Culture and Growth

The long-term development of a country is function of both economic and non-economic factors (values and norms, religion, governance, etc.). Deriving insights from Max Weber, Landes, and Mokyr, a case is made that culture has a deep nexus with economic growth. Using the topology of Mokyr, it is argued that the culture of Pakistan is backward-looking which eulogizes traditional education. For economic growth, a culture of knowledge is required which helps promote ideas and networking. The significance of economic ideas is highlighted for economic growth. Economic ideas are necessary for producing complex goods. The countries like South Korea grew economically by producing and exporting more complex goods. On the contrary, Pakistan is producing simple goods and ranks very low on the competitiveness ladder. Economic ideas demand a culture of tolerance. They need investment. Pakistan can, however, capitalize on the advantage of backwardness. Its economy is operating inside the production possibility frontier (PPF) and as such big investments in R&D are not needed. It can accelerate economic growth through the mode of imitation. Just prioritization of technical and vocational education would be required to develop a productive workforce which can understand instructions and manuals to operate machines and use technology. An analysis of output per worker of comparator countries indicates that the productivity of Pakistani workers is very low. A productive workforce is needed even to use imitation mode for economic growth. A right type of education, which imparts skills and cultivates an attitude to embrace new ideas, would help remove the constraint imposed on economic growth by the backward-looking culture.