Pakistan: A country in crisis

By Shahid Javed Burki
Published: April 30, 2012

Pakistan is attracting a great deal of academic and analytical interest. That is not surprising. Some have called it the most dangerous place on earth. The titles of a number of recent books on Pakistan throw light on the various aspects of a state and society in deep trouble. Anatole Lieven, in Pakistan: a hard country (2011), looks at the social and political structures of a country that, even six-and-a-half decades after achieving independence, is still engaged in the process of creating one nation out of many different people. The ‘hard’ in the book’s title has several meanings. To begin with, the country is not easy to understand. It is full of contradictions: modernisation versus extreme conservatism; asceticism versus love for the good things of life; a tradition of philanthropy versus little regard for the sufferings of the less advantaged; isolationism versus a deep desire to work with the world, in particular the West.

The ‘hard’ also refers to the fact that though torn by numerous conflicts that divide its people, the country keeps muddling through. It is a hard country to put down. What gives it resilience is the set of local loyalties that bind the citizens to the members of the political establishment that, in turn, meet the people’s basic needs and aspirations.

Maleeha Lodhi’s Pakistan beyond the crisis state (2011) is a rare book in the sense that its contributing authors are positive about the country’s future. They believe that the contemporary security challenges and long-term demographic pressures and energy shortages can be overcome if the country’s political establishment can muster the political will to undergo wide-ranging institutional and structural economic reforms. The authors look at what might emerge in the country once the difficulties it faces are overcome. At the end of a long tunnel through which the country is now passing, they see it emerging not very different from a number of other Asian states that have already produced high rates of sustainable GDP growth. They argue that Pakistan is capable of transitioning itself into a stable modern Islamic state, though bold reforms are necessary. The country can be reeled back from the brink of crisis.

According to Ahmed Rashid, the country is already on the brink. His latest book, Pakistan on the brink: the future of Pakistan, Afghanistan and the West (2012), adopts a tone even more somber than his earlier ones. His reading of the Pakistani situation is different from that of Lieven and those of the contributors to Lodhi’s volume. The former sees some resilience in the structure of the Pakistani society, while the latter believe that actions by the ruling establishment can not only save the situation from further deterioration, they can also move the country toward a better future. Rashid, however, is considerably less optimistic. He lays the blame equally on those who have ruled in the past and those who are ruling right now. “They take no responsibility for providing services to the public, while indulging in large-scale corruption. They allow an unprecedented economic meltdown to become worse by declining to carry out reforms or listening to international advice.”

Some of the analytical interest in Pakistan looks at the impact it is likely to have on the world if the crises it faces are not managed. According to Zahid Hussain’s The scorpion’s tail: the relentless rise of Islamic militancy and how it threatens America (2010), Pakistan carries a lot of poison stored in its body. Provoked, it will sting. Having delivered the poison it carries it may die, as scorpions are said to do once they have attacked, but its sting could prove to be fatal for its victim. Stephen Cohen’s The Future of Pakistan (2011), (which he has edited) does not believe, at least according to the volume’s editor, that the country has much of a future. But, in line with Zahid Hussain, the editor of this rather depressing volume suggests that this highly troubled South Asian nation will go a long way toward determining what the world looks ten years from now. They advise the world to watch Pakistan closely and prepare for the worst.

To this list of recently publishedbooks we should add the World Bank’s World Development Report, 2010 which comes with the subtitle, Conflict, Security and Development . While not entirely focused on the situation in Pakistan, It sees the country belonging to the category of what it calls “fragile states”. The Bank’s report has one powerful message: that there is enough evidence from around the globe to suggest that the fragility of the states it examines need not result in their failure. They can recover but will need to be kept on life support for years to come.

There is one thing common to all these analyses. They focus on many crises Pakistan currently faces. It is a perfect storm through which the country will have to navigate. Whether it can go through without capsizing will depend on how the Pakistani establishment is able to steer the state towards the safety of a shore. What will help those in command is to develop a better appreciation of the nature of the many crises they must deal with. They should also have some idea about the way the country dealt with crises in the past.

Source: A Country in Crisis

The Punjab story

By Shahid Javed Burki
Published: May 7, 2012

It will take more than one short article to tell what the Lahore-based Institute of Public Policy (IPP), Beaconhouse National University, calls the “Punjab story”. This is the subtitle of the institute’s fifth annual report launched on May 2, in Lahore. As has been the practice in the past five years since the institution’s founding in the fall of 2006, the annual reports come in two parts. The first deals with the state of the economy at the time of the writing of a particular year’s report. In each year, since the first report was published in the spring of 2008, the mood of the authors has become progressively more sombre and their predictions for the future of the economy increasingly dire. This year, they have concluded that the economy may be heading towards another major crisis unless remedial action is taken by those who currently hold the reins of power in Islamabad and the four provincial capitals.

The other important recent development in Pakistan is the devolution of considerably greater executive authority to the provinces. This happened as a result of the passage of the Eighteenth Amendment to the Constitution in 2010, which was preceded by the announcement of the Seventh Award by the National Finance Commission (NFS) in late 2009. The NFS has significantly increased the flow of resources from the centre to the provinces. The Eighteenth Amendment has greatly expanded the scope of provincial operations, making it possible for them to do what could not be done under the previous constitutional dispensation.

