Factors that make an economy Strong

Factors that make an economy Strong

Unfortunately, Pakistan’s economy has been through its worst phase since last 60 years. Though the people can draw on a host of resources and can exploit them to express the economic power in the face of an effective military,
but the current circumstances, marred by huge fiscal deficit, unbridled inflation, mounting external and internal debts and energy shortage along with a weak will on government’s front to fix the issues is hindering the country’s potential to progress on economic
front.

Matter of fact, nations and countries are different from the business (limited) companies, and despite of being through financially and economically difficult times, they possess a certain amount of resources which can help them
conduct economic activities. No matter how small or big, every country in the world has a number of national resources, utilizing which in a rational manner, the nation can turn itself into an economic giant. These national resources can vary from country
to country, for instance, the Middle East is utilizing oil, the natural resource it possess in abundance, South Africa is utilizing the resources like gold and diamond and central Asian countries are relying upon the resources of Gas to build their financial
resources, to acquire the latest technology and to build the capacity of their human resource.

All the examples of above mentioned countries illustrate the fact that they have been making progress while solely relying upon a single natural resource, but contrary to them, there are countries like Singapore that have achieved
the present economic heights only by educating and building the capacity of its human resource. Completely disregarding the paucity of natural resources, the Singapore government opted for investing in the education of the nation which is paying its dividend
by turning the island into an economic hub.

When we take the example of Pakistan, as mentioned above, the resources that country possesses are a unique combination. It is not only rich in natural resources like minerals, coal, gold, bronze, copper and precious stone mines,
it also possesses one of the most talented nations in the world which mark the human resource richness of the country. And in presence of all these vast resources if the country is considered and counted among the economically vulnerable nations, it highlights
the predicament that nation could not invest on to educating its sons and daughters, and thus could not acquire the economic managers who could devise the right policies for the country.

Economists around the world agree with the notion that without acquiring a dynamic and robust industrial set up, no country can eradicate unemployment, control the inflation, raise standard of living of its people or can bear necessary
military expenditure that may ensure its freedom and sovereignty. And for establishing an industrial set up, three types of resources appear to be crucial for the value-addition activities that transform and add up to the worth of raw minerals that finally
allow the state to reap the economic gains from it which are later on spent for fortifying the national security. And these three resources are Human, Capital and technological; among the most visible means a nation can employ to strengthen the economic areas
where they are weak and vulnerable.

Human resources, the labour and management of a country, can only be productive if provided with quality education which may transform the strengths and capabilities of the labour force to give the highest quality of output. A
capable and motivated workforce can add up to the performance of an economy through introducing the change of scope and discovering new dimensions to their activities. Moreover, a management that harbor leadership, promote innovation and prepare its workers
for accepting calculated risks can always have better chances of introducing better products.

Just like the human resources, capital resources have also become increasingly important for setting the foundation of an economically independent nation. Capital usually refers to physical or financial assets, while in economics;
the role of this resource is discussed in both contexts. Physical plants represent the traditional image of an industrial base that allow a nation to transform its raw resources into final products, while the financial resources provide the essential resources
that are used to construct or modify the existing physical plants. Generally, what happens is that countries utilize the financial resources to get the means of production which are vital economic growth but which are not available within the border of that
country. Such investments that also provide a boost to the foreign economies are welcomed by the countries which solely rely upon the export of their natural resources but do not have the technological capacity or the required capital to directly transform
them into final products and to sell them to the outer world.

Finally, the technological advancement of a nation helps in replacing or substituting the products. The capital acquisition of a nation promotes its economic advancement in two ways. First, by providing the physical base, and secondly
by financing the researches and development projects which lead towards the application of scientific knowledge to face the ever challenging problems. In militarily aspects, technology supports the invention of weapons and to expand its war-fighting capabilities.
Technology though can also be acquired by buying it from other nations, but it only allows a nation to make the economic leaps when a nation’s own human resources are behind its advancement.

Dynamic economies are usually quick to realize the fact that power or strength of their economy lies in acquiring huge financial resources and in investing their human resource to have a hand over the technological advancements
being introduced in the world. China, in this context, provides an impeccable example. Just about a few decades ago, the country was challenged by lack of capital and non-existent technological knowledge. But to cope up with the situation, what China did was
to opt for the policies that offered cheap labour and abundance of raw resources to the investors, which culminated in bringing in billions of dollar and helped the country to curtail the unbridled unemployment. Moreover, the Chinese government sent its students
to the foreign lands for the sole purpose of acquiring critical knowledge of the desired technology.

As it is evident from the above mentioned examples, a country’s government has a critical role to play in its performance on the economic fronts. Government formulate policies that boost up business as well as labour activities
and motivate and encourage the market to indulge into the activities that may lead towards innovation or towards promoting a culture of competence. As the nation indulges into economic activities with a positive mindset, it ultimately develops the country’s
economic power. Similarly, the government can choose to foster the public infrastructure and can lay the foundation for growth. By opting to spend on improving the infrastructure like roads, utilities and on provision of other basic and necessary services,
a government can send a message to the investors from within and outside of the country regarding how does it plan to treat the business activities.

Nevertheless, another important step in this regards is the government’s attitude towards dealing with the issues like maintaining a differentiation between public and private owned business enterprises, the taxation and labour
laws and its stance over other such activities that may impact the economic activities of the country one way or the other. Operating within their area of influence, the decisions taken by governments not only affect the economic activities within the country,
but it affects the international events as well.

Acting at international level, the governments may opt to follow the international standards set by the organizations like WTO, support the regional or international alliances or move towards adjusting the tariffs that may improve
the flow of goods and services.

Matter of fact, none of the countries in this world have all the desired resources that will cater to the aforementioned needs of a nation, thus, the best option in such a condition is to use a combination of these resources in
the best possible manner.

The economical interdependence of two or more countries has resulted in the prevalence of some interesting phenomena worldwide. For instance, taking America’s example in this regards, the country has one of the largest and most
robust economy in the world, but amid the interdependent economic relations, sometimes even smallest of the countries influence its foreign and economic policies where from it buys the raw material for several industries.

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Posted by Fayyaz Yaseen on Apr 26 2012. Filed under Pakistan. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry