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Arain007 Monday, April 30, 2012 10:31 AM

[B][U][CENTER][SIZE="5"]Pakistan: [COLOR="Sienna"]A country in crisis[/COLOR][/SIZE][/CENTER][/U][/B]

[B]By Shahid Javed Burki
Published: April 30, 2012[/B]

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.

[B]Source: [URL="http://tribune.com.pk/story/371738/pakistan-a-country-in-crisis/"]A Country in Crisis[/URL][/B]

Arain007 Monday, May 07, 2012 10:58 AM

The Punjab story
 
[B][U][CENTER][SIZE="5"]The Punjab story[/SIZE][/CENTER][/U][/B]

[B]By Shahid Javed Burki
Published: May 7, 2012[/B]

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.

[B]Source: [URL="http://tribune.com.pk/story/374874/the-punjab-story/"]The Punjab Story[/URL][/B]

Arain007 Monday, May 14, 2012 10:40 AM

Punjab’s economic importance
 
[B][U][CENTER][SIZE="5"]Punjab’s economic importance[/SIZE][/CENTER][/U][/B]

[B]By Shahid Javed Burki
Published: May 14, 2012[/B]

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.

[B]Source: [URL="http://tribune.com.pk/story/378252/punjabs-economic-importance/"]Punjab's Economic Importance[/URL][/B]

Arain007 Monday, May 28, 2012 10:07 AM

[B][U][CENTER][SIZE="5"]Migration and economic backwardness in Punjab[/SIZE][/CENTER][/U][/B]

[B]By Shahid Javed Burki
Published: May 28, 2012[/B]

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.

[B]Source: [URL="http://tribune.com.pk/story/384904/migration-and-economic-backwardness-in-punjab/"]Migration and Economic Backwardness in Punjab[/URL][/B]

Arain007 Monday, June 04, 2012 07:58 PM

[B][U][CENTER][SIZE="5"]Public policy to address backwardness in Punjab[/SIZE][/CENTER][/U][/B]

[B]By Shahid Javed Burki
Published: June 4, 2012[/B]

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.

[B]Source: [URL="http://tribune.com.pk/story/388210/public-policy-to-address-backwardness-in-punjab/"]Public Policy to Address Backwardness in Punjab[/URL][/B]

Arain007 Monday, June 11, 2012 11:17 AM

[B][U][CENTER][SIZE="5"]Taking stock of the situation[/SIZE][/CENTER][/U][/B]

[B]By Shahid Javed Burki
Published: June 11, 2012[/B]

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.

[B]Source: [URL="http://tribune.com.pk/story/391683/taking-stock-of-the-situation/"]Taking Stock of the Situation[/URL][/B]

Arain007 Monday, June 18, 2012 12:59 PM

[B][U][CENTER][SIZE="5"]Pakistan in a bind[/SIZE][/CENTER][/U][/B]

[B]By Shahid Javed Burki
Published: June 18, 2012[/B]

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.

[B]Source: [URL="http://tribune.com.pk/story/395070/pakistan-in-a-bind/"]Pakistan in Bind[/URL][/B]

Arain007 Monday, July 02, 2012 08:32 AM

A quiet revolution by women in Pakistan
 
[B][U][CENTER][SIZE="5"]A quiet revolution by women in Pakistan[/SIZE][/CENTER][/U][/B]

[B]By Shahid Javed Burki
Published: July 2, 2012[/B]

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.

[B]Source: [URL="http://tribune.com.pk/story/401995/a-quiet-revolution-by-women-in-pakistan/"]A Quiet Revolution by Women in Pakistan[/URL][/B]

Arain007 Wednesday, July 11, 2012 08:37 PM

Changing the landscape
 
[B][U][CENTER][SIZE="5"]Changing the landscape[/SIZE][/CENTER][/U][/B]

[B]By Shahid Javed Burki
Published: July 9, 2012[/B]

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.

[B]Source: [URL="http://tribune.com.pk/story/405398/changing-the-landscape/"]Changing the Landscape[/URL][/B]

Arain007 Tuesday, July 17, 2012 08:06 PM

[B][U][CENTER][SIZE="5"]What lies in our future?[/SIZE][/CENTER][/U][/B]

[B]By Shahid Javed Burki
Published: July 17, 2012[/B]

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.

[B]Source: [URL="http://tribune.com.pk/story/409031/what-lies-in-our-future/"]What lies in our future?[/URL][/B]

Arain007 Monday, July 23, 2012 10:48 AM

[B][U][CENTER][SIZE="5"]Pakistan in the role of Asian glue[/SIZE][/CENTER][/U][/B]

[B]By Shahid Javed Burki
Published: July 23, 2012[/B]

In terms of providing for the economic well-being of its citizens, Pakistan, today, is the poorest performing economy in south Asia. It is not doing well when its performance is measured in terms of a variety of economic and social indicators. It has had a declining rate of growth for almost 50 years. The trend started in 1965, when Pakistan fought a brief war with India over the issue of Kashmir. But punctuating this declining growth trend were a few spurts, each lasting for about three to four years. All of these occurred during military rule and all were associated with large foreign capital flows.

The military leaders were able to access foreign aid since it was consequent upon subscribing to America’s strategic interests in the area around Pakistan. The military rulers had more degrees of freedom to work with foreign governments. They did not feel they needed to be constrained by public opinion. As can be gauged from Pakistan’s difficulties with the US in 2011-12, a democratic government has to take people’s views into account while fashioning foreign policy. As a recent survey by the Pew Research Centre revealed, a very large proportion of people in Pakistan view the US unfavourably compared with other countries in Asia.

Pakistan’s current economic downturn has been extremely severe, lasting longer than any other in its history. It has lasted for five years and is likely to persist for a while. One way of dealing with this situation is to completely reorient the country’s approach to economic development. It needs to focus more on developing strong links with the Asian nations in its neighbourhood rather than continue to seek a close relationship with the US. For some time now, Pakistan has been attempting to negotiate a free trade arrangement, FTA, with the US. That is an impractical approach since Washington has signed FTAs with mostly small nations such as Panama. These countries could be given tariff-free access since they did not pose much threat to America’s domestic industry. For a large country such as Pakistan with one large sector — textiles — the path to an FTA will be slow and will not be particularly rewarding. Instead, this may be a good moment to think about going Asian.

Given Pakistan’s current chaotic situation in both politics and economics, it would be rather presumptuous to suggest that the country could act as the glue for binding different parts of Asia, a large continent, which is now on the move. Several analysts have suggested that the 21st century will be the Asian century; that the extraordinary combination of demography, the role of the state and recent economic history will take Asia forward. The 19th century was the century of Europe and the 20th that of America. This was now the turn of Asia. According to this line of thinking, Asia could, in the not too distant future, overtake both Europe and America in terms of the respective sizes of the economies of these three continents. There is enough dynamism in Asia for several scholars to be comfortable with the thought that such a repositioning of the continental economies is inevitable. However, the pace of change could be quicker and the result more definite if the various Asian countries, large and small, could work together and enable the continent to become a well-connected economic entity with strong inter-country links. Such an outcome could become possible if there was the political will to act on the part of Asia’s large countries. In this context, Pakistan’s role could be critical even when its own economy is very weak at this time.

Some analysts have suggested that rather than one Asia there were, in fact, two Asias, one dominated by China, the other by India. The question was whether the two Asias would converge into a loosely-bound economic entity, or diverge — each part going its own separate way — developing separate economic and political systems and pursuing different goals. There were just too many systemic differences between these two parts of Asia for them to meld together. The state systems in the two anchor economies, China and India, were so different that working together within a common policy framework would not be a practical proposition. China was a highly centralised state. In India’s evolving political system, federating states possessed considerable autonomy, a trend that was weakening the centre. Political systems were also different. China was able to orchestrate regime change in a fairly orderly manner; a process in which it was engaged in now for more than a year and will reach a well-choreographed finale in the spring of 2013. However, the transfer of power in India occurred through elections and the formation of governing coalitions was not always a smooth process. The two countries were headed in quite different directions. Divergence was the more likely outcome.

However, it is, perhaps, even better to think in terms of not one or two Asias but about four rather different parts. This further division of a geographic entity that many would like to see merge into one cohesive economic system certainly complicates the thinking about the future. But looking at Asia from this perspective is more practical and makes it easier to handle the making of public policy. It also makes Pakistan a central player. I will pick up this subject next week.

[B]Source: [URL="http://tribune.com.pk/story/411736/pakistan-in-the-role-of-asian-glue/"]Pakistan in the role of Asian Glue[/URL][/B]

Arain007 Monday, August 06, 2012 10:45 AM

[B][U][CENTER][SIZE="5"]Steps towards greater South Asian cooperation[/SIZE][/CENTER][/U][/B]


[B]By Shahid Javed Burki
Published: August 6, 2012[/B]


Four steps need to be taken towards turning South Asia into a well-integrated economic entity. The first would be to bring Pakistan back into South Asia in the economic sense. If one recalls, the area that is now Pakistan was once an integral part of what was once British India. Back then, Pakistan exported three-fourths of its food and commodity surpluses to India, getting in return about the same proportion of imports from the former. And then politics intervened and with it came suspicion, particularly on the Pakistani side of the border. Following the trade embargo imposed by India in 1949, trade between the two countries dried up. Pakistan turned its back towards India and started looking towards the West. The distant United States became its largest trading partner, defying what trade economists call the ‘gravity model of trade’.

India, in turn, adopted what some analysts call the ‘look east’ policy. The first step, therefore, would be to bring Pakistan back to South Asia and breathe new life into the South Asian Free Trade Area. The process has begun but there should be full commitment from both sides to maintain the momentum. There are groups on both sides of the India-Pakistan divide that have an interest in derailing the process. They must not be allowed to succeed.

The second step should be to open Pakistani space for use by India to trade with Afghanistan and beyond. Once again, there is movement here; a transit agreement is in the works for Afghanistan to trade with India using Pakistani territory. It is the flow of goods in the other direction that Pakistan is hesitant to permit. It is this inhibition that needs to be overcome.

The third step would be to link the various Asian countries through a network of oil and gas pipelines and with an electricity grid so that energy begins to flow from the energy surplus to the energy deficit countries. Some work has been done in this context. A gas pipeline is being constructed on the Iranian side of the border to eventually be linked with Pakistan. The Chinese have long been interested in connecting their western provinces with the gas-rich countries in the Middle East with a pipeline that will cross the length of the Pakistani territory. The private sector in India is planning to lay an oil pipeline from a new refinery located in Bhatinda in the Indian state of Punjab to the Pakistani province of Punjab. This will provide gasoline and other refined products to Pakistan.

It would take a great deal of investment to develop these routes of international commerce. Finding resources for building this type of connectivity is, therefore, the fourth step. Pakistan does not have the means to do this but it can be done with the help of private finance and private technology.

A programme focused on creating a regional network to facilitate trade could be launched. And it should have much greater involvement of the private enterprise. This is where an Asian centre of finance such as Singapore may enter the picture. It has the banking sector and other instruments of finance to establish a financial consortia to implement such a project. It also has a large and experienced construction industry to join such an effort. A city-state such as Singapore may well become the headquarter of a large consortium to handle these infrastructure projects.

Insofar as the financing of such an investment programme is concerned, there are several possibilities. The traditional sources would be the two multilateral development banks, the World Bank and the Asian Development Bank. To this, two more could be added. The BRICS countries are now working on the possibility of setting up a development bank of their own, which would be capitalised by them from their large external reserves. Large inter-country infrastructure construction projects would be a good starting point for the proposed BRICS bank.

In sum, it is possible to create a vibrant economic entity in South Asia. What is needed is political will and imagination on the part of various countries that would be involved.