It is for this reason that we in the IPP thought that it would make a good deal of sense to start writing the provincial development stories. In the report for 2012, we tell the Punjab story which will be followed in the coming years by the stories of other provinces. It made sense to start with Punjab. It is the largest province in the federation in terms of the share in population as well as in the national product. It is also the most important gateway to India as the trade between the two long-feuding nations is revived after a lapse of almost six decades.

A trip to the Wagah border is a good indication of the interest the city’s citizens have in the opportunities that will become available once trade begins to flow without many hindrances. Every late afternoon, thousands of Lahore’s citizens take the trip to the border with India to watch the elaborately choreographed ‘changing of guards’ ceremony.

That this show will become a part of the history is shown by the massive infrastructural development at a stone’s throw from the old border. A new gateway has been constructed there to facilitate trade between both countries. As we drove to the old border to watch the change of guard ceremony, we saw scores of trucks laden with Pakistani gypsum to be taken across the border to feed India’s growing appetite for cement. We were told that a convoy of trucks was also waiting on the Indian side bringing in fresh agricultural produce to Pakistan. The composition of this trade will change enormously as the current restrictions on trade are removed. This will happen as the two countries continue to press for the normalisation of economic and trade relations among them.

Punjab is the province that is likely to be affected the most by this development. This development along with the process of devolution of economic authority to the provinces is the reason why the IPP decided to focus our attention on provincial development. The Punjab story is also important since it provides a menu of options for the policymakers to take full advantage of provincial dynamics to rescue the Pakistani economy from the current slump and hence, it is the focus of the IPP’s 2012 report. What the story is, will be the subject for the next few columns in this space.

Source: The Punjab Story

__________________
Kon Kehta hy k Main Gum-naam ho jaon ga
Main tu aik Baab hn Tareekh mein Likha jaon ga

Punjab’s economic importance

By Shahid Javed Burki
Published: May 14, 2012

Much of what happens to the Pakistani economy in the future will be determined by what happens in its provinces. Islamabad is too distant from the citizenry to address their immediate problems and to design a better economic future for them. One reason that Islamabad dominated policymaking in Pakistan was the long rule by the military. The military believes in a highly centralised command and control system of management. That may work for facing an external enemy. But it is not the right way to manage a country that has close to 200 million people who are also extremely diverse in their ethnic composition, the languages they use and their state of economic and social development. They need to have governments that are physically closer to them. That is why provincial, economic and social development must receive serious attention.

Under the Eighteenth Amendment of the Constitution, provinces have been given a much greater say in their development. How they should make use of the opportunities now being offered in order to improve the lives of their citizens will depend not only on the quality of governance that democracy produces for them but also on their demographic and economic situation. In a country as large as Pakistan, the provinces have different economic potentials that need to be understood by policymakers.

According to recent estimates, Punjab’s population is approaching the 100 million mark. The current size of the population is more than five times what it was in 1947 when the province became a part of Pakistan. Punjab then had a population of 18 million of which only two million lived in urban areas. Its urban population is now just a bit less than 50 million, three times the size of the province’s total population at the time of Pakistan’s birth.

This demographic transition has had several consequences but the most important consequence for the province’s future is the median age of its population, which is 22 years. This means that about 50 million of the people are at or below that age. By providing its youth with education and appropriate skills, the province could ensure a better economic future for itself. Ignoring the development of this cohort would mean political and social instability. Any program for provincial betterment must, therefore, focus on educating the young and providing them with modern skills.

Over the last 65 years, Punjab’s economy has done better than the average for Pakistan. For the final quarter of the 20th century, the provincial product grew at a rate of 0.1 per cent more than the national average; 5.1 per cent a year compared to five per cent for Pakistan as a whole. The annual report launched a few weeks ago by the Lahore-based Institute of Public Policy has an interesting finding about the relative rates of economic growth for Pakistan taken as whole and for the province of Punjab. The province does much better than the country when the economy is moving at a sluggish pace. For instance, in the relatively sluggish 1990s, when the national product increased at a rate of 4.4 per cent a year, Punjab’s gross income increased at a rate of 4.8 per cent. It was the reverse in the more rapid growth period of the 1980s. Then, the Punjab economy expanded at a rate 0.1 per cent a year less than the national average; six per cent versus 6.1 per cent. The reason for this behaviour of the provincial economy is the smaller share in manufacturing which is usually the sector that does better when the economy is growing rapidly. Its share in agriculture is larger than the national average. Agriculture has fewer ups and downs in growth rates.

There is an important change taking place in the structure of Punjab’s agriculture sector. The share of crops in the provincial product has declined in recent years, from 52.9 per cent in 1999-2000 to 46.8 per cent in 2010-11 due to a significant increase in the share of livestock in the agricultural economy. The share increased by as much as 7.5 percentage points; from 44.2 per cent to 51.7 per cent in the same period. One reason for this is that province is running out of land available for the production of such land-intensive crops as sugar cane and cotton while animals can be managed in fairly constricted space.

