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Pakistan's Path Ahead

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    Pakistan's Path Ahead

    The path ahead

    By Shahid Javed Burki

    Pakistan was the poorest performing economy in South Asia in the decade of the nineties. That was also the longest period when the country was under the management of popularly elected governments. Four different administrations held office during this period following a series of general elections held in 1988, 1990, 1993, and 1997.

    Two prime ministers from two very different parties subscribing to two very different political philosophies were twice given the responsibility to run the country. Both failed spectacularly. Should we, therefore, draw the conclusion that democracy has not been good for the Pakistani economy?

    Or should we suggest that it was not the system that was the problem but the people who managed it? But then the proponents of democracy suggest that the systems that deserve to go by that description have built-in corrective mechanisms. Bad and incompetent leaders and groups undeserving of broad popular support may sometimes rise to the top but cannot stay there for very long. There is a strong belief that in a democratic system the true worth of the not very desirable people will be exposed sooner or later.

    The system will ultimately cleanse itself. In the process there will be some cost to the society but it is worth paying that price rather than letting the system fall into the hands of those who cannot be removed form the positions they acquire. It is only short-sightedness that leads sometimes to the welcome of those who usurp power. Democratic systems don't suffer from such myopia.

    Or - to continue the argument a bit further - should we look a little deeper into Pakistan's unhappy history and argue that the country's experience in the last decade does not necessarily indicate a negative relationship between the rate of economic growth on the one hand and democracy and the quality of leadership on the other? In fact, those who are troubled by continuous military interventions in Pakistan's politics place on them most of the burden for poor economic performance.

    They argue that had the political parties and the politicians been left to their devices they would have eventually put the country's dysfunctional economic house in order. With the military not giving enough freedom of movement to political regimes, there was never enough time available to them to leave their mark on the economy. As such, according to this line of thinking, Pakistan's poor economic performance cannot be blamed on democracy.

    My own - and I must confess, oft repeated - view is that what Pakistan practised during the nineties was not democracy by any stretch of political imagination. Instead, what we had was a system that was extremely malleable in the hands of crafty, corrupt and selfish politicians. The system proved easy to manipulate and allowed a small group of elites - the country's political establishment - to exploit it to its own advantage. What ensued was a period of extraordinarily poor governance in which political and bureaucratic corruption became rampant and the number of people living in poverty increased exponentially.

    For ten years, the country was not governed according to a system of rules promulgated by the representatives of the people. It was governed according to the will and whims of a few men and women. While few would dispute that Pakistan in the nineties was poorly governed, it still does not establish a case for military intervention in politics.

    This is a difficult argument to settle one way or the other. What is important to contemplate, instead, is where do we go from here. Before answering this question, let us take a look at some numbers and place Pakistan's economic achievement in the context of South Asia. Viewed from that perspective, Pakistan turned out a truly pathetic performance.

    India had the highest rate of economic growth in the nineties - it averaged 6 per cent a year, twice as high as the rate of increase in the first forty years after independence. Raj Krishna, the late Indian economist, once dubbed this anaemic rate of increase in GDP the "Hindu rate of growth". But as a result of the quickened rate of growth achieved after India began the process of reform, the country's economy was 80 per cent larger in 2000 compared to its size in 1990. But India was not the only country in South Asia to outperform Pakistan. Sri Lanka, in spite of the continuing civil war in the country, was the second best performing economy in South Asia. Its GDP increased at the annual rate of 5.3 per cent.

    Bangladesh, with a rate of growth of 4.8 per cent a year came in third. Pakistan's GDP increased at the rate of only 3.7 per cent, slightly more than one-half of the rate of growth in the previous forty years. In 2000, the Pakistani economy was 44 per cent larger than in 1990. Juxtaposing Pakistan's performance with that of India's, we begin to see the cost to the former of the extreme political turbulence that characterized the decade of the 'nineties. While the Indian rate of growth doubled in the nineties, the Pakistani rate of increase declined by one-half.

