by Fauzia Nasreen*
The author served as Ambassador/High Commissioner to Nepal, Poland and Australia. She has taught in Fatima Jinnah University, NDU, NUML. She was head of the Centre for Policy Studies in COMSATS University. Presently, she is serving as Adviser in COMSATS’ Secretariat responsible for Sustainable Development Goals. She regularly contributes articles in various journals and newspapers on socio-economic and other issues.
Special Economic Zones (SEZs) and such variations as industrial zones and industrial and technological parks have a direct bearing on economic growth as they attempt to attract foreign capital, improve exports and strengthen connections with global supply and value chains. They strengthen public and private sector capacities to harness and institute people-oriented development strategies and build a sound framework for economic benefits. The indirect spin off is in terms of enhancement of the social sector, growth and development in general and human resource development in particular. Direct and indirect benefits of SEZs contribute towards effective poverty reduction strategies and policies. Stable and firm macroeconomic conditions provide the necessary space for building resilient communities equipped with the tools to meet the challenges of the ever changing environment.
There is an inextricable link between economy and poverty reduction which is critically dependent on capable and healthy populations. Therefore, in order to break the vicious cycle of poverty, especially in the prevailing and post COVID-19 situations, SEZs could provide an important intervention mechanism. The novel corona virus pandemic has driven home the importance of prioritizing the health and education sectors. Their neglect by countries and societies militates against the vital objectives of prosperity, well-being and economic vibrancy. Re-orientation of SEZs is needed in the post COVID-19 environment focusing on innovative technologies for better health care and management, research and development and education needs. Infectious diseases is an area which cannot be pushed aside as epidemics and pandemics are likely to recur. Another linked issue is that of food security.
In the context of Pakistan the causes of poverty have generally been associated with governance issues and slow economic growth. Despite various measures, development spending has not only been erratic but has not really resulted in the desired outcomes. Inequality and regional disparities have had a crippling effect on poverty levels and economic resilience. From the perspective of SEZs and socio-economic impact four aspects are important: employment generation, skill formation (human capital development), technology and knowledge up-gradation and economic rejuvenation. SEZs smart management would translate into the achievement of the twin goals of economic prosperity and stable communities.
The shrinking economic space assumes even more criticality given the youth bulge presently confronted by Pakistan. COVID-19 has forced the government to make difficult choices between “lives and livelihoods”. However, it is important to keep hope alive, especially of the youth. The unemployment issue is compounded by the fact that there is virtually no social security safety net in the form of disturbance or unemployment allowance. The Ehsaas Program cannot be expected to have a wide reach from the point of view of continued financial viability. The challenge lies in our capacity to convert the tremendous issues we face into opportunities. The establishment of SEZs provide us an opening. Prior to the pandemic, according to the UNDP National Human Development Report of 2017, Pakistan needed to generate 1.3 million jobs every year. Targeted strategies for developing the requisite skills, knowledge and expertise have become quintessentially relevant in this endeavor.
Globalization and information technology have had a profound impact in every region. It has helped in developing connectivity and created a virtual world. E-commerce and entrepreneurship patterns have become the defining characteristics of global, regional and national transactions. The ensuing challenges and opportunities have created an environment that brings with it vast possibilities together with management problems. Digital technology is a pre-requisite for efficient e-commerce – a growing field and requirement in the current ‘smart lockdown’ and restricted mobility situation. Correspondingly, protectionist trends have made the conditions for economic progress and trade much more corrosive. Initiatives for reaping the advantages of globalization require astute planning with the possibility of building local consumer markets.
The world is also in the midst of the fourth industrial revolution. Technologies and knowledge are transforming all aspects of our private and public lives. Artificial intelligence, big data and the digital revolution have introduced new dynamics for which industries as well as human resource development will have to adapt accordingly. Planning and implementation of SEZs will require in-depth assessment of all these interlinked factors. The international development paradigm has also undergone dramatic change, especially since the start of the new millennium. During the last few decades global attention and priority has also shifted towards poverty eradication and the ancillary challenge of sustainability. At the Millennium Summit in 2000 the international community realized that threats to international peace and security demanded a comprehensive approach premised on human security and in line with Human Development parameters rather than purely GDP based economic progress.
