Cities and clusters

Undoubtedly, cities play an extremely important role in economic development simply by providing markets, infrastructure, human resource, educational institutions, diversity of human and technological interaction, transportation network, communication, entertainment and what not; which is why it is extremely surprising that as a nation we seem to be ignoring our key cities.
The view that the State needs to invest in Karachi because it is the biggest hub of economic activity in the country and contributes the largest amount of taxes, is perhaps on the money; killing the goose that lays the golden eggs is stupid.
Any investment in electricity, gas, water, sanitation and other logistics, should always have been first focused on the cities which were the bread earners for the nation, before anywhere else; inevitably the probability of employment creation is higher in existing industrial and business cities, than in the peripheral or far flung cities and towns.
But looking at how Karachi keeps deteriorating, the conclusion can only be that we are not interested in economic development.
The argument is not that all the taxes of the main cities be spent on them only, however, it is necessary that enough is spent on the earning cities to at least maintain, if not improve, their state of affairs.
With this background, being sceptical about a policy to develop IT Parks or IT cluster, if not an IT city, to pursue growth in the services sector, is but natural; if we can't look after what we have!
Nonetheless, can it be done?
Apparently it can, albeit you need time, a lot of time as in the case of our pain in the backside neighbours to the East, Bangalore, which started with establishing an IT University in the 70s; or you need a lot of money as in the case of Dubai.
Unfortunately, we are short of both.
And reading through "The Flat White Economy" by Douglas McWilliams, one cannot but help agree that other than time and money, you also need an entrepreneurial culture, intellectual property protection, liberal immigration rules and strong government support; we are definitely not batting 100% on all these counts as well.
We still struggle with universal wireless and high speed broad band spread across Pakistan, a precondition for any IT cluster or incubation centre.
A supportive regulatory environment is necessary too, which is not good for us considering our ranking on the ease of doing business.
Although one observation in the book does work for us: according to Mr Williams, Silicon Valley had the support of US defence spending, and current growth of the Jewish state in this sector is also driven by military spending, Huawei grew out of the communication arm of the Peoples Liberation Army, and Russian technology cluster also has links with military development. Something that we come back to later in the article!
All of the above is not to say that we should not pursue investing in an IT cluster, only to point out that expectations for quick returns are perhaps ill founded; and perhaps we need to be pragmatic in our approach towards such a cluster and develop a strategy which works keeping the above factors in mind.
Having always held a view that Pakistan needs to industrialize, Special Economic Zones and/or industrial estates, on the other hand, are the right policy, which can result in much quicker gains.
Every penny that we have available to spend on infrastructure is better spent on such clusters and estates which are expected to give huge dividends in the medium and long term.
But here again, a mushroom growth of SEZs across the country is unlikely to succeed; spreading resources in many areas will accomplish nothing.
A better approach might be planned development of SEZs, focused on identified industries; one at a time; this perhaps might even be more productive.
And here we might take cue from the observation above; military spending can be a positive support for growth of industrial clusters as well.
A while ago, this column argued that ship-building may have been a catalyst for the growth of many economies across the globe since it results in creating and developing multiples related industries; a bit wiser now; not that Ship Building is not something that needs to be explored.
Aviation cities do that also, as well as support an IT cluster.
In July 2017, there was news about the groundbreaking ceremony of the Aviation City Kamra; in January 2018 there was news about the groundbreaking ceremony of Air University Aerospace and Aviation Campus which was held at newly established, Aviation City Kamra.
Perhaps the most encouraging news was in May 2019, that the current government under the new policy intends to set up aviation cities and clusters.
All of this is wonderful news, but we seem to be dragging our feet on a great opportunity.
Clusters like this require strong Government support and investment, and it would be a good idea to focus on developing aviation city on fast track; such an initiative is more than likely to act as a catalyst for the much-needed economic growth, via industrialization and information technology. About time we invested in Cities and clusters.
(The writer is a chartered accountant based in Islamabad. Email: [email protected])