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PcW's 2017 report on global economic order change by 2050 has brought sunshine to the dark corners of our home. Future is bright. By 2050 Pakistan is projected to be the world's 16th largest economy, frog-leaping such luminaries as South Korea, Italy, Canada, and Australia. The Report, as they say, went viral. The Prime Minister saw it as an affirmation of his vision. Most Pakistanis read it as a promise to be celebrated. But the devil is in the detail.

We don't want to rain on anyone's parade but perhaps the trumpeters should stay in the wings a while. The Report takes pains to underscore Pakistan, and others, have the potential to be in the top league, and not that they will necessarily be there. It details, in no uncertain terms, what it takes to get there. 'Structural Reforms' is the key word. Improved macroeconomic stability, a more diversified economy, and effective political and legal institutions are the entry tickets. Our policy czars are not unfamiliar with this anthem of development, tirelessly sung by IMF and our development partners.

Even if we get these reforms under our belt we have the potential to rise from our current 24th position to the 16th largest in 2050 on Purchasing Power Parity (PPP) basis, which adjusts for price level differences across countries. The more common standard to rank world economies - nominal GDP (market value of goods and services converted into US dollars at official exchange rate) - neutralizes PPP's cheaper cost of living uplift. India, for instance, is world's third largest economy on PPP basis but seventh when its nominal GDP is employed as a ranking measure. To lend greater perspective, the US economy is only twice that of India in PPP terms, but nine times greater on GDP basis.

The Report rightly recognizes productivity gains and technological progress as the fundamental drivers of growth. It highlights the incentives-generating role of international trade and investments for innovation and entrepreneurship. But it also relies, quite heavily, on demographics to give a fillip to growth. That is where the Report gives Pakistan, with its high average working age population growth,(second only to Nigeria) a hefty bonus. Indeed, Vietnam's meteoric rise apart, most of the countries that the Report projects to do well - India, Indonesia, Pakistan, Bangladesh, Nigeria, Philippines, Egypt - are countries with significant population growth. The premise is that fast growing populations will boost domestic demand as well as add to the size of workforce.

'Demographic dividend' is now an accepted factor of growth, dividend coming in the form of greater productivity made possible by a larger pool of young workers who have the ability to supplement technology and adapt to innovation. This requires higher levels of education and skills. Pakistan will no doubt have the numbers, but will it also have the right kind of workforce, assuming there is a fast enough GDP growth to absorb the three to four million people entering the job market each year? Educational catch up rate is the single biggest risk factor for us. Unless urgent measures are taken to overhaul our truly worrisome state of education - some 25 million kids not going to school today, the numbers growing each year, and the steady deterioration in the quality of training - high working age population growth spells not a dividend but a demographic disaster.

Capital investment is another critical element of the Report's model, as it should be. However, if Pakistan is an example to go by we suspect not too great a weight has been assigned to it. At 16% we have the second lowest investment to GDP ratio among the 32 countries that the Report charts. It is projected to increase only to 17% by 2025. In comparison, Vietnam and Philippines are projected to take their ratios up from 21% to 26% over the same period- and even with this impressive increase by 2025 they will still be below the 2016 levels of China(37%) and India and Indonesia(both 27%).

Pakistan is not doing too well in technological progress, and given our low educational and skill levels and tepid investment ratios we should not expect any significant 'catch up growth' in total factor productivity (TFP). This will further retard our competitiveness, with obvious implications for export growth as well as our ability to protect the domestic market, in an environment of rapid TFP growth of our competitors.

Clearly, the Report's optimism about Pakistan is founded largely, if not exclusively, on population growth and a younger workforce. Worryingly, and the Report acknowledges it, absent a huge effort in education our demographics could well become a serious liability.

The Report also raises the inequality red flag: 'inequality is not just a matter of social injustice; it also acts as a drag on economic growth'. It surveys the Gini coefficient (measure of inequality) of the E 7 countries (BRIC plus Mexico, Indonesia, and Turkey), the emerging economic giants that the Report mainly focuses on, and sees inequality as a serious threat. For us the threat is more real. Despite all the talk about inclusive growth our current growth model is geared to promote income and regional disparities.

The glad tidings of our projected ascendency can be taken with a pinch of salt but not the widely spoken rise of 'the three fastest growing economies' of the region - India, Vietnam, Bangladesh. Each is a formidable competitor in our traditional export markets, even if Bangladesh loses its LDC (least developed country) status which it soon will. We would need to position ourselves well to fight better to reverse the emergent trends.

India's rise poses strategic challenges that go beyond trade. Already, at over $2 trillion, India's GDP on MER (market exchange rate) basis is eight times ours. By 2050, it is projected to be ten times ours, creating a gap of $25 trillion between the two economies. How well will our defence, foreign, and commercial policies respond to this massive differential?

It is good to have the audacity of hope. But hope without what it takes - resolve, hard work and sacrifice - is wishful thinking. Potential is not enough. If it were we wouldn't have our history of 'grounded take-off stages'. For starters, we will have to abandon our culture of 'declaring victory'. Forewarned is not always forearmed. But hope we must.

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