As the new government struggles to provide even a semblance of economic relief to working people, it is important to make sense of the broader structural constraints to which policy-makers are subject. This is not to suggest that the government could not undertake pro-people measures -- even if they are largely symbolic -- if it had the requisite political will, but it would also be foolish to pretend that Pakistan's political economy is unaffected by regional and global factors.

Long before the government came to power, it was evident that it was burdened by enormous problems that it inherited from the previous regime. The shortages of power and wheat have been highlighted on numerous occasions, by myself and others, and therefore there is no need to rehash this by now familiar theme. However, it is important to point out in the case of wheat and other basic food items that the problem has been exacerbated by the increase in food prices globally and that things will not settle down within the country until some stability returns to international markets.

The government also inherited a ballooning trade deficit from the previous government that has now increased to more than $20 billion. This, of course, is partially a function of food shortages that have mandated increased imports of staples. Furthermore, imports of light consumer durables from China have increased tremendously in recent years. Meanwhile, the exports just do not seem to be increasing at the rate that our economic managers and creditors alike have constantly insisted that they would.

Pakistani textiles -- effectively our only meaningful export -- do have some small captive markets, such as the Gulf States where a large number of Pakistani migrants are based. However, our exports are struggling against increasingly stringent restrictions that have been imposed on third world economies under the World Trade Organisation (WTO), as well as in the form of bilateral aid agreements. So for example, under the terms of the so-called 'Multi-Fibre Agreement' (MFA), Pakistan stopped providing supports to its textile exporters in 2005.

Then there arguably is the most alarming trend of all -- the rapid devaluation of the Pakistani rupee. On the one hand, this is a function of the growing trade deficit and the fact that we are simply unable to generate enough foreign exchange through our exports to be able to meet the growing import bill. On the other hand, we are suffering the effects of a slumping US dollar given the government exchange rate policy that effectively translates into the pegging of the rupee to the dollar.

The US economy, of course, is also heading towards recession; its trade deficit in the hundreds of billions and the impacts of the increasing price of oil truly hitting home. In this way, the Pakistani economy is not unlike many other third world dependent economies that hold a vast majority of foreign reserves in dollars and effectively conjoin their welfare to the US.

The above, of course, is a brief overview of Pakistan's economic woes in the context of international trends, presented in conventional idiom. If one reads between the lines of figures, such as trade deficits and exchange rates, it becomes clear that all is not well in the world economy. Indeed there is even talk in some circles of the entire international capitalist system coming undone. A brief discussion in this regard is in order.

As I myself have pointed out previously on these pages, in the aftermath of the last big and sustained increase in oil prices in the early 1970s, a paradigmatic shift took place in the international economy; such that dependent economies were made subject to a new and rigorous regime of financial discipline. whereas the centres of international capitalism -- namely, western Europe, Japan and the United States -- embarked on a massive and unprecedented spree of unregulated financial activity.

In short, the result of this new political alignment of the world economy has been a deepening of the Third World's dependent status and a binge of profiteering in the financial centres of the First World. Through the late 1990s, this re-ordering of international capitalism translated into high growth rates amid an 'information revolution' that changed the very meaning of time and space. The huge transfers of capital across borders were accompanied by triumphant proclamations about the innumerable benefits of 'globalisation'.

And then the bubble burst. The famed 'tiger' economies collapsed in a heap and the enormous contradictions of the post-1973 capitalist order were exposed for the world to see. At around the same time, the 'dot.com' phenomenon also stuttered to a stop. The problem was as simple as this: the unprecedented generation of wealth in the First World was actually far in excess of the world economy's real productive capacity. In other words, financial speculators had been making money out of thin air and leaving the real producers -- along with gullible web surfers in the First World -- to deal with the devastating consequences.

The International Monetary Fund (IMF) and numerous central banks claimed to have repaired the damage after the system's mini-implosion. But, of course, they did not; and arguably could not even if they wanted to. The crises of capitalism in its phase of high finance have simply multiplied. As before, the price of oil, global stocks of which are said to be at or around their peak, is the most poignant indicator of how much trouble we are actually in. What is most disturbing is that things are set to get much worse.

Among the most pressing problems that the world faces (and is yet unwilling to truly acknowledge) is that of ecological meltdown. Experts suggest that by 2010 the effects of climate change will truly start to kick in. The most acute impacts, of course, will be felt by the Third World, but the First World will only be able to ward off the problem for so long. To many it might seem amazing that in an age when humanity has proven to be capable of so much technological achievement, it is still unable to address the most basic contradictions in the order of things.

But such a view ignores the fact that the international system is not guided by some innately pro-people and pro-nature rationality. In fact, it is a political economic order that reproduces exploitation of people and natural resources on a monumental scale. And those who benefit from this order do not do so inadvertently; rather, they actively attempt to protect their dominant position even at the risk of the system itself imploding.

In the early 1970s, neo-liberalism was conceived of as the appropriate reaction to the contradictions of the world order. Today neo-liberalism has reached the end of its rope. The neo-conservatives in the Bush administration have gone much beyond neo-liberalism, but they too have not succeeded in conquering the contradictions of the system or indeed suppressing resistance to it. As we in Pakistan watch our political and economic systems collapse in front of our eyes, we would do well to bear in mind that ours is just a microcosm of the global stage. A scary thought indeed.

A couple of weeks after the US invasion of Iraq began on March 20, 2003, a mathematical discovery was announced at a conference in Germany on algorithmic number theory.

I remember thinking at the time that it was wonderful that in the midst of a war against Iraq, and in the midst of all the television talking heads that the war had brought out of the woodwork, we could still have a conference on algorithmic number theory.

It only went to prove that there were more things in heaven and earth than were dreamed of in George W Bush's philosophy, and that life went on despite the death and destruction the US president and his fellow bombardiers were raining down on Baghdad and other Iraqi cities.

"Philosophy? What's that? A branch of psychological warfare?" Bush might well have asked, puzzlement writ large on his face as he struggled to grasp what was, after all, an abstract concept -- just as his much ballyhooed 'war against terrorism' is a war against an abstract noun.

