Education: the economic angle
Ijaz A. Qureshi
November 22, 2024
DAWN
“The economy is the start and end of everything. You can’t have successful education reform or any other reform if you don’t have a strong economy.” — David Cameron
IN the age of information, economies are dependent on knowledge workers. The more innovative the higher education institutions in a country, the better the economy. Graduates produced without knowing what organisation they would be serving simply means the workforce isn’t market-ready.
This situation would not only create further stress for the graduates due to unemployment but would also burden the economy, ie, no value added. When the number of unemployed graduates rises, the youth will resort to activities that are not healthy for them and not supportive of the economy.
Worth mentioning here are two of our neighbours. The exports of India and Iran are continuously on the rise. The most important reason for this undoubtedly is the education system — what’s taught at university is helping the economy.
Software exports in India in FY2024 touched $205.2 billion; the US was the major destination, with 54pc of total exports reaching there and 31pc went to Europe, where the UK was the major destination. Overall, India’s exports are expected to cross $800bn across the world soon.
At the same time, our other neighbour, Iran, has touched $98.2bn in exports, despite being impacted by the serious economic sanctions imposed by the US and the European Union that prevent the country from reaching its full economic potential. While Indian exports include software products and services, plus other items, Iran is gradually moving from oil-only products to consumer goods and UAVs mostly used in warzones.
When a comparison is made with our neighbours’ export figures, Pakistani and global intellectuals and policymakers should sit up and reflect on the situation. Among the first questions that come to mind is: what are our universities doing and what contribution should they be making to economic growth in Pakistan?
It seems that our universities simply follow the ‘research publication’ area and overlook other extremely important responsibilities, such as best teaching practices, industry collaborations and engagement, and producing confident, knowledgeable students, who have been prepared for a cutting-edge world. International rankings show that Pakistan stands at number 30 out of 245 in the category of countries with the most publications in scientific research. Apparently, it has left behind countries like Singapore and other fast-moving economies. On the face of it, this might appear to be a convincing effort, but where is the reflection of this research work in the economy?
It seems like there is a numbers game when it comes to research publications. University faculties are financially rewarded for the number of publications they put out; it is a quick cash-creating win-win for authors and institutions. Authors get cash and their name is added to the existing list of publications, which the university in question reports to global ranking agencies for enhanced marketing results. The faculty is fully aware of the fact that working with industry won’t produce immediate results and neither will the university acknowledge the time and energy invested, as nothing is visible in the short run.
MS theses and PhD dissertations are completed as research articles — without any consideration for local industry. There are several benefits of involving local industry in university research activities. For example, students will not be unemployed after graduation. Secondly, they will receive a certain honorarium if projects are completed in collaboration with a local industry. And third, the university will correct its direction and build its reputation in a specific domain, like Stanford University has in science and technology, UC Davis in agriculture sciences and USC Los Angeles in film and communication.
For Pakistan, to catch up with its neighbours, it is imperative that higher education institutions set right their focus. They should target the industry in their community and work closely with them to add value. The cottage industry can produce high-value products. In some cases, university administrators who have never ventured into practical business would not understand the cottage industry and value addition. The idea is not simply to increase exports but to also add value to them — in a way that does not require expensive technology to complete this process. This is achievable provided there is a willingness to go the extra mile. An example of value-addition are dairy products — just one area that many of our small cities are known for.
The university regulators need to create a culture of increased industry engagement to enhance practical research skills and to boost the local economy through academic input. The colleges (now offering associate degree programmes) should be encouraged to adhere to professional qualifications — ADP in computer science, software engineering, and animation and game design can put our young researchers in the queue of professionals. They can then contribute towards turning around the country’s fortunes as freelancers or as employees of organisations working with foreign clients.
Finally, another important aspect missing in the university system is the training of students as members of customer services teams. Young graduates have no clue that in the US and Europe, it is normal for CEOs to be part of a team serving customers in the retail environment. The ability to communicate with foreign clients using correct and comprehensible language skills can also contribute to making our graduate market-ready and a real asset for industry.
The writer is the founding vice chancellor of the University of Sialkot and currently serves as the president of the JFK Institute, Lahore.
IjazQureshi@Berkeley.edu.
Published in Dawn, November 22th, 2024
“The economy is the start and end of everything. You can’t have successful education reform or any other reform if you don’t have a strong economy.” — David Cameron
IN the age of information, economies are dependent on knowledge workers. The more innovative the higher education institutions in a country, the better the economy. Graduates produced without knowing what organisation they would be serving simply means the workforce isn’t market-ready.