The structure of the manufacturing sector in the province is also different from that in the rest of Pakistan. While Punjab’s share in large scale manufacturing has declined by more than a percentage point in the last one decade, from 40.3 per cent in 1999-2000 to 39.2 per cent, the share of small scale manufacturing has increased to 70 per cent. It is in this part of the manufacturing sector that Punjab has a clear comparative advantage.

The structure of the provincial economy and the recent changes within it make it clear that the province must adopt a growth strategy that will be significantly different from the one that would make sense for other parts of Pakistan. What the design of such a policy should be will be taken up in a later article. Next week, however, I will look at the differences among the various regions of the province. These differences must also inform the making of economic public policy.

Source: Punjab's Economic Importance

__________________
Kon Kehta hy k Main Gum-naam ho jaon ga
Main tu aik Baab hn Tareekh mein Likha jaon ga

Migration and economic backwardness in Punjab

By Shahid Javed Burki
Published: May 28, 2012

Staying with the Punjab story as told by the Institute of Public Policy (IPP) in its 2012 annual report, I will today begin to look at what has kept the province’s southern districts persistently poor compared to those in other parts of the province. There is a high level of correlation between the incidence of poverty and the level of district development. There is nothing surprising about this result. The incidence of poverty in the southern districts is 43 per cent of the population while that for the province as whole is 27 per cent. It is even lower in the districts in the province’s center and north.

Poverty is much more severe in small towns and cities than in the countryside. Migration it appears has played an important role in this context. One reason for this may be that the rural poor choose to relocate themselves in the urban areas in the expectation that more jobs will be available in the urban economy. Economists call this the ‘push factor’ when poor economic conditions in the place of residence persuades people to move to the areas where there may be better prospects for finding jobs. Opposite to this is the ‘pull factor’ when it is known that better paying jobs are available in a particular geographic space some distance away from the place of residence.

The push factor is independent of the amount of distance travelled by those who choose to move out. Short distance migration especially in southern Punjab is an example of the push factor. One result of this is that poverty simply gets exported from one place to the other. Just by moving out, the migrants help those who remain behind. However, they bring down average incomes by moving into the urban areas that don’t have many opportunities to offer. This appears to have happened in the case of the southern districts of Punjab.

For some reason, those discouraged by their circumstances in the countryside as are the people in the southern districts of Punjab province, have preferred to relocate in the nearby towns and cities. They seem to avoid long-distance migration. There are, accordingly, relatively few people from these districts in the well-populated Pakistani diasporas in the Middle East, Britain and North America. A good example is out-migration from Gujrat district situated on the border of central and northern Punjab. The people from this district are to be found in many distant places. They constitute the bulk of the Pakistani population now resident permanently in Norway. I was once told by the Norwegian ambassador to Pakistan that one percent of her country’s population was made up of Pakistanis. In Oslo, the country’s capital, Pakistanis accounted for 10 per cent of the population. Most of these people were from Gujrat district.

Outmigration from Gujrat to Europe offers some interesting insights not only for understanding why people move but also of the choice of their destinations. Once it was appreciated in the district that migration was an important and effective contributor to poverty alleviation, people began to look actively for the opportunities that were available. The Gujratis took advantage of the path discovered by illegal migrants from North Africa to Spain to join this stream of migration. There is now a fairly large community in Barcelona of the people from this district.

Karachi’s growth, on the other hand, is a good example of the pull factor. Millions of people who have left their homes in such poor areas as the tribal regions of Khyber-Pakhtunkhawa (K-P) and the barani areas of north Punjab and Azad Kashmir and moved to Karachi. By doing so, they have generally improved their economic situation. They also help the places from which they come by sending back remittances. These have become important contributors to the incomes of the areas such as North Punjab and K-P. Although in its Punjab study the IPP did not do work on the impact of remittances on economic and social development, there is good reason to argue that this must have been positive.

For some reason, which sociologists and anthropologists need to ponder on, is that there are areas that send out more migrants compared to other places. In the case of Pakistan, the people from K-P and northern and central parts of Punjab have been more inclined to travel long distances in search of jobs than those who live in South Punjab, Baluchistan and Sindh. Demonstration affect may be one reason why people from some areas find long-distance migration to be a reasonable way for addressing their poor economic circumstances. Once remittances from those who have gone to distant places begin to arrive they provide incentives for those who are under stress for economic reasons to also contemplate migration. Also, once people from a particular area have formed communities of their own in places such as Karachi, Oslo and Barcelona, it is easier for the newcomers to get settled. Pioneering migrants have much more difficult time in creating opportunities for themselves in their adopted homelands. It is much easier for those who follow them.

Pakistan’s economists, in particular those who study the country’s history, have not paid much attention to how migration has contributed to development. A better appreciation of the links between the movement of people and its impact on economic development and social change will lead to the making of better public policy.