Ever since the events of 9/11, grammarians have been wondering whether there can be such a thing as a war against an abstract noun. But look at it this way: English grammar's loss is US armaments manufacturers' gain -- what with Tomahawk cruise missiles costing a million dollars a piece, to say nothing of the cost of coalition military equipment destroyed by so-called 'friendly fire'. Small wonder, then, that US arms companies' share prices on Wall Street have gone through the roof over the past six years.

Bush went to Yale and the Harvard Business School, but I doubt whether he studied very much philosophy or mathematics there, or very much of anything for that matter. He knows quite a lot about baseball, though, having once been part owner of a baseball club in Texas.

It is said that what Dubya really wants to be is US baseball commissioner and that he only ran for president in order to improve his CV for the baseball job. He also owns a ranch in Crawford, Texas, where he likes to stay in shape -- so we have been repeatedly told -- by going for long runs, riding his mountain bike and relaxing afterwards by chopping wood. "Thwack! There goes another Tomahawk missile," one can imagine him saying.

Germany is one of the countries that was opposed to the war against Iraq. Maybe that's why the Germans decided to hold a conference on algorithmic number theory in the middle of the war, in a sort of symbolic gesture aimed at demonstrating that wars come and go but mathematics goes on forever.

In a story about the discovery announced at the conference, the BBC reported: "A pair of mathematicians has made a breakthrough in understanding so-called prime numbers, numbers that can only be divided by themselves and one. Other mathematicians have described the advance as the most important in the field in decades. It was made by Dan Goldston, of San Jose State University, and Cem Yildirim, of Boagazici University in Istanbul, Turkey."

The advance, the BBC story added, "is related to an idea called the twin prime conjecture. This idea, still unproved, is that there are infinite number of pairs of prime numbers that differ only by two. Primes have always fascinate mankind. The third century BC Greek mathematician Eratosthenes developed a way to find the prime numbers. Over the years, mathematicians such as Pierre de Fermat in the seventeenth century, Georg Riemann in the nineteenth century and Godfrey Hardy in the twentieth have advanced our understanding of these strange numbers."

Fermat, of course, is the author of a riddle known as 'Fermat's Last Theorem' that confounded the world's greatest mathematicians for 358 years -- until it was solved by a mathematician named Andrew Wiles in 1994.

Wiles is an Englishman who emigrated to America in the 1980s and took up a professorship at Princeton University, where he earned a reputation as one of the most talented mathematicians of his generation. Now, he is famous as the man who cracked the most celebrated riddle in mathematics.

The story of Fermat's Last Theorem is unique. Fermat's Last Theorem was the Himalayan peak of number theory. Wiles laboured in isolation for seven years pulling together all the most recent techniques of number theory to apply to his proof. Although the mathematics involved in Wiles proof is some of the toughest in the world, the beauty of Fermat's Last Theorem lies in the fact that the problem itself is supremely simple to understand.

As Simon Singh notes in his fascinating book Fermat's Last Theorem, "It is a puzzle that is stated in terms familiar to every schoolchild. Pierre de Fermat was a man in the Renaissance tradition, who was at the centre of the discovery of ancient Greek knowledge, but he asked a question that the Greeks would not have thought to ask, and in so doing produced what became the hardest problem on earth for others to solve. Tantalisingly, he left a note for posterity suggesting that he had an answer, but not what it was. That was the beginning of the chase that lasted three centuries."

In those three centuries mankind progressed from 'humours' in medicine to gene-splicing, identified the fundamental atomic particles, placed men on the moon, and did a thousand other things. But in number theory Fermat's Last Theorem remained inviolate.

Fermat was one of the most brilliant and intriguing mathematicians in history. Like Pythagoras, who did not have to check every triangle to demonstrate the validity of his theorem that in a right-angled triangle, the square on the hypotenuse is equal to the sum of the squares on the other two sides, Fermat did not have to check every number to show the validity of his theorem.

Fermat's Last Theorem, as it is known, stated that: "x raised to the power of n plus y raised to the power of n equals z raised to the power of n has no whole number solutions for n greater than 2." Check it out!

Now that Fermat's Last Theorem has been solved, what's left? Well, mathematicians have still got the good old unsolved Riemann hypothesis up their sleeves. This hypothesis concerns an infinite sum of numbers called the zeta function. And no, the zeta function has nothing to do with the drop-dead gorgeous Catherine Zeta-Jones, worse luck!

"Those who dominate research are power centres, not competence centres," stated the famous German sociologist Professor Richard Munch. In his book titled The Academic Elite (2007), Munch takes the elite thinking in universities and research to task, head on, claiming the current policies are counter productive and actually work against the goals they are set out to reach, notably help improve the universities in Germany and make some of them into top universities.

The German Research Council (DFG) has selected 10 of the country's 70 universities to become centers of excellence. True, there was often need to improve standards and increase efficiency and quality in production of ordinary and research graduates at German and other European universities, but the approach is wrong, Munch argues. Pakistan, too, can draw useful lessons from Germany's experience. Also, the country wants some of its universities to become top institutes of higher learning, as well as the standards in all universities to be improved. The Higher Education Commission (HEC) is vigorously pursuing these goals.

Why top institutions?

Instead of lifting the general standards of the universities, Germany has gone for an elitist approach. They could have chose to improve the standards across the board, through economic incentives to all teachers and students; funding of a number of research projects and programmes; better libraries; better and closer supervision of students; expanded contact with the outside world, including the private and public sectors; and improved and increased co-operation with domestic and foreign sister institutions, including exchange visits and study tours, etc. Eventually, such improvements will have to be implemented for the whole higher education and research sub-sector, not just for a small fraction.

Good institutions are better

This ought to be simple; we know a lot about what it is that keeps up standards and improve quality in academic institutions. Whether the whole university will change over night is questionable, to say the least, because there are many factors that decide quality alleviation, such as good secondary education and undergraduate courses, with good teachers. And it should be underlined that when we talk about good universities, we do not only mean good doctoral study programmes and research conditions for staff. As important, and in developing countries probably more important, is it to improve the undergraduate courses and the graduate courses at master's level, including in the professions.

However, provided that the basic training is in order, there would not only be good chances, there would be likelihood for developing many good pockets with research in the universities, which over some time could grow into very good or excellent milieus. Steady work in stimulating milieus always leads to good results, not some false understanding about superiority and elitism.

