KARACHI: The International Monetary Fund (IMF) has named a Pakistani-American as one of 25 young economists who are expected to be most high-ranking in the decades to come.
In its September edition of Finance and Development, a quarterly publication of the IMF, the Washington-based lender has named 39-year-old Atif Mian, professor of economics at Princeton University, among 25 economists under 45 “Who are shaping the way we think about the global economy’.
Mian recently co-authored a book titled House of Debt, which has received critical approval from academia, policymakers and the general public. Nobel laureate Paul Krugman, debatably the most influential economist alive, has called Mian a leading expert on the theme of debt.
Commenting on the state of Pakistan’s economy, Mian said the principal challenge it faces is boosting domestic productive capability.
“The low export number tells us that Pakistanis have trouble producing good quality products that they can then sell to the outside world,” he told the media.
The most significant aspect for long-term development, Mian says, is the development of ‘soul institutions’ that protect an individual’s personal, contractual and property rights. Explaining that the methodical corrosion of space for patience, plurality and peaceful coexistence is Pakistan’s core dilemma, Mian says the ‘rule of just law’ has been replaced by religious fanaticism and cruelty.
“It is this core issue that separates Pakistan from Bangladesh and India, and restricts Pakistan’s growth potential,” he said.
Moreover, data from the US and European economies recommend that people in the lower half of the income distribution be inclined to have a disproportionately higher marginal propensity to spend. Mian concludes that a shock to the wealth of subprime borrowers, like crashing home prices, results in massive cuts in their household spending. This sends the economy into a tailspin and cause foreclosures, unemployment and reduced output – a perfect recipe for an economic disaster.
Mian is one of the few public intellectuals who identify the current siege of the Pakistani state by religious extremists as a joint legacy of Bhutto and Zia.
“Today’s unstable macro environment is a direct result of the Bhutto-Zia legacy, and it needs to be reversed if Pakistan is serious about growth. Doing so is not easy. But there is no other choice,” he said.