Source: Migration and Economic Backwardness in Punjab

__________________
Kon Kehta hy k Main Gum-naam ho jaon ga
Main tu aik Baab hn Tareekh mein Likha jaon ga

Public policy to address backwardness in Punjab

By Shahid Javed Burki
Published: June 4, 2012

In this final article on the relative development and backwardness of the administrative districts in the province of Punjab, I will take up the issue of public policy. Following the added responsibilities transferred to the provinces by the Eighteenth Amendment and the promise of the flow of additional resources from the federal to the provincial governments as a consequence of the Seventh Award of the National Finance Commission, the provinces now have larger space available to them to address their problems. For Lahore, regional disparities need to be addressed with considerable seriousness.

As discussed in the earlier articles, those that have been left behind economically and socially are mostly in the south, those that are relatively better off are mainly from the districts in the province’s centre and a couple in the north. Given what we know and what I have discussed before, raises an important issue concerning public policy. What can the provincial government do to close the yawning gap between the province’s backward areas and those that have done well?

A comparison of the overall development ranking of the districts with the three sets of indicators used for this purpose (income and wealth, social development, and development of economic infrastructure) yields a number of interesting results. It should be expected that the top districts would do well in terms of income and wealth. That, surprisingly, is not the case. There is more than a five-point difference between district ranking on the development scale compared with the ranking on the scale of income and wealth for 17 out of the 35 districts. In other words, almost one-half of the districts do well even when their wealth and income indicators are not very high. To take two extreme examples: Gujrat ranks 16th on the development scale but is 33rd on the scale of income and wealth. This means that there are factors other than wealth and income that have contributed to the district’s better performance. Long-distance migration that results in large flow of remittances may be one of them.

The other extreme is the district of Bhakkar, which is 22nd on the development scale but sixth on the income and wealth scale. By and large, the less developed districts in the south do better in terms of income and wealth. This may well be because averages used for wealth and income hide the extremes in their distribution. However, since distribution data are not available at the district level this conclusion will remain in the realm of speculation.

The relative backwardness of the south is largely because of poor social development and poorly-developed economic infrastructure. These, as indicated above, are the other two indicators of overall development used by the Institute of Public Policy in its recent work on Punjab. It is, therefore, in these two areas that public policy needs to focus on to reduce the development gap between the more and less developed districts of the province. In these two broad areas, the provincial government should pay particular attention to four things: education, in particular at the tertiary level; health care; improvement of the irrigation system; and inter-district transport. I will say a few words about each of these four areas of public policy focus.

The need for getting all children educated has long been recognised as an important development objective. It is one of the Millennium Development Goals (MDG) to which Pakistan has subscribed. However, while this MDG is to be met by 2015, Pakistan remains way behind. This is particularly the case for the country’s backward areas, including the less developed districts of Punjab. While the realisation of this goal must receive the attention of all governments, Punjab should give special attention to improving the levels of skills of the youth in the province. A public-private sector partnership should be developed where the government could provide land grants and supporting infrastructure to private operators who have demonstrated their ability to provide quality higher education. These seasoned educational entrepreneurs should be encouraged to establish vocational institutions in the areas where the region could establish new industrial and service sector enterprises.

In the health sector as well, the government, while focusing on providing primary care, could work with private parties to build hospitals in all the less developed districts. These medical establishments should be part of an integrated chain with different district centres specialising in different areas of medical expertise. This way patients will not need to go to the more developed cities in the province to get the medical attention they need.

There is now a realisation that Pakistan has not given as much attention to maintaining and further developing the rich irrigation infrastructure it inherited from the British period. It is a water-scarce country, which needs to properly husband this precious resource. The Punjab government needs to formulate an action plan aimed at providing the neglected infrastructure the maintenance it needs.

Developing a road network linking the districts is the fourth priority for the government’s focus. Such a network is needed so that south Punjab can move towards developing agro-processing industry. The new retail chains that have arrived in the country and set up shop in some of the major cities have indicated that they would be able to increase their processing activity if they can quickly move perishable commodities from the production areas to processing centres.

I will conclude this series of articles with the suggestion that the policymakers operating from Lahore may consider developing a special plan for the development of the backward districts. The plan should be formulated by involving the private sector and by consulting the citizens of the districts. And it should indicate the source of the required funding including the possibility of levying a ‘backward areas development tax’ on consumption in the relatively better-to-do parts of the province.

Source: Public Policy to Address Backwardness in Punjab

__________________
Kon Kehta hy k Main Gum-naam ho jaon ga
Main tu aik Baab hn Tareekh mein Likha jaon ga

Taking stock of the situation

By Shahid Javed Burki
Published: June 11, 2012

As Pakistan’s current democratically elected government enters its fifth year in office and as it begins to prepare itself and the country for the next general elections, it is legitimate to take a good look at the situation which prevails today. These are troubled times in Pakistan. The economy is slipping; Pakistan is now the sick man of South Asia. If the current trends continue, after having been overtaken by Bangladesh — whose GDP growth rate is now twice as high as that of Pakistan — the country may well become the poorest in the subcontinent. The budget presented on May 30 covering the 2012-13 financial year did not address the issue of the loss in growth momentum. Nor did it promise the long overdue structural reforms needed to restore health to the economy. In the absence of serious structural reforms, the faltering economy is not likely to regain balance.

