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A journey from glory to turmoil

Analysing the causes behind Pakistan’s current poor economic performance, weak governance and social disorder

A journey from glory to turmoil
Low investment in education means low development.

Some time ago, I came across a research report by Institute for Democracy and Economic Affairs, Kuala Lumpur that mentioned a senior police officer from Pakistan, Shah Nazir Alam, was invited in 1957 by the Malaysian government. Alam made excellent recommendations to eradicate corruption and set up anti-corruption institutions in Malaysia and many of his recommendations were implemented.

Another similar story is cited by a Cambridge Economist Ha-Joon Chang; Malaysia had sent its bureaucracy to Pakistan for training that helped Malaysia in the economic development process. These encounters and a few other nostalgic excerpts from our history made me write today.

The narrative of Pakistan’s remarkable domestic performance and support to other countries can be traced back to 1960s — starting from airlines to international sports and economic planning to international diplomacy. Though, there were voices against regional inequalities, authoritative governance, and crony capitalism, largely things were far better in the past.

Many Pakistanis still shine globally in academia, international development, and other walks of life, but the national institutions and organisations as such have not been doing better.

Look at our current performance in international indicators related to governance, growth, corruption, and state capacity and compare it with our own past. One can find out that the glory started dwindling after 1960s… Why? How?

Maybe the simplest and most common answer would be a couple of countries who are generally presumed to have no business other than conspiring to destabilise Pakistan! But, this narrative shifts attention from our wrong domestic and foreign policy choices that we ourselves made, about the way country was run. Indeed, there is need for a sharp and unbiased system analysis that can inform the dialogue. To this end, I have tried to share few reasons of current turmoil and traced its roots before moving to emerging hopes in the country’s great future.

Lower investment in education and other areas of social development may be considered as one of the fundamental reasons pulling back the country because investment in education develops the human capital which becomes the source of progress for nations. William Easterly argues in his paper “Political Economy of Growth Without Development”that despite one of the top recipients of foreign aid and high growth achiever till 2000, Pakistan remained unable to invest in human development and other social areas. Education as a whole remains neglected in terms of size and quality of resources. Moreover, fragmentation, poor quality of text books, a flawed examination system, unmotivated teachers and overall non-conducive teaching-learning environment have led to lower performance of the country in terms of human development.

Now, let’s turn to politics. Many a time, we blame political instability during 1990s and slow growth after 2007, as reasons of Pakistan’s current poor economic performance, weak governance, and social disorder. But the roots of all of this malaise were actually laid down by Bhutto and Zia.

Bhutto nationalised thriving entrepreneurial base of the country and suppressed the future growth and innovation in economy. Zia’s reliance on religious instigation to solidify personal regime and serve poorly-planned international proxy wars militarised non-state actors that disturbed social order and international image of the country afterwards. Other blunders made by Zia include the enlargement of the public sector and increase in state-sponsored corruption in economic development projects.

Both of them also brutalised opponent voices of their time which intensified political and social intolerance in society and some of the seeds of internal conflicts and violence have roots in that time period.

The mistakes were not only confined to education system and political choices but also entrenched into our societal aversion towards knowledge and science. Reference to popularity of fraudulent miracle of water-run car in recent past is sufficient to prove my point here. Similarly, lack of quality discourse and research on economic and social policies in the country and absence of openness of politicians and policy makers to fresh ideas and professional advice has been a serious issue. Nadeemul Haque and M.H. Khan have shared their perspective in a paper “The Economics Profession in Pakistan” that how we could not develop tradition of knowledge and sound dialogue in economics and policy-making. Somehow, we continue to believe in intuition, personal whims and ideas of ‘defunct economists’.”

The country continues to remain averse to economic openness, enabling business environment and rule of law. Resultantly, we could not become a choice for domestic and foreign investors, which led to reliance on public debt to spur growth. The only viable business in recent time is idle investment in real estate speculation at the cost of fewer capitals for productive sectors. This trend has negative impact on revenues of the government and rapidly rising young labour force which is unable to find decent work opportunities.

While India, China, and a few other developing countries made phenomenal economic progress on account of high levels of domestic savings and investment, exploiting international trade opportunities, and hosting foreign investors during 1990s/2000s; Pakistan could not seize the moment due to legacy of structural imbalances, internal conflicts and flawed policies. Rising international business interests in India and China also helped them achieve international diplomatic objectives which were the other way around for us at the same time.

A lot can be added to the above list including personality-driven politics, centralised governance and a hostile neighbourhood, but I would stop here and share my opinion about reversal of this trend. First of all, we need to start discussion on reshaping institutions and policies which were detracted long ago. Next is to reform education system to professionalise young labour force, to provide equitable opportunities to all who are left behind, and to promote a culture of social, ethnic, religious, and political tolerance. Finally, there is a need to reorient civil service and economic institutions to respond to current challenges of lower investment and slow growth, and reshape formation and governance of political parties to improve state capacity and democratic legitimacy.

New hopes have started emerging on many fronts in the country. The Nawaz government deserves a credit for forging political and economic stability while Imran Khan deserves immense appreciation for political mobilisation in the country and strengthening voices for transparency and reforms. This is indeed beauty of a democratic and political process that will unleash massive opportunities.

Developments on economic and security fronts in the form of China-Pakistan Economic Corridors, regional energy trading and Zarb-e-Azb will have spillover effects in the near future. Domestic manufacturing of high quality JF-17 fighter planes and other missile system is a manifestation of strong defense and scientific capabilities that can be commercialised.

Pakistan’s youth is now doing far better in education, entrepreneurship, technology ventures and open discourse in key economic, political and social areas. When the whole world was unable to accommodate refugees, Pakistan was recognised for observing far higher standards of morality and governance to accommodate Afghan refugees and internally displaced persons. Pakistani society at large has realised that time has come to correct past malaise and rebuild our economic, political, social and administrative institutions.

Naveed Iftikhar

2 comments

  • VImport-substitution industrialization in the 1950s was by default because of severe shortages of the consumer goods, providing lucrative incentives for the private sector for establishing consumer goods industries. During Ayub era it was by design. It had no doubt put Pakistan on the trajectory of rapid growth but had now run its steam and its negative after effects were emerging. Capital goods industry had been totally neglected due to easy availability of profitability in a protected market for consumer goods. Proverbial shyness of the private sector to avoid unnecessary risks and lack of finances at their disposal to establish capital goods industries had led to a lopsided industrial structure.

    1960s was the time to start rectifying this anomaly but it was lost. Foreign assistance coupled with generous fiscal and non-fiscal concessions to the industrialists during the Ayub period continued the same pattern of industrial development with few exceptions.

  • Thanks, it’s really helped. I’m ecstatic.

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