This situation would not only create further stress for the graduates due to unemployment but would also burden the economy, ie, no value added. When the number of unemployed graduates rises, the youth will resort to activities that are not healthy for them and not supportive of the economy.
Worth mentioning here are two of our neighbours. The exports of India and Iran are continuously on the rise. The most important reason for this undoubtedly is the education system — what’s taught at university is helping the economy.
Software exports in India in FY2024 touched $205.2 billion; the US was the major destination, with 54pc of total exports reaching there and 31pc went to Europe, where the UK was the major destination. Overall, India’s exports are expected to cross $800bn across the world soon.
At the same time, our other neighbour, Iran, has touched $98.2bn in exports, despite being impacted by the serious economic sanctions imposed by the US and the European Union that prevent the country from reaching its full economic potential. While Indian exports include software products and services, plus other items, Iran is gradually moving from oil-only products to consumer goods and UAVs mostly used in warzones.
When a comparison is made with our neighbours’ export figures, Pakistani and global intellectuals and policymakers should sit up and reflect on the situation. Among the first questions that come to mind is: what are our universities doing and what contribution should they be making to economic growth in Pakistan?
It seems that our universities simply follow the ‘research publication’ area and overlook other extremely important responsibilities, such as best teaching practices, industry collaborations and engagement, and producing confident, knowledgeable students, who have been prepared for a cutting-edge world. International rankings show that Pakistan stands at number 30 out of 245 in the category of countries with the most publications in scientific research. Apparently, it has left behind countries like Singapore and other fast-moving economies. On the face of it, this might appear to be a convincing effort, but where is the reflection of this research work in the economy?
It seems like there is a numbers game when it comes to research publications. University faculties are financially rewarded for the number of publications they put out; it is a quick cash-creating win-win for authors and institutions. Authors get cash and their name is added to the existing list of publications, which the university in question reports to global ranking agencies for enhanced marketing results. The faculty is fully aware of the fact that working with industry won’t produce immediate results and neither will the university acknowledge the time and energy invested, as nothing is visible in the short run.
MS theses and PhD dissertations are completed as research articles — without any consideration for local industry. There are several benefits of involving local industry in university research activities. For example, students will not be unemployed after graduation. Secondly, they will receive a certain honorarium if projects are completed in collaboration with a local industry. And third, the university will correct its direction and build its reputation in a specific domain, like Stanford University has in science and technology, UC Davis in agriculture sciences and USC Los Angeles in film and communication.
For Pakistan, to catch up with its neighbours, it is imperative that higher education institutions set right their focus. They should target the industry in their community and work closely with them to add value. The cottage industry can produce high-value products. In some cases, university administrators who have never ventured into practical business would not understand the cottage industry and value addition. The idea is not simply to increase exports but to also add value to them — in a way that does not require expensive technology to complete this process. This is achievable provided there is a willingness to go the extra mile. An example of value-addition are dairy products — just one area that many of our small cities are known for.
The university regulators need to create a culture of increased industry engagement to enhance practical research skills and to boost the local economy through academic input. The colleges (now offering associate degree programmes) should be encouraged to adhere to professional qualifications — ADP in computer science, software engineering, and animation and game design can put our young researchers in the queue of professionals. They can then contribute towards turning around the country’s fortunes as freelancers or as employees of organisations working with foreign clients.
Finally, another important aspect missing in the university system is the training of students as members of customer services teams. Young graduates have no clue that in the US and Europe, it is normal for CEOs to be part of a team serving customers in the retail environment. The ability to communicate with foreign clients using correct and comprehensible language skills can also contribute to making our graduate market-ready and a real asset for industry.
The writer is the founding vice chancellor of the University of Sialkot and currently serves as the president of the JFK Institute, Lahore.
IjazQureshi@Berkeley.edu.
Published in Dawn, November 22th, 2024
Is the economy improving?
IT has now become a routine question. Every TV anchor and people I meet in any gathering all want to know: is it true that the economy is ‘improving’?
The short, and best, answer here is ‘yes and no’. Yes, because the deficits that plagued it have been plugged. No, because growth remains a far-off dream. The proper term to use is ‘the economy is stabilising’, but it is not yet, and will not be for a long time, ready to grow.
This presents a problem. Without growth, you don’t get employment generation to absorb the new entrants to the labour force, of which there are an estimated two million every year. You also don’t get income growth, meaning all the purchasing power that was destroyed in the inflationary fire of 2021 to 2024 will not be recovered. At least not in the near future.
