Political economy and reforms

Political economy is a very byzantine subject. The interplay of actors and multidimensional behaviour of factors make it complex.

Political economy in Pakistan revolves around the goal of power grabbing, at any cost. Power is a desired tool to achieve two specific objectives – how to extract benefits and how to distribute benefits among affiliates and cronies.

Regrettably, reforms in Pakistan have become subservient to the political economy of power grabbing. Alliances are built to secure power to control benefit distribution.

International financial institutions (IFIs) are well aware of the situation that allows them to secure their own interests. In the name of assistance for reforms, they bring their own conditions and try to infuse them into the national system.

For instance, IFIs like the International Monetary Fund (IMF), World Bank, etc have been working with Pakistan since the 1960s to put the country on development path but still the country is struggling to achieve higher economic growth.

The decade of 1960s is termed an era of development but no one talks about the inequality caused by that period. The IFIs-induced model of development helped in the concentration of wealth in a few hands.

The next generation of reforms was presented to Pakistan in the late 1980s. IFIs advised that if the country wanted to grow and develop, then it would have to follow new types of reforms. These reforms, however, sparked an entirely new set of problems.

Since 1988 Pakistan has been on the path of reforms and with that the economy and governance have deteriorated. Successive governments have been trying to apply innovative tools but with no meaningful results.

A major reason for this failure is the flawed model of reforms, which does not take into account the ground realities.

Developed countries also adopt the same strategy. They engage their own organisations and think tanks to advise assistance-seeking nations. This way, they portray they are providing assistance but in reality they invest in their own people.

A major chunk of assistance goes back to the developed states in the form of consultancy fee, purchase orders and jobs. However, the consultants engaged by the organisations have least understanding of the issues faced by the host countries, which most the time leads to failure of the assistance programme.

This has resulted in numerous challenges for Pakistan. Its economic and social development indicators show a dismal picture. The failure to introduce people-centric reforms is the real contributing factor to poverty (39%), food insecurity (58.5%), low education (24 million kids out of school) and the lack of livelihood opportunities (rising unemployment).

Resource distribution

We hear a lot about abundance of resources in the country but seldom talk about equal distribution of resources.

The country’s elite are on the path to squeeze livelihood opportunities and capture all resources. In recent years, they have tried to enhance the scope of their influence and introduced new means of capturing resources.

For example, there is a surge in the “post-retirement enlightenment syndrome”. The elite serve the national bureaucracy in their entire career and at the time of retirement they start talking about reforms and good governance.

Now, they want to advise the government but during their active service they do not follow reforms. They are also venturing into new sectors or services, which have nothing to do with their expertise or professional experience.

A new trend is emerging under which the elite are establishing non-government organisations. Except for a few, we can find numerous examples where the elite use such organisations for their personal benefit.

These actions are creating an entirely new class of aggrieved and unemployed people, especially the educated youth. The youth, equipped with modern tools, can be exploited on a wider scale.

Hence, Pakistan needs to learn from the history and work on reforms, which can deliver fruitful results. Reforms, which defy the existing political economy of power, bring common people into the mainstream. For that purpose, Pakistan will have to take a few steps.

First, break the nexus between the power and reform structure as Pakistan needs reforms according to the ground realities.

Second, stop listening to the post-retirement reformists and do not hire them for undertaking reforms. Third, listen to national experts as they have a better understanding of the ground realities and can help to develop a programme which can cater to needs of the country.

Fourth, talk to and work with real stakeholders eg farmers as currently they are being represented by the feudal lords who ignore the problems faced by small growers.

Fifth, all reforms in Pakistan must analyse the nexus between the political economy and power grabbers. It will help to propose better reforms and better tools of implementation.

Lastly, we need to understand if we fail to introduce people-centric reforms, then we will have to face the worst impact. The present government can change the existing system and for that purpose it needs to show wisdom with special focus on ordinary people.

The writer is a political economist



Published in The Express Tribune, October 26th, 2020.

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