##s. this vision and road map must have a non - partisan and national consensus and all political parties must be agreed and committed to the broad thrust and the direction of the economy. of course, there will be many nuances and approaches to implementation and the road map will be altered in light of experience gained but, at least, the investors and economic actors will be assured that there will be no abrupt reversals and significant derailments. china offers an excellent example of this process where the vision and the road map adopted by deng xaoping has been followed, with some modifications and alterations, by successive governments. the skeptics may contest this conclusion by arguing that the same political party has remained in power since 1978. while this is true, but the point i wish to underscore is that in plural democratic societies when even the contesting political parties have a broad agreement on the vision and direction of the economy, the voters will judge their performance by their relative success in implementing the programs, policies and projects and bringing about an improvement in the living standards of their electorate during their respective tenures. it is the differentiation in their relative performance that will distinguish the record of one political party from the other and win and lose the support of the electorate. past achievements and current status. let me now turn to the substantive question that i have raised, i. e. the state of preparedness of the south asian economies in meeting these future challenges. south asia has shown a remarkable growth about at 5. 6 percent in the last ten years which is above the average of developing countries. most countries have been able to achieve and maintained macroeconomic stability i. e. low inflation, low domestic interest rates, stable and flexible exchange rates. they have built up foreign exchange reserves to cushion themselves against external shocks. fiscal consolidation and discipline have begun to set in with fiscal deficits being brought down to manageable levels. private sector has become the main vehicle for investment, production and distribution of goods and services while state intervention has been limited to provision of physical infrastructure, social services and other public goods in support of private investment and making markets function efficiently. trade liberalization has proceeded quite rapidly and average tariff rates have declined drastically. export promotion is being actively pursued and inward looking import substitution and protection of domestic industry have been abandoned as principles of public policy. financial sector and capital market reforms have been stepped up in almost all the countries and are at various stages of implementation. new laws and regulatory mechanisms have been adopted to

ishrat husain : the perils of higher skill shortages for pakistana€™s economy what can we do about it? chief guest address by mr ishrat husain, governor of the state bank of pakistan, at the prize distribution ceremony of the institute of bankers, karachi, 26 november 2005. * * * it is highly paradoxical that in a developing country such as pakistan, we are experiencing serious skill shortages and, at the same time, high rates of open and under employment. a lot has already been said about the causes of the mismatch between the skills required by the economy and the skills generated by the educational institutions. in this paper, i am also not going to focus on technical and vocational skills such as carpenters, masons, electricians, plumbers, automobile, air conditioning, refrigeration mechanics, medical technicians, nurses, foremen, etc. but mostly on higher skills such as needed by the i. t. and telecommunications industry, aviation industry, financial sector, accountancy, engineering goods industry, infrastructure industries, bio - medical sciences and bio - medical engineering, media industry, etc. a box, containing my assessment of where the shortages and surpluses are, is presented for provoking further refinement and discussions. ( box i ). the basic thesis of this paper is that in absence of an integrated model of skill formation, upgradation and maintenance, the adhoc and piecemeal approaches will remain unproductive and inadequate. it is true that the start - up costs and time involved in getting this integrated model up and going are high but we have already wasted so much time and energy that we are lagging behind other countries. moreover, this proposed model has been tested and applied in case of the state bank of pakistan ( sbp ). we should, therefore, adopt a bootstraps approach and lay solid foundations for reliable flows of high quality skilled manpower responsive to the changing needs of the economy. the pipeline we have constructed in the state bank in the last six years has already produced 400 out of 800 professional staff easing the shortages of skills in the central banking segment. these young men and women, i am very proud to say, are in heavy demand both within and outside the country. from a situation that we were stuck with people who could not be used anywhere now there is a high degree of mobility and the sbp professionals recruited and trained in the recent years are commanding premiums in