Interesting analysis but how can we claim that foreign investment funded domestic consumption? It seems reasonable to assume that, given the lack of improvement in the FI/GDP ratio but what does it mean empirically? Roads and power plants seem less export oriented than chips and batteries but what if the roads are needed to carry the chips and batteries to the ports and the power plants are needed to produce such goods?
We have observed almost 10 years of post CPEC era and even more time of operations of these power plants. It is evident that our exports haven't gone up. Basically, it could, if the same investments had a balance of necessary components that Atif Mian pointed out in this post. It again goes down to the "broken nervous system" that we have.
I guess writer is suggesting a balanced approach. No FDI is forever and all come with future remittances in foreign currency (interest, dividends, principal, etc.). We either need to cut imports through local production or become competitive in foreign markets to export.
Agree but there is nothing unique about that advice. The issue with many analyses of CPEC is that there is not enough data to make strong conclusions. Not clear whether the problem is that foreign investment is not enough or if there is not enough foreign investment.
Interesting article! However I think that you are overemphasizing technology transfer, but overlooking broader socioeconomic benefits like job creation and infrastructure development. We need to have a more balanced perspective, acknowledging both positives and negatives of CPEC in Pakistan.
Insightful analysis and very timely to warn our current policy-making circles on the myth of foreign investment. The increasing emphasis of successive governments over the past decade on remittances also seems to be a myth given the lack of productive skills in Pakistani labor (particularly those who aspire to work abroad) but lack the competitive advantage in the global labor market. Your comment on this will greatly help us understand how to retain Pakistani talent within the country with growth-oriented incentives and what the governments should do to change this perspective of graduates from "earning abroad" to "earning at home". It's extremely disappointing that everyone here regardless of having no skills aspire to leave the country. Agreed that Pakistanis have a talent, but comparing to countries in the region, realistically speaking we have to acknowledge that somehow, we have overrated the "talent" in Pakistan. Our education system and higher education policies are equally responsible for this talent-gap.
There were such rational voices back than when CPEC was coming to Pakistan but they were dubbed as traitor or western agents. What you have written is now clear to general public as well and you are right about broken nerve system. Now once again we are in a trap with fancy name of SIFC.
How can we public influence the decisions of this deep state quasi military rule when they are not elected by people of the country and are under no obligation to take decision which are good for long term economy instead of short term personal goals?
This article brings up some valid points, but it does seem a bit one-sided. CPEC did address major gaps in Pakistan’s infrastructure, like roads and electricity, which were serious issues before. It doesn’t seem fair to dismiss these projects as having “no value,” since basic infrastructure is essential for any country’s progress. Also, expecting investments in high-tech fields like chip manufacturing feels a little unrealistic when foundational needs still aren’t fully met. Big projects like CPEC need time to show their long-term impact, so it seems a bit early to judge its effectiveness completely.
It seems that Pakistan should stop relying on foreign loans for development. The country must first achieve political and economic stability at the domestic level. Once stable, it can pursue joint ventures with private-sector companies specializing in advanced technologies. Unfortunately, Pakistan has made little progress in addressing loss-making state-owned enterprises. It appears that the leadership lacks a clear strategy, borrowing from international agencies without a well-defined plan or consideration of whether the loans will yield productive outcomes. The leaders possess only superficial knowledge, while the bureaucracy lacks the necessary capacity to implement effective solutions. If we didn't correct skewed thinking, disaster is written on the wall.
Couldn't agree more that large-scale foreign investment should ideally occur through domestic joint ventures to guarantee that skills and technology from the investment passes through to domestic firms.
Interesting analysis but how can we claim that foreign investment funded domestic consumption? It seems reasonable to assume that, given the lack of improvement in the FI/GDP ratio but what does it mean empirically? Roads and power plants seem less export oriented than chips and batteries but what if the roads are needed to carry the chips and batteries to the ports and the power plants are needed to produce such goods?
We have observed almost 10 years of post CPEC era and even more time of operations of these power plants. It is evident that our exports haven't gone up. Basically, it could, if the same investments had a balance of necessary components that Atif Mian pointed out in this post. It again goes down to the "broken nervous system" that we have.
I guess writer is suggesting a balanced approach. No FDI is forever and all come with future remittances in foreign currency (interest, dividends, principal, etc.). We either need to cut imports through local production or become competitive in foreign markets to export.
Agree but there is nothing unique about that advice. The issue with many analyses of CPEC is that there is not enough data to make strong conclusions. Not clear whether the problem is that foreign investment is not enough or if there is not enough foreign investment.
Interesting article! However I think that you are overemphasizing technology transfer, but overlooking broader socioeconomic benefits like job creation and infrastructure development. We need to have a more balanced perspective, acknowledging both positives and negatives of CPEC in Pakistan.
Insightful analysis and very timely to warn our current policy-making circles on the myth of foreign investment. The increasing emphasis of successive governments over the past decade on remittances also seems to be a myth given the lack of productive skills in Pakistani labor (particularly those who aspire to work abroad) but lack the competitive advantage in the global labor market. Your comment on this will greatly help us understand how to retain Pakistani talent within the country with growth-oriented incentives and what the governments should do to change this perspective of graduates from "earning abroad" to "earning at home". It's extremely disappointing that everyone here regardless of having no skills aspire to leave the country. Agreed that Pakistanis have a talent, but comparing to countries in the region, realistically speaking we have to acknowledge that somehow, we have overrated the "talent" in Pakistan. Our education system and higher education policies are equally responsible for this talent-gap.
There were such rational voices back than when CPEC was coming to Pakistan but they were dubbed as traitor or western agents. What you have written is now clear to general public as well and you are right about broken nerve system. Now once again we are in a trap with fancy name of SIFC.
How can we public influence the decisions of this deep state quasi military rule when they are not elected by people of the country and are under no obligation to take decision which are good for long term economy instead of short term personal goals?
This article brings up some valid points, but it does seem a bit one-sided. CPEC did address major gaps in Pakistan’s infrastructure, like roads and electricity, which were serious issues before. It doesn’t seem fair to dismiss these projects as having “no value,” since basic infrastructure is essential for any country’s progress. Also, expecting investments in high-tech fields like chip manufacturing feels a little unrealistic when foundational needs still aren’t fully met. Big projects like CPEC need time to show their long-term impact, so it seems a bit early to judge its effectiveness completely.
It seems that Pakistan should stop relying on foreign loans for development. The country must first achieve political and economic stability at the domestic level. Once stable, it can pursue joint ventures with private-sector companies specializing in advanced technologies. Unfortunately, Pakistan has made little progress in addressing loss-making state-owned enterprises. It appears that the leadership lacks a clear strategy, borrowing from international agencies without a well-defined plan or consideration of whether the loans will yield productive outcomes. The leaders possess only superficial knowledge, while the bureaucracy lacks the necessary capacity to implement effective solutions. If we didn't correct skewed thinking, disaster is written on the wall.
I totally agree.
Crisp & precise analysis.
Couldn't agree more that large-scale foreign investment should ideally occur through domestic joint ventures to guarantee that skills and technology from the investment passes through to domestic firms.