite unveiling industrial policy because they remained unable to ensure comparative advantages which lead to misallocation of resources and end up with corruption and rent seeking.
He outlined six major steps as pre-requisites to ensure industrialisation in the country and said that the first step would be achieving higher growth trajectory by transforming the structure of the economy and the second step would be placing upgrading the infrastructure.
Third required step would be inviting foreign direct investment where there is comparative advantage and fourth step will be scaling up private innovations. Under fifth step, he said the industry could be used to overcome barrier to entry, attracting FDI and establishing industrial clusters. The sixth required step will be providing tax incentives, direct credits for investment and access to foreign exchange.