Saturday, January 29, 2011

Pakistan - South Asia's sick man

Pakistan - South Asia's sick man

Today, Pakistan is South Asia’s sick man. This year – the financial year ending on June 30 – if the Pakistani economy grows at all, the rate of increase will be no more than the rate of growth in population. This means that there will be no increase in average income and, for most of the population, income per head will decline. This will add another 10 million to the pool of poverty, bringing the total to over 70 million. In the immediate future, the national output is likely to increase at a rate less than one-half of that expected for Bangladesh and one-third of that projected for India.

I pointed this out to Pakistan’s President Asif Ali Zardari in a recent meeting. He responded by saying that by comparing the performances of India, Bangladesh and Pakistan I was comparing apples and oranges. India had had a democratic system of government for more than 60 years and Bangladesh had been under democratic rule for a longer period than Pakistan. He said he had inherited a damaged economy and a dysfunctional political system from a military dictator. His government’s first priority was to provide the country with a political system that was fully representative of the wishes of the citizenry.

My purpose for bringing to the attention of the Pakistani president the divergent tracks being followed by the major economies of mainland South Asia was to suggest that there were public policy lessons to be learnt from the development experiences of India and Bangladesh. However, upon reflection I thought that the president was raising a valid point: the importance of a democratic system for sustained economic development. One thing that stood out in India’s case – and to some extent also in the case of Bangladesh – was the continuity in the making of economic policy. In a democratic system policy makers would not be allowed to make sudden changes in the direction of policy unless it was warranted. The Indian electorate punished Indira Gandhi when she put the country under an emergency. It rewarded the Congress party when it gave up, during a period of deep financial crisis, the discredited “license raj” in favour of a more open economy. In Pakistan, however, the roller coaster political ride – alternating between civilian and military rules – had also resulted in wide swings in the economic priorities pursued by those in power.

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