Research is more like an art or sports -- it demands skills, repetition, stamina and pleasure at what you do, as well as general good work conditions and equipment. The goals of programmes and projects must be well defined, and so on. But after that, it is pretty much up to the human minds and hearts to take it from there. Let me add the importance of learning research methodology, which is included in master's courses, making the students understand research work, realise its importance and be able to carry out own research work.

Substance, not slogans

Our approach and understanding rest on a thinking different than that of the current technocratic, elitist approach that we today see in Germany and many other countries. In our time, it is seen important to know all the right words; but alas, not necessarily the right substance. It is in vogue to talk about quality assurance, efficiency, standard alleviation, excellence and so on, to use some of the common buzz words in a forest of slogans. In our eagerness to become as good as some top American universities are, we use marketing vocabulary and thinking, not scientific language and reasoning. What about the substance, the themes and topic studied and not studied, and the power of the research councils and other funding organisations? They influence what will be seen as good research, and they make political and even scientific decisions about what should be studied and how it should be studied.

Those who speak about centres of excellence often think they are smarter than the rest of the lot. They have already carved out a niche for themselves. But actually, they build on mediocre understanding of the inner life of academic institutions, the psychology of researchers and students. They even miss out on economics; the working life needs of many good candidates, not just a handful of top ones.

Creativity

One of the most important factors in achieving academic excellence is to develop milieus, which have abundance of optimism, new and bold ideas, and self-confidence among staff and students. There is need for open debates with the outside world, and the private and the public sectors, which are the users of research and the future employers of most of the students. Good academic institutions must also be fun places to work and learn; something we often forget in the grown-up, serious world we live in.

Creative academic work must be serious, but not only serious. Joy leads to dynamic and creative environments, hectic and active places, full of life and experimentation. Everyone, especially the youth, must feel that they are part of 'shaping history' in their institution, or at least in their discipline. The older academic staff will get stimulated from exchange with young people's enthusiasm and bold ideas, from seeing issues 'from another angel', which the older and more careful professors could never afford to do in their often guarded and calculated academic careers. Well, some of the best may also once in a while have let their 'hair down' even in the past.

Self-confidence and modesty

When this writer was young, we were part of such a creative milieu, in Norway and Sweden; we had no less than three opportunities, in sociology of education, peace research, and international and comparative education. All these milieus were led by Scandinavian and internationally recognised leaders. Well, that is how we talk in academia, in spite of the fact that international standards are not always higher than local and national standards! In Norway, with only five million inhabitants, we say this is a 'cotter mentality', thinking that if you are rich and come from a big country, you are automatically better. We know that is not true.

Third world countries should also keep up their self-confidence when due; they are often in the same boat as the Norwegians among us! Productivity and quality is certainly not always better in big country private or public research institutes than in small and, shall we add, remote universities. As a matter of fact, the dissertation years of higher and advanced degree students are often particularly productive, and many may realise later in life that they cannot keep up their youthful performance, or maybe only for one or two other projects.

Often, the milieus research students work in are made up of a handful of good friends and colleges, with good links to the outside world. Or put differently, we do not always need a big and expensive Toyota land cruiser when a modest Suzuki or even a bicycle can do the job -- and perhaps we get more focused on our real research work if there is some modesty in it? After all, even centres of excellence will not produce the final answers to any questions; they may at best take us a step of two forward, and certainly, they will advertise their achievements well and maybe inflate them beyond recognition. But that is how our media world has become.

Teamwork makes all better

And another note on being modest; it is not even sure that it is the top professor who is the best teacher and research supervisor, as it is not always the best CEO or department head in an office who is the best leader. This is important to note as we learn to work in teams and where we realise that different members in a team have different qualities. Excellent results may actually come from good and average researchers, as individuals, but the team makes them excel. Sector inputs may be unique in the larger project, but just average if they are presented alone. None of us is expert on everything, and most of us are actually often quite inadequate in many fields outside our subjects and fields of specialisation.

Progress and performance depend not only on how teachers function in relation to the students, but also on how they make each of the students relate to each other, so they can perform optimally. In a good working team, the members enhance the quality of each other's work. And let us be reminded too that whereas children learn from their teachers, they probably learn more from each other, and from the environment outside the school. Also adult students learn from each other. University teachers and researchers are 'team leaders', but not the 'ultimate experts', to help shape the working environment and instill enthusiasm and curiosity in their students.

Idealism

In the examples given above from our own experience, we all worked twice as hard as we would have done in any other educational programme or research post. Two of the milieus were quite well financed, while one, notably peace research, did not receive good funding, probably since some of the reports challenged conventional wisdom and were even anti-establishment. Well, research should do that too, in search of alternatives and truth. In all three milieus idealism drove us all, from the directors to the library acquisition assistants and messengers. The results were amazing.

Constant change

But such milieus do not last forever; they have their time. In two of the mentioned cases, the enthusiasm ebbed after a decade or so, often when the senior professor(s) moved on, or simply because other competitive milieus also developed. Nothing is better than the latter, because then what was done had a model function and others wanted to challenge and do even better. More good candidates would be produced and good work done in jobs afterwards. After all, we do not want elite institutions producing just a couple of scores of top candidates; we want hundreds and maybe thousands of candidates, so that they can continue their mission in real-life jobs, in educational institutions and research, the civil service, the private sector, and so on. The impact of a broader quality improvement is much more effective than the elite approach.

Lessons

What can we learn in Pakistan from these examples? A number of things. Maybe the most important would be that education and research demand freedom and openness. Research work and studies are not only trying to be creative; much of it is actually quite tedious and repetitive. It also demands practical skills and accuracy. But without the creative side and the enthusiasm of the group of colleagues, everyday work may become boring and the quality will suffer.

Naturally, salaries and facilities for education and research are important, and the HEC has done a lot in recent years to improve work conditions at Pakistani institutions, including establishing improved physical and on-line libraries, and institutional and personal linkages. This is commendable. Yet, from our visits to a number of universities in Pakistan, a lot more must be done, not only in engineering and technological fields, but across the board. And we believe that leaders of academic institutions must be academicians themselves, or at least have good experience of academic work, so that they understand what it is indeed about. Good administrators and technocrats are needed, but academic leaders should be charismatic and visionary leaders, at institutional, faculty and department levels; and they should have broad contacts with the outside world to avoid becoming ivory towers. Then they will also avoid making such mistakes as that the German elitist thinking leads to.

