THE ‘South-South’ cooperation or its later version of ‘Look East’ did not initially take off in view of not-so-conducive ground realities.
The newly independent states were not producing the needed range of products that could, in turn, be exchanged to enable them to catch up with advanced countries.
It also offered prosperous markets for low-value added goods and jobs to talented professionals of third world countries; while capital technology and investment were provided for much needed economic development.
Even now corporate Pakistan is not oblivious of the importance of the developed economies of the West and Japan for securing the latest technologies and relevant ideas from which it could benefit.
Although the nature of cooperation is changing with local big business houses occupying the leading segments of the economy.
However, the range of choices in trade, investment and capital has widened. Many developing economies can offer each other at least intermediate technology (if not the latest ones) which may be suited to Pakistan’s professional reservoir’s level of skill and the current level of socio-economic development.
China and members of Brics (Brazil, Russia, India, China and South Africa) are making inroads into areas which were the virtual monopoly of developed economies.
Further impetus has been provided to regional cooperation by China acting as a catalyst in Asia, spurred by the ‘America First’ and Brexit policies followed by worldwide effort to blend more protectionism with free trade.
All this has created an enabling environment for Pakistan to diversify its sources of capital inflows, investment and trade with a regional bias and renew its focus on re-balancing the economy.
For example, China and Turkey alone account for more than 50pc of $2 billion foreign direct investment received by Pakistan in 11 months of the outgoing year.
With the changing pattern of foreign trade and surging trade deficit, Pakistan will have no option but to continue to restrict imports of non-essential items while being induced to remove barriers in domestic commerce.
Unfortunately, the ministry of commerce is not moving fast enough in this direction, as required. Not much has happened beyond setting up a special cell for this purpose.
No doubt building highways and roads, now underway, will further open-up and integrate the domestic market.
With export-oriented industrialisation ceasing to be an option, at least in the near future, exchange of goods and services between trading partners will be restricted to trade surpluses that are left after domestic consumption.
To overcome the huge trade and current account deficit and enormous debts faced by many countries, foreign trade needs to be carried out on a balanced basis as far as possible.
Pakistan imports oil from Middle Eastern countries, therefore it should be able to sell much more food to them. The surge in CPEC-related imports should be balanced by stepped up exports from the country to the huge neighbouring market.
Pakistan has become a full member of the Shanghai Cooperation Organisation.
While trade diversification efforts should be directed towards fast growing economies in Asia as well as elsewhere; Pakistan needs to examine the new ideas being thrown-up to reshape the European Union and the euro zone which are currently stated to be in ‘big trouble’
The EU has provoked widespread dissatisfaction throughout Europe against Brussels and particularly Germany calling the shots in a single market and the euro zone making it difficult for EU members to come out of their current state of stagnation.
According to a recent special issue of The Economist, a new set of ideas are being thrown-up to get the EU project to survive and prosper: more flexible ways that offer different categories of membership in a multi-tier Union.
Members may pick and chose the arrangement that suits them. They should also be also eligible to move at different speeds and with relative ease, step by step, towards a well-defined destination.
This may also help increase the membership of the looser group especially of countries not willing to compromise their national sovereignty. The European Union should find a place for non-members as well.
In an editorial, the weekly concludes “if the Union cannot embrace differentiation, it faces the risk of disintegration instead.”
Currently the continent has 48 countries inhabited by 750 million people of which only 28 states with just over 500m people are members of the EU and merely 340m people in 18 countries live in the euro zone.
What is important for EU members, or even non-members, is the reciprocal relationship based on common interests with bias in favour of less developed states to enable them to catch up with advanced countries.
The concept of a single market cannot produce a ‘win-win’ situation for the most advanced as well as less developed economies.
Regional economic integration cannot be meaningful without ensuring free movement of labour along with capital, goods and services. Immigration of labour has become a major problem for EU.
With cooperation gaining momentum in its region, Pakistan needs to be fully aware of emerging international trends to be able to draw as much advantage as it can to shore up its economy and move with the times. And it is ideas and technology that count the most.
Jul 19, 2017 0
Special coverage on China's Two Party Sessions by The Daily Mail - People's Daily