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Evolving strategies for a new phase of capitalism

A summary of article by Jalaluddin Soofi EMBA summer 2009 Registration: 080912

Introduction:
The article is written by By Shahid Javed Burki printed in Dawn dated: Monday, 20 Apr, 2009. The author who is also the chairman Planning Commission’s Task Force on Private Sector Development is an Economist expressing his concern about financial crisis in our country, how the world and our country entering a new era of capitalism which requires the states interventions.

Summary:
The meaning of capitalism is changing today to a more active role required to be played by the state.
Emerging countries especially Pakistan which relay on external finance must develop new ideas.
Mr. Gilani said that they didn’t want strings attached to aid provided by US referring politics, US and other potential donors want to see that their money is actually helping economic stability and progress of the country thus wants government to look into proper use of the aid.
The Washington Consensus had a number of conditions attached to the funds offered to Pakistan.
The favored sectors i.e. Telecommunications, real estate esp. luxury housing & shopping malls and automobiles initially slowed down the rate of economic growth but when the savings produced highest rates of return. Economy boosted in GDP but these sectors didn’t generate significant amount of employment.

After the Washington Consensus announced obsolete the Pakistani policy makers must rethink how to manage the domestic economy? Special task force must keep a vigilant eye on the private sectors to ensure that opportunities are being created for the citizens. The current financial crises lead to three main agreements firstly people don’t always behave rationally with borrowed money in pocket, secondly if unchecked people with good contacts in the higher ranks may take undue advantage. Thirdly market is now global and domestic regulators may not be able to control operations of firms in the global market thus requires international regulatory mechanism. The Planning Commission’s Task Force on Private Sector Development has suggested that large enterprises should not feel confronted & Small operators can keep their costs low. Second, the private sector should invest in skill development. Third, the country’s unique geographic situation has provided the businesses opportunities but has also posed problems. Our relations with the neighboring countries must be trade friendly.

The Task Force on the Private Sector Development shall take Pakistan’s economic situation in the context of redefined capitalism.

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