[B]Source: [URL="http://tribune.com.pk/story/417930/steps-towards-greater-south-asian-cooperation/"]Steps towards greater South Asian Co-operation[/URL][/B]

Arain007 Monday, August 13, 2012 10:28 AM

[B][U][CENTER][SIZE="5"]Crisis in policymaking[/SIZE][/CENTER][/U][/B]


[B]By Shahid Javed Burki
Published: August 13, 2012[/B]

The situation in Pakistan is now precarious. There is a consensus both inside and outside the country that most systems, economic as well as political, are dysfunctional. But as economists now emphasise, an economy not supported by an appropriate institutional framework cannot expect to have a reasonable rate of economic growth, cannot provide adequate services to the citizenry, cannot alleviate poverty and cannot reduce income inequalities.

There are many things wrong with official thinking about the state of the Pakistani economy. Some useful material was produced at the Planning Commission. What the Planning Commission called the Framework for Economic Growth, or FEG, has some innovative material. It is right to focus on what it labels the “soft side” of the development equation. The Commission has claimed that for Pakistan to increase the rate of economic growth, it needs to invest in the softer aspects of development and not continue to commit large sums of public money on brick and mortar development schemes that have, in the past, dominated the Public Sector Development Plan.

The “soft side” advocated by the Planning Commission includes institution building, human resource development, increasing the capacity of the private sector to innovate, reducing the regulatory burden carried by private enterprise and changing and modernising urban regulation so that cities become the most dynamic part of the economy. The Commission is also concerned about the declining efficiency and effectiveness of the various civil services. It has called for a fundamental restructuring and reform of the civil administration. All these are worthwhile goals and they needed to be included in an approach aimed at the long term. However, they don’t constitute a strategy that could pull Pakistan out of the deep economic hole it has dug for itself.

The FEG is an approach that will deliver rewards over the long term. It will do very little to solve Pakistan’s current economic problems. Following are some of the many problems crying out for policymaking attention, listed in no particular order: Pakistan’s longest lasting recession with no end in sight; continuing violence, some of it directed at the state; increasing isolation from the world; continued dependence on external capital flows for financing low levels of public-sector investments; the loss of confidence on the part of the investment community, both inside and outside the country, in Pakistan’s economic future; low rates of domestic savings and low tax-to-GDP ratio; very little public-sector investment in improving the quality of the large human resource; declining share in international trade; poor relations between the federal government and provincial administrations; and increasing incidence of public sector corruption.

Pakistan is now regarded as a fragile state by development institutions such as the World Bank. In one of its recent World Development Reports, the Bank also picked up some of the soft factors in the growth function. These, it suggested, are essential ingredients of long-term sustainable development. But it emphasised — correctly I believe — that it will take a generation or two, before fragile economies such as Pakistan can begin to use these factors effectively in the development equation. In the meantime, they need to pull their economies out of the low growth traps into which they have fallen. To get to the long term, they need to focus on the short term.

What should be the development agenda for the policymakers at this delicate moment in the country’s economic history? There are at least five areas that need the policymakers’ urgent attention: revival of growth; increasing domestic resource mobilisation; reconnecting the country with the world; reducing income disparities; and investing in the development of the large human resource. Each of these areas requires a series of government actions. There are no indications that any of these are planned. What needs to be done in one area will impact on the remaining four. In other words, a comprehensive approach that dealt with the short-term is the need of this precarious hour. Long-term thinking could wait while the short term was being fixed.

[B]Source: [URL="http://tribune.com.pk/story/421155/crisis-in-policymaking/"]Crisis in Policymaking[/URL][/B]

Arain007 Thursday, August 23, 2012 10:50 AM

[B][U][CENTER][SIZE="5"]Political parties and economic development[/SIZE][/CENTER][/U][/B]


[B]By Shahid Javed Burki
Published: August 20, 2012[/B]

The growing literature on how politics interacts with economics places particular emphasis on the development of political parties within political systems. The parties serve several economic functions. They bring together those in society who share ideologies, values and views about the direction that should be taken by the state that governs the society. Well-organised parties can influence the making of public policy. A good example of this in the context of Pakistan is the rise of the All-India Muslim League (AIML), founded in 1906 in Dhaka. There was some anxiety on the part of the Muslims in British India that a Hindu-dominated independent country that would be the consequence of the British departure would be less than fair to them. The AIML, therefore, was motivated by economic interests of the community it represented. Over time, it focused on only one demand: the creation of an independent state for the Muslims of British India. Once that demand was met, the rechristened AIML as the Pakistan Muslim League (PML) lost its raison d’être and morphed into a number of different organisations.

Pakistan’s political landscape was transformed in 1968 when Zulfikar Ali Bhutto founded the Pakistan Peoples’ Party (PPP) as a national organisation with a socialist agenda. It won the most seats in the National Assembly allocated to West Pakistan in the elections held in December 1970. A year later, it formed the first PPP-dominated government in the part of the country that was left after the separation of East Pakistan. But the success of the separatist movement in what was once Pakistan’s eastern wing encouraged the establishment of political organisations promoting narrow regional interests. For a number of years, Pakistan’s political landscape was dominated by national parties — the PML, the PPP and the Jamaat-e-Islami. However, the rise of regional parties complicated the making of economic policies especially when regional interests could not be reconciled with national priorities.

The PML’s political monopoly was broken when in the election of 1954 in East Bengal, the Muslim League was trounced by a coalition of parties that had assembled under the banner of the United Front. The name given to the coalition was suggestive of its Marxist orientation and combined religion with a socialist orientation. The group included Fazlul Haq who had joined hands with Mohammad Ali Jinnah and campaigned for the establishment of Pakistan. The success of regionalism as reflected in the lopsided victory of the United Front when it won 300 seats versus the 10 secured by the PML became the inspiration for the development of a number of narrowly focused regional parties. The most successful of these efforts was the Muttahida Qaumi Movement (MQM) as well as the Awami National Party (ANP). The names of these parties signified national aspirations rather than purely regional interests and were to have profound impact on the formulation of national economic strategies.

One example of this was the position taken by the MQM with reference to the design of fiscal policy. The MQM represented the Sindh urban middle class, which was reluctant to see its tax burden increase while the landed community was mostly spared. In 1973, when Bhutto was engaged in drafting the Constitution, he won support of the powerful landed interests by excluding agricultural incomes from the tax base. This provision had serious economic consequences. For most of the time, value added in agriculture increased impressively but this growth could not be captured in tax revenues. The attempt by the IMF to increase the tax-to-GDP ratio as a part of the programme it negotiated with Islamabad in 2008 did not succeed. The Fund’s proposal to levy a tax on consumption was resisted by the MQM. Its opposition resulted in the collapse of the IMF programme in 2011.

We may be witnessing another shake-up in the institutional structure of politics in Pakistan. The rise of Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) may bring another national force in play that will focus on the country rather than on narrow regional interests. The coming electoral competition between three or four national groupings — the PPP, the two Muslim Leagues and the PTI — will have significant economic consequences. If they score big victories in both the central and provincial elections, they may be able to swamp the regional parties. That will make the formulation of economic strategies that keep national interests in their sight become somewhat easier and practical.

[B]Source: [URL="http://tribune.com.pk/story/424186/political-parties-and-economic-development/"]Political Parties and Economic Development[/URL][/B]

Arain007 Tuesday, August 28, 2012 10:25 AM

[B][U][CENTER][SIZE="5"]Politics and economics: a theoretical perspective[/SIZE][/CENTER][/U][/B]

[B]By Shahid Javed Burki
Published: August 28, 2012[/B]

That economic development affects politics and vice versa are two beliefs that have been at the centre of academic discourse for a long time. The way politics and economics interact with each other was investigated with some thoroughness by a number of scholars in the 1960s. Among them was an economist, Gunar Mydral, who won the Nobel Prize in Economics for his efforts, a political scientist, Samuel P Huntington, who had a profound impact on Western thinking about Islam and a political-economist, Albert O Hirschman, who laboured hard to bring political science into economics and business management.

More recently, one sociologist, one political scientist and one economist have joined the ranks of these three scholars in analysing the process of economic and political change. The sociologist, Francis Fukuyama, is currently engaged in studying the development and decay of what he calls the “political order”. The other work to which I will make reference is by Daron Acemoglu, an economist at MIT, and James Robinson a political scientist at Harvard University, called Why Nations Fail.

Several ideas from the works of these analysts have relevance for understanding Pakistan’s economic and political development. Among the questions are: why has political and economic power remained concentrated in the hands of a handful of groups in Pakistani society? And why has the society resisted change that would take it towards modernisation?

Myrdal famously coined the word “the soft Asian state” to explain why in many post-colonial countries in Asia the state did not act as if it had the power and authority to overcome the interests of several strong vested groups. To allow so much power to be accumulated in so few hands was done by colonial rulers for the purpose of having well-entrenched groups in Indian society develop strong loyalty towards the British Raj. Shaken by the Great Mutiny of 1857, the colonial masters of India chose the Muslims of the northern provinces to shoulder some of their security burdens. They did this by bringing Punjabis and Pathans into the British Indian Army in large numbers, by allowing some members of the carefully identified communities of northern India become important players in the elaborate bureaucratic structure that was established and by developing a system of rewards to recognise those who showed great loyalty towards the British rule. In return, the rulers put on the books a large number of laws that protected Muslim landowners from losing their land to Hindu moneylenders. They also restricted the role of middlemen in agriculture to those the state favoured. By dividing Indian society into martial and non-martial races, the British allowed only a few communities to find employment in the armed forces.

Most of these groups were not particularly keen on the idea of a separate homeland for the Muslims of India. Once the idea of Pakistan became a reality, these groups devoted their immense energy and resources to protect their economic and political interests. They had little interest in developing the Pakistani state based on a rule of law. They kept the state “soft” so that it remained under their control. They, in other words, became members of what Acemoglu and Robinson call an “extractive system”. This is a system that has its own rules, very different from those that must govern a modern political entity. The main goal of the extractive systems is to extract as much political power and material wealth from the rest of the society as possible. In the Acemoglu-Robinson formulation on the other side of the politico-economic spectrum are the “inclusive systems”, which allow political and economic power to be very broadly shared. The extractive systems work on the basis of informal rules while the inclusive systems follow formal rules such as those embedded in the constitutions that modern societies write for themselves to regulate individual and community behaviour. Can societies transit from the exclusive to the inclusive state? Can this be done by an independent judiciary? Can elections be the way to bring about this change? I will answer these questions next week.

[B]Source: [URL="http://tribune.com.pk/story/426882/politics-and-economics-a-theoretical-perspective/"]Politics and Economics[/URL][/B]

Arain007 Monday, September 03, 2012 11:06 AM

Moving out of the slump
 
[B][U][CENTER][SIZE="5"]Moving out of the slump[/SIZE][/CENTER][/U][/B]


[B]By Shahid Javed Burki
September 3, 2012[/B]

I have long held the view that the economic circumstances of a country — the problem it faces, its future prospects and the public policy choices leadership groups are likely to make — cannot be understood without developing a good appreciation of the structure of the society and the operating political system. Most under-performing economies have a lot of slack in the system. This can lead to better economic performance if the capital that has already been invested in the economy is put to more efficient use and if the workers that are engaged in low productivity activities are able to move to those that have higher personal as well as societal rates of returns. Once the economy begins to recover, the pace of growth can be sustained for a long period of time.

That was the experience of India. Following the reforms instituted in 1991, the Indian economy left the path of what the country’s own economists called “the Hindu rate of growth”. The country quickly climbed on to a new growth trajectory that produced an average rate of increase in national output that was twice the Hindu rate of growth. In the 44-year period from 1947 to 1991, the average rate of increase in national income was 3.5 per cent a year. Since then, it has averaged 7.3 percent per annum. Several Latin American countries went through the same kind of experience, quickly recovering from slumps once the right set of policies ware put in place.

Pakistan also had periods of growth spurts that took the economic rate of growth close to 7 percent a year. This happened during the first half of the rule by President Ayub Khan; it happened again in 1982-89 when the country was governed by General Ziaul Haq; and it happened for the third time in 2001-07 during the presidency of General Pervez Musharraf. But it is important to understand that these were essentially deviations from the trend line; they were not the consequence of structural changes that could sustain high rates of growth over the long-run.