Highlights:
- Pakistan enjoys wide diversity in terms of geography, climatic conditions, resources, culture and level of development. These are significant factors and have a bearing on the selection of the locality for SEZs from the point of view of poverty alleviation. While there are important lessons to be learnt from the SEZs experience elsewhere, the local environment will have to be kept in mind in order to achieve socioeconomic dividends;
- The political system and governance structures also have an important role in creating the conditions for distribution of the benefits of SEZs down to the grassroots level. Federal, provincial and local governance structures will need to work in tandem for policy cohesion;
- Mapping of regional strengths and weaknesses is an arduous task but is crucial for targeted policy interventions and efficient functioning of the SEZs. Reports of UNDP, ADB, World Bank and others can be helpful in this regard. Reliable data availability and its accurate interpretation on the basis of indicators based on indigenous parameters will prevent the authorities from reaching defective and distorted assumptions.
THE WAY FORWARD:
Human resource development:
In order to fully benefit from the SEZs there is a dire need for smart planning for human resource development which has to be compatible with Pakistan’s economic and industrial development over the next five to six years. Additionally it should factor in sectors that would qualify for development of various SEZs. Since the declared SEZs are in such areas as agriculture, food/fruit processing, mineral resources, manufacturing, information technology, textiles, etc; different levels and types of skills would be required for which requisite education and training programs need to be implemented.
Capacity building and training:
Since the nature of economic activity will be continuously evolving, regular plans for capacity building and training should be developed and included in the management of the workforce. Vocational training programs should be variegated in accordance with the requirements of the industrial activity. As part of the poverty reduction objective, enhancing of local capacities for improved job opportunities must be given due priority.
Integration of SMEs and Creation of Clusters:
Over 90 percent of economic activity in Pakistan is performed by Small and Medium Enterprises. They are a source of great strength for business and commercial output. Their linkage or integration within SEZs could play a significant role. There would be a need to ensure that the local industry is not hit too hard by SEZs. In order to make SEZs more effective and meaningful for socio-economic impact, clusters built around localities must consider the relevant skills and strengths associated with the locals, thereby, providing a conducive broad-based environment of shared growth.
Role of the Educational Institutions:
The 2017 UNDP report on human development and youth identifies three Es in the context of the youth bulge and their integration. It points towards three drivers: Education (quality), Employment (equitable opportunities) and Engagement. The report provides a wide range of measures in which educational institutions of Pakistan have a vital role. SEZs must factor in how their activities can provide impetus to the three Es.
Social Safety Net and Healthcare:
In addition to the welfare of the individuals and families associated with the SEZs, improvement in healthcare and quality of life of the people in the surrounding communities would go a long way in supporting the objectives outlined above and in reducing poverty in these communities. SEZs, under CPEC, could take advantage of the recent development and poverty alleviation discussions between China and Pakistan. Better food intake and clean and safe drinking water, together with good hygiene facilities and disaster preparedness strategies, if linked with SEZs would be beneficial for the investors in the SEZs and for the communities as well as for furthering national priorities.
Imperatives imposed by COVID-19:
The Coronavirus pandemic has dramatically changed the situation. The economy has been severely affected. The investment climate globally is not encouraging. Overseas workers have no other choice but to return to their homeland, saddling the government with the twin burden of reduced remittances and absorption of the returning workforce. It might be useful to benefit from their work experience. SEZs development could play a catalyst role in generating employment opportunities for them. Crafting of futuristic policies and approach is essential where all the relevant stakeholders need to coordinate in promoting the nation’s as well as their own interests.