(The writer is a Norwegian social scientist currently based in Pakistan.

Email: atlehetland@yahoo.com)

According to the Water and Power Development Authority (Wapda) website, it has a total of 17,806,987 registered domestic and commercial consumers. To cater to the needs of these and their dependent consumers, Wapda has four thermal and 13 hydel power generation plants. Moreover, 18 independent power producers (IPPs) help Wapda deal with the power demand in the country. While the website projects a nice picture of Wapda's power generation capacity, the overall net generation capacity of the hydel and thermal power stations in the country stands at 6,440 and 4,664 mega watts, respectively; while the IPPs have a net generation capacity of 5,674 mega watts, which should have been enough to meet our energy needs. The situation on the ground, however, speaks volumes of the actual performance.

The total estimated gap between the demand and supply of electricity in the country remains at 3,500-4,000 mega watts in the peak hours. To bridge this gap, Wapda has but to resort to frequent and long-duration power shutdowns, which bring unbearable hardships on the commoners, negatively impacts the commercial and industrial sectors, and often results in losses of precious human lives and public and private properties when people come out to protest against load-shedding.

According to the Asian Development Bank (ADB), the Pakistani transmission system faces three major challenges -- the heavy power flow through the 500 KV systems, the shortage of supply capacity for the 200 KV systems and high transmission losses. To put it simply, wastage of energy in big cities, and in public and private offices; the increased power demand due to surging population; electrification of new localities; and purchase of millions of home appliances (it is estimated that in financial year 2005-06, 7.5 million home appliances -- including refrigerators, deep freezers, air-conditioners, microwaves, television sets, washing machines, room coolers, etc -- were purchased by consumers, thanks to the easy finance facility offered by commercial banks) sucked up an additional 2,550 mega watts of power, thus overloading the already fragile national grid.

Wapda's failure to use the country's vast hydro, gas and coal resources for power generation, and to build new power generation plants; low voltage because of outdated wires; low capacity transformers and capacitors; hooking and stealing; lack of a proper and uniform surveillance system against the wrongdoers; and corruption are some of the reasons for this sorry state of affairs. The countrywide load-shedding extending from four to 12 hours daily has made life miserable for the common people. Power outages for long duration have sucked the life out of Pakistanis. There is no light and, thus, no water at homes, hospitals and educational institutions. Moreover, peaceful sleep is a distant possibility.

The rich can successfully cope with the load-shedding, because they can afford to buy uninterrupted power supply (UPS) systems or generators, or they can go to cool places such as Murree or the Northern Areas to fight the sizzling heat, but what about the poor majority in the country? Khalil khan, who hails from Mardan, tells The News on Sunday that the poor can do little about the power shutdowns, expect for cursing themselves or Wapda officials.

"They cannot go outside their homes at night, because the law and order situation is poor. But they may use hand-fans to mitigate their sufferings. They may climb their roof-top if an opportunity exists, but here too they are exposed to the danger of aerial firing," he says. We can only pray for the rain, Khalil adds with a touch of sarcasm in his tome, because it lowers the temperature, reduces the demand of electricity and provides a breathing space to the overloaded national grid.

"The long hours of load-shedding have slowed down everyone's progress: it has an impact on people's output, small industries are facing hardships and students have turned to the oil lamps to study for their exams," writes a blogger from Karachi. Taimur Khan, a resident of Peshawar, says the prices of UPS, generators and their accessories, such as batteries and wires, have registered an increase of more than 100 percent in recent months. "A small battery used in UPS that priced Rs3,000 till a few months ago is now being sold at more than Rs7,000," he informs.

A vendor in stabilisers, who wishes not to be named, seconds Taimur's views. He says that the smallest of generators is now being sold at Rs6,000; whereas, it used to cost only Rs3,000 till a few months ago. "The biggest one that was available at Rs80, 000 then is now priced at Rs160,000," he informs. Raza Khan, who hails from Peshawar, says: "We, the consumers, are deprived of electricity for six to 10 hours daily, but are being made to pay full electricity bills. This is a malpractice on part of the utility company." He opines that the poor are being forced to steal electricity.

There does not seem to be an immediate end to this crisis, because no power generation project is ready to be commissioned to help solve the problem. With bigger hydro-electric projects stalled due to the lack of political will and consensus, and thermal ones unable to get off due to bureaucratic hesitation and lack of private sector interest, a bigger power-crisis looms large on our national horizon. Experts say that no respite is likely before the end of 2009, when some private and small hydel and thermal power projects would begin production of about 2,000 to 4,000 mega watts.

The current PPP-led ruling coalition has also vowed to eradicate load-shedding. Minister for Water and Power Raja Pervez Ashraf has announced that by August 2009, the nation would see no load-shedding and low-voltage. Let us see whether it turns out as yet another addition to the countless promises that always wait for fulfillment! The 25 percent transmission and distribution losses, meaning 3,286 mega watts, must be checked to save Wapda from disaster. According to the current rate of selling, each mega watt lost amounts to an estimated loss of seven million rupees.

The performance of the economy in financial year 2007-08, as depicted in The Economic Survey of Pakistan, was disappointing, to say the least -- gross domestic product (GDP) growth decelerated, and savings and investment levels fell; while inflation, and fiscal and current account deficits went up enormously. The per capita income crossed the $1,000-mark for the first time, but income inequalities remained a matter of concern.

In financial year 2007-08, the economy grew at the rate of 5.8 percent -- slower than the last four years' average growth rate of seven percent, but still healthy. As the pattern of economic growth is as much important as its rate, mere expansion of the economic output does not tell us the whole story -- one has to see that the growth is broad-based and accompanied by macro-economic stability.

In financial year 2007-08, the economic expansion had a narrow base, because the services sector alone accounted for 75 percent of the total growth. The sector grew by 8.2 percent, while agriculture and manufacturing -- the commodity-producing sectors -- grew by only 1.5 percent and 5.4 percent, respectively. The growth of the services sector was mainly due to the financial services sub-sector, which grew by 17 percent. The growth of the services sector and the financial services sub-sector in financial year 2007-08 was in line with the preceding years.

