Development policies

Wednesday, Jul 06, 2022

In this new world order, the key for rapid socio-economic development lies in the ability of nations to manufacture and export high-technology and high value-added goods.

Successive governments have failed to realize this simple but powerful strategy, and so we have fumbled with a myriad of weak policies that have kept changing from one government to another, taking us round and round in circles. The result is that even countries like Bangladesh have forged ahead, while Pakistan has lost its way.

The path forward lies in prioritizing the limited funds available and diverting them towards our real and most valuable resource – our young people. It is only through focusing our investments on education, science, technology, innovation and entrepreneurship can we prepare our nation for the fourth Industrial Revolution and move forward to meet the challenges of the emerging fifth Industrial Revolution.

Let us take India’s example. India was fortunate to have Jawaharlal Nehru to guide the nation in its earlier development, and it therefore placed the highest emphasis on quality education and building the high-quality Indian Institutes of Technology (IITs), which today rank among the best institutions in the world. Admissions to these cherished institutions occur centrally with hundreds of thousands of India’s brightest students competing for admission for limited seats.

There are now 23 IITs in India. The older six IITs have already contributed over $400 billion to the Indian economy. On the strength of its high-quality engineering graduates, India has forged ahead with industrialization in many key high-technology fields including the manufacture of engineering goods, satellites, fighter aircraft, space vehicles, automobiles, pharmaceuticals, vaccines etc.

One example of the benefit to industry is that of Tata Motors. This top Indian automobile manufacturer was founded in 1945 under the guiding support of Jawaharlal Nehru, and it produced its first commercial vehicle in 1954 in collaboration with the top German automobile manufacturer Daimler–Benz AG. After acquiring the latest technological know-how from Daimler-Benz, Tata decided to throw away the foreign crutches and go its own way. The collaboration ended in 1969. Starting off with the manufacturing of trucks and buses, Tata moved into car manufacturing by 1998. Unlike Pakistan’s automobile manufacturers – who are assemblers and not manufacturers – Tata went into full basic manufacturing mode. Accordingly, Tata Motors acquired the capability to indigenously produce all parts of a car including the engine, gear box and other parts.

The first fully indigenously manufactured car, Tata Indica, was launched in 1998. In 2004, Tata bought over the South Korean truck manufacturer Daewoo, thereby getting access to the latest Korean technologies. In 2008, it acquired the ownership of Jaguar motors, acquiring knowledge about the latest automobile technologies in engine manufacturing and other systems used in modern luxury cars as well as access to cutting-edge research in this fast-moving field.

In 2008, Tata launched the world’s cheapest passenger car Tata Nano. Today, Tata Motors is manufacturing the next-generation cars including Harrier, Tiago, Hexa, Tigor, Nexon and Altroz. It is also now the world leader in mass public transportation. The company has launched the Starbus Electric (9m and 12m) and the Starbus Hybrid 12m buses. It has also rolled out a range of smart buses powered by alternate fuel sources. India’s first ‘fuel cell bus’ is also under development. The Tata Group reported annual sales of $103 billion last year from its various ventures including engineering goods, automobiles, textiles, etc.

There are many lessons that we can learn from the evolution of the Tata Group over the past 30 years. This is particularly important since the world seems divided into two halves: those who are investing massively in quality education, science and technology, and are taking necessary measures to acquire high technology and to promote innovation, and those that are trapped in the low value-added economies, relying mainly on low value-added agricultural goods for exports. Pakistan, unfortunately, belongs to the second group because of the myopic policies of successive governments.

An important perquisite for technology development or transfer to occur is that a country needs to have highly skilled workers who can develop, adopt, properly absorb and utilize the available technologies. For this, we need to make major investments in upgrading existing technical training centres, setting up high-level applied universities of science and engineering (Fachhochschule) on the pattern found in Germany and other European countries, and full-fledged engineering research universities. We have over a thousand technical training centres which need to be linked to top international institutions so that they can be brought to the highest standards. For development of new cutting-edge technologies, we need to set up or upgrade existing engineering universities, and research and development institutions in collaboration with reputable foreign partners, as India did in the case of its IITs.

The budget of science and technology for India is about INR150 billion, equivalent to about Rs400 billion, whereas the budget of the Ministry of Science and Technology is less than Rs4 billion in Pakistan. Taking the six-fold population difference into account, it should be at least Rs65 billion.

Similarly, university research budgets are an average of about Rs15 million ($ 70,000) per year for equipment, chemicals, maintenance and research salaries. The paucity of research funds and required infra-structure during the last decade has stifled research and gradually converted most universities to poor-quality colleges, with a few notable exceptions such as NUST, COMSATS, UETs, etc, that have managed to survive somehow.

Private-sector investment in research and development is also virtually non-existent in Pakistan. To encourage companies to undertake meaningful research and development efforts to be globally competitive, the government must offer major incentives to the private sector. These should include tax breaks for investments into research, provision of liberal government grants for foreign training of workers in key technologies, strengthening of laboratories in private industries through matching grants for equipment and training, and promoting new business ventures in high-technology areas through long-term tax rebates, etc. This was done by me when I was the federal minister of science and technology in 2003 when a 15-year tax break was given to the IT industry for the first time.

Pakistan must change directions if it is to emerge from the deep hole of poverty and deprivation into which it has sunk.

The writer is the former federal minister for science and technology and former founding chairman of the HEC. He can be reached at: