Reforming the government in Pakistan: rationale, principles and proposed approach-I
ISHRAT HUSAIN
ARTICLE (June 20 2007): A legitimate question that is often raised by those working for the Government in Pakistan but not the outsiders is: Why reform the Government? Most of them believe that things are going well and the costs of bringing about these reforms will prove to be disruptive for the economy, as well as for administration.
We had inherited a strong, robust system from the British that has been tried and tested over time and there is hardly any compelling reason to bring about any major structural changes. In order to address this question we have to provide the rationale for bringing about reforms in the government. Having established the business case for reforms, the next step is to lay down the principles that would underpin these reforms. Finally, the proposed approach to design the reforms will be discussed.
RATIONALE FOR REFORMS: It must be conceded at the outset, that the time-horizon for the consummation and impact of the proposed reforms is long term - next 10 to 20 years, and not immediate or short term. The rationale for this plan should therefore be viewed in the context of the long-term vision of Pakistan, the external environment in which Pakistan will be operating as a country, the lessons learnt from other successful developing countries, the diagnostic studies including public opinion polls about the government performance in Pakistan and the growing expectations of the public at large.
(A) LONG TERM VISION AND EXTERNAL ENVIRONMENT: Vision 2030 prepared by the Planning Commission in consultation with the private sector, academia, civil society organisations etc envisages Pakistan to be a developed, industrialised, just and prosperous nation at the end of the next 20-25 years.
This vision is to be achieved through rapid and sustainable development in a resource constrained economy by deploying knowledge inputs. The transition for achieving this objective is proposed to be managed by an intelligent and efficient exploitation of globalisation through competitiveness. Pakistan is therefore opting to become an active participant in the globalise economy for goods, labour, capital, technology and services and this option has serious consequences for the future governance of the country.
The imperative of integrating Pakistan in the larger global economy places certain essential demands and one of these demands is that the structures of state and instruments of government have to be redesigned to use knowledge and technology inputs to create opportunities for increased productivity and competitiveness within the constraints imposed by depleting resources.
Among the 180 nations of the world who are Pakistan's competitors for capturing a market share in the ever-expanding global economy, only those will survive that remain agile and adapt themselves to the changing demand patterns, supply value chain and technological up-gradation. The main actors in a country that will together impinge upon its competitiveness and productivity are the state, market and civil society. The respective roles of these main actors and their interrelationships have therefore to be redefined and re-calibrated.
Structural economic reforms to improve Pakistan's prospects for competing in the globalise economy require stable, functioning, competent and responsive institutions for implementation. But unfortunately, we are at present caught in a difficult logjam.
While the economic reform themselves create dislocation and displacement in the transition period, strong working institutions provide the wherewithal and armoury to withstand these shocks, thus minimising the costs of adjustment and maximising the benefits to the poor and neglected. The urgency to build up strong institutions to implement these structural reforms is therefore quite obvious.
Following this logical sequence, the various organs of the State - Executive, judiciary and legislature - have to be assessed and evaluated to determine whether they are capable of meeting this new challenge, or do they need to be revamped to develop new capabilities and build up new response capacity. The task assigned to the National Commission for Government Reforms (NCGR) is limited to a review and examination of one of the organs of the State, ie the Executive branch. The Commission has been asked to assess whether the Government, its structures, processes and human resource can keep up with these new demands or need modification or alteration.
(B) LESSONS FROM OTHER DEVELOPING COUNTRIES: The role and limitations of governments in various types of developing countries have been analysed at great length. The majority view is that governments should do what they are capable of doing better than in the past. A strong and effective government is needed, rather than weak and expansive government.
The all-wide encompassing government has become too cumbersome and centralised with overlapping and competing interests, inefficient and unresponsive to the emerging needs of the public. Civil servants are poorly trained, sub-optimally utilised, badly motivated and ingrained with attitudes of indifference and inertia. It has been argued by development economists that an effective government in developing countries was not only necessary due to abundant market failures, but possibly even sufficient to achieve economic development.
A number of developing countries have successfully reformed their governments and tackled the market failures, as well as achieved rapid economic development. How have they been able to transform the expansive government into a well-focused, well-functioning and result-oriented effective government? The interpretation of the success of East Asian countries, such as Newly Industrialising Countries (NICs), Asean countries and China is a matter of serious debate among development economists.
Neo-classical economists attribute the success to market-friendly, private-led growth and openness to trade with the governments providing macroeconomic stability, security of person and property, infrastructure services, promoting research and development, investing in education, health, science and technical training. Others such as Wade and Amsden have argued that an interventionist state, which guided and steered a proactive industrial policy and picked the winners was largely responsible for their success.
By now, there is some consensus that if the labels and ideologies are set aside, the evidence suggests that countries that have tended to promote competition and avoided monopolies or oligopolies, ensured a level playing field and entry for new comers in the market, made privatised firms face competition, exercised regulatory vigilance (but eliminated inefficient and outdated regulations), opened up the economy to international trade, provided the way for judicial independence, provided dispute resolution mechanisms and enforced contracts, promoted transparency, observed rules of law, have been relatively successful.
In short, the government provided an enabling environment for private businesses to carry out production, distribution, trade of goods and services, but did not itself indulge in these activities directly.
The other piece of empirical evidence that is beginning to gain wide acceptance is that decentralisation and greater devolution of power, authority and resources to lower tiers of government also makes a difference, through better allocation and more efficient utilisation of resources. Devolution also helps in moving towards a more relatively egalitarian outcome in the provision of basic public goods services.
(To be continued)
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