IT was in 1776, the year of the American Declaration of Independence, that celebrated economist Adam Smith`s magnum opus Wealth of Nations was published. While almost everyone in the economics fraternity and a considerable number outside of it is aware of the work, not many bother to delve into what he wrote or to contemplate what he said. (It is amusing to see folks, who have never read a word of the book, embarrass themselves by holding forth as if they were an authority on the subject.) A major aim of Wealth of Nations was to dispel and discredit an economic theory holding sway in Europe since at least the 16th century mercantilism. One of the basic tenets underlying mercantilist thought was that the wealth of a nation lies in the number of minerals at its disposal, especially valuable ones like gold and silver. The more the stock of mineral wealth, the greater the power and standing of a nation.

Smith took the mercantilists to task, arguing against their zero-sum thinking that produced endless conflicts in the race to get a hold of precious metals. Instead, he advocated for more trade, instead of closed markets, and argued that a nation`s real wealth did not lie in accumulating minerals.

What reminded me of Smith is the sudden love that Pakistan`s policymakers have developed for minerals, the latest in the line of recycled ideas dangled before the world as a sweet offering, and aimed at attracting much-needed greenbacks to finance our gluttonous consumption and payment obligations. This idea has actually been peddled for long but without much success. (The April1956 issue of Pakistan Affairs, for example, carries the statement of a leading government luminary about exploiting Pakistan`s mineral wealth). This is besides the other sweeteners we have offered to the world, like `the gateway to Central Asia`, `connectivity hub`, `regional transport and logistics hub`, `front-line state against terror`, `best-kept tourism secret`, `CPEC game changer`, etc.

Despite all the enticing offers, and whatever mineral wealth we have found and already utilised, the trajectory of GDP growth in Pakistan remains topsy-turvy, and human capital indicators have been persistently poor. This shows that the presence of mineral deposits does not in itself guarantee sustainable development or economic growth. In fact, they could well be the purveyorsof trouble, as the residents of Sui discovered over time, and the residents of Waziristan have recently been finding out.

Let us contemplate the question of `national wealth`. What should policymakers look at in terms of increasing the national wealth? We turn to Adam Smith and his book again: `The annual produce of the land and labour of any nation can be increased in its value by no other means, but by increasing either the number of productive labourers, or the productive powers of those labourers who had before been employed.

The `productive power` of labourers implies labour productivity. In fact, Smith gave productive labour so much importance that he made capital a subset of it (capital, in turn, helps propel labour specialisation). Almost 400 years before Smith, Ibn-i-Khaldun reached more or less thesame conclusion regarding labour productivity and specialisation.

A final seal of approval on their thought came via Nobel Prize-winning economist Paul Romer.

His articles in 1986 (`Increasing returns and longrun growth`) and 1990 (`Endogenous technical change`) settled the debate over long-run growth determinants in favour of human capital as the most critical component.

So what should Pakistan`s policy be? Well, start with changing the traditional infatuation with the `game changer` slogan and concentrate on what`s really important. The most critical game changer in any place is its labour force and its productivity, with other factors complementing it in the formation and growth of national wealth. And where do we stand when it comes to productive labour and the overall quality of human capital? The less said the better.

It`s not that minerals cannot contribute tonational well-being; they can. But for that to happen, there needs to be a complementary system top-classinstitutions,technologicalprowess, quality human capital, excellent management, property rights, an efficient legal system, etc to maximise the potential of mineral wealth. Pakistan, unfortunately, has none of these attributes.

What does all this leave us with? Unless there is some drastic change in variables such as economic management and the quality of human capital, all talk of the country`s fabulous mineral wealth will not help it achieve sustainable growth or show any marked improvement in development indicators.

At best, given our experience and the present circumstances, the flow of foreign exchange from selling minerals would cater well to our consumption-based growth model and create partial relief in terms of our foreign payment obligations (this assumption holds only if we don`t keep on piling up more foreign debt).

Let me take the reader back to the 16th-century Spanish conquistadors who found a much-soughtafter mineral silver in the Potosi mines of Bolivia. Its abundance led to Potosi being called the `Treasury of the World`. Suddenly, the Spanish empire found itself less pressed by the perennially pressing fiscal demands as huge quantities of silver started flooding its cities, making it easier to print loads of silver coins and help Spain`s colonial expansion. (It was only gradually that they found out that an exponential rise in money supply gives rise to exponential inflation).

What of the residents? Except for wages which barely helped them survive it brought misery, forced labour, high mortality rates and environmental pollution. In our times, Africa and its fabulous mineral wealth is perhaps the nearest example of Potosi-type expropriation (remember Leonardo di Caprio`s Blood Diamond, or residents slugging it out in cobalt mines?).

The lesson is that mineral wealth on its own is nothing without complementarities such as quality labour and institutions. So stop dangling it as a miracle cure to our economic ills. • The wnter is an economist. His cur ent research focuses on cost-benefit analysis of foreign-funded PSDP projects, economic reforms and history of economic thought.

shahid.mohmand @gmail.com X: ShahidMohmand79