Future need not be bleak
By Shahid Javed Burki
Tuesday, 03 Nov, 2009
I HAVE used the ‘perfect storm’ metaphor before in these pages but that was always in the economic context. I have argued on several occasions that the Pakistani economy has been buffeted by simultaneous events and developments that merit some extraordinary interventions by the state.
There will have to be a departure from the conventional wisdom on how to pull an economy out of extreme distress. But what works in normal crises will not work in Pakistan’s case.
The state remains weak, there is still considerable uncertainty about the direction politics could take in the country. There is immense foreign interest in guiding the country towards a future that does not pose a serious threat to the rest of the world.
Pakistan finds itself at the centre of developing events that could produce global upheaval of a magnitude that is difficult to predict. This is the other perfect storm which a developing and still-to-mature political system must face while it is deeply engaged in dealing with an economic crisis without precedence in a crisis-prone country.
The country has been targeted by a number of different forces some of which have shown remarkable resilience. Let us begin with Al Qaeda. The top leadership of this group has shown the ability to survive for many years in dark caves and tunnels in a region which has felt the effects of isolation. The strength of the leadership could have been depleted but it still seems capable of sending its message across to a large number of people scattered across the globe. According to this message the world order has to change in order to serve Al Qaeda’s interests.
Then there are a number of groups in Pakistan who have developed a strong belief that the state has not fulfilled the country’s original purpose, which was, they believe, to create an Islamic entity that would be the centre of the Muslim world. They believe that the Pakistani elite has always stood, and continue to stand, in the way of the realisation of this goal.
Also included in this troubling situation are the interests of the various large countries in the area. The United States is active for the reason that it was from here that the most devastating attack was launched on American soil on Sept 11, 2001. It would not want to see that happen again. China is rising in a way not anticipated by even those who know the country well. India, largely because of the remarkable development of its economy in recent years, has regional and global ambitions which include reducing Pakistan’s capacity to do it harm. And, finally, there are the countries of the Middle East which are in a state of economic, political and social flux that washes onto Pakistan’s shores.
How do we deal with this dangerous situation? Having practised economics all my professional life, it is not surprising that I would suggest that it is in this area that we must search for a way to steer the country out of this storm. International interest in helping Pakistan find a way out of this difficult situation has presented the country with an enormous opportunity. This must not be missed. Cash-strapped Pakistan will have to work closely with the international community that has shown enormous willingness to help with money and advice.
The much — and I believe wrongly — maligned Kerry-Lugar bill was crafted and signed into law with this intention in mind. The fact that it was received with such scepticism in the country can only be ascribed to certain reasons and motives. Those who have adversely commented on it did not familiarise themselves with its content and intent. Also, a small number of critics believe that Pakistan must reduce its dependence on foreign capital flows that always come attached with political strings. But it will take time before the country develops the capacity to wean itself off dependence on foreign money. In the meantime it must not only accept the offered assistance but put it to good use.
How should this be done? The list is long but I will mention three at this stage. The first is to build the capacity of the state to serve the people. This has deteriorated over time. It not only means providing good governance with all that the term implies. It also means bringing the government closer to the people. This can only happen if Islamabad is prepared to devolve authority to the provinces and the provinces to the institutions of local government, particularly in the cities and towns of a rapidly urbanising country.
The second is to remove the obstacles that stand in the way of putting the country on the path of long-term sustainable rates of growth that can begin to reduce the number of people living in absolute poverty. Power shortages must be removed, infrastructure improved and an expanding population provided with modern skills.
The third is to make this rate of growth ‘inclusive’. This term is being used with increasing frequency in economic literature and means helping those sectors of the economy, and within those sectors those activities, that help the poor by providing them with productive employment.
These and several other approaches that cannot be elaborated upon in this limited space must be incorporated into a comprehensive strategy of economic growth and the promotion of human welfare. This may seem like a daunting task but it isn’t. The continually evolving discipline of development economics provides enough knowledge about what works and what does not to put together a strategy that would be credible and pertinent for Pakistan’s current difficult circumstances.