Syed Ehtisham Ahmad, a Washington-based senior economist, on Monday stressed the Pakistani government to adopt the economic reforms introduced by China during 1993-1994.
He was speaking on a website organized by the Pakistan Institute of Development Economics, Islamabad on ‘Fiscal Policy for Sustainable Growth: Can Pakistan learn from China or Mexico’? Ahmad worked with the Chinese government since 1980, also during the 1993-94 reforms period, and supervised similar reforms in Mexico in 2015.
Pakistani Finance Minister Shaukat Tarin also spoke on the website and said that he will learn about the Chinese economic reforms from Ahmad during his visit to the U.S. in October.
‘Led by Paramount Leader Deng Xiaoping, these reforms powered China to become the second largest economy in the world; brought millions of people out of poverty, ensured fair and equal distribution of resources across the country, and elevated China’s tax-to-GDP ratio to above 20% from 10% in 1992’, said the Pakistan-born economist who has also worked with several other governments across the world, including Pakistan and the U.S. Ahmad has also worked with the IMF on key positions and wrote several books on public policy and fiscal reforms. He is presently a senior fellow at the London School of Economics and the University of Bonn.
Ahmad said that the Chinese economic reforms had three lessons for Pakistan. The first lesson is consolidating revenue collection machinery at the federal level through a comprehensive tax reforms scheme, he said. Secondly, the Chinese reforms were not only about collecting more taxes, but incentivising the processes in a way to spur growth and inclusion, and thirdly, creating special economic zones for investors with hassle-free connectivity between the population and industrial hubs, Ahmad explained. As a result of these reforms, as many as 150 million people moved from rural areas to new economic zones along the coastal lines, he said.
Ahmad said that he remained involved with the Pakistani government for over three decades and always advocated to observe the Chinese fiscal reforms. “I was told that China and Pakistan had very different circumstances, so these reforms would not work here. However, after the successful implementation in Mexico, where conditions are similar to Pakistan, there is no doubt that we can still benefit from adopting the Chinese model of economic reforms” , he stressed. He said that the China-Pakistan Economic Corridor (CPEC) initiative had provided Pakistan with an opportunity to test these reforms. He said that Pakistan should focus on industrialization in KP and Balochistan provinces, especially in Gwadar. He said that Pakistan must attract Chinese investors to Gwadar Free Trade Zone and other economic zones being set up across the country under CPEC to improve its balance of payment regime with export growth.
