Majid Khan
Atif Mian, a well-known Pakistani-American economist and current professor at Princeton University, recently expressed his concerns about Pakistan’s economic situation. He pointed out that Pakistan seems to be caught in a ‘poverty trap,’ a situation where ongoing malpractices, such as low investment in education and healthcare, and high levels of corruption, have hindered the country’s growth for decades. A ‘poverty trap’ is a self-reinforcing mechanism that keeps a country in a state of poverty, making it difficult to escape without outside help or significant changes in policy.
Mian underscored that poverty, while devastating, can serve as a catalyst for growth. He pointed out that individuals living in poverty often possess the drive and willingness to work for lower wages, and the knowledge required for increased productivity already exists. By effectively harnessing these inherent advantages, countries like Vietnam and Korea have achieved significant growth and prosperity. This perspective offers a ray of hope for Pakistan’s economic future, instilling a sense of optimism in the audience.
The economist illustrated that sustained efforts are required to suppress growth over extended periods. However, some countries, due to collective decisions, find themselves trapped in a ‘poverty trap,’ a situation that, according to economists, Pakistan currently faces due to long-standing malpractices. This highlights the importance of collective decisions and shared responsibility in avoiding such traps, making the audience feel the need for unity and collaboration in economic matters.
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Mian backed up his analysis by citing data from the 1980s, demonstrating Pakistan’s progressively declining growth rate. He emphasized that the economy is currently stagnating, leading to the conclusion that Pakistan is indeed stuck in a “poverty trap.”
Furthermore, Mian highlighted the dire economic conditions in Pakistan, asserting that the last two years have been the worst in the country’s economic history. Annual inflation and per-capita GDP growth data since 1980 further reinforced this observation. The economist stressed that the significant spikes in inflation and declines in growth in 2023 and 2024 are unparalleled, even when compared to global crises such as those of 2009 and 2020. He pointed out that these recent economic challenges are a result of Pakistan’s own decisions and actions.
Mian not only presented statistical evidence but also provided first-hand observations of the prevailing hopelessness in Pakistan. He noted a surge in the number of people seeking visas to leave the country, highlighting a widespread sentiment of disillusionment and a desire for opportunities elsewhere.
Discussing the nature of poverty traps, Mian emphasized that they are indeed ‘traps’ with incremental change being insufficient to break free from the cycle of poverty. He stressed that the only viable path out of the poverty trap is through significant and sustained policy changes. These changes could include increased investment in education and healthcare, measures to reduce corruption, and policies to encourage long-term economic growth, which he plans to elaborate on in the future.
Concludingly, Mian expressed deep concern about the current state of Pakistan’s economy, underlining the urgent need for substantial and sustained policy changes to break free from the poverty trap. He criticized the prevailing business-as-usual approach in Pakistan, emphasizing that this trajectory is detrimental to the country and its people. The gravity of the situation necessitates substantial and sustained policy changes, underscoring the urgency of the matter and the need for immediate action.
