Tribal Economies

Could the tribal belt join the game?

China is now at the center of a new global industrial economy that is the result of what economists of the 1980s began to call “globalization.” It relies on the use of supply chains that produce parts and components for end products such as automobiles and computers. With rising wages and an aging population, China is now dependent on small-scale manufacturing in countries in its southern neighborhood.

Cambodia, Malaysia and Vietnam have become major suppliers of parts and components for major industries in China. Countries in the west like Afghanistan and Pakistan could follow the same path if their governments tried to create an environment that fostered the development of these small and medium industries that could join industries dominated by China. The communications network that China is currently investing in building in Pakistan and other countries in the west – President Xi Jinping calls it the Belt and Road Initiative – could lay the groundwork for connecting companies in places such as Gujranwala and Sialkot with possible locations in the Tribal. Belts and creation of supply chains. The three countries – China, Afghanistan and Pakistan – working together could develop a program that would create the skills needed for such ventures.

To imagine that new technologies could transform the economies of the tribal belts that Pakistan and Afghanistan share to the point that the people who live there are not drawn to extremist causes would seem like a crazy dream. Most of those who inhabit this geographic space are Pashtuns. Pakistan has a majority of this ethnic group. In this context, I remember a conversation I had with Ashraf Ghani decades ago when, after resigning from the World Bank, he was on his way back to his native Afghanistan. Hamid Karzai, then president of the country, had persuaded Ghani to leave the Bank and join him in his efforts to turn around the country he now ruled.

“You were Pakistan’s finance minister briefly in the late 1990s. Perhaps you could guide me in the areas I should focus on,” he said. I said he should pay great attention to the development of the tribal areas that lie along the Pakistan-Afghanistan border. There are perhaps 20 million Pashtuns living in this space. The two governments should work together to improve the economic situation of tribal people.

The two international development banks – the World Bank and the Asian Development Bank – which had developed projects to improve the economic well-being of the inhabitants of these two regions were focusing on the development of agriculture and irrigation in both belts. This was not the right approach because the large mountainous terrain of these regions and the few water sources made it difficult to use agriculture as a basis for development. The approach should be to develop new skills in the areas in which the tribe members have shown aptitude. They have worked extensively with metal in the hundreds of gun factories in the region. The two governments should focus on this approach and use China as a partner.

The Chinese were investing heavily in building physical infrastructure in Pakistan. If this approach could be extended to Afghanistan, it could disrupt the economies of those regions and cause the people who live there to work in these establishments rather than opt for extremist activities. Ashraf Ghani listened to me with great interest but once he took over as head of the Afghan administration he chose to use military force to quell the discontent. This approach, as we have seen, did not work.

What would it take for the United States and China to use technology as a player in this global game? While China is quickly catching up in this important area, the United States continues to lead in some vital industries. Chin is now the second largest economy in the world, but it is growing twice as fast as that of the United States. In less than two decades, it is likely to overtake the United States and become the world’s largest economy. Some experts have identified several areas that will require the attention of the US government not to lose to the Chinese. The United States maintains its lead in emerging areas such as quantum computing and artificial intelligence, as well as sectors such as software and semiconductors. Chinese companies like Huawei depend on imports of computer chips and advanced software to run them to take advantage of developments like 5-G telecommunications. But China has made progress in some industries such as smartphones, drones, and electric vehicles.

China owes its economic boom to advanced technologies which are the result of a number of factors, including a skilled and low-cost workforce, although there has been such a significant increase in domestic wages these days. last years. The Chinese state also plays an important role in technological development by providing huge subsidies to several industries. He was willing to finance expensive manufacturing that often generates lower profits. I’m going to take a quick look at a few new industries where China has already become or is on the way to be the biggest player.

China has made the most progress in the manufacture of solar panels. Its share of global sales has increased from just 4% in 2005 to 67% in 2020. China’s dominance in the industry is even greater when one takes into account that a large part of the production in Malaysia and Vietnam is controlled by the Chinese. companies.

Another area likely to see Chinese dominance is that of electric vehicle manufacturing. American, European, Japanese and Korean companies have dominated the global gasoline automobile market, Chinese manufacturers have become important players in the field. China is now the world’s largest automobile market. Tesla, based in California, continues to hold the largest global market share among electric vehicles, accounting for 15% of the global total; but SGMW, a joint venture between General Motors and two Chinese manufacturers, quickly gained market share and now represents 11% of the world total.

China is developing supply chains in several areas, but for demographic reasons, it faces a severe labor shortage. He could look to the more populous Afghanistan and Pakistan to tie up with his labor-strapped businesses. However, for this to happen, the three governments will need to work together to develop a program to integrate businesses in tribal areas into the global supply chain system. The three countries could start by establishing education and training centers in the tribal belts to prepare indigenous workers to enter these fields.

Posted in The Express Tribune, October 4e, 2021.

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