The Ayub model — in contrast to the one India had followed — gave considerable space to private enterprise. The government’s role was limited to providing encouragement, access to capital and investment in creating supporting infrastructure. It was during this period that a multibillion dollar investment programme was completed that included the building of two large dams. These works improved the already well-developed irrigation system and significantly increased hydro-power generation.

What should be the content of the policies to be adopted in order to move the economy on to a growth path much higher than the one it is on at this time? At this point, and once again relying on my work experience, I would make three observations. The first relates to the restoration of confidence in the country’s future among different segments of the population. Economies generally respond to the signals the policymakers give. At this time, the signal is that of indifference to the economy. There is anecdotal evidence of considerable amount of capital flight from the country because of the growing belief that Pakistan is not a safe place in which to keep money.

However, there will be a positive response if a different signal were to go out. Some of the capital that has left the country will come back if an impression was created that those who hold the reins of power would not spare any effort to put the economy back on track. More capital would be kept at home rather than taken outside the country. This could increase the rate of domestic investment by as much as two percentage points a year, resulting in adding half a percentage point to GDP growth rate.

The needed policy framework should be divided in two parts; one for the near-term, say the next three years and the other for the medium-term, say the next three to eight years. The programme for the near-term should focus on institutional reform aimed, to begin with, at three areas. The first and by far the most urgent is reform of the fiscal system by levying a consumption tax, incorporating the taxes on incomes that are outside the reach of the taxman, and improving the system of collection. How all this could be done has been detailed in a number of studies various individuals and development institutions have carried out for the government over the last several years. The second area would be to reform the system of accountability by giving its leadership autonomy and protection. The third part of the immediate effort should be to reform the civil service system. Again, this is an area of reform into which a great deal of thinking has already gone. These efforts should result in increasing investments and adding 2.5 percentage points to the growth rate bringing it to 6.5 percent by 2016.

For the longer term impact, four more areas will need to receive attention. They include easing the shortage of energy, both electricity and gas; improving the security situation; increasing trade with India; and incorporating six ‘positives’ in a grand development strategy. My list of positives is: agriculture, an engineering industry made up of thousands of small and medium enterprises; the demographic dividend; devolution of power from the centre to the provinces; arrival of one million well educated and trained women in into the work force; and the presence of large Pakistan diasporas in three continents. Such initiatives could increase the rate of economic growth to eight per cent by 2020, adding another 1.5 percentage points.

[B]Source: [URL="http://tribune.com.pk/story/430200/moving-out-of-the-slump/"]Moving Out of the Slump[/URL][/B]

Arain007 Monday, September 10, 2012 10:17 AM

[B][U][CENTER][SIZE="5"]Reviving the crumbling state[/SIZE][/CENTER][/U][/B]


[B]By Shahid Javed Burki
September 9, 2012[/B]

The Pakistani state is crumbling; it needs to be revived. It is crumbling since it is failing to provide the citizens what they need the most — basic services. The institutions that make up the state are in disarray and we know from the experiences of other countries that once institutions become dysfunctional if it takes a long time to get them to work again. Why is the Pakistani situation so dire? There are several answers and all of them need to be factored into the policies of those who would like to see Pakistan working again. This is the season to reflect on what is happening to the Pakistani state. This is the right time to think about this problem since both the people and those who wish to lead them are preparing for another set of elections. An opportunity will be given to the people to choose their rulers at both the federal and the provincial levels.

For several years now, economists have been saying that it takes more than capital and labour to produce growth. Institutions are one of those things that need to be brought into the development equation. When economists talk about institutions, they don’t necessarily mean organisations with well-defined structures and business plans. They mean rules, both formal and informal that people follow in order to deal with one another. They also mean enforcement mechanisms, when established rules are defied. A legal system that has well-written laws and courts, and a system of regulations that are overseen by their own organisational structures, it ensures compliance. Culture and societal norms ensure compliance of informal rules. One example of the latter is what anthropologists call “vartan bhanji” — the system that enforces giving, in order to celebrate or observe life’s many passages. For instance, people are expected to give on weddings keeping in mind what they have received themselves.

The problem arises when informal rules begin to overwhelm those that are formal; when culture begins to mean more than formal laws and regulations. This is one of the more serious problems Pakistan faces today. It is slipping back from formality to informality. Political scientists have begun to emphasise that political development is not a linear, unidirectional process. Development happens when formal rules become more important for transactions than those that are informal. In that case, political decay rather than political development takes place.

If the preceding sounds too negative, let me bring into this discussion something that is positive. There is no doubt that in spite of the political roller coaster we have been riding since independence was gained 65 years ago, there is now some forward movement. That the military, by repeatedly intervening in the political process, set back political development seems to have withdrawn to the barracks. It is not being asked to come back and save the country and provide the citizens what they want from the state. There is now consensus in the country that the only solution to the many problems that must be dealt with is through the political process.

There is also consensus that the state must function at several different levels — the federal, the provincial and the local. The Eighteenth Amendment to the Constitution has provided the framework that brings the state one step closer to the people. Powerful political leaders in the past and the military with a strong preference for centralised command and control had established styles of governance that made the state very distant from the people. However, the full impact of the amendment has as yet to be felt but it will generally be positive. However, the devolution must not stop at the provincial level. It must continue down to the local levels. Many services can only be provided effectively and efficiently when those who are receiving them can literally see who are supplying them. This is one reason why institutional economists have begun to emphasise what they call ‘localisation’ in the process of governance.

The third positive is the increasing power that is being claimed by institutions that can provide, what in the American system are called, ‘checks and balances’. These institutions have to keep in check and in balance the enormous amount of power all political systems give to the government’s executive branch. This usually comes from a combination of the legislative and judicial branches. In Pakistan, however, the legislature remains weak, in part, because political parties remain seriously underdeveloped. Legislative weakness has brought the judiciary forward filling the gap that exits for all to see. But there is another check on all branches of government that has assumed an increasing role. This is the power of the civil society, often expressed by the use of the ‘street’. If there is a lesson to be drawn from the Arab Spring, it is this: the citizenry will push back after a certain point has been reached. There is a reason why all the deprivation that Pakistan’s citizens have experienced for the last several months has not caused an explosion in the street. The reason is that people have developed some confidence in the political process.

The main conclusion that I have to offer is that while the state is becoming increasingly dysfunctional, political evolution since 2008 offers some hope. People must demand solutions for rebuilding the crumbling state from the political parties that will compete in the coming elections.

[B]Source: [URL="http://tribune.com.pk/story/433925/reviving-the-crumbling-state/"]Reviving the Crumbling State[/URL][/B]

Arain007 Monday, September 17, 2012 10:23 AM

[B][U][CENTER][SIZE="5"]Know thy neighbour[/SIZE][/CENTER][/U][/B]


[B]By Shahid Javed Burki
September 17, 2012[/B]

The recent visit by the Indian Foreign Minister, SM Krishna, to Islamabad and the indication that Pakistan may finally get a visit from the Indian Prime Minister, Manmohan Singh, are clear indications that the process of economic and trade normalisation is proceeding slowly but reasonably smoothly. There are three aspects of this process that need some consideration and will be the subject of the article today, and a couple that will follow thereafter. The first is that most of the advances have been made at the political level. The decision to move the process forward was taken at an informal meeting of the Indian prime minister and Pakistani President Asif Ali Zardari, a few months ago. Most of the work related to normalisation was done by the ministries of foreign affairs in the two countries. There was relatively little involvement of the technical people and institutions.

The second important aspect of this process is that the Indian states and the Pakistani provinces that would be affected as normalisation proceeds have not been directly involved in the discussions. When the bulk of the trade begins to flow over land-routes, the provinces on the Pakistani side of the border and the states on the Indian side will need to be included in the contemplated changes. Third, a framework will be needed to move the process forward. It is interesting that much of the work that has been done, to-date, was undertaken outside the Saarc and South Asian Free trade Area arrangements. However, if the process also brings in countries other than India and Pakistan, as it must, a multilateral framework would be required.

Now that India and Pakistan are inching towards closer economic relations, it would be useful if each country understood well how the policymaking process works across the border. The Indian system has been democratic virtually from the day the country started out as an independent state. Pakistan, on the other hand, has ridden a political roller coaster, trying and discarding many systems. It is only during the five-year period since the beginning of 2008 that a durable democratic political order has been shaped. Both countries are now democratic, India more so than Pakistan. Both are evolving rapidly but in doing so are moving in different directions. It is important to understand where they are going in order to appreciate the relationship that will develop over time in the area of economics.

As political scientists point out, calling a political system democratic means more than recognising that those who wield policymaking power do so as the elected representatives of the people. Holding periodic elections to choose those who will govern is only one part of the political process. A political order is also defined by the location of the policymakers. This is what distinguishes a highly centralised system from the one that is federal. At this point in time, both India and Pakistan are federal systems but that is where the similarity ends. Political power is much more disbursed in India than is the case in Pakistan. This difference will deeply impact the development of economic ties between the two countries as they evolve.

The states in India at this time are important economic actors. The economic choices they make are determined more by the local political establishment than by those who govern in New Delhi. This is one reason why there are vast differences in the economic performance of the states, as well as in the economic systems that have been adopted by them. Gujarat, for instance, has given the private sector much greater space within which it can operate. West Bengal, on the other hand, has a much more intrusive government. This reflects the very different histories of the two states. Gujarat has some well-established industrial and business houses that became prominent players, not only in the state, but in all of India. West Bengal was long governed by a coalition of Left parties led by the Communist Party of India (Marxist), which saw the government as the leading player in the economy.

In Pakistan, in spite of the passage of the Eighteenth Amendment to the Constitution that allowed the provinces much greater authority in economic matters, policymaking has remained highly centralised. Not only does Islamabad remain the most important policymaker, most important policies are taken by the presidency. If the Eighteenth Amendment were to be interpreted literally, it would have created a presidency akin to the one that exists across the border in India. The president would have become a figure head, with most of the power in the hands of the prime minister, answerable to parliament. That has not happened. In India, the constitution also sees the prime minister as the most important policymaker. That, however, is not the case at present. Much of the power resides in the hands of the leader of the Congress Party that governs as the leader of the ruling coalition in New Delhi. In both cases, these are departures from the Constitutions that clearly give governing authority to the head of the government — the prime minister — not the head of the state; which is the president. Why that has happened is an important answer to determine in order to understand which way the two systems may be proceeding. I will take up this question next week.


[B]Source: [URL="http://tribune.com.pk/story/437593/know-thy-neighbour/"]Know thy Neighbour[/URL][/B]

Arain007 Monday, September 24, 2012 10:31 AM

[B][U][CENTER][SIZE="5"]Pakistan’s lessons from India[/SIZE][/CENTER][/U][/B]


[B]By Shahid Javed Burki
September 24, 2012[/B]

Looking at India will be of enormous help for fashioning Pakistan’s political order. Not to imply that Pakistan should follow what India is doing, but there are some lessons from what happened to India’s political system as it evolved.

As Pakistan stumbled from one political crisis to another, many looked with envy at what the Indians had achieved — they managed to create a political system that worked reasonably well for a country much more diverse than Pakistan. That happened for basically two reasons. The first was leadership continuity during the country’s formative years. From 1947 to 1964, India was governed essentially by one man: former prime minister Jawaharlal Nehru. He was not only one of the founding fathers of India but was also a committed democrat. The second reason for India’s more robust political development was that unlike the Pakistan Muslim League (PML), the Congress Party in India did not lose its raison d’être the moment the country won independence.

The PML was a one-issue party. As the All-India Muslim League, its predecessor, it had only one mission: the establishment of a separate homeland for the Muslims of British India. Once that was achieved, the party failed to redefine itself. It floundered. The Congress Party had a more ambitious political agenda: to end colonial rule, keep India united and create a political, social and economic system that would improve the well-being of the common Indian citizen. The two major leaders of the pre-independence India had two very different ideologies for achieving the third objective. MK Gandhi wanted to do it by returning India to its traditions in which the citizen’s welfare was based on the work of small communities, essentially villages or “little republics”. Nehru, on the other hand, wanted to bring European socialism into India. The Soviet Union became his model as he began to shape public economic policies.

