Why Pakistan Lost Out

A respected economist unravels the failure of the country’s institutions

Written by Khaled Ahmed | Updated: April 30, 2018 12:21:32 am

State Bank of Pakistan governor, Ishrat Hussain’s book bares warts, before setting excessive pessimism right.

At the Lahore Literary Festival on February 28, State Bank of Pakistan governor, Ishrat Hussain, introduced his new book, Governing the Ungovernable: Institutional Reform for Democratic Governance. The book bares warts, before setting excessive pessimism right. Accepting that the generals ruling Pakistan did better in economic matters at times, Hussain faults Zia-ul-Haq and his Islamisation for negating the positive achievements of General Ayub Khan: “He spread the Kalashnikov and drug culture that has nurtured ethnic and sectarian violence throughout the country, the mushrooming of illegal and parallel economic activities such as smuggling of arms and goods, and promotion of Jihadist parties and elements.”

The Z A Bhutto regime — which Zia overthrew — prepared the pitch for the General. While initiating his nationalisation drive, Bhutto did not scan the crises dogging the already collectivised states. But Zia didn’t set things right either haunted as he was by the Bhutto Case and involvement in the Afghanistan jihad. He also had a protectionist finance minister, Ghulam Ishaq Khan. After Zia’s death, Pakistan was overtaken by the now-familiar routine of toppling governments. Hussain argues that in the decade of the 1990s, the boom years of the Asian economies, when India and Bangladesh broke through to their high growth rates, Pakistan lost its way and is still groping.

He notes the rise of the middle class as Pakistan rallied economically. Between 2001 and 2013, Pakistanis spending $4 to $10 per day per person, joined the middle class, forming 42 per cent of the population of Pakistan. This accounts for the rising conservatism in Pakistan, an aspect examined in the book. The sharp reduction in poverty in 2001-16 has, however, not been paralleled by efficient tax collection, which remains abysmal, “informal economy being 91 per cent of the formal economy in 2007-08”.

The book describes the mushroom growth of madrasas leading to obscurantism and violence. The state was more inclined to favour the narrow worldview of the madrasa than the schools it ran or private sector schools. Politicians who announce doing away with “English-medium” O-level institutions have no regard for the job market that regularly rejects the ideologically acceptable products. The book asserts: “Over the past three decades, intolerance and violent reactions to dissent and differences of opinions, particularly relating to issues that have to do with religion, have displaced class, caste, and other divisions and occupied the space of national discourse.”

While the political parties wrangle they choose nonetheless to worsen the domestic conflict by indulging their phobia of the US that is supposed to “regularly form and remove governments in Islamabad”. The national pessimism decides if the economy is functional or not: “If Pakistan records a growth rate of 7 per cent or a decline in the level of poverty, these happy outcomes are attributed to a fudging of figures but if the same official data shows an inflation rate of 10-12 per cent, these figures are readily believed and used as a stick to beat the government in power”.

Pakistan thought of democracy in 1947 and gave birth to the Objectives Resolution; the Arabs thought belatedly of democracy in the 21st century and their Arab Spring has turned out to be an internecine Armageddon. Hussain leans on Gunnar Myrdal to explain this Muslim harakiri. “The Pakistani societal mindset has to change from personalising the impersonal, blaming others, conspiracy theories, double-think, hypocrisy; compartmentalisation of beliefs and actions, and the strongman syndrome; the belief that there is a ‘fix’ for everything: the use of force, right connections, or money, to one which encourages work ethic, doing their jobs professionally, taking initiative and responsibility for their actions, entrepreneurship, and a go-getting culture,” Hussain writes

Punjab is the only province in Pakistan governed nearly normally. The percentage of approval rating for Khyber-Pakhtunkhwa is 38 per cent, while Balochistan and Sindh languish at 26 and 25 per cent respectively. The army, despite criticism, is the most trusted institution in Pakistan with an approval rating of 76 per cent, followed by the Supreme Court/High Court (62 per cent). About the lower courts the less said the better. The book removes the doubt that the army eats up above 3 per cent of the GDP. The 520,000-strong force used up 3 per cent during 1990-2015 when the GDP growth rate had rallied. The globally accepted yardstick is that anything above 3 per cent starts hurting the people the army is supposed to protect.

The book concludes: “The perennial problem of Pakistan has been its failure to develop functional and accountable institutions of governance and service delivery in the civilian side.”

The writer is consulting editor, Newsweek Pakistan

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