The country has become progressively isolated. It has lost the affection — and most certainly the respect — of what the present government once called the “Friends of Democratic Pakistan (FoDP)”. For a while, the FoDP worked as a quasi-formal association, discussing how to aid a friend in distress. While not much new finance flowed into the country from this source, its support resulted in a conditionality-mild but resource-rich program devised by the International Monetary Fund. The main purpose of the IMF programme was to help Pakistan recover from the poor state in which the economy was left by the military government. But Islamabad was not able to meet the gentle conditionality of the program and let it lapse even when billions of dollars remained undisbursed. There is now talk of going back to the Fund so that the country remains current with foreign obligations.

There is an insurgency on the country’s border with Afghanistan. The government’s writ never ran in the tribal areas but now a large military presence is needed to keep the militants operating in the area confined to their geographic space. On many occasions, the militants from the tribal belt have struck devastating blows in the country’s major cities. They have not spared the large military establishments, including the headquarters of the army in Rawalpindi and a naval base in Karachi. The size of the force stationed in this part of the country to prevent the insurgency from slipping into other areas almost matches the size deployed in the eastern border with India.

Pakistan will face additional security problems as the Americans begin to withdraw their forces from Afghanistan. They are committed to completing the process by the end of 2014 and it is hard to predict how this will affect Pakistan. The country may not be able to protect itself if the result in Afghanistan is another civil war of the type that tore it apart following the departure of the troops from the Soviet Union.

There is violence in Karachi, Pakistan’s largest city and the centre of commerce and finance. The city has exploded with violence twice during the tenure of the current government. The city’s fragile political system is not able to settle the differences among the three major ethnic groups that are roughly balanced in terms of their size. There are groups working in Balochistan, the country’s largest province in terms of geographic size, hoping to move their province towards greater autonomy, if not towards independence.

There was an expectation that when the democratically elected government replaced military rule in March 2008, it would uphold the rule of law. That was the spirit behind the Charter of Democracy signed on May 14, 2006 in London by the leaders of the two main political parties. One of these, the Pakistan Muslim League-Nawaz, joined the leaders of the lawyers’ movement to bring back to the bench some of the independent-minded judges who had been removed by General (retd) Pervez Musharraf, Pakistan’s fourth military president. Back in their positions, the revived judiciary did what it was expected to do — it acted independently. It held the functionaries of the government, even those in high positions, accountable. But its judgments and orders were largely ignored. Prime Minister Yousaf Raza Gilani, convicted of having committed contempt of the Supreme Court, remains in office. The powerful interior minister lost his seat as a result of the Supreme Court’s intervention. According to the law of the land, a person holding dual nationality cannot be a member of parliament. But the minister left his position only for a few hours. He was back in charge of his ministry as an advisor to the prime minister. The list of the problems that the country faces goes on. The state of Pakistan, in other words, is highly troubled.

Why was the promise of 2008, when democracy returned to the country in a stable form, so totally lost? For an answer to this question we should turn to the growing literature on state failure. This subject has received serious attention from a number of scholars as well as development institutions such as the World Bank. In the coming weeks, I will turn to these works to explain what has happened and is happening to Pakistan.

Source: Taking Stock of the Situation

__________________
Kon Kehta hy k Main Gum-naam ho jaon ga
Main tu aik Baab hn Tareekh mein Likha jaon ga

Pakistan in a bind

By Shahid Javed Burki
Published: June 18, 2012

Pakistan is currently sitting on a demographic bomb which could explode if some fundamental economic changes don’t take place. But economic changes and development occur within a facilitating social, political and external environment. Even the most conservative economists wedded to the basic principles of their discipline have begun to recognise that growth is not simply the consequence of capital accumulation and moving the work force from the less to the more productive activities. That was the assumption made by Arthur Lewis, one of the founding fathers of development economics. His suggested growth equation just had two contributing factors, capital and labour.

Now, with decades of experience behind them, economists have begun to recognise that they must go beyond the boundaries of their discipline to understand how economies succeed and fail. The number of factors contributing to growth continues to increase as more empirical work is underway in intuitions such as the World Bank that now has large amounts of economic, social, political and demographic data at hand to understand the relationships between the many different attributes of any society. This applies to both, developed and developing nations. The latter group is now euphemistically called ‘emerging nations’.

It is safe to assume in the case of a country such as Pakistan that politics and international relations will profoundly affect the structure of the economy and the rate of its expansion. Both in turn will have enormous social consequences. One of the disturbing things about the way the country’s economy has been managed has to do with the lack of attention given to statistics and the availability of information. The size and rate of increase in the country’s population are two important pieces of information that are critical for undertaking economic planning. There is other population related information that is needed. For instance: what is the gender division of the population, what is the rate of increase in the number of people living in large cities and towns, what is the rate at which people are leaving the countryside and moving to the urban areas, what is the size of the work force, how many women are now working and how many of them are working outside their homes? It is from population censuses that such information is obtained but Pakistan, mostly for political reasons, finds it hard to systemically count the people and collect information about their social and economic circumstances. A household survey was conducted which was to be followed by a population census. The latter has not taken place. In the absence of this information we have to proceed on the basis of guess work.