The Congress continued to dominate the political system for half a century but then, because of the way the party itself was governed, a number of regional parties emerged to challenge it. The Indian system developed and, as pointed out by Pratap Bahnu Mehta in a recent Foreign Affairs article, “Indian politicians and bureaucrats all shared four basic management principles — vertical accountability, wide discretion, secrecy and centralisation — all of which made for a government that was representative but not responsive”. The two principles that mattered most were the fact that leaders at all levels of the system looked up to the person at the very top. Most of the time, the top person was the prime minister. The second principle was centralisation. The party was governed from New Delhi.

Several similarities exist between the way the two mainstream political parties are governed in Pakistan and the governance of India’s Congress party. Both the PPP and the PML-N are dominated by a single leader who commands total loyalty and runs a highly centralised organisation. As a result, both have left space for the regional parties to gain power in some parts of the country. However, in Pakistan, there is still space between national and regional parties that can be occupied by a relatively new national organisation. The Pakistan Tehreek-e-Insaf has gained some traction as the citizens have lost some confidence in the established parties.

To the four principles mentioned by Pratap Mehta as the bases on which the Indian system was built, a fifth needs to be added, particularly on the economic side. The Indian system, to a large extent, is self-correcting. This is because for endurance, it must respond to the pressure by the citizenry for change. This affects both the economic and political components of the system. But the change comes after a lag; it took many years before the government stepped out of the way of the private sector. Nehru had placed the state on the commanding heights of the economy which produced the “Hindu rate of growth” for four decades. This experience taught the policymakers that excessive intervention by the state, as practised during the Nehru years, resulted in the economy growing at a rate much lower than its potential.

What does the Indian experience tell us about Pakistan’s likely political development and how it might affect our economy? I will take up this question next week.

[B]Source: [URL="http://tribune.com.pk/story/441279/pakistans-lessons-from-india/"]Pakistan's Lessons from India[/URL][/B]

Arain007 Monday, October 01, 2012 10:30 AM

[B][U][CENTER][SIZE="5"]Who will own the system?[/SIZE][/CENTER][/U][/B]


[B]By Shahid Javed Burki
October 1st, 2012[/B]


There is, at this delicate moment in Pakistan’s history, a big question that must find an answer: who will own the new political order that is in the process of being shaped and how will that ownership be exercised? In the last few articles, I have been comparing Pakistan’s political development with that of India and will respond to this question first in the Indian context.

India is a more diverse country than Pakistan and yet, it has developed a consensus on how it should be governed. Its constitution, adopted in 1950, is based on two simple but powerful premises: that the will of the people must prevail and the rights of all communities must be fully protected. India can be justly proud of the fact that its head of government is a Sikh belonging to a religious community that once rebelled against the state and since then, has been fully accommodated in the political system. While it often deviates from these two rules, what is attractive about the Indian system is that it has the ability to return to the old established norms.

Today, the Indian system is faced with at least one big challenge: the slow death of national parties. The Congress has found it difficult to climb out of the dynastic mould. It is widely expected that the fourth generation in the Nehru-Gandhi family will take command of the party and the government when Sonia Gandhi and Manmohan Singh pass from the scene. The Bharatiya Janata Party (BJP) is finding its ideological foundation to be a weak force for building a national base. The progressive failure of the national parties has created space for those with strong regional interests. The inevitable tension between the regional and national parties has made it very hard to formulate economic policies that are aimed at national rather than regional objectives. Prime Minister Manmoham Singh’s latest set of economic reforms has run into predictable regional opposition.

Whether New Delhi will persist with them will determine the future of the Indian political order.

Now let me turn to the case of Pakistan and the evolution of its political system. There are a number of contending forces in the country as well. Some of these don’t hesitate to use violence to get their way. Islamists and secularists have their views and are vying for influence, the former by using threats and intimidation to gain support. It was this group that assassinated Punjab governor Salmaan Taseer in January 2011 for expressing secularist views about the incarceration of a poor Christian woman on charges of blasphemy. Regional and separatist forces are fighting the weakened state, seeking to control the people who live in their territories and establish a claim on the resources that are yet to be exploited in these areas. Sectarianism is now a force with each faction within the same faith claiming to be in possession of the full truth. Religious minorities are being hounded to gain political ground. It is clear that the forces that seek to divide rather than unite will use whichever opportunity arises to get their way. It was not bad policing that produced mayhem in Pakistan following the airing of a YouTube video that disparaged the prophet of Islam in mid-September. A score of people died so that those who excited them could gain additional political ground.

Religion has become the battleground in Pakistan. In India, the failure of the BJP to use the Hindu identity to define national politics pushed religion to the background. That has not happened in Pakistan. A fully democratic order that respects the rule of law is the only way to bring together different forces and get them to resolve their differences through the ballot box and from the floors of the national and provincial assemblies. Once a law is placed on the books, there must not be any deviation from it, in particular by those who hold the reins of power. The law, for instance, does not permit any individual — certainly not a federal minister — to urge the murder of a person who may have hurt the sensitivities of those who follow his faith. This was precisely what was done by the minister in charge of railways when he announced a reward of $100,000 for the murder of the man behind the YouTube video.

Will Pakistan be able to reconcile the deep devotion to Islam as the faith of the country’s majority with the demands of a political order based on accommodating different views not only about religion but on other issues that lie in the domain of public policy?

[B]Source: [URL="http://tribune.com.pk/story/444802/who-will-own-the-system/"]Who will own the system?[/URL][/B]

Arain007 Monday, October 08, 2012 11:27 AM

Demography and politics
 
[B][U][CENTER][SIZE="5"]Demography and politics[/SIZE][/CENTER][/U][/B]

[B]By Shahid Javed Burki
Published: October 8, 2012[/B]


If you look far back into Pakistan’s history, say, to the time when the country was founded, the scope and extent of the demographic change that has occurred in the past several decades becomes evident. In 1947, the year of the country’s birth, what is Pakistan today had a population of 30 million. Of this, only five million people lived in urban areas. By the end of 2012, the size of the population will possibly touch 190 million. Sixty-five years after the country became independent about 40 per cent of the population is urban. In 1947, Karachi had a population of 400,000 people. It is now what demographers call a mega city — contiguous urban clusters with populations of more than 10 million people — with a population of probably 18 million. The city, in other words, accounts for one-quarter of Pakistan’s urban population of 76 million. All this change is awe-inspiring. The population is more than six times larger than its size 65 years ago. The urban population is 15 times bigger. Karachi’s population is 45 times larger. Lahore is now the country’s second largest city having also attained the status of a mega city, with a population 12 times larger than its size at the time of Partition.

In describing this change, I have used a number of qualifiers — ‘possibly’, ‘probably’, ‘perhaps’ and ‘likely’. These lend some uncertainty about the numbers mentioned and the extent of change implied. The reason for making these statements in a tentative way is that the country has not carried out a population census for more than 14 years, exceeding the ten-year interval after which most nations count the number of people who are their citizens. The last time a count was made was in 1998 and that was 15 years after the census of 1981. In fact, in the country’s 65-year history, it has conducted only five population censuses — in 1951, 1961, 1972, 1981 and 1998.

Politics was the main reason for this lack of regularity. Rapid population growth brings about equally rapid economic and social change. This is inevitably reflected in politics. But the Pakistani political structure in spite of the roller coaster it has ridden has one abiding element: it has been dominated by the groups that prefer the status quo over change. Holding censuses on a regular basis would mean incorporating the changes that occurred in the inter-censal periods. This would have altered the political structure in a fundamental way.

According to Article 51(5) of the Constitution, “the seats in the National Assembly shall be allocated to each province, the Federally Administered Tribal Area, and the Federal Capital in accordance with the last preceding census officially published”. Given the enormous demographic change that has occurred would mean a significant shift in political power from the rural to the urban areas. Some simple arithmetic would highlight this point. Given the possible size of the population in 2012 and the likely increase of about five per cent a year in the number of people living in towns and cities, urban areas should have a much larger representation in the national and provincial assemblies. There will also be a shift in power among the various regions in the country. This will be the case in particular for the parts of the country that have been losing a significant number of people through migration. Urbanisation, therefore, is one of the more important demographic changes that are taking place in the country. The urban jump over the last 65 years is two and a half times larger than the increase in overall population. The jump in Karachi’s population is three times higher than in the total growth in urban population. The political system, which is still under development, must reflect these demographic changes.

Let me illustrate this point by taking a closer look at Karachi. The enormous increase in the city’s population is the consequence of three waves of migration. The first brought more than half a million refugees from India over a four-year period between 1947 and 1951, doubling the city’s size. The second wave occurred when the city went through a construction boom to accommodate the federal government and to provide space for rapid industrialisation. This wave brought in people from the country’s northern areas — north Punjab and Khyber-Pakhtunkhwa (K-P). It was because of this movement of people that Karachi acquired its Pakhtun colonies. Once these colonies were well established, they attracted new migrants, especially from K-P and the tribal areas — the parts of the country destabilised by the long Afghan wars. This was the third wave of migration. These movements of people brought about one important change: the political mobilisation of the descendants of those involved in the first wave of migration. The Muhajir community has become a potent political force. However, its attempt to carve out political space for itself has resulted in much volatility in the city.

Pakistan will have to find a way of accommodating, within the political structure, the enormously significant demographic changes that have already occurred and those that will occur in the future. The country’s rapid urbanisation and relocation of people through migration are the two most important demographic developments that must be factored into the making of a new political order.

[B]Source: [URL="http://tribune.com.pk/story/448331/demography-and-politics/"]Demography and Politics[/URL][/B]

Arain007 Tuesday, October 16, 2012 12:49 PM

[B][U][CENTER][SIZE="5"]Dispersal and coherence: a challenge[/SIZE][/CENTER][/U][/B]


[B]By Shahid Javed Burki
[/B]
Will the coming elections solve Pakistan’s many economic, political and social problems? The answer to that question will depend on the outlook towards governance on the part of those who are returned to power. The way Pakistan has evolved politically and economically is to allow the few who govern to accumulate in their hands an enormous amount of political authority. It would do well to understand how that has happened: how the past has shaped the present?

To achieve durability for the state, those in power will have to learn to share their authority — to disperse it through the use of various institutions and instruments to the country’s distant corners. This would mean accepting federalism as embedded in the Constitution and by developing political organisations that truly represent the country’s many people. At the same time, this dispersal of authority should be done to retain one state working for one nation. In that context, it will be worth exploring how Pakistan developed a taste for centralised authority in the first place.

Pakistan’s founding fathers, by creating political space for the Muslim community of British India, solved one problem but left a number of others unresolved. The problem that was solved was the perception that the Muslims would not a get a fair deal in a united India. The solution was to create a Muslim homeland and provide those who came to live within the boundaries of the new state, the opportunity to control their own destiny. But what was left unsaid was how this space, once created, would be used to help the citizenry. It was also not clear as to who would be in charge of policymaking in this space. This was to become the dilemma of the Pakistani state. It has preoccupied several generations of leaders in the country’s history.

Two approaches were tried alternatively. The first one was to let policymaking be the responsibility of the people’s representatives. The second one was to allow the self-appointed to guide the affairs of the state. The first meant the adoption of democratic rule; the second was the rule by the bureaucracy, first the civilian, then the military. The first had great merit as has come to be recognised by most communities across the globe. The second was found to be attractive by large segments of the population during periods of great economic stress. With hindsight it can be said that the military left the country in a worse situation from the one it inherited at the time it usurped power. Initially, it did succeed in making the ‘trains run on time’. It brought a degree of coherence during moments of extreme chaos. But each time, it failed in the larger task: to create one nation with one purpose out of diverse people. The military tried four times and failed each time.

The first intervention in 1958 was justified by those who assumed power by pointing to the failure of the civilian leadership that had governed for 11 years without developing a tenable and durable political order. Society then was even more divided than it is today. There were serious differences between the two main regions — East and West Pakistan. There was conflict between those who had arrived from India as refugees and those who were indigenous to the areas that had become parts of Pakistan. A large number of refugees settled in some of the larger cities and gave the urban population a say in politics they never had during the British period. All these differences needed minding, which meant serious delays in defining the political order meant to provide governance in the country. The military leadership concluded that the civilian leadership was not up to the task and intervened.

