The Asian Development Bank (ADB) has approved technical assistance (TA) of $0.5 million for Pakistan aimed at the formulation of evidence-based economic policies for private sector development and export promotion as well as reducing the trade deficit.
The almost stagnant growth in exports poses a significant development challenge for Pakistan. This trend continued even during the recent period of sharp currency depreciation that started in 2019.
Food and textiles remain Pakistan’s key exports, but they continue to suffer from declining external demand, low value-addition, poor trade facilitation, and higher competition from other countries.
Pakistan also lags in export competitiveness, resulting in a continual loss of market share. Therefore, evidence-based policy formulation for export sectors that aims to enhance exports’ value-addition, increase diversification, and pave the way for more robust export-led growth is critical to ensuring sustainable economic growth in the country.
The documents further stated that policymaking is a multidimensional exercise that involves dealing with varying degrees of uncertainty and complexity. The first step towards adequately addressing the multifaceted challenges beset by private sector development and export growth in Pakistan is sound policy formulation. Pakistan’s public institutions often do not have the adequate capacity to formulate evidence-based policymaking. It is critical to conduct quantitative and qualitative analyses of own and other countries’ data to make informed decisions.
By appropriately applying evidence from real-world situations, efficient and effective policy solutions accelerate growth in the private sector and boost exports. This TA will offer that evidence through various knowledge products, including analytical and diagnostic studies, research papers, and policy briefs, focusing on innovative technology and e-commerce, said the documents.
As per documents, the TA will also provide capacity building to relevant stakeholders to formulate evidence-based policymaking. The government of Pakistan is actively seeking assistance for an e-commerce strategy through an action plan. The knowledge products generated through this TA will help support that strategy to promote the private sector development and support export-led growth.
Human capital quality and performance closely link with public sector organizations’ ability, capacity, and performance for effective policy formulation and implementation. The role of public sector employees in offering key inputs in policy formulation and ensuring successful implementation is instrumental. This underscores the need for public officials’ continuous training and capacity development to fill knowledge and/or skills gaps that may develop over time.
Under the current diverse and rapidly changing environment, policymakers in the public sector must continually learn and acquire new skills, tools, and methodologies that enable them to effectively deliver solutions to complex problems. This TA will support this objective by offering training on applying complex and/or advanced analytical techniques that bolster the formation of well-informed, evidence-based policy solutions.
Another important objective of this TA is to support knowledge creation and sharing among policymakers to introduce new and innovative technology in the space for small- and medium-sized enterprises and public-private partnerships. New technology, like e-commerce and e-business, is expected to enhance female labour participation.
The technical assistance will also promote linking various academic institutions, think tanks, and research organizations. Knowledge hub, the knowledge-sharing platform across crucial players in the policymaking apparatus, will have a robust multiplier effect for sharing knowledge and best practices among policy experts and professionals in the public and private sectors. It will render problem-solving experiences reusable and enable the application of valuable knowledge and skills in similar situations.
Moreover, a knowledge hub will facilitate speedier and better decision-making, diminish the loss of important knowledge, and boost innovation, creativity, and growth.
It will enhance evidence-based policy formulations for private sector development and export promotion, capacity building for economic modelling, and support for the knowledge hub to accelerate sustainable economic reforms.
The technical assistance will also aid in preparing analytical studies and briefs focusing on innovative technology and new businesses for policy formulations, including e-commerce. For capacity building, the TA will provide training for applying complex and/or advanced analytical techniques such as computable general equilibrium models, and guiding policy formulation.
It will identify reputable academic institutions, think tanks, and research centres as a national knowledge hub for the last sub-component. It will also connect knowledge hubs to international think tanks like Central Asia Regional Economic Cooperation Institute and Asian Development Bank Institute and support conferences and knowledge dissemination activities.