In the last four years, the services sector and the financial services sub-sector have grown on average by 7.1 percent and 24.42 percent, respectively. In fact, the financial services sub-sector has grown faster than any other sub-sector. The major problem with this sub-sector is that it is not labour-intensive and does not have much effect in terms of employment generation.

On the other hand, the lackluster performance of the agriculture sector was mainly due to negative growth of three percent of the major crops. Cotton production fell by 1.2 million bales, resulting in negative growth of nine percent. Similarly, wheat output declined by 1.6 million tonnes, resulting in negative growth of 6.9 percent. The slow growth of the manufacturing sector was mainly due to only 4.8 percent growth of the large-scale manufacturing (LSM) sub-sector, which accounts for almost 70 percent of the total manufacturing. The poor performance of the commodity-producing sector not only subdued employment generation capacity of the economy, but also contributed to increasing inflationary pressures.

Another discouraging aspect of the growth in financial year 2007-08 is that it was essentially consumption oriented. The total consumption grew by 6.5 percent -- compared with 2.3 percent in financial year 2006-07. Importantly, the consumption rate was also faster than the overall GDP growth rate of 5.8 percent. On the other hand, investment grew by only 0.7 percent, compared with 2.7 percent in the preceding fiscal. The net exports (difference between exports and imports), the other component of GDP, registered negative growth of 1.2 percent, compared with one percent in the preceding fiscal.

The disposable income (income minus taxes) is either consumed or saved; therefore, increase in consumption is at the expense of savings. Though increase in consumption expenditure increases aggregate demand, which may serve as a stimulant for investment, actual increase in investment depends on funds generated through savings. That is why increased consumption may serve as a drag on both savings and investment. Hence, in financial year 2007-08 national savings-GDP ratio fell to 13.9 percent from 17.8 percent in the preceding fiscal. Similarly, investment-GDP ratio fell to 21.6 percent from 22.9 percent in the preceding fiscal.

Increase in consumption had other effects as well. For example, given the sluggish growth of the commodity-producing sector, consumption-driven increase in aggregate demand in the absence of a corresponding increase in supply accentuated inflation. Similarly, as the difference between domestic output and domestic demand is met by buying foreign goods, increased consumption contributed to increase in imports, as well as the trade and current account deficits.

The key to achieving sustained high growth rate is to increase the level of savings and investment; the latter has a two-fold role in the economy. In the short-run, it affects aggregate demand and, thus, output and employment. In the long-run, it affects GDP growth. A country's rate of growth largely depends on how much it sacrifices present consumption to provide for production of capital goods. That is why savings and investment are called the 'engines of growth'.

The deceleration of the growth rate in financial year 2007-08 was accompanied by widening of current account and fiscal deficits. In the first 10 months of financial year 2007-08 (July 2007-April 2008), the current account deficit reached $11.6 billion -- about 6.8 percent of GDP. This surge can be attributed to the trade deficit, which increased to $17 billion in the first 10 months of the outgoing fiscal. The trade deficit is projected to reach $20.5 billion or 12.3 percent of GDP when figures for the whole of the outgoing fiscal are compiled. The current account deficit would have been even higher, but for the workers' remittances worth $5.3 billion in the same period.

A country's current account deficit is financed by inflow of capital from outside, of which the most credible source is foreign direct investment (FDI). It was recorded at $3.48 billion in the first 10 months of financial year 2007-08, 16.7 percent less than the figure for the corresponding period of the preceding fiscal. Moreover, the composition of FDI remained a matter of concern: it was concentrated in three sectors -- communication, financial, and oil and gas -- that collectively accounted for 67 percent of related inflows in the outgoing fiscal.

In financial year 2007-08, the fiscal deficit reached 6.5 percent. Though the total revenue collected was Rs1.54 trillion, higher than the targeted level of Rs1.47 trillion, tax revenue registered a shortfall of Rs25 billion. On the other hand, the total expenditure was registered at Rs2.22 trillion; thus, a deficit of Rs680 billion, more than 80 percent of which was financed through bank borrowing, particularly from the State Bank of Pakistan (SBP), which is highly inflationary. It is pertinent to mention here that these figures are provisional and are subject to change when actual figures till June 30, 2008, are compiled. More often than not, the fiscal deficit increases because the expenditure exceeds even the revised budgetary estimates.

To curtail the fiscal deficit, the government has decided to phase out fuel and power subsidies in this budget. In financial year 2007-08, the government provided subsidies worth Rs407.48 billion, including subsidy of Rs175 billion on petroleum products after an unprecedented increase in international oil prices that continue to go up. The surge in fuel prices accompanied by increase in food prices means that inflationary pressures will mount in the days to come.

Inflation remains a fundamental macro-economic problem. In financial year 2007-08, Consumer Price Index (CPI) inflation was 10.3 percent, while food inflation was 15 percent. Inflation has negative effects on real income, savings, investment and exports. It also forces the government to pursue a tight monetary policy, as it has already done, which slows the pace of the economy by increasing the cost of doing business. At present, the government is worried more about the fiscal deficit than inflation, but soon it will be required to give more attention to this problem.

In financial year 2007-08, the per capita income crossed the $1,000-mark for the first time. It increased to $1,085 from $925 (by 17.29 percent) in the preceding fiscal, mainly due to an increase in the workers' remittances. However, in rupee terms, the real per capita income rose by 4.2 percent, compared with 4.9 percent in the preceding year. This means per capita income also decelerated due to contraction of GDP growth. Moreover, growth of per capita income lagged behind that of consumption expenditure, which means that we are consuming at a faster pace that we are earning.

Per capita income does not tell us about income disparities. A country may have a high per capita income, but at the same time may also have gross income inequalities. Pakistan is one such country where increase in per capita income has been accompanied by increase in income inequalities. This is shown by the movement of the Gini Coefficient, a measurement of income disparities. The higher the value of the Gini Coefficient, the higher the level of inequality. As reported in The Economic Survey, the Gini Coefficient has increased from 0.27 in 2000-01 to 0.30 in 2005-06.