In mid-2012, the population of Pakistan stands at some 190 million. The median age is 21 years, one of the lowest of all major population groups in the world. This means that some 95 million people are below that age. The current rate of increase in population is adding close to four million people a year. Given the fact that the rate of population increase in the past was a little higher, the work force is increasing at rate of three per cent a year. This rate could be even higher if more women begin to look for work outside their homes.

Some of the analysts who have worked in this area of economics believe that employment elasticity in Pakistan is a bit more than 0.5, which means that for every percentage point increase in GDP, employment grows by half a percentage point. Based on this estimate, the GDP must increase by six per cent a year for the pool of the unemployed not to increase in size. The rate has to be higher than this in order to shrink the size of the pool of the unemployed.

With the rate of GDP not likely to be much more than 2.5-3 per cent a year for the next few years, Pakistan can count on social turbulence. What form it will take is hard to predict. The democratic system under development gives an outlet to those not being helped by the economy. The Benazir Income Support Fund which is believed to be reasonably well-managed and is said to be free of the types of leakages that are common for such programmes also helps in keeping the frustrations of the very poor for being articulated in violent ways. Pakistan will probably not see the kind of Arab Spring that shook the Middle East. What could happen though is that the unemployed youth may get attracted to extremist causes which pick up their recruits from among those who don’t see much of a future for themselves. For social peace, therefore, it is important that the Pakistani state works hard to increase the rate of economic expansion. But here politics and international relations are proving to be hindering forces.

For the rate of growth to increase, Pakistan must invest a larger proportion of its income, particularly in the areas in which the state must be involved. This means the ability to raise more resources by improving tax collection and bringing more people and sectors into the tax base. This has been hard to do. There are important political constituencies that won’t allow these changes to take place. In order to meet the resource gap, Pakistan could turn to the outside world but this has turned increasingly hostile. The country is, therefore, in a bind. Getting out of it will require political will, which those who hold the reins of power seem to lack.

Source: Pakistan in Bind

__________________
Kon Kehta hy k Main Gum-naam ho jaon ga
Main tu aik Baab hn Tareekh mein Likha jaon ga

A quiet revolution by women in Pakistan

By Shahid Javed Burki
Published: July 2, 2012

The term ‘a quiet revolution’ sounds like an oxymoron, since revolutions normally produce a lot of noise. But when something entirely unexpected happens that, too, can be called a revolutionary event even if it is not noisy. That is precisely what women in Pakistan are experiencing. A significant number of them are leaving their homes and entering the workforce. The numbers involved are large enough to make a difference not only to the women’s overall welfare, but it will profoundly affect the way Pakistani society will function, the way its economy will run and the manner in which its political order will evolve. This change is coming about as a result of development in three major areas: education, employment and entrepreneurship.

Let us begin with education. There is a widespread belief that women are faring poorly in receiving education. That impression is correct to some extent. The overall rate of literacy for women is low; much less than that for men which is also not very high. Although the Government of Pakistan is a signatory to the Millennium Development Goals (MDG), the country is far from achieving them. Attaining universal literacy for both boys and girls by the year 2015 was one of the MDGs. With literacy rates standing at 70 per cent for boys and only 45 per cent for girls in 2010, Pakistan will miss these goals by a vast margin.

However, when speaking of a revolution, the reference is to the growth rate in women’s enrolments in institutions of higher learning. Here, the recent trends are extraordinary — in fact revolutionary. It is interesting and puzzling that some of the numbers used here to make this point have not appeared in the country’s discourse about economic and social issues. Over the last 17 years, from 1993 to 2010, the number of girls enrolled in primary education has increased from 3.7 million to 8.3 million. This implies a growth rate of 6.7 per cent a year, about two and half times the rate of increase in the number of girls entering the primary school-going cohort. However, even with this impressive rate of increase, it is worrying that girls still account for less than one half — the proportion was 44.3 per cent in 2010 — of the total number of children in school.

It is in higher education that girls have made a most spectacular advance. The numbers of girls attending what are described as ‘professional colleges’ has increased in the same 17-year period, at a rate of eight per cent per annum. In 1993, there were only 100,400 girls attending these institutions. Their number increased to more than 261,000 in 2010. There are now more girls in these institutions than boys. Their proportion in the total population of these colleges has increased from 36 per cent to 57 per cent in this period.

It is attendance in the universities, though where the real revolution has occurred. There were less than 15,000 girls in these institutions in 1993; their number increased to 436,000 in 2010. The proportion of girls is approaching the 50 per cent mark with the rate of growth in their numbers an impressive 28 per cent a year. While a very large number of girls drop out between the primary stage and the stage of professional and university education, the numbers completing higher education is now much greater. Three quarter of a million girls are now leaving the institutions of higher learning every year.

