Holy grail of economics

Economic growth remains the paramount objective for policymakers worldwide, often referred to as the 'holy grail' of economics. Its significance lies in its proven ability to reduce poverty and elevate living standards. China's experience in the 1990s serves as a prime example, where breakneck growth lifted hundreds of millions from poverty and established the foundation for its global manufacturing dominance. This growth also provided the fiscal resources for substantial infrastructure development, expanded social security, and military modernization, all achieved without excessive borrowing.

In contrast, Pakistan's economic trajectory has been far less successful. While the nation once achieved decent growth rates, its economic engine began sputtering in the 1990s. By 2008-09, Pakistan's growth had significantly slowed, allowing India's per capita income to catch up and surpass Pakistan's. Despite numerous 'stabilization' efforts over two decades, Pakistan's economy has struggled to regain momentum. In the last four years, economic growth has averaged a mere 2.3 percent. With population growth estimated at 2.55 percent, per capita growth, which directly impacts living standards, has actually been negative.

The consequences of this stagnant growth are severe. Pakistan's flagship household survey indicates an almost 20 percent reduction in the real income of urban households over the past six years. The World Bank has warned of the need to create 30 million jobs over the next decade, a daunting task given the anemic economic growth. This lack of high-quality job creation is forcing thousands of young Pakistanis to seek opportunities abroad through perilous journeys. Despite repeated attempts to revive the economy, often involving expensive foreign consultants, the underlying problem appears to be deeper than a mere shortage of strategies, pointing towards fundamental issues with productivity.