The reason the economy is important is when a country is unable to pay back its debts (called default in economic terms), the internal economy might be able to function but it will be never difficult to attract foreign investments.
Pakistan has been a member of the IMF since 1950. Due to the unpredictable nature of the economy heavily dependent on imports, the global financial institution has bailed out Pakistan on 22 different occasions. These loans come with strings attacks and strict terms and conditions. The global lenders want to receive their money back and not concerned about the economy and welfare of people.
Amid the ongoing coronavirus crisis, the global banks are allowing more time to the government for loan repayments, while the government is trying to raise funds by issuing bonds on high interest rates for these repayments. This does not bid well for the economy as at the end of the day, we need to earn and generate revenue to repay our loans, or else the economy will collapse under pressure.
Economics is the study of how societies use their limited resources to generate income. We must utilise funds on developing the economy rather than using it to cover our shortfalls. Unfortunately, we are using these funds without any long-term strategy for immediate benefits.
Economic growth is driven by consumer spending and business investment. Tax cuts and rebates are used to return money to consumers to boost spending. Deregulation relaxes the rules imposed on businesses and has often been credited with creating growth but can lead to excessive risks.
The government needs to the six real factors that lead to economic growth. These include natural resources; the discovery of oil or mineral deposits may boost economic growth, along with physical capital or infrastructure, population and labour, human capital, technology and law.
In the present scenario, we should focus on agriculture growth. Edible oil is one of the most important commodities for everyday use. Pakistan has chronically deficient in oil production and 70% of our requirements are met through imports. Oilseeds imports have been rising since 1968 but we have never focused on agriculture to grow oilseeds, corn, soya beans, canola, rapeseeds, or sunflower to extract oils.
This is just an example where the government can save billions of precious foreign exchange by not importing oil seeds if it focuses on agricultural growth. For many years, our main focus has been industrial growth which we can never achieve due to the high cost of production and lack of competitive advantage. We need to focus on long term economic plans and discuss these economic models in parliament.
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