In education, it is the numbers that make a revolution. Given the rate of increase in the number of girls attending these institutions, it is not an exaggeration to suggest that by 2015 a million girls will be ready every year to enter the modern sectors of the economy. That has already begun to happen and here the statistics on participation in the workforce don’t tell the complete story. Official statistics still indicate very low levels of women’s participation in the workforce. According to the official data, only 16 per cent of women were working compared to 50 per cent of men. The rate of women’s participation in the workforce is higher in the countryside than in urban areas — 19 per cent as against eight per cent. But these statistics don’t paint the real picture. A lot of the work that women do, either in the households or in the work place, does not get recorded. This is not only the case for developing countries. The same happens in more developed economies that keep a better record of what people do for living. In Pakistan, for instance, women are very actively engaged in the livestock sector but that goes mostly unnoticed in official accounting.

There are a number of sectors in modern areas of the economy where women now make up a significant part of the workforce. These include the traditional areas where educated women have been active for decades. These include teaching and medicine. However, more recently, as the number of women with high levels of skills increased, they have become players in sectors such as banking, communications, law and politics. Women also now makeup a significant proportion of the workforce in companies engaged in IT work. Some IT experts have estimated that in their sector, there are tens of thousands of women working in what they call ‘cottage businesses’. These are women with good computer skills, who are working from their homes undertaking small contractual work for members of their families or their friends who are living and working abroad. Some estimates suggest that more than a billion dollars worth of work gets done in these informal establishments. These are, by large, one-person shops that receive payments through informal transactions. However, it is the entry of women in the entrepreneurial field where the real revolution is occurring. I will take up that subject in this space next week.

Source: A Quiet Revolution by Women in Pakistan

__________________
Kon Kehta hy k Main Gum-naam ho jaon ga
Main tu aik Baab hn Tareekh mein Likha jaon ga

Changing the landscape

By Shahid Javed Burki
Published: July 9, 2012

It is in education that the Pakistani women have made the most spectacular advance in the country. The change noted above has come about for the reasons that are not unique to Pakistan. It is happening in other parts of South Asia as well. The state was failing to get the public sector to deliver the quality of education demanded by parents belonging to the middle class. As the demand for spaces within the educational system increased, the state came under growing pressures. More financial and human resources were required to take in all the students knocking at the doors of the system. Most South Asian states did not have the funds in the amounts needed, qualified teachers in the numbers desired and textbooks of the quality parents demanded should be used to teach their children. One conclusion that was drawn was that the availability of finance in the needed amount would reform public education. This turned out to be the wrong assumption to make.

That additional finance alone won’t solve the problem was vividly illustrated by the embarrassment caused to the World Bank by the spectacular failure of its large social action programme, or SAP, in Pakistan. This multi-donor, multibillion dollar program was aimed at giving a major lift to the educational sector in the country by increasing the rate of enrollment for both boys and girls, by building new schools in the rural areas so that children didn’t have to walk long distances to attend classes, to provide better trained teachers, and to improve the quality of instruction by using better textbooks. The program’s intentions were good but the reason for its almost total failure was its implementation.

In the initial stages, the programme concentrated on the province of Punjab. The education department in Lahore, the provincial capital, had a poor reputation. It was under the influence of the political forces that put pressure on its officials to employ their friends and relatives or to move those who were already working in the system to more desirable places. To use a jargon of the time, the provincial education department was focusing on “postings and transfers” of teachers as its principal function. An enormous growth in the availability of funds in the system because of the resources provided by the SAP led to a sharp rise in the level of departmental corruption which was already high. The program because of these design failures was eventually abandoned by the Bank and other members of the donor community.

However, failed efforts such as these created an opportunity for women with good education, with access to family funds, and with children of their own to step in and establish institutions which they would manage themselves. Their own children and the children of their friends and relatives were their first batch of students. Mona Kasuri from a well established political and business family was one of the pioneers in this area in Pakistan and her performance is an excellent example of the marriage of entrepreneurship to the availability of opportunity.

Some of the more impressive school systems in Pakistan started modestly with the founding-mother creating a facility over which she could watch as her own children were being taught. Some of these ventures were begun in the homes of the budding education-entrepreneurs. These modest institutions grew from the pre-school and kindergarten stage to the primary stage and to the high school stage. In one case — in the case of the school started by Mrs Kasuri — its development took it to the university stage. The Beaconhouse school system is said to be one of the world’s largest: having received an infusion of a significant amount of foreign capital provided by a private equity fund it has gone beyond Pakistan’s borders and established — in some cases acquired — school systems in Africa, the Far East and Britain. The owners of this for-profit educational system have ploughed back some of their accumulated earnings by giving a large donation for the establishment of a liberal arts university called Beaconhouse National University. BNU, specialising in liberal arts, has concentrated on the subjects that attracted women and for which there were growing markets. It is providing instruction in communications, IT, visual arts, architecture and economics.

