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Reshaping Pakistan’s Economy

Javaid Iqbal discusses why Pakistan must focus on EDTs to sustain long-term economic and social growth.
Published 17 Jan, 2024 05:25pm

Introduction & Global Trends: Over the past decade, Emerging and Disruptive Technologies (EDTs) have been instrumental in reshaping the foundation of the global economy. These cutting-edge innovations have given rise to entirely new industries and economic drivers, while simultaneously transforming established sectors. According to findings from the Computing Technology Industry Association (CompTIA), the economic sectors propelled by EDTs have witnessed an astounding 104% year-on-year growth in global market value between 2018 and 2023.

The World Economic Forum (WEF), the United Nations Industrial Development Organisation (UNIDO), and the Brookings Institution have also forecast that economic sectors like healthcare, education, government services, telecommunications, infrastructure development, aviation, transportation, agriculture, high-end manufacturing, national security, energy, and financial services are likely to experience rapid tech transformation and disruption in the short and medium term. Recognising this potential, developed countries like China, Germany, South Korea, and the US continue to position themselves at the forefront of this shift, with significant investments in R&D, human capital development, advanced manufacturing facilities, and strategic policy measures – while emerging economies like India, Indonesia, Iran, Saudi Arabia and Turkey are actively pursuing ambitious projects of their own to maintain ‘player’ status.

Governance Framework: Due to their inherent complexities, the EDTs present unique governance challenges, ranging from defining technological assets, conducting systematic risk assessments, establishing policies, implementing governance structures, creating compliance mechanisms, managing risks and crises, establishing security protocols, and integrating ethical considerations. Navigating these in multifaceted domains requires implementing progressive policies and regulations that not only enable innovation but also ensure public trust. This also requires keeping an open, innovative and agile-centric mindset, which apart from the complexities of national security and other parameters of similar nature, is neither that common nor that easy.

These emerging dynamics have left governments around the world searching for suitable doctrines, policy and regulatory vehicles and agile governance regimes to effectively transform their national agendas, keeping in mind their own social, cultural, and strategic contexts. The Fourth Industrial Revolution Framework (4IR) presented by the WEF offers a comprehensive and strategic vision for countries to harness the potential of EDTs and thereby achieve sustainable and inclusive economic growth. As the founder and executive chair, Klaus Schwab stated in 2016, “We are standing at the precipice of a technological revolution that will fundamentally reshape the way we live, work and interact with one another. This transformation in terms of its scale, scope, and intricacy, will be unlike any experience humankind has encountered before.” Since then, leading economies across North America, Europe, the Middle East, and Asia have embraced this framework – and 18 countries have also established Centres for Fourth Industrial Revolution (C4IRs) to align their national developmental priorities according to global trends.

4IR for Pakistan: Goldman Sachs, a leading global financial institution, envisions Pakistan’s potential to become the fourth-largest economy by 2079. Realising this potential necessitates structural economic reforms, centred on transitioning into a high-tech economy and embracing EDTs within the framework of 4IR. This transition also presents a challenge for Pakistan’s government and state institutions tasked with developing comprehensive legal and policy frameworks – due to the fragmentation of the existing regulatory environment and due to the lack of collaboration among key stakeholders.

In this context, the Special Technology Zones Authority (STZA) Act of 2021 emerges as an agile regulatory framework designed to steer Pakistan’s national economic transformation in line with the 4IR benchmarks. The act integrates crucial innovation elements from industry, academia and government into a coherent governance structure, following the triple helix model of innovation to nurture technology organisations and start-ups, by providing them with targeted incentives and regulatory support. The STZA Act includes more than 40 EDT-driven sub-sectors within its legislated agenda, creating an ideal environment for human capital development, attracting foreign direct investment, enabling knowledge and technology transfer, and enabling the commercialisation of R&D. Within this framework, STZA continues to play a vital regulatory role by notifying nine Special Technology Zones (STZs) located across the country, including I-Technopolis, Lahore Knowledge Park, National AgriTech Park, National Aerospace Science and Technology Park, Pakistan Maritime Science and Technology Park, National Aerospace Science and Technology Park-Sierra, PAF-IAST, and Pakistan Digital City – while more than 20 STZs are currently in various stages of review. These STZs are strategically focused on developing new economic sub-sectors, including AgriTech, FinTech, Blue Economy, Aerospace and Defense Technology, High-tech Manufacturing of wearables and IoT devices, and Autonomous Systems, among others.

Pakistan’s Next 25 Years: In the future, Pakistan is expected to boost its regional integration with Central and South Asia, Eurasia, China, and the Middle East through initiatives like CPEC, the Central Asia Regional Economic Cooperation (CAREC) programme, the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project, Gul Train Project, the Central Asia-South Asia 1000 (CASA-1000) electricity transmission project, and the Uzbekistan-Afghanistan-Pakistan Railway project and more. These initiatives can facilitate the development of electrical power, energy, trade and security linkages among the countries in the region, thereby positioning Pakistan as a strategic hub for regional connectivity, trade, security, and investments.

PwC’s economic outlook also envisions Pakistan climbing to the ranks of the world’s top 20 economies by 2050. Over the past five decades, Pakistan’s economy has largely remained reliant on agriculture, traditional industries, and the service sector, resulting in stagnant economic growth. This situation underscores the pressing need to establish new tech-driven economic sectors while concurrently instituting the requisite legislative and regulatory frameworks, with a strong emphasis on nurturing innovation as a catalyst for economic growth. Pakistan’s strategic emphasis on bolstering regional connectivity, and leveraging its geographical location can be complemented by a concerted effort to harness its substantial innovation potential, positioning itself as a leading 4IR economy in the region. In the next 25 years, the STZs across the nation shall play a key role in reshaping Pakistan’s economic reality, by commercialising cutting-edge EDT trends like Next-Generation Process Automation, Process Visualisation, Future Connectivity, Distributed Infrastructure, Next-Generation Computing, Applied Artificial Intelligence (AI), Software 2.0, Trust Architecture, Bio Revolution, Next-Generation Materials, and the Future of Clean Energy Technology. This tech transformation will also have a profound impact on legacy 3.0-IR industries, requiring a fundamental rewriting of existing economic, social, and governance constructs.

It is vital to establish a robust framework for governance, regulation, and the development of EDTs with well-defined and measurable objectives. This can be achieved by initiating a strategic agenda encapsulated within a comprehensive “National Innovation Act” that necessitates a detailed assessment of the existing laws (including STZA Act), policies, and regulations, followed by their integration into the broader national policy framework, safeguarded by an act of parliament for overall governance, growth, and prosperity. The vertical integration of state resources within the context of the 4IR Governance Framework and the National Innovation Act regime can enable Pakistan to unleash its true innovation potential.

This strategic reform agenda aims to provide new revenue sources and economic growth for Pakistan. If implemented in sync with global trends, this framework will be crucial in resolving Pakistan’s challenges such as climate change, water security, food security, job creation, healthcare, education, trade, and national security. The tech sector also represents an opportunity for Pakistan to rewrite the rule book for its foreign relations through joint ventures, investments, people-to-people contacts, business linkages, and partnerships between Pakistani and foreign tech organisations. Therefore, it is essential for Pakistan to focus on EDTs for sustainable economic and social growth – to ensure long-term prosperity for Pakistan’s 240 million, mostly young, citizens and prime them to become the ultimate workforce for a technologically advanced world.

Javaid Iqbal serves as the Chief Commercial Officer, Member, and Executive Director of the Special Technology Zones Authority (STZA), Government of Pakistan. The views in this article are his own and do not reflect those of the government or any other body or person.