    But GDP growth rates tell at best one-third of the story. What also matters is the rate of increase in income per head of the population. This, of course, is determined by a combination of the growth of GDP and the increase in population. Of the four large economies of South Asia, Pakistan had the highest growth rate in population - 2.5 per cent a year, compared to 1.8 per cent for India, 1.6 per cent for Bangladesh and only 1.3 per cent for Sri Lanka. In the decade of the 1990s, Pakistan added almost as many people to its population as its entire population at the time of its birth. In 1947, Pakistan had only 32 million people.

    Between 1990 and 2000, the country's population increased from 107 million to 138 million, an addition of 31 million people. Continuing rapid growth in population ate into the little growth in GDP that did take place. Per capita income increased by an insignificant 1.2 per cent a year. On the other hand, the Indian income per head of population increased by an impressive 4.2 per cent a year. This was three and a half times the Pakistani average. In other words, an average Indian was fifty per cent more prosperous in 2000 compared to his (or her) situation in 1990. An average Pakistani, on the other hand, was only 13 per cent better off at the end of the decade compared to its beginning.

    We are still talking about averages. To get the full picture, we should look not only at GDP growth rates and the rate of increase in population. We should also factor in the change in the distribution of income. By some accounts, this worsened in Pakistan in the ten - year period between 1990 and 2000. The result was a sharp increase in the incidence of poverty in the country. By the close of the 20th century, Pakistan had 50 million people living in absolute poverty and their number, according to my estimation, is now increasing at the rate of 10 per cent a year.

    The only comfort Pakistan could draw from these dismal statistics is that even in 2000 it had more equitably distributed income than was the case in other countries of South Asia. The bottom ten per cent of the population in Pakistan had the highest share in total income in the region - 4.1 per cent as against 3.9 per cent in Bangladesh, and 3.5 per cent for both India and Sri Lanka.

    Estimates of the Gini coefficient - the most commonly used measure of income equality or absence of it - suggests the same conclusion. The higher the measure of the coefficient, the less even is the distribution of income. At 31.2, on a scale of 100 to 0, Pakistan had the lowest Gini with Bangladesh at 33.6, Sri Lanka at 34.4 and India at 37.8.

    These numbers suggest that in the nineties Pakistan lost a great deal of economic ground compared to other South Asian countries. There were a number of reasons for this but poor economic management comes out at the top of the list. Whatever the explanation for the sharp deterioration in the way the economy was managed, there cannot be any argument that there is now an urgent need to bring about a radical improvement. This is where the government headed by General Pervez Musharraf could play a decisive role.

    I suggested in the two-part article that appeared last week that President Pervez Musharraf should spend a good part of the time available to him between now and the elections scheduled for October this year on ensuring two things: that Pakistan begins the process of creating a fully representative system of government and that the people should finally begin to be served by a fully functioning state. It is reasonable to ask the following question in this context: Why shouldn't the military government headed by General Pervez Musharraf leave these tasks to the elected officials who will take office following the elections this fall?

    The simple answer to this important question - the one I have already indicated above - is that several times in the past elected leaders have failed to do these two things. There is no reason why they should behave any differently now. If they fail again as they did so many times before, the result for Pakistan will be truly tragic. The result of Pakistan's failure could also be tragic for the world at large.

    The suicide bombing on May 8 that took the lives of a dozen Frenchmen outside Karachi's Sheraton hotel is one horrible manifestation of what awaits Pakistan if its institutional structure continues to deteriorate. That is the lesson we must draw from what happened to Afghanistan in the quarter century following the invasion by the Soviet Union. A great deal, therefore, rides on what I would like to describe as General Pervez Musharraf's Pakistan project.

    That project would have followed a different trajectory had the president been inclined to be more enterprising in his approach. Having gone as far as he did first in October 1999 by throwing an elected government out of office and again in November 2001 by reversing the direction of the country's foreign policy, General Musharraf could have proceeded to totally remodel the political structure. In an earlier article I suggested an elaborate way of how that would have been done.

    I was of the view that it might be appropriate to convene a broadly representative Constitutional Convention to give the country a durable political structure rather than continue to heap the much abused 1973 constitution with more amendments. But that has not happened. Marginal rather than a radical change appears to be the preferred option. However, even within this constrained approach it is necessary to be precise about the direction the political leadership must take once it is inducted into office. What should be done by the Musharraf government in this context is the subject I will pick up next week

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