Since the bulk of a poor family's budget is spent on food items, the drastic surge in food prices also means that more people are falling below the poverty line (BPL). The economy is in dire straits because of a host of domestic and external factors, including political uncertainty, poor law and order situation, high international fuel and food prices, energy crisis, and failure to act against cartels due to political expediency. In the last five years, a lot was achieved on paper in terms of improvement in economic numbers, but little was done to increase the productive capacity of the economy. Now that the bubble of economic growth has burst and a new government has taken over, it is high time that realism prevails in policy making.

Renowned economist Joseph E Stiglitz argues that financial crisis and economic downturns have become so frequent that now they are taken as normal occurrence in human existence. Relying on the remedial efficacy of market fundamentalism, no serious attempt is made to re-evaluate the systemic failures in national and global financial and economic systems. Without recourse to getting institutions and interventions right and innovative, international policy establishment informs that this time around, financial and economic wizards are intellectually more equipped and strategies more sophisticated to handle any crisis.

Old products and remedies are re-introduced without acknowledging that such crises are systemic failures, rather than a product failure. The current economic slowdown in the United States and its possible contagious effects in other parts of the world provide ample proof of such a dependency in financial and economic policy-making. In the last six months, no significant employment has been created in the US. As a result, more people are facing economic problems than in 1999. The system of finance and economics works in such a way that it empowers and enriches the top, such as chief executive officers, without distributing economic gains towards the lower strata of social organisation.

Taking example of the housing sector, the financial system inflates the prices to increase asset value so that huge quantities of credit start pouring in as investments. While the credit and borrowers multiply, the ability to repay either stagnates or grows slowly, which results in increase in the number of people who lose their homes. The financial instruments become a reflection of predatory lending and, as in the United Kingdom, credit crunch follows and bail out efforts for financial sector, using tax-payers' money, set in. Bailouts result in more powers for the financial managers to make more mistakes.

In developing countries such as Pakistan, the mainstream economic and financial situation is not much different from the West, at least in terms of distributional effects. When economic growth occurs, it enriches a certain type or class of people and brings welfare gains in certain regions. The rest of the population can only enjoy development of others, with empty hands and glazed eyes! The elites who accumulate riches in such circumstances tend to strengthen and secure the centre, and weaken the periphery of economic and infrastructure development initiatives. As a result, economy grows but cannot sustain the growth momentum because, as Dani Rodrik claims in one of his researches, "inequality in land and income ownership is negatively correlated with subsequent economic growth."

In developing countries such as Pakistan, in the absence of a responsible, transparent and accountable government to mediate prudently the distribution of economic resources and opportunities, the shock-absorbing capacity of middle and lower economic strata of society diminishes. For instance, though the slogan of roti, kapra aur makan (food, clothing and shelter) stands revived, the mainstream belief in market fundamentalism has prompted the government to withdraw subsidies on fuel and electricity.

The reason is simple: while subsidies are a developmental instrument to adjust prices and allocate resources for long-term economic growth, financial and economic managers in Pakistan claim these as distortions in price mechanisms. They fail to acknowledge the empirical evidence that subsidies have been main instruments of economic growth and development in the economies of the West as well as the East.

It appears that the issue is to realise the importance of the role of government in making subsidies and other support measures work for sustained pro-poor economic development. In South Korea, Alice Amsden claims, subsidies were made reciprocal to economic performance of the recipients, especially for 'real' research in and development of export-oriented industries. The Pakistani government also needs to evaluate seriously the reciprocity of industries, such as the garment sector, to avoid taxpayers' money being transferred to foreign consumers with lowering export prices due to subsidies.

Another set of policy instruments of the government of Pakistan springs from a near-religious belief in the effectiveness of monetarism. While the current economic crisis is due to increase in international prices of fuel and food, and shortages of electricity, the so-called inflation-pursuing tight monetary policy may not deliver the desired results. It may be a recipe for disaster, especially in those cases where availability of cheap credit restrains growth. More than a belief in monetary instruments, Pakistan needs to re-regulate mainstream commodity markets to remove both artificial and real shortages, and bring about stability in supply. It needs to focus on remedial measures regarding information asymmetries and poor investment coordination, which create and entrench bubble-like economies perching on inequality and concentration of wealth.

One of the basic lessons of economics is that there is no free lunch. Focusing on this lesson, the need of transparency and accountability becomes apparent. While the finance minister spoke, in his budget speech, about the need of withdrawing selected subsidies, he did not share any long- or medium term-strategy for equitable economic growth or any credible analysis about how much money will be spent in the name of 'stabilisation'. When the real scale and scope of social and economic costs are not measured, no good strategy can be designed to mitigate the adverse affects of economic change. It seems that Pakistan's economy is designed to take away money from the middle and lower income groups and give it to the rich.

In Pakistan, in line with Stiglitz's viewpoint, the economic managers should re-locate the role of a transparent and accountable government in controlling the current crisis, and simultaneously go beyond short-term inflation targeting and excessively relying on monetary control measures. They are suggested to target the distribution side of the economy for stemming the economic meltdown while getting tax, subsidy and social security related interventions right in the direction of efficiency with equity.

While moving in this direction, the first non-Bhutto PPP regime must know that 'too late, too little and badly designed' policy decisions and interventions cannot equitably spread the fruits of national welfare gains. Equally important is to understand that even a well-targeted Benazir Income Support Programme would at best be a good politics, but the economy requires something more. It requires consistency in efforts and a strong doctrine of state for equity-based full employment, which cannot be substituted by dependency-creating charities in any economy.

The Federal Budget 2008-09 has been criticised by experts for allocating an extremely low amount to the education sector. According to figures, the current budget for 'Education Affairs and Services' has only been marginally increased from Rs24.147 billion (later revised to Rs24.28 billion) in the outgoing fiscal to Rs24.622 billion in financial year 2008-09. This increase, as we all know, is not enough to cater to even the effects of the inflation we are currently experiencing or the needs of the increasing population.

On the other hand, the allocation for the education sector in the Public Sector Development Programme (PSDP) or the development budget has actually been reduced from Rs6.509 billion in the outgoing fiscal to Rs6.27 billion in financial year 2008-09. Interestingly, in the last fiscal, allocation for the education sector in the PSDP was revised to Rs4.383 billion, which shows that even the scarce resources allocated to education were not fully used.