Up until the military intervention, political leadership was mostly from among those groups that had left their homes in India. The new leaders had little mass support. Had they created a political system as India did after only two-and-a-half years of gaining independence, they would have had to ask for people’s support. That was not there. In that situation of uncertainty, the leadership tried subterfuge to retain power. The result was the gradual surrender of power to those who had learnt governance from being members of the various ‘imperial services’ of British India. The men who rose to the top in various Indian civil services had followed a model of decision-making that relied on the centralisation of authority. The British had used the model successfully for almost a 100 years. A viceroy appointed by London sat on top of an administrative structure that put faith in the efficiency and goodwill of a few. The vernacular term for this approach to governance was ‘mai-baap’ (mother-father): the citizens were the state’s children to be cared for as such.

In its formative years, Pakistan developed a hybrid model of political management and governance. For a little over four years, politicians were clearly in charge. However, after the assassination of Liaquat Ali Khan, the country’s first prime minister, politicians gradually lost power to the bureaucracy. After Liaquat was killed in October 1951, a new brand of managers emerged. These were bureaucrats-turned-politicians. Their ascent was to leave a lasting impression on the Pakistani political landscape for decades. How that happened will be the subject of the article next week.

[B]Source: [URL="http://tribune.com.pk/story/451484/dispersal-and-coherence-a-challenge/"]Dispersal and Coherence[/URL][/B]

Arain007 Monday, October 22, 2012 10:11 AM

[B][U][CENTER][SIZE="5"]Taking power to the people[/SIZE][/CENTER][/U][/B]


[B]By Shahid Javed Burki
[/B]

Liaquat Ali Khan’s assassination was to profoundly affect Pakistan’s political development. Those who really governed after the death of Pakistan’s first prime minister were ‘strong men’, the praetorian guards trained to exercise authority over those they ruled. Five of these six were bureaucrats-turned-politicians. The sixth was a politician. With just one break in the 1990s, these men governed for a total of 46 years out of Pakistan’s 61 years during which the search for a durable political order was on. It was only in 2008 that a new political order began to take shape but even then some of the legacies from the old orders were still in evidence.

Liaquat Ali Khan’s death was followed by the ascent to power of two strong men, made possible by the weakness of the political order. The first in line was Ghulam Mohammad, the country’s third governor general who was followed by Iskander Mirza, the fourth governor general and Pakistan’s first president. Liaquat left the political scene without resolving the differences between the refugees who had come from India and were able to dominate politics and the host populations who had numbers on their side. This conflict between the outsiders and insiders was to define Pakistani politics to this day.

The impact on Pakistan’s political development of the way Ghulam Mohammad and Iskander Mirza governed has largely been forgotten. Both were bureaucrats with technocratic flair and trusted those who were similarly inclined. Their dependence on the bureaucracy for wielding and exercising power gave the military the incentive to step in. Insofar as bureaucracies go, the military was much more organised than its civilian counterpart. Two of the strong men — Ayub Khan and Zulfikar Ali Bhutto — who followed Ghulam Mohammad and Iskander Mirza, thought it necessary to prescribe a legal framework within which to function. Both wrote new constitutions. The 1962 document unabashedly adopted as its basis a strong centre and limited participation for the citizenry in the working of the government. The 1973 Constitution reflected what the people wanted — a federal system with considerable dispersal of governing authority. However, prime minister Bhutto did not allow the federalist provisions to come into force in the political order he had authored. The original intent of Bhutto’s Constitution became possible 48 years after its promulgation. This resulted from the adoption of the far-reaching Eighteenth Amendment to the Constitution.

Whereas Ayub Khan and Bhutto wrote new constitutions, the two strong men who followed them, tinkered with the one they inherited. The fact that neither Ziaul Haq nor General (retd) Pervez Musharraf dared to abrogate the Constitution of 1973 was the fear that such a step would unleash a reaction that may not be controlled. That Constitution, unlike the one adopted in 1956, was the consequence of the exercise of popular will. Amending it to increase the power of the president was considered a feasible option rather than doing away with it altogether.

The adoption of the Eighteenth Amendment was a revolutionary step. It introduced two fundamental changes in the way the country should be governed. It took power away from the president and placed it back with the prime minister and his cabinet. The latter was responsible to parliament. It also provided the country a real federal structure and coming as it did after the issuance of the Seventh National Finance Commission award, it moved a considerable extent of control over public funds to the provinces. The first of these two changes has not produced much change in the way the country is governed. Most of the executive authority resides with the president, who is able to exercise it since he is the undisputed leader of the political party that controls the ruling coalition. The second change is being worked out. Both are important for dispersing power beyond Islamabad and making the provinces partners in the process of governance. Without such devolution, the Pakistani state will remain fragile.

[B]Source: [URL="http://tribune.com.pk/story/454830/taking-power-to-the-people/"]Taking Power to the People[/URL][/B]

Cute Badshah Monday, November 05, 2012 07:43 PM

Embrace, not reject the United States
 
[B][U][CENTER][SIZE="5"]Embrace, not reject the United States[/SIZE][/CENTER][/U][/B]


[B]By Shahid Javed Burki
Published: November 4, 2012[/B]


Most American news outlets, both print and electronic, carried an item that showed Pakistan to be the only country among a couple of dozen surveyed, which would favour a win in the presidential election by the Republican candidate Mitt Romney. This has confirmed the view of those Americans who have interest in Pakistan and in the area of which it is a prominent player that relations between Islamabad and Washington are now totally ruptured. Much of this antipathy towards Pakistan has been created by the impression that the country is the most serious obstacle in the way of America’s decent and not-costly withdrawal from Afghanistan.
As Vanni Cappelli, president of the Afghanistan Foreign Press Association, wrote in a long letter to The New York Times on October 31 that “the deterioration of the situation in Afghanistan has been the inevitable result of America’s continuation of the very dynamic that led to the September 11 attacks — hefty, decades-long military assistance to Pakistan, which it used to incite proxy militants to crush socio-economic reform at home and commit aggression against its neighbours.” This reading of Pakistan’s recent economic history is not totally accurate but the point is that this kind of thinking is receiving the attention of influential policymaking institutions. Cappelli also offers a solution to what he labels as America’s “Afghan-Pakistan woes”. He suggests: “Continued military and diplomatic engagement in South-Central Asia, with a truer aim of containing Pakistan’s ability to destabilise its neighbours and affecting a transition to real civilian rule there, is our best option. Such a policy would proceed not from triumphalist myopia but from tragic recognition and is the only course that will bring peace and security to Afghanistan, the region and America.”
The treatment meted out, a few days ago, to Imran Khan by the US immigration authorities when the former cricket star and now an influential politician was entering the US from Canada, did not help Pakistan-US relations. This treatment did not create many friends for America in Pakistan. This will further deepen the divide. That is unfortunate for the simple reason that post-Afghanistan withdrawal, Pakistan will need the US more than the US will need Pakistan. After the Americans have pulled out, their interests in Central and South Asia will be better served by maintaining close and friendly relations with Afghanistan and India. The Americans are interested in obtaining access to the fabulous energy and mineral riches of Central Asia. A Pentagon report estimated Afghanistan’s mineral wealth at over a trillion dollars. The Central Asian states have known reserves of gas and oil as well. America’s other geopolitical interest in the area is containing the rising China. That is better served by a close association with India. This logic, therefore, essentially marginalises Pakistan in the eyes of the policymakers in Washington.
But Islamabad must find a way of staying on the right side of America. This is for good economic reasons. For as long as the country is unable to generate a greater amount of domestic resource for investment and for as long as it fails to exploit the riches available from taking what should be its share in expanding international trade, Pakistan will remain dependent on external flows of capital. Foreign savings are needed to close the domestic investment-savings gap, as well as the gap between export earnings and expenditure on imports. In the past, America has played very important roles in helping the country with these two gaps. It has provided both direct assistance, as well as pressured institutions such as the International Monetary Fund to come to Pakistan’s assistance. With the palpable cooling of relations, help from America may not be as readily available as was the case during several balance of payments crises in the past. It is recognised in Pakistan that the country, as it moves towards another general election, will face a new balance of payments crisis. There will be only two ways of solving it. Islamabad could severely tighten its belt and thus slow down even more its tepid rate of growth. Or hope that a large flow of external assistance would be forthcoming to tide over the coming difficulties. The former approach would have serious political and social consequences. The latter approach would need setting relations with America on a less rocky course.
The large and prosperous Pakistani diaspora in the US could be of help as it was in countering the damage done by the Pressler Amendment, named after Senator Larry Pressler from South Dakota. This imposed severe sanctions on Pakistan as Islamabad continued its programme for developing nuclear weapons. At that time, a number of American citizens of Pakistani origin were able to put pressure on the US Senate to pass another amendment, eased the sanctions and eventually restored aid to Pakistan. The Indian diaspora, which is three times the size as the one from Pakistan, is now well-organised to play an important role for their country. Unfortunately, the Pakistani community in the US carries a heavy burden — that of some links with Islamic extremism, which have further eroded its latent political power. Those who have some influence over the making of public opinion must recognise that promoting a better relationship with the US is in the country’s interests. The reverse is not the case.

[URL="http://tribune.com.pk/story/460663/embrace-not-reject-the-united-states/"]http://tribune.com.pk/story/460663/embrace-not-reject-the-united-states/[/URL]

Arain007 Monday, November 12, 2012 10:26 AM

[B][U][CENTER][SIZE="5"]The Afghan factor in Pakistan’s future[/SIZE][/CENTER][/U][/B]

[B]By Shahid Javed Burki
November 12, 2012[/B]

None of the standard and respected works on Pakistan’s economy make reference to Afghanistan; for instance, the books by Parvez Hasan and Ishrat Husain on Pakistan’s economic development between 1947 and 1997. The omission seems surprising when we look back at the country’s economy and reflect on its future from the perspective of the closing months of 2012. There is no doubt that Pakistan’s economic future will be heavily influenced by the way Afghanistan settles down after the American pull-out. President Barack Obama’s re-election may even hasten the process. Once the Americans depart, what will they leave behind?

We can contemplate two extreme possibilities, each of which will have enormous consequences for Pakistan. On one end of the probability spectrum, it can be assumed that the country will settle down after the withdrawal of foreign troops. Most of the violence is directed at foreign troops and the Afghans that support them. According to this scenario, various segments of the diverse Afghan society will find a way of working with one another, preferably, within a political framework that will be representative and durable. Once politically settled, the Afghans will begin to rebuild their war-ravaged economy, reduce dependence on foreign support and exploit the country’s enormous mineral potential. A Pentagon study estimated the potential of mineral deposits at one trillion dollars. It covers a number of minerals, including iron, copper, gold and platinum. Some of the mineral veins extend into Pakistan, especially in the country’s south. There is considerable foreign interest in getting to these deposits and foreign involvement will draw Afghanistan even closer to Pakistan.

If we move to the other side of the probability spectrum, a very grim picture could be painted about Afghanistan’s future. According to this, the civil war that followed the pull-out by the Soviet Union will look like a picnic when the United States and its allies leave. The assumption that a very large Afghan force of more than 300,000 soldiers will be able to take charge of security will prove to be highly optimistic. There are already signs that the force that has been built up by the Americans, working with their European allies, may not have the cohesiveness and have it remain loyal to the state. Instead, the moment the American umbrella is removed, we will see this force fracture.