But stability means the end of inflation, the plateauing out of prices which had begun to spiral out of control in early 2021 and reached an inferno by 2023. It means no shrill warnings of default, at least not for a few years, and no catastrophic devaluations, rationing of foreign exchange reserves, import controls, and so on. All that belongs to the past now, mercifully. Pakistan dodged a bullet in the summer of 2022, when foreign exchange reserves ran so low that they brought the country to the very edge of a disorderly and potentially catastrophic default. Then it dodged the same bullet again, in the summer of 2023, when it returned to the same position one more time.
Until we see deep-rooted changes being implemented, we cannot say the economy is ‘improving’.
Since July 2023, a set of policies have been implemented steadfastly that have finally averted the dire situation we faced back then. These policies included a very high interest rate and very high tax burden to be borne mostly by those already in the tax net. Between them, these measures extinguished economic growth and choked much of the otherwise routine economic activity. But the net result was that the pesky current account deficit, which returns every few years to drain our foreign exchange reserves, vanished and turned into a surplus. And the fiscal deficit came under manageable control, despite some issues below the surface with provincial surpluses and other line items.
These deficits were the main reason why the country’s foreign exchange reserves had depleted and inflation reached historic highs. With both deficits under control, the reserves stabilised and prices plateaued. So far so good. We’re in a good place.
But we cannot stay here for very long. This stabilisation is what happens every time in the first year of an IMF programme. There are no surprises here. This is precisely what the IMF medicine is supposed to do. Every government that has ever implemented an IMF programme in its first year in power has touted these achievements as its success. This history goes back to 1988, and even earlier. It has happened every single time. A new government enters office. The economy is nearly bankrupt. The new government signs onto an IMF programme. In the first year of the programme the deficits stabilise, growth plummets, reserves rise. The government claims victory.
But the hard-fought stability that comes as a result of the painful decisions made under IMF auspices is only the beginning. The real story is in securing the kind of changes in the structure of the economy that will enable it to grow without depleting its foreign exchange reserves and giving rise to inflationary pressures. The real game is in ensuring growth returns, but either without the deficits that destabilised it, or with the deficits but an accompanying, sustainable way to finance them.
What exactly are these changes? Consider for example, the fact that the state cannot operate a national airline or a power sector without accumulating massive losses. Or consider that the country’s exports remain wedded to the same commodity they were wedded to in the 1980s: cotton. How do we operate state-owned enterprises in a way that doesn’t lead to the accumulation of such massive losses? How do we build an export base beyond cotton?
These are the kinds of questions that require answers urgently to make the transition from stabilisation to growth. But successive governments from 1988 onwards have failed to make this transition. This is the main reason we remain stuck in an endless loop of the same policies that first stabilise the economy, then pump it for growth which destabilises it again making another round of stabilisation necessary.
So if you want to know whether the economy is ‘improving’, ask yourself this question: are deep-rooted changes taking place? Or do you see even the beginnings of deep-rooted changes being brought about? The answer is a clear no. One feeble first step was just attempted in the privatisation of PIA, and we all saw how that ended in an embarrassing fiasco, so much so that various ministers in the government are now blaming each other for the mess.
Until we can see deep-rooted changes being brought about to improve power sector efficiency, a reduction in the rate of accumulation of the circular debt, broadening of the export base as well as the base of revenues, expenditure management, plateauing in the rate of debt accumulation (both domestic and external), rising rate of investment driven by rising domestic savings, and so on, until we can see changes of this sort happening, we cannot say the economy is ‘improving’. We can at best say the economy is ‘stabilising’.
Here is the big problem with stability: it is temporary. Having found a fragile stability, after almost 18 months of hard and intense discipline in the management of the macroeconomic fundamentals, the government now faces the real challenge of transitioning from stability to growth. How well they manage this will decide whether or not we are seeing ‘improvement’.
The writer is a business and economy journalist.
khurram.husain@gmail.com
X: @khurramhusain
Published in Dawn, November 21st, 2024
November 21, 2024
DAWN
IT has now become a routine question. Every TV anchor and people I meet in any gathering all want to know: is it true that the economy is ‘improving’?
The short, and best, answer here is ‘yes and no’. Yes, because the deficits that plagued it have been plugged. No, because growth remains a far-off dream. The proper term to use is ‘the economy is stabilising’, but it is not yet, and will not be for a long time, ready to grow.
