An interesting week for journalism as newspapers collectively revealed an important shift in the way the economy is being discussed. As I have noted in previous reviews, economic reporting has largely revolved around the daily cycle of announcements: another IMF review, another export target, another meeting of the ECC, another increase in petroleum prices, another promise of investment, another privatization plan. Journalism has remained an extension of official press releases. This week, however, several reporters and commentators moved beyond announcements and began asking questions about institutions, incentives and implementation. The movement is tentative, uneven and incomplete, but it needs to be encouraged.

Perhaps the best example was Profit's continuing coverage of the wheat market. Rather than simply reporting farmers' protests or government responses, it used economic logic to discuss the sequencing required to liberalize a market. Merely eliminating procurement did not automatically create competitive markets because farmers still lacked storage facilities, warehouse receipt systems, commodity finance, transparent price discovery and effective competition among buyers. The result was a strengthening of intermediaries rather than markets, leaving farmers exposed to precisely the uncertainties that the supply chain was supposed to minimize. Thus the newspaper demonstrated something that Pakistani journalism rarely manages: policy reform is not merely a knee-jerk policy change without understanding the institutions that must exist if the market and supply chain are to work.

Profit continues to distinguish itself because its reporting reflects an understanding of economics rather than merely business news. Its coverage of the power sector is a good example. The immediate news was that distribution companies were seeking another tariff adjustment, but the newspaper looked beyond the regulatory hearing to explain the underlying problem. As more households and businesses switch to solar, the fixed costs of the old electricity system are spread over a shrinking number of grid consumers. Capacity payments remain locked into long-term contracts, pushing tariffs even higher and encouraging still more consumers to leave the grid. What they missed was what research has repeatedly shown: that the power sector is controlled by the bureaucracy, which does not allow a deregulated market-based system to emerge after 20 years of commitments.

Several newspapers correctly highlighted the impressive inflow of worker remittances of over three and a half billion dollars during July, recognizing its importance for Pakistan's external position. Yet remittances are only half of a much larger story. During the same week, reports also noted the continuing outflow of skilled and semi-skilled Pakistani workers seeking employment abroad. Rising remittances undoubtedly ease balance-of-payments pressures, but they may simultaneously indicate........

© The Friday Times