This one example provides a good illustration of how women’s advanced education and acquisition of modern skills have begun to change the social and political landscape. Well qualified women with right kinds of skills have decided not to stay at home and build and care for their families. They are increasingly becoming professionals and occupying high level positions. Some economists maintain that supply creates its own demand and that has indeed happened in the case of Pakistan with some significant changes in public policy. For several decades after independence, Pakistan did not admit women into what were called the “superior services”. These included the Civil Service of Pakistan and the Pakistan Foreign Service. That ban on the recruitment of women was lifted a couple of decades ago and now women have advanced to the senior most echelons in both services. According to a paper written recently by a female diplomat, there are now more than a dozen women serving as ambassadors around the globe.

It is, therefore, fair to conclude that even in a country which is presently in a severe depressed condition, women’s educational and work performance may offer one hope for a better future. By relegating women for so long to the back benches, Pakistan was operating its economy with one hand tied to back. That hand has now been loosened and may contribute to the country’s revival.

Source: Changing the Landscape

__________________
Kon Kehta hy k Main Gum-naam ho jaon ga
Main tu aik Baab hn Tareekh mein Likha jaon ga

What lies in our future?

By Shahid Javed Burki
Published: July 17, 2012

Pakistan’s future has never seemed more uncertain than it appears today. The country faces difficulties on many fronts. The economy is weakening; it appears highly unlikely that the governing coalition in Islamabad will be able to take the steps to bring growth back to the level needed to absorb two million additional workers that join the work force every year. The IMF has recently estimated that the economy needs to expand by seven per cent a year to keep unemployment from increasing. It expects that rate of growth at 3.4 per cent in 2012-13. The country’s external situation is weakening as it gets ready to service the large amount of accumulated debt, in particular, the amount owed to the IMF.

The recent agreement with the US on reopening the Nato supply route to Afghanistan will bring some financial rewards. The Obama Administration will send Congress a request to appropriate $1.2 billion for Pakistan. This money is owed to Islamabad for the services that have already been provided. Pakistan estimates the owed money at more the $3 billion. There is, however, no mention of the flow of funds from the Kerry-Lugar-Bermen bill, which was supposed to put Pakistan-US relations on a firmer ground. Even if Congress acts with dispatch — not certain that it will, given Pakistan’s very low reputation in that body — it might ease the financial situation for a while. But the basic arithmetic will not change. Pakistan spends more than it collects in taxes; it buys more imports that it is able to earn from exports.

In fact, exports are doing poorly and the trade deficit has widened. While Raja Pervaiz Ashraf, the new prime minister, has made solving the deepening energy crisis his first priority, prospects don’t look promising. Electricity shortage has resulted in loadshedding of more than half of the day in many areas, particularly in Punjab. There are also shortages of natural gas. The people are becoming restive and many have taken to demonstrating in the streets. The State Bank of Pakistan has begun to lose reserves and the rupee is under pressure as its value has declined by more than five per cent in 2012.

There are no signs of any easing of tension between the government led by President Asif Ali Zardari and the senior members of the judiciary. The Supreme Court has been relentless in pursuing cases of alleged corruption by members of the administration, including the president. It forced Yousaf Raza Gilani out of premiership and has begun to move against his successor.

“The point is that the prospect of disaster, no matter how obvious, is no guarantee that nations will do what it takes to avoid that disaster,” wrote Paul Krugman, the Nobel Laureate, in a recent column in The New York Times. His reference was not to Pakistan but to Europe, where a dithering leadership was letting the continent slip towards an economic abyss. But the possibility of disasters on several fronts does not seem to have focused the minds of the policymakers in Pakistan, either. There is a consensus both inside and outside Pakistan that most systems in the country are now dysfunctional. The most worrying development of recent years is the emergence of extremism, a movement joined in by those who are working towards a radical change in the system of governance. For them, liberal democracy the rest of the world has decided is the best way to govern is an anathema. These groups and people have to be reintegrated into society. Their anti-state activities have cost the economy dearly and ruined the country’s reputation in the international community.

It would take a multi-pronged approach to bring Pakistan out of the deep crisis it faces at this time on many fronts. In the area of economics, public policy will have to address the issue of poor governance. It will need to deal with the failure of the state to raise sufficient resources for delivering public goods to an increasingly frustrated and disgruntled citizenry. It must overcome serious shortages of goods and services critical for industrial output as well as household consumption. There is work to be done to reduce interpersonal and inter-regional income inequalities. Physical infrastructure needs to be improved and what has already been built needs to be maintained. It has not fully dawned on the policymakers that global warming is likely to prove disastrous for Pakistan, making the already stressed water situation even more problematic. The list of ‘dos’ is a long one.

Experiences from other parts of the world show that appropriate sets of economic policies and good quality leadership can quickly turn the situation around. This happened in Latin America in the 1990s. It is happening now in some parts of Africa. But these changes always occur when those who lead are committed to improving general welfare and not their own economic situation and that of their families and close associates. It requires political will to take difficult decisions when they are not favoured by some powerful segments of society. Most of these conditions don’t exist in Pakistan. But they may appear as a consequence of the cleaning of the political house that may result from the next general election. One can only hope that this wait will not be a long one.

Source: What lies in our future?

__________________
Kon Kehta hy k Main Gum-naam ho jaon ga
Main tu aik Baab hn Tareekh mein Likha jaon ga