This presents a problem. Without growth, you don’t get employment generation to absorb the new entrants to the labour force, of which there are an estimated two million every year. You also don’t get income growth, meaning all the purchasing power that was destroyed in the inflationary fire of 2021 to 2024 will not be recovered. At least not in the near future.
But stability means the end of inflation, the plateauing out of prices which had begun to spiral out of control in early 2021 and reached an inferno by 2023. It means no shrill warnings of default, at least not for a few years, and no catastrophic devaluations, rationing of foreign exchange reserves, import controls, and so on. All that belongs to the past now, mercifully. Pakistan dodged a bullet in the summer of 2022, when foreign exchange reserves ran so low that they brought the country to the very edge of a disorderly and potentially catastrophic default. Then it dodged the same bullet again, in the summer of 2023, when it returned to the same position one more time.
Until we see deep-rooted changes being implemented, we cannot say the economy is ‘improving’.
Since July 2023, a set of policies have been implemented steadfastly that have finally averted the dire situation we faced back then. These policies included a very high interest rate and very high tax burden to be borne mostly by those already in the tax net. Between them, these measures extinguished economic growth and choked much of the otherwise routine economic activity. But the net result was that the pesky current account deficit, which returns every few years to drain our foreign exchange reserves, vanished and turned into a surplus. And the fiscal deficit came under manageable control, despite some issues below the surface with provincial surpluses and other line items.
These deficits were the main reason why the country’s foreign exchange reserves had depleted and inflation reached historic highs. With both deficits under control, the reserves stabilised and prices plateaued. So far so good. We’re in a good place.
But we cannot stay here for very long. This stabilisation is what happens every time in the first year of an IMF programme. There are no surprises here. This is precisely what the IMF medicine is supposed to do. Every government that has ever implemented an IMF programme in its first year in power has touted these achievements as its success. This history goes back to 1988, and even earlier. It has happened every single time. A new government enters office. The economy is nearly bankrupt. The new government signs onto an IMF programme. In the first year of the programme the deficits stabilise, growth plummets, reserves rise. The government claims victory.
But the hard-fought stability that comes as a result of the painful decisions made under IMF auspices is only the beginning. The real story is in securing the kind of changes in the structure of the economy that will enable it to grow without depleting its foreign exchange reserves and giving rise to inflationary pressures. The real game is in ensuring growth returns, but either without the deficits that destabilised it, or with the deficits but an accompanying, sustainable way to finance them.
What exactly are these changes? Consider for example, the fact that the state cannot operate a national airline or a power sector without accumulating massive losses. Or consider that the country’s exports remain wedded to the same commodity they were wedded to in the 1980s: cotton. How do we operate state-owned enterprises in a way that doesn’t lead to the accumulation of such massive losses? How do we build an export base beyond cotton?
These are the kinds of questions that require answers urgently to make the transition from stabilisation to growth. But successive governments from 1988 onwards have failed to make this transition. This is the main reason we remain stuck in an endless loop of the same policies that first stabilise the economy, then pump it for growth which destabilises it again making another round of stabilisation necessary.
So if you want to know whether the economy is ‘improving’, ask yourself this question: are deep-rooted changes taking place? Or do you see even the beginnings of deep-rooted changes being brought about? The answer is a clear no. One feeble first step was just attempted in the privatisation of PIA, and we all saw how that ended in an embarrassing fiasco, so much so that various ministers in the government are now blaming each other for the mess.
Until we can see deep-rooted changes being brought about to improve power sector efficiency, a reduction in the rate of accumulation of the circular debt, broadening of the export base as well as the base of revenues, expenditure management, plateauing in the rate of debt accumulation (both domestic and external), rising rate of investment driven by rising domestic savings, and so on, until we can see changes of this sort happening, we cannot say the economy is ‘improving’. We can at best say the economy is ‘stabilising’.
Here is the big problem with stability: it is temporary. Having found a fragile stability, after almost 18 months of hard and intense discipline in the management of the macroeconomic fundamentals, the government now faces the real challenge of transitioning from stability to growth. How well they manage this will decide whether or not we are seeing ‘improvement’.
The writer is a business and economy journalist.
khurram.husain@gmail.com
X: @khurramhusain
Published in Dawn, November 21st, 2024
Mourners pray for victims of a gun attack on passenger vehicles in KP’s Kurram District that killed more than 40, outside the Parachinar Press Club on November 22. — via author