The Higher Education Commission (HEC) has also suffered, because its allocation has been kept constant at Rs18 billion. It is pertinent to mention here that the full allocation for the HEC could not be used in the last fiscal and was reduced to Rs16.9 billion in the revised estimates. Many issues need an objective analysis in this connection. The country has a youth threshold with a vast majority of the population in need of educational input, but the opportunities and possibilities of facilitation are extremely limited.

With a little more than 400,000 available seats in all universities / institutions of higher learning in the country, it approximately makes a ratio of 100 to one. The social development in its broadest respect cannot be achieved without raising priority of education to the highest level. In fact, the appreciation and correct usage of health care also follows educational attainment. An illiterate or semi-literate cannot appreciate merits of modern health care facilities. Above all, the much desired human capital for the national progress and economic prosperity demands proportional investment.

Among the revenue generating avenues, the remittances from overseas Pakistanis is the only stable source in the overall economic realm. It registered 20 percent increase in the first 10 months of the outgoing fiscal (July 2007-March 2008) with $5.3 billion. An analysis of overseas worker requirement clearly shows a shift from unskilled / semi-skilled to skilled categories in diversified domains. The job market has become exceedingly competitive with developing nations trying to improve their respective shares. In order to keep afloat, the government must invest in certain essential domains. Language skills, especially of English and Arabic; maintenance technicians (plumbers, electricians, supervisors, fitters, computer technicians, etc); construction workers; supervisors and many other fields have enormous potential, if rightly developed. Only quality work force with competitive advantages can survive in this era of globalisation.

Pakistani workers also need elementary education on sound footings, as well as personal grooming to adjust in overseas working environment. The advanced scale human resource in the form of professionals and white-collar work force is also in demand at the right ends. Whereas the domestic demand also remains to be suitably met, the market pulls automatically makes overseas chances attractive due to higher remunerations and better quality of life. Unconventional human capital markets, such as China, may also be explored in this regard.

If Chinese language is taught to the interested youth with adequate abilities in English, they can make an excellent choice for the booming Chinese corporate and industrial sector. Intelligent planning, identification of strategic niches and proper investment can lead to very effective outputs. Similarly, there is an enormous potential for qualified teachers, paramedics, technicians and computer literate clerical staff in high performing economies in Africa. Those regions already have host populations from the subcontinent; therefore, it will be all the more useful to target the labour markets in these emerging regions of opportunity.

Human capital also needs to be developed for the overall starved sectors in the country. In Pakistan, there is an acute shortage of institutions of higher learning with credible quality. It is a proven fact that any such institution takes at least 20 years from the drawing board to outputs. In the times of diversity and specialisation, laid back and sluggish approach can hardly suffice. Some useful work was done in the last five years, and the new government needs to analyse the achievements of the past and draw lessons for the future. It is disappointing to note that instead of building on the successes of the previous government, the new ruling coalition has decided to destroy whatever little was accomplished.

The universities in the country are in desperate need of augmenting their capacities, through strategic measures to generate quality outputs in terms of human resource and research work. Standards in instruction, library resources, liaison with the practical fields outside academic environments, focus on employment prospects, exposure of students to the challenges in the real life situations and confidence building in personalities are few essentials to be dealt with in a sustained equation.

The country faces the menaces of a displaced population away from its place of residence due to law and order problems, aftermath of natural disasters, and fear of invasion under the so-called 'war on terror'. Social situation of the country shall face the fragile balance, which breaks every now and then and gives rise to upheavals. Appropriate investment in the human resource development alone can bring about positive changes. The outskirts of Karachi houses at least 0.4 million people uprooted from the Federally Administered Tribal Areas (FATA) in the last decade or so. Similarly, hundreds of thousands of people in interior Sindh, Balochistan and the NWFP live in abject poverty because they have been displaced from their native areas on one account or the other.

It is common sense that sense of deprivation can automatically cause inclination towards anti-social activities. Instead of bolstering gun-totting personnel in the name of security, the government must encourage short- and long- term capacity building programmes for the eligible youth in these localities. A sustainable livelihood for a family is the best prevention from violence and terrorism. The policy-makers must also profess the importance of this matter to the overseas masters that control their moves in more than one ways.

Gender mainstreaming in terms of human resource development has remained an affair with illusions. The country portrays a dismal picture on this count, self pleasing reports and statistics notwithstanding! Dozens of schools and colleges dedicated for female education have been bombed or closed down under threats from fanatics. Implications of these gruesome influences forced the law-abiding families to restrain their female wards from attending schools and colleges.

The opportunities are eroded by the non-conducive environment, lack of serious and continuous follow up, and corruption. There is an acute shortage of qualified female personnel in basic fields of work, such as computer data entry, medicine, accounting, teaching, media sciences, etc. Whereas the higher education sector in the country has recorded a growing trend in female enrolment, the development of the same in respect to the mid-level human resource development opportunities is extremely limited.

It may be noted that the socio-cultural milieu of our country is still gripped under taboos of sort that shall need decades to be reformed. The only available way to deal with this problem is to prioritise female education and encouragement in employment in a continuous manner. At the same time, the cultural stings tied up with certain professions / occupations including nursing affect the aspirants from making the rightful choices. A tailor-made and incentive-oriented programme is the need of the hour to address this vital area in our socio-political agenda.

It may be noted that the parties that are at the helm of the affairs represent a progressive mindset, at least through their manifestoes. It shall amount to a great failure if they decide to look the other way without addressing the issue of human resource development. No rhetoric or magic shall cause an economic turnaround, but a steadfast investment in building the capacities of our people. One can take a cue from Cuba ñ a much smaller country ñ that dispatched more than 2,000 doctors and medical staff after the October 2005 earthquake in Azad Jammu and Kashmir (AJK) and the NWFP. One hopes that some day we may have a human resource of our own to fetch dignity and laurels to our nation!

In his last days, the late Nawab Akbar Khan Bugti floated the idea of a single Baloch party. Before he could materialise this dream, he was mercilessly killed by the Pakistan Army. Since then, an intense struggle for the Baloch leadership is on. The Balochistan National Party-Mengal (BNP-M) resigned from the previous National Assembly, the Senate of Pakistan and the Balochistan Assembly in protest, while other Baloch nationalist parties -- including Akbar Bugti's Jamhoori Watan Party (JWP) -- did not follow suit and continued to remain part of the previous parliament and the provincial assembly.