Washington’s promise to pay $1.4 billion a year to sustain a large force will not amount to much after the pull-out is complete. The Americans are faced with a serious fiscal problem, in which all expenditures are being looked at to reduce the enormous burden of debt the economy carries. Providing such a large amount of support to Afghanistan for a long period of time will be one of the first commitments to fall by the wayside. Heavily armed men not certain that they will continue to receive their salaries will begin to seek the support of the numerous warlords in various parts of the country. If the Soviet Union’s departure resulted in a civil war with half a dozen contenders, there will be many more this time around. The conflict among them will be bloodier than the war that ended with the triumph of the Taliban in 1996. This time, the Taliban will be one of the active participants in the fight from the very beginning. The northern and central areas will come under the control of other social and ethnic groups. The Tajiks and the Uzbeks will control the northeast and the groups that have the support of Iran will dominate the west. This possible division of Afghanistan into three parts will create an extremist state right on the border with Pakistan. That state will continue using its ideological force to destabilise the areas south of the border, which will have serious economic and political consequences for the state and the people of Pakistan.

Which way Afghanistan goes will matter for Pakistan. Those who have chronicled Pakistan’s economic past may have overlooked Afghanistan as a contributing factor.

[B]Source: [URL="http://tribune.com.pk/story/464140/the-afghan-factor-in-pakistans-future/"]The Afghan Factor in Pakistan's Future[/URL][/B]

Cute Badshah Sunday, November 18, 2012 09:02 PM

Women to Pakistan’s rescue
 
[B][U][CENTER][SIZE="5"]Women to Pakistan’s rescue[/SIZE][/CENTER][/U][/B]


[B]By Shahid Javed Burki
November 19, 2012[/B]


Often, it is not realised by those who study Pakistan that the women in the country may be in a position to come to its rescue. Even without any assistance by the state, they will be contributing more than a full percentage point a year to the rate of economic growth in about five years. They have made some extraordinary progress in the last decade. Female literacy has improved, albeit from a low base. Women are doing particularly well in institutions of higher learning. There are now more female than male students in colleges and universities. By 2015, a million well-educated and trained women will be ready to join the workforce. A number of these will get married and start families. But many will also take up jobs in modern sectors of the economy. Even many of those who are not formally in the workforce will be using their time productively, adding to family income by the part-time application of skills they have acquired. Also well-educated mothers are good in bringing up children.
Women now have a significant presence in the national and provincial legislatures. This is one area where General (retd) President Pervez Musharraf should be given full credit. It was as a result of the changes he made in the political order that women were able to increase their number in the legislatures. Women have entered the legislatures not only by being elected to reserved seats but many have won elections from open constituencies. Pakistan is one of the very few countries to have a woman as the speaker of the National Assembly. In a conversation a couple of months ago, with Dr Fehmida Mirza, she proudly pointed out to me her successful initiatives. She has organised a ‘women’s caucus’ in the National Assembly that includes legislators from all political parties. “They have been able to work together, unmindful of the fact that they come from different political organisations”, she said. They have introduced a number of bills aimed at improving women’s welfare.
Women are also occupying leadership positions in non-governmental organisations, especially those dealing with social issues. Combining this work, with what they have begun to do in politics, has made it possible for women to address some of the problems they face in the country. In addition, women have become entrepreneurs in many businesses.
What is impressive about the remarkable progress made by women is that it has resulted mostly from their own initiatives. Women are doing well in education, in large part because several female entrepreneurs established educational institutions which could be conveniently attended by girls with some comfort. Some of the largest school systems in the country, such as the Beacon house Schools, City Schools and Grammar Schools are products of women’s entrepreneurship and the business and pedagogical models for these schools were conceived by them. They provided the initial funding and are also being managed by women. Not only have women worked hard to improve the quality of education girls receive. It is women who are now also at the forefront of the fight against extremists who are dead set against female education. A brave teenager, Malala Yousafzai from Swat, has become the symbol of the struggle being waged by women in a country that is increasingly moving towards an extremist interpretation of Islam. The defiant campaign launched by almost cost her her life. Having survived the attack, she will be a beacon of hope for the Pakistani women.
Pakistan, although headed in that direction, is different in many ways from conservative Islamic societies. Saudi Arabia is a country many Pakistani citizens admire and would like to follow, in terms of its professed moral rectitude. However, it remains hostile towards women exercising their rights. It has failed to accommodate the very women in the work place that the state has paid to educate in foreign universities. There are 17,000 Saudi women studying in American colleges and universities. According to a report, “Saud Arabia has sharply reduced female illiteracy, virtually eliminating it among women ages 15 to 24.” But educated women, even those with foreign degrees are unemployed. “Unemployment among Saudi women who want to work is 34 per cent — almost five times as great as the seven per cent rate for men.”
Pakistani women have better opportunities compared to those in such conservative societies as Saudi Arabia. They are readily able to find jobs. They have also been able to become successful entrepreneurs. Well-educated women don’t come up against the brick wall that others face in several Muslim countries of the Middle East. Pakistani women are doing well in the work place and in the business world. They have established both formal as well as informal firms, in sectors such as education, communication, fashion and micro finance.
The contribution that women have already begun to make to the economy, and are likely to make even more significantly, applies mostly to the urban areas. In the above referred conversation with Dr Fehmida Mirza, she emphasised that women remain economically and socially distressed in the poorer districts of the country. She used Badin, her district in southern Sindh, as an example of how much work women do both inside and outside their homes but in spite of that their economic situation remains poor. Women are advancing but still have a long way to go. Once they achieve their full potential, they will be able to lend a helping hand to rescue Pakistan from its current economic travails.

Source: [URL="http://tribune.com.pk/story/467638/women-to-pakistans-rescue/"]http://tribune.com.pk/story/467638/women-to-pakistans-rescue/[/URL]

Cute Badshah Monday, December 03, 2012 02:37 AM

The economic benefits of more women in the workforce
 
[B][U][CENTER][SIZE="5"]The economic benefits of more women in the workforce[/SIZE][/CENTER][/U][/B]

By [I]Shahid Javed Burki[/I]
December 3, 2012

My previous columns on the contribution Pakistani women could make to the development of the economy invited a number of comments. Some of these were sceptical of the claims I was making. There was an impression on the part of several commentators that I was attempting to be cheerful about one, possibly manufactured, aspect of what is indeed a dismal situation. Those who believe that the economy is going down uncontrollably on a slippery slope are not prepared to look at some of the positives on which a better future could be built. One of them is the role women are poised to play. This is one reason why I am revisiting the subject and providing another way of looking at what women could do for the country’s economy.
One place to start this inquiry is to provide a measure of the cost to the economy of the Pakistani women’s persistent — and it should be emphasised forced — backwardness. A simple calculation will help to underscore the magnitude of this loss. According to the 2011-12 Pakistan Economic Survey, Pakistan’s labour participation rate in mid-2012 was an estimated 32.8 per cent of the total population. This is extraordinarily low when compared to other developing countries. For a population of 181 million, this means the size of the workforce is 59.41 million. Of this, 41.2 million (69.4 per cent) is in the countryside and the remaining 18.2 million is located in the towns and cities. The World Bank estimates Pakistan’s GDP in 2012 at $200 billion. This implies output per worker at a little over $3,400. As explained below, this should be much higher in case women were allowed to participate more fully in the workplace.
Pakistan has one of the world’s youngest populations in the world with a median age of about 22 years. This means that one-half of the population, or 90.5 million, is below that age. A much larger share of this population should be in the workforce. If this were the case, the country would be benefiting from what the economists call the demographic window of opportunity, when the proportion of the working population is much greater than those who are dependent on it. This would be realised if both men and women of working age were able to work. This is not the case in Pakistan. The proportion of men in the workforce is relatively high; 68.6 per cent. That of women is very low; only 31.4 per cent. This means that while 63.5 million men are in the workforce, the number of working women is only 29 million.
This does not mean that millions of women are sitting idly in their homes. In fact, most of them are doing a great deal of housework looking after their children, preparing food for the family, and in the countryside, often tending farm animals. Would getting them out of the house and into the workforce add to the country’s gross output? The answer is, probably yes, if the marginal return to their work in the marketplace is higher than what would be paid to those who would be called in to provide help in the house. This will be the case certainly among the middle-income households in the urban areas. By stepping outside their homes, middle-income women will create opportunities for those women lower down on the income scale. This will produce a ripple effect in the economy or in the language of economics a ‘multiplier’ will get to work.
This brings me to one of the ‘what ifs… ?’ questions about the situation in Pakistan. What would be the impact on the economy — to its size and the rate of growth — if the proportion of women in the workforce reached, not quite the level attained by men, but close to it, say 50 per cent. This would mean an addition of 25 million women to the labour force. This addition to the workforce will have the capacity to add $85 billion to the gross domestic product of $200 billion — an increase of 42.5 per cent. With this increase in the country’s GDP, income per capita will increase from the current $1,100 to $1,575. In other words, women could make a larger contribution to the economy if they are allowed to be part of the workforce. But for that to happen, the society will have to lift the many burdens that weigh down women and prevent them from contributing to the economy.
Women could help in one other way. Much of the contribution made by them to the national output is in low-paying and low-rewards jobs. This is particularly the case in the countryside. No firm estimates are available on gender inequality in terms of per capita income. If we assume that the monetary rewards from the jobs they perform are only three-fourths of that by men, then by narrowing the gap, there would be a significant addition made to the gross domestic product.
The most productive way of making women contribute more to the national product is to improve the level of their literacy and impart them with better skills. This has begun to happen as argued previously in this space. We should, in other words, look positively at some of the changes that are taking place — changes that could ensure a better economic future for the country.

[URL="http://tribune.com.pk/story/474164/the-economic-benefits-of-more-women-in-the-workforce/"]http://tribune.com.pk/story/474164/the-economic-benefits-of-more-women-in-the-workforce/[/URL]

Cute Badshah Monday, December 10, 2012 05:26 PM

Pakistan’s tarred reputation
 
[B][U][CENTER][SIZE="5"]Pakistan’s tarred reputation[/SIZE][/CENTER][/U][/B]

By [I]Shahid Javed Burki[/I]

December 9, 2012

While Pakistan’s dependence on the West for capital and also on receptive markets for its exports continue to increase, the West — in particular the United States — is becoming wary of Pakistan. In a democratic system, what people feel about a country with which it has relations matters. In this context, how Pakistan is viewed by the citizens of the United States acquires considerable importance.
Pakistan’s stagnant exports and the sharp drop in foreign direct investment mean that the country needs large doses of official finance to keep the economy afloat. The capital that is needed can come from two sources. It can be provided by Washington or it can be made available by the multilateral development and financial institutions. In the United States, Congress reigns supreme in money matters. The executive may promise but it is Congress that disposes. Unfortunately for Pakistan, the country’s reputation is not high in that body. As such, the United States will not be able to play in Pakistan’s corner in the World Bank or the International Monetary Fund where Washington has a great deal of influence. It should, therefore, trouble Islamabad that while the country’s senior officials were in Washington holding important discussions on economic matters, two influential publications came out with disturbing stories about Pakistan.
The world has begun to take notice of what it sees as another ugly turn in Pakistan. This is not good for Pakistan and its stressed economy, dependent as they are on external support. However, the country needs a helping hand from abroad, without which it would sink into a deeper hole. Pakistan’s policymakers and the people of Pakistan must realise that the country today does not have the respect of the international community. Two detailed stories in recent days — one in The Economist and the other in The New York Times, brought their readers news about the rise of sectarianism in Pakistan. This has added another dimension to the Pakistani story.

The British journal’s story was about Karachi; that of the American newspaper about Quetta. Reading them together provides a view that is of immense concern for the international community. It is of concern because innocent people are being killed, sometimes in broad daylight and sometimes with the killers making no attempt to hide their identity. The only reason why so many people are being killed is that they profess a different faith than the one to which the killers subscribe. It concerns those who are watching this deteriorating situation that the security forces have not tried very hard to stop the carnage and bring to justice the people who are engaged in it. It is also of concern since the slow disintegration of normal life in two cities, each important in its own way, has begun to showcase what is going wrong in the Muslim world.
Karachi is the nerve centre of the Pakistani economy but is being torn apart by several conflicts among the various components of its fragmented citizenry. The Sindhis, the Muhajir and the Pashtun are fighting for political and economic space. The Islamic radicals, whose numbers have increased significantly because of the influx of tens of thousands of Pashtun from the restive tribal areas, are attempting to force their religious beliefs and cultural norms on the rest of society. This is an unfortunate development for the city’s large and reasonably affluent middle class. Karachi had deservedly earned the reputation of being Pakistan’s most open and modern city. That reputation is being tarnished. According to some observers, Karachi is being Talibanised. If this is the case, it will pose a problem for the United States since its crowded slums will not be within easy reach of the drones, the weapon of choice for America’s counterterrorism efforts. At the same time, a dysfunctional Karachi will add to Pakistan’s many economic woes.

