Tag Archives: Pakistan
The Limited Access Order (LAO) conceptual framework is an excellent way to understand why developing countries work the way they do, analyze their political and economic dynamics, and formulate policy ideas appropriate to their context. Its focus on power, violence, rents, and elite bargains provides far greater explanatory and predictive power than the standard template that uses developed countries as a model for how countries ought to work. As such, everyone in the development field working in a policymaking role should make use of it.
No one, including the state, has a monopoly on violence . . . An LAO reduces violence by forming a dominant coalition containing all individuals and groups with sufficient access to violence . . . The dominant coalition creates cooperation and order by limiting access to valuable resources – land, labor, and capital – or access [to] and control of valuable activities – such as contract enforcement, property right enforcement, trade, worship, and education – to elite groups . . . The creation and distribution of rents therefore secures elite loyalty to the system, which in turn protects rents, limits violence, and prevents disorder most of the time. (more…)
Like many struggling countries, Pakistan’s two most critical problems are feckless leaders and a feeble state. Can donors do anything to help get such countries’ political economy moving in the right direction?
I recently convened a working group of leading Pakistani development professionals and outside experts at the Global Economic Symposium (GES) to discuss just such this question.
Many fragile states suffer from incoherent legal systems. Whereas in developed countries, one single system exists and is effectively enforced, in fragile states multiple systems work side-by-side, each weakly enforced, and often operating in contradiction with each other. Creating a unified and robust system of law is one of the biggest challenges these countries face.
In most cases, this incoherence is a direct product of colonialism. One system, often with the greatest relevancy to local populations, has roots in the precolonial system of governance. It may have evolved a lot since then, but is still based on local circumstances and institutions. The state, itself a product of foreign rule, follows another system, based on Western legal tradition, imported from abroad. Neither is consistently or equitably implemented. Corruption distorts outcomes. Officials (whether those of the state or local leaders) lack training. Favoritism is common.
In some places, religion comes into play with its own system (such as Sharia), creating three legal layers, each with its own logic. Outcomes and incentives can be widely divergent. Local systems may also vary tremendously by location, creating a complex mosaic of different mixes of different systems depending where in a country one is. (more…)
Quite a number of books on Pakistan have been published in recent years. The best for policymakers working on development issues in the country is Pakistan: Beyond the ‘Crisis State’, edited by Maleeha Lodhi.
Written exclusively by leading Pakistanis, it looks beyond the headlines that dominate Western perceptions of Pakistan in examining the country’s myriad challenges. Individual chapters focus on the state, energy, economic management, competitiveness, education, ideology, the civil service, the army, and relations with Afghanistan and India. It is comprehensive, going well beyond what other books cover and in greater detail. (The downside of this approach is that some of the chapters are too policy oriented for the average reader.) (more…)
Cross-posted from Global Dashboard
Most people in the West believe that Pakistan is an unstable country on the verge of imminent collapse or an explosion of violence. It is consistently portrayed—by politicians, policymakers, and the media—as the most dangerous and dysfunctional state in the world, struggling with terrorism, an out-of-control military, and interreligious conflict.
And yet, Pakistan is included on Goldman Sachs’ list of the next eleven (N-11) most important emerging markets. Although it has (along with Nigeria and Bangladesh) “broad and systematic issues across a range of areas” that will prevent it from fully delivering on its growth potential, the country’s large population (it currently has 180 million people) assures its inclusion. Indeed, within a generation, Pakistan will have the fourth largest number of people in the world, behind only India, China, and the United States, and be a market too significant to ignore. (more…)
Homegrown nongovernmental organizations (NGOs) play crucial roles providing social services to the poor, holding governments accountable, aggregating the political power of the disenfranchised, and helping to shape public policies. Their importance to development is well known.
But what explains the reason why some developing countries possess so few independent organizations while others have a multitude?
Take Pakistan for instance. Whereas in Bangladesh, the former East Pakistan, NGOs have played such a prominent role that they have supplanted the state in some crucial areas, in Pakistan they are far less influential. Despite having 180 million people, the latter has relatively few important NGOs, think tanks, and independent monitoring organizations (IMOs), as pointed out by former ambassador to Pakistan William B. Milam in his book Bangladesh and Pakistan. Despite a generally positive government attitude (at least towards domestic organizations) and much growth in recent years, the number of important institutions pales in contrast to Bangladesh’s total. (more…)
Pakistan has been caught in a trap of poor performance, [but] a crisis, by any imagination, would look far worse than the present economic indicators reveal.
Those who have been hammering the ‘collapse and crisis’ mantra are not wrong in citing many of the statistics they do. The fiscal deficit is high and growing, inflation seems to be stuck at around 14 per cent, investment is low, poverty has grown over the last five years (though less than expected), and so on. Clearly, these indicators reveal an economy which is performing poorly.
However, these economists — and many non-economists who know nothing about how the economy works but yet hold forth — have ignored numerous factors which have prevented a crisis situation from emerging.
Two speculative reasons requiring a much more rigorous analysis can only point towards answering these questions. While ideas about the informal sector or the black or underground economy abound, there has been little research done on how Pakistan’s wide social and economic networks allow families and individuals to live in worlds which are often not on the economists’ map. Similarly, what has also not been analysed in recent years is how remittances have allowed numerous families to weather the storms created by the economists’ statistics of doom and gloom.
Many economists, even those who have been around for many decades, fail to understand how Pakistan’s economy really works, and why it continuously avoids any real crisis. They use a few select facts from the data to make their point, but this reveals only their own lack of understanding and ignorance about the actually existing economy.
While the oft-repeated cries of ‘collapse and crises’ now sound terribly boring, what would make for a more interesting and relevant analysis is why and how Pakistan manages to avoid an economic crisis. The truth is, really, we don’t know enough.
The two issues he mentions — the informal economy and remittances — play important roles influencing the robustness of many economies worldwide, but are not well understood. Many poor people somehow survive, and even see improvement in their lives despite statistics that suggest otherwise. Research and hard data often fall short of explaining what actually is going on.