After the killing of Akbar Bugti, an unprecedented violence shook most parts of Balochistan. The BNP-M announced a long march from Gawadar to Quetta to protest Bugti's killing, resulting in the arrest of the party's leadership and workers. Meanwhile, other nationalist parties faced an extraordinary pressure from the Baloch youth to resign from the previous parliament and the Balochistan Assembly, and launch a struggle to pursue Baloch rights more actively.

Meanwhile, the JWP split into different factions. Akbar Bugti's grandson Brahamdagh Khan Bugti names his faction of the JWP as the Baloch Republican Party (BRP). The National Party also eventually resigned from the previous assemblies, but as a component party of the All Parties Democratic Movement (APDM) and not because it was a Baloch nationalist party. On the other hand, after Akbar Bugti's killing, the Balochistan Libration Army (BLA) resorted to more violence for pressurising the government to meet its demands. In this backdrop, the February 18 general elections were boycotted by almost all major Baloch nationalist parties.

After his release from detention recently, Nawab Akhtar Mengal was received warmly in Balochistan and the politics of the province took a new term. The new government started a reconciliation process to address the issues of the Balochs, but failed to win the trust of Baloch nationalist parties. Akhtar Mengal and his party, the BNP-M, suspected the reconciliation process from the very beginning and chose to oppose it. The nationalist party termed it a distraction from the real issues. The BLA also refused to become part of the reconciliation process. Recently, however, Nawab Khair Bakhsh Marri, an inspiration for the BLA, said in an interview that he was willing to represent the group in talks with the government, but only if they were held on his own terms and conditions.

The rift in Baloch nationalist parties has now become even more evident. The BNP-M considers itself to be the only party struggling for the rights of the Balochs. Nawab Khair Bakhsh Marri, however, recently said the BNP-M cannot claim to be a Baloch nationalist party until it also has representation of Balochs living in Afghanistan and Iran. In the speeches he has made after his release, Akhtar Mengal has said more than once that his party will never create any hurdles in the way of Baloch guerilla fighters. However, he too believes that a political movement is also needed to for the success of the Baloch movement.

This implies that the BNP-M also favours resistance, but alongside a political process. The party's move of resigning from the parliament and the Balochistan Assembly after Akbar Bugti's killing should also be seen in the backdrop of the race for Baloch leadership. The BNP-M has its major support base in Kalat, Khuzdar and central Balochistan. The party, however, is also trying to extend its influence in other parts of the province and the recent public meetings of Akhtar Mengal should be seen in this perspective.

The National Party, on the other hand, believes in political struggle for the rights of Balochs and prefers to stay away from armed resistance. Dr Abdul Hayee Baloch-led National Party claims to be the sole representative of the Baloch middle class. Its stance on Baloch issues is seldom different from that of the BNP-M, but the approach of the two parties regarding pursuing their stated objectives is very different.

In short, the National Party is more organised than the BNP-M -- the former has a second-tier leadership having profound knowledge of the political problems and their solutions. It enjoys the support of a vast majority of the population in the Mekran division, and in a number of other districts in southeast and south Balochistan. The National Party has both street power and vote bank in these areas, and it is considered to be a party that believes in political activism and peaceful struggle. The rift in the JWP, especially the formation of the BRP, has weakened its position considerably, but both still appear to believe in politics of resistance to assert their rights. They also suspect the reconciliation process and have refused to become its part.

The Balochistan National Party-Awami (BNP-A) enjoys support in the districts of Kalat, Panjgur and Kech, but it is also trying to get the support of other Balochs in the province. The party moved a resolution against the killing of Akbar Bugti in the inaugural session of new Balochistan Assembly. This move received a positive response from the common people in the province, but its alliance with the previous government involved in Bugti's killing has distanced it once for all from other Baloch nationalist parties. It is because of this that the resolution against Bugti's killing by the BNP-A has been termed a political move, aimed at joining the race for Baloch leadership.

The BLA's case is different from that of the political parties. On the one hand, it wants total control over the province and its resources; while, on the other hand, it wants Balochistan to be vacated of all settlers, particularly Punjab's. Co-existence with the settlers is unacceptable to the party and it believes only in armed struggle against the rule of others in the province. In short, the idea of Balochistan's independence and separation from Pakistan serves as an inspiration to the BLA.

There are also some other political groups having their own understanding of the Baloch issues. One can pose a simple question here: despite having a common stance on most issues, why Balochs are divided into so many political parties and groups? All Baloch nationalist parties believe that the province must be given control over its resources and it must make its own development policies. None of these parties and groups wants the status quo, which leads to exploitation of the Balochs, to continue. All of them want to change the colonial treatment being meted out to the province by the federal government. It is true that their approaches and strategies are different from one another, but should this hinder them from waging a joint struggle for their rights?

Such questions lead the people to think about the involvement of some external factors that might be creating hurdles in the way of Baloch unity. It seems that some external forces actually have a major role in highlighting the differences between various Baloch nationalist parties, tremendously affecting the Baloch cause. In a political struggle, the cause is often considered to be much stronger than the strategies. To confuse a cause, therefore, external forces try to divide the political parties into many groups, so that the struggle of a group to have an edge over the other group can divide their strengths to respond to the basic question.

Some experts believe that the establishment will never allow the Baloch nationalist parties to unite on a single platform, because this is seen as a threat to its luxurious lifestyle that is sustained by resources of Balochistan. Though there is a strong desire to unite all Baloch nationalist parties on a single platform, practical steps to realise this dream are not forthcoming. It seems that the current Baloch leaders are divided over the leadership question ñ even if they agree to form a single party for the attainment of their rights, the question who will lead the party remains to be answered.

Thus this hesitation to accept each other's leadership is being exploited by the external forces to keep the Baloch nationalist parties at a distance from each other. Whenever the idea of a single Baloch party is floated at some forum, the establishment expedites its process of divide and rule. According to a Baloch activist, it is a ploy of the establishment to put the responsibility for this on some third country ñ by blaming a third country for Balochistan's problems, the establishment only wants to hide its own dirty role in the process.