Quetta, the other troubled city, is disturbed by a similar set of problems. Like Karachi, it is also multi-ethnic. Its many diverse communities have come together because of economic and political developments of recent years. Balochistan, of which Quetta is the capital, is rich in mineral resources. One of them, natural gas in Sui, has been fully exploited and now accounts for a significant share of energy consumption. Its successful exploitation brought many highly trained and skilled people from other parts of the country, churning up the ethnic mix of the province. America’s war in Afghanistan brought in another group to the city’s environs, the so-called ‘Quetta shura’. With its supporters armed to the teeth, they have taken over parts of the geographic space in the province. These are troubling tales.
The story Pakistan needs to tell those who are watching the many disturbing developments in the country is that a period of transition is underway. Pakistan is transiting towards a political order in which conflicts will get resolved through discourse and legislation and not through violence. As such, the country needs the West’s support and not scorn at this delicate time in its history.

Source - [URL="http://tribune.com.pk/story/477347/pakistans-tarred-reputation/"]http://tribune.com.pk/story/477347/pakistans-tarred-reputation/[/URL]

Cute Badshah Tuesday, December 18, 2012 02:22 AM

Living in the Muslim world
 
[B][CENTER][U][SIZE="5"]Living in the Muslim world[/SIZE][/U][/CENTER][/B]

Published: [I]December 17, 2012[/I]

Economic progress requires political stability and social harmony. This has been the story of much of the Muslim world and the reason why it has lagged behind other developing nations in terms of economic development.

The Arab Spring of 2011 changed many assumptions regarding governance in the Muslim world. In the period that followed, five questions were asked. These relate to the roles of Islam and the military in politics, the location of executive authority, accommodation of minorities within the political and social systems, and the basis of relations with the West. In the move towards the establishment of such an order, there will be flow of ideas and influences from one country to the other. In this context, Pakistan will have an important role to play. The reason for that is simple: Pakistan has struggled the hardest and longest in finding answers to the questions being raised in the Muslim world.

By far, the two most important questions are the roles of Islam and the military in the evolving political systems. Pakistan and Turkey have found an answer to the first question, while the Arab world is still looking for it as it transits from one type of political order to another. These two non-Arab Muslim states have come from different directions to find more or less the same solution. In spite of the intense campaign and hard work put in by the political organisations that call themselves Islamic, it is clear that the majority of the Pakistani people don’t want to live in a political system that is strictly Islamic. This is the main reason why those who want to create an Islamic state are operating from outside the political system rather than from within it. They have chosen to use violence as their tool. That is not acceptable to the majority. The mainstream political parties are prepared to accept Islam’s guidance, not its ruling tenets. The system that emerged since 2008 has resolved this issue.

Turkey has reached the same conclusion but has come to it from the other side. Kemal Ataturk, the founder of modern Turkey, created a secular state in which a number of practices associated with the practice of Islam were strictly banned. Such draconian dispensation produced instability. The country was able to resolve the issue of Islam in politics once power was assumed by the Justice and Development Party headed by Prime Minister Recep Tayyip Erdogan. He and his party have declared that while the religion of the vast majority of the country’s people must be respected, it must not have a role in governance. The Arab world, however, has not found an answer as is shown by the struggle over the draft constitution produced by the Muslim Brotherhood. According to Western observers, “to Mursi and his Islamist backers, the draft charter is the legitimate product of a democratically-elected Constitution-writing assembly that is dominated by Islamists. To his opponents, the document represents a kind of tyranny of the new Islamist majority.”

The second question — the role of the military — has been answered decisively by Turkey and to some extent by Pakistan. It, too, remains unanswered in the Arab world. In both, it has become clear to the men in uniform that the people want them to remain in their barracks and help to provide security to the citizens. Any attempt to enter the political space will be resisted by the street. The street has shown its power not only during the Arab Spring but even before that in the Lawyers’ Movement of 2007 in Pakistan that brought the dismissed judges back to the bench. In Egypt, however, the Brotherhood has been tempted to use the military to strengthen its claim to power. In the controversial decree issued by President Mohamed Mursi, the military was given additional powers to deal with the protests that may seriously disturb the peace as the Constitution was voted upon in the December 15 referendum. In the article next week, I will take up some of the other questions that need answers.

Source - [URL="http://tribune.com.pk/story/480479/living-in-the-muslim-world/"]http://tribune.com.pk/story/480479/living-in-the-muslim-world/[/URL]

Cute Badshah Monday, December 24, 2012 02:35 AM

Where should executive authority reside?
 
[B][U][CENTER][SIZE="5"]Where should executive authority reside?[/SIZE][/CENTER][/U][/B]

Published: [I]December 23, 2012[/I]

In last week’s article in this space, I wrote about two aspects of political transformation in different parts of the Muslim world. In some of these, the political systems are moving away from authoritarianism and going towards some form of democracy. I suggested that in determining the role of Islam and the military in politics, Turkey and Pakistan have gone further than Arab nations also involved in making the transition. However, in neither of these two non-Arab Muslim nations has there been a clear indication as to where the executive authority should reside. Both Pakistan and Turkey are, on paper, parliamentary democracies. However, the person who controls the governing party holds the reins of power.
In Turkey, Prime Minister Recep Tayyip Erdogan has the executive power because that is where the Constitution places it. Turkey’s current basic law was written by the generals when they were in power. Although they gave the state’s executive authority to the prime minister, they kept enough power for themselves to keep a close watch on the performance of the civilian leader. The generals did not hesitate to intervene if they believed that the people’s elected representatives were acting against the basic principles of governance laid down by Mustafa Kemal Ataturk. The political predecessor of Erdogan’s Justice and Development Party was removed from power when the generals felt that the secular foundations of the Turkish state were being compromised. Erdogan used the power of the ballot box to ultimately bring the military establishment under civilian control. Three electoral victories, each with increasing popular support, gave him the confidence to move the generals back to their barracks. In his latest term in office, he felt powerful enough to put some generals on trial, even to send some of them to prison for plotting to take over control from the civilian government.
Erdogan having indicated that he will not serve another term as prime minister after completing his current tenure is contemplating a move to the presidency. He will do so if he is able to change the Constitution and create a quasi-presidential system.
In Pakistan, a different kind of ambiguity exists. The Constitution of 1973 was clear in giving full executive authority to the prime minister. This was the reason that Zulfikar Ali Bhutto, the principal author of the new basic law, stepped down as president and became the first prime minister under the 1973 dispensation. Even while taking that step, he continued to involve himself in some trappings of the office he had given up. For instance, he kept taking the stage along with the president to receive the salute from the military in the march past to celebrate the Pakistan Day.
The Pakistani Constitution was put through some massive distortions by two military leaders who succeeded Bhutto. Both Generals Ziaul Haq and (retd) Pervez Musharraf inserted clauses in the Constitution through amendments that gave the ultimate authority to the president on most important state matters. The changes included the infamous Article 58(2b) which gave the president the right to dismiss the prime minister and dissolve the National Assembly. He could do that on a variety of grounds. These were not hard to justify in the courts when the dismissals were challenged. Four dismissals followed this change to the Constitution, one by General Ziaul Haq, two by president Ghulam Ishaq Khan and one by president Farooq Leghari. Each of these was upheld by the Supreme Court.
The Eighteenth Amendment, passed during the tenure of the current PPP-led government, effectively took the Constitution back to its original 1973 form, restoring the prime minister as the repository of executive authority. However, even after the adoption of this amendment, executive authority has remained with President Asif Ali Zardari. He exercises it not because of the office he holds but because of the chairmanship of the PPP, his political party. That is the basis of his power. The constitutional situation in Pakistan, therefore, has become ambiguous about the positioning of executive authority. Ambiguity is never propitious for orderly political development. In other words, the development of political order in the Muslim world is a work in progress.

Arain007 Tuesday, January 01, 2013 10:30 AM

[B][U][CENTER][SIZE="5"]Professor Hirschman and Pakistan[/SIZE][/CENTER][/U][/B]


[B]By Shahid Javed Burki[/B]


I was a student of Professor Albert O Hirschman at Harvard in the late 1960s. First at Harvard’s Kennedy School and later at the University’s Economics Department, Professor Hirschman taught me development economics. He was a pioneer in that area of economics, one of the few economists who developed the discipline but was not awarded the Nobel Prize. He was not recognised for the reason that it was difficult to pin down his specialty: was he an economist or a political scientist; an anthropologist or a sociologist; a historian or a philosopher. Professor Hirschman died a few days ago, in New Jersey, at the age of 97. His last affiliation in the academia was with the Institute of Advanced Studies in Princeton University that was made famous by Albert Einstein, the scientist who changed physics and the way we know the world today.

When I was a student of Professor Hirschman’s, he was working on a book that was to have a profound influence on several disciplines. In the several discussions I had with him then, I talked about Pakistan. At that time, the prevailing wisdom at Harvard was that Pakistan under president Ayub Khan had found the road to economic success. Hirschman did not buy that conclusion. He believed that an inflexible political system did not have the capacity to absorb discontent when it surfaced. His book titled Exit, Voice and Loyalty: Responses to Decline in Firms, Organisations and States appeared in 1970 and dealt with the subject of alienation and some possible reactions to it. If people are unhappy with the situation they are in, asked Hirschman, how do they normally respond? This question became extraordinarily relevant with the launch of the Arab Spring in 2011. It is also tremendously relevant for today’s Pakistan.

Hirschman looked at three possibilities. People could remain loyal to the system that has caused them anxiety and despair. In that case, their hope will be that they can work within the system to reform it and thus improve their own situation in it. This happens in most functioning democracies. People use the opportunities inherent in democratic systems to improve what they receive from politics and economics. The second option is to raise their voice. That can be done by stepping out of the system and entering into a different kind of discourse. This is essentially what was done by the participants in the Arab Spring. The Arab street woke up when the realisation became acute that the autocratic structures in several Arab states did not have the space in which the alienated could raise their voice. They took to the streets and to the public squares and brought about regime change in several countries that had been governed for decades by autocrats.

The third option — of exiting the system — is the most radical of the three that Hirschman considered. This has happened in Syria. Earlier, it happened in Pakistan when the citizens of the eastern wing decided to opt out and create a country of their own. They had tried hard to remain within the Pakistani system as conceived by Mohammad Ali Jinnah but the political structure within West Pakistan could not countenance the idea of political power moving from Islamabad to Dhaka. That would have happened had the results of the 1970 election been allowed to create the government that would have been dominated by East Pakistan’s Awami League. What followed is familiar history.

There can be no denying the fact that the level of people’s alienation with the current economic and political systems in Pakistan has, at this time, reached a level never experienced before. And yet, the citizens have chosen to remain within the developing political order, rather than opt out and try for something new. That the people’s response this time around has been different from those in the Arab world is because of their belief in the political order that is under development. But the process of development has been messy which was to be expected. This brings me to another point that Hirschman developed in his long academic career.

He was of the view that progress is never linear. It does not happen in a smooth way, either with the economy or with the political system. Most systems operate through disequilibria making adjustments as they go along. According to Jeremy Adelman, a professor of history at Princeton whose biography about Hirschman will be published next year, the late professor thought “disequilibria creates a problem that you have to solve — and that’s a good thing. Somehow we only think in terms one thing to happen; everything else will coalesce around it and we’ll come out all right”. But change in the world of politics and economics is much more complicated than that. Had he been viewing the situation of today’s Pakistan, he would not have despaired. He would have suggested that in today’s turmoil are to be found the seeds of positive change. The tensions that we see today in the structures of country’s economics and politics will get resolved in time. The important thing is not to exit the system, to stay loyal to it but continue to raise your voice to get the change that would be positive for the entire citizenry. To quote from Adelman again, Hirschman thought that “even the most seemingly immutable, impossible situations could be solved, that you could change things that seemed unchangeable.” There is an important lesson in this for Pakistan.

[B]Source: [URL="http://tribune.com.pk/story/486740/professor-hirschman-and-pakistan/"]Professor Hirschman and Pakistan[/URL][/B]

Arain007 Monday, January 14, 2013 10:46 AM

[B][U][CENTER][SIZE="5"]Sindh’s missed opportunities[/SIZE][/CENTER][/U][/B]


[B]By Shahid Javed Burki
January 14, 2013[/B]

The story of the use of endowments in Sindh is that of missed opportunities. The province shared Punjab’s two endowments — a rich agricultural base and small, skill-based manufacturing sector. The latter, however, differed from that of Punjab. Much of the province’s small manufacturing base was artisanal, making adornments for buildings and producing colourfully embroidered garments. These could not have become the base for industrialisation. Sindh’s two other endowments took the provincial economy in a different direction. It had abundant supplies of gas and coal and a seafront with a number of natural harbours. Gas reserves were exploited but unfortunately, not in the most productive way. The enormous reserves of coal remain to be tapped. Even with increasing international environmental concerns about the burning of coal for producing power, Sindh has to find a way for developing this rich endowment. Coal remains, and will continue to remain, the major source of energy for such large economies as China, India and the United States. Sindh and Pakistan also need to move forward and use this resource in a responsible way.

While the Karachi port has been developed well, it is the city’s location on the map of international air routes that has not been exploited. This is another case of a missed opportunity. When long-distance air travel became commercially viable, Karachi turned into an important stopping point for several airlines operating out of Europe and the US. It lost that advantage to cities such as Dubai and Doha that were nowhere on the map when Karachi was already an important airport to call on for several Western companies. Now, Karachi is just one of the many links the Middle Eastern airports have developed with near and distant destinations. It was the adoption of wrong public policies that lost Karachi this comparative advantage. But this was not the only missed opportunity.

I will discuss two more. One of these had to do with the Pakistan International Airlines (PIA) whose advertisements once use to boast that they were “great people to fly with”. In the 1970s, the airline earned a reputation for efficiency and good service. It was engaged by what are now some of the 21st century’s more developed Asian and Middle Eastern airlines to get them started. The PIA now has deteriorated to the point that in 2013, its very existence as a separate entity is threatened. It now has the highest ratio of employees per plane, the result of having been used — along with several other state-owned enterprises — as the employer of first resort for the political workers of the parties in power. The Pakistan Steel Mills at Karachi is one other public enterprise that has suffered the same fate as PIA’s.

The Partition of British India and its human consequences produced for Karachi another endowment. The exchange of population between India and Pakistan in the few months around that time brought millions of well-educated Muslims from the urban areas of British India. For more than a decade, these migrants provided the human resource base for the development of the state in Pakistan. That changed with the decision by president Ayub Khan to move the country’s capital to Islamabad. But another type of human resource continued to lend support to Karachi’s sharp development as the financial and commercial centre of the country. During the presidency of Ayub Khan, the Karachi-based banking sector developed rapidly. Several private sector commercial banks developed links with the Middle East and Britain. This process would have continued had it not been interrupted by the ill-conceived nationalisation of banking and insurance by the administration headed by prime minister Zulfikar Ali Bhutto. It was during the Bhutto period that the Middle East went through its first economic boom. Had the banking industry remained with the private sector, it would have enlarged its Middle Eastern operations with Karachi becoming an important regional financial hub for the region. Instead, the financial industry moved in the other direction with the young Middle Eastern banking industry developing a base in Pakistan by acquiring some of the assets that were to be privatised in the 1990s at bargain-basement prices.

Karachi’s mixed ethnicity offers the greatest challenge for the development of Pakistan’s largest city. It can only make the contribution its location and human resource endowment can make to the country’s economic advance if the structure of city politics is developed in a way that it provides the means to settle inter-ethnic disputes. Karachi will remain a troubled and violent city for as long as a new and inclusive political order does not get developed. It will also remain a magnet for the people that will undoubtedly be displaced by the struggle in the tribal areas following the winding down of the American involvement in Afghanistan. This new influx of migrants to the city needs to be anticipated with a view to their economic and political absorption.

[B]Source: [URL="http://tribune.com.pk/story/493448/sindhs-missed-opportunities/"]Sindh's Missed Opportunities[/URL][/B]

Cute Badshah Monday, January 21, 2013 12:35 AM

Punjab’s endowments and economic development
 
[B][U][CENTER][SIZE="5"]Punjab’s endowments and economic development[/SIZE][/CENTER][/U][/B]

By Shahid Javed Burki
January 06, 2013

I will begin by first defining what the term ‘endowments’ implies. Does it mean the various inheritances by the provinces from the century-long British rule of the Indian subcontinent? If that is one of the meanings then Punjab — and to a lesser extent Sindh — came to Pakistan with richly endowed surface irrigation infrastructures. If endowments mean the minerals that lie under the surface waiting to be exploited then Sindh and Balochistan are particularly rich and Punjab relatively poor. Should we stretch the word endowments to include the human resource? If that is the case then each of the four provinces have different kinds of human endowments, each with a different potential.
The word endowments should also perhaps include geographic location. If that is the case then each of the four provinces have different positional advantages. In that case, it is interesting to note that all the four provinces have international borders — the Punjab and Sindh with India, Balochistan with Iran and Afghanistan, and Khyber-Pakhtunkhawa (KP) with Afghanistan and China. Two provinces — Sindh and Balochistan — border the sea. The two other — Punjab and KP are landlocked. I will discuss below what each of the four provinces possess by way of endowments, how these have affected their economic and social development, how they have influenced their view of the world, and how their future could be shaped by their use.
Punjab inherited a vast and intricate system of surface irrigation that had turned its vast virgin plane into the granary of British India. It was in the potential embedded in the vast amount of water that flowed though the six major rivers of the Indus system that the colonial administration in India found a solution to a major problem it faced. The northeastern parts of the Indian colony had suffered from several severe famines that took the lives of millions of people. The British had just recovered from the mutiny of 1857 and they did not want another series of events to agitate the citizens of their expanding Indian empire. Having tried several different approaches, they settled on the one that involved huge investments aimed at turning the Punjab plane into a large food surplus area.
Water brought by well engineered works on the Indus and its tributaries quickly increased the output of food in the newly colonised lands. Since these surpluses had to be transported to the food-deficit areas, the British also invested large sums of money in building a network of railways and roads. The strategy worked and for several decades northeast India received large amounts of food from the Punjab.
The partition of the subcontinent need not have disrupted Punjab’s economic links with India’s food-deficit provinces and its industrial belt. But that happened largely because of the actions taken by the new government in India. The Indians, through a series of actions, sought to show Pakistan that it was a mistake for a significant number of Muslims to leave India. The Pakistani reaction was based on the assertion of the rights of a newly formed state and to convince India and its own citizens that the pursuit of the demand for a separate state for the Muslims of British India was the right way to proceed.
These were not the right choices to make. The series of actions and reactions led to the severance of the Pakistani economy from that of India. Most of the fault lay with India that took a number of aggressive steps in the area of trade. These led to the detachment of Punjab from the Indian economy. Had that not happened, what is now Pakistan’s Punjab would have remained primarily an agricultural economy supplying various items of food to the Indian population and industrial and various raw materials to the industries in India. An economy based largely on agriculture is not necessarily inferior to the one that draws its strength from manufacturing or from modern services. Denmark and the Netherlands, for instance, are more economically and socially developed than many parts of industrial Europe.
The Punjab’s other endowment was the skill base of its population. The small towns and medium-sized cities situated along the famed Grand Trunk Road had well-established small metal working industries at the time of independence. These supplied manufactured products for everyday use, as well as parts and components for large industries. The area that has come to be called the ‘Golden Triangle’ — it includes the cities of Gujranwala, Gujrat and Sialkot — could have played a much more important role than it did in developing the Pakistani industry. The small manufacturing concerns located in the triangle could have created supply chains for large industries in East and South Asia.

Looking at today’s Punjab from the perspective of its initial endowments suggests that the province could have made better use of them than it did. Sometimes it was forced into other directions by the circumstances over which its policymakers did not have any control. At other times, it took a different route by choice. The results would have been more satisfying if the province’s rich endowments had become part of a well thought-out development strategy.

[URL="http://tribune.com.pk/story/489951/punjabs-endowments-and-economic-development/"]http://tribune.com.pk/story/489951/punjabs-endowments-and-economic-development/[/URL]

Cute Badshah Wednesday, February 06, 2013 10:14 AM

Governance woes in Balochistan and K-P
 
[B][CENTER][U][SIZE="5"]Governance woes in Balochistan and K-P[/SIZE][/U][/CENTER][/B]

Published: January 20, 2013

If any evidence was needed to demonstrate that Pakistan’s two relatively backward provinces — Balochistan and Khyber-Pakhtunkhwa (K-P) — were in that situation on account of poor governance, it came on January 13. On that day, President Asif Ali Zardari exercising “the powers conferred on him by Article 234 of the Constitution” imposed governor’s rule in Balochistan. Only time will tell whether that action will bring stability and good governance to that province. Deprived of both for decades, Balochistan and K-P, the former’s neighbour, have not been able to exploit their enormous mineral endowment for the benefit of their deprived citizenry.
While some of the mineral wealth, such as the large natural gas deposits found in Balochistan’s Sui fields, has already contributed significantly to Pakistan’s economic growth, several other remain on the books of geologists. A couple of years ago, America estimated the value of Afghanistan’s mineral wealth at more than a trillion dollars. This has relevance for Pakistan since mineral seams don’t stop at political borders. Moreover, the Chinese have been involved in the exploitation of extensive copper deposits in Balochistan. However, in early January, the Supreme Court stepped in to void a major foreign contract aimed at exploiting the Balochistan’s rich copper and gold deposits. The Court said that the contracts were drawn up in total disregard of the Constitution. This was one other evidence of poor governance blocking economic development in this part of Pakistan.
Present in K-P is another kind of mineral wealth. In a report, prepared by the Asian Development Bank a few years ago, it was suggested that the tribal belt straddling Afghanistan and Pakistan has large deposits of marble and other semi-precious stones. Some of these are being exploited but not in the most productive way.
It will, of course, take a great amount of investment to reach these resources. An extensive communication and transport infrastructure will have to be built to access them and to take them to the processing and consumption centres. In most cases, these types of investments are made by the state, which then attempts to recover some of what it has invested by selling leases to the areas where minerals are believed to be present. The Pakistani state, however, is financially weak and may not be able to make the needed investment. It may have to rely on external capital. However, a very difficult security situation may even prevent such an arrangement from materialising.

By intelligent strategising, the Pakistani state may be able to simultaneously address two problems it faces in these two provinces. One reason for the persistence of insurgency in Balochistan is the ability of the province’s tribal chiefs to satisfy their material ambitions while creating a deep resentment against the state. The bulk of the royalties paid by Islamabad for bringing gas out of the ground in Balochistan have gone into the pockets of a small group of people who have then used the control they have over the tribal people to convince them the state has indulged in predatory behaviour.

One way of dealing with this situation is to take out the tribal chiefs from these transactions. Agreements with the companies invited to work on the mineral deposits should be concluded in a totally transparent way. The proceeds from the sale of leases or the royalties paid by the firms should be deposited in a Fund for Future Generations (FFG). The FFG should be professionally managed and its proceeds should be used for developing the relatively backward human resource in these provinces.

In sum, the country’s two poorer provinces have rich endowments that could relieve them of their relative backwardness. But that would need good governance and state involvement. It will also require a significant improvement in security so that foreign capital and expertise can be used to fully exploit the immense wealth that lies below the surface in the two areas.


06:31 PM (GMT +5)

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