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Debt trap—II

In Pakistan, however, industry/value addition is relegated to secondary position in reward to investment in real estate, official business sector is extractive thus the very model of Pak economy is flawed and not pro- economic growth which needs to be redirected as pro- industrial base with value-addition and creation of export surplus for which blue-prints are available.

It is established by credible studies that economic prosperity depends above all on the inclusiveness of economic and political institutions and the Pak governing and economic models being extractive have resulted in an elite resource capture of up to USD 17.2 bn equivalent to 6% of the GDP amounting to more than USD170 in ten years as per UNDP report (2017-18). In fact, ours is more a case of state capture than that of elite capture where a small group of people influences decision-making processes of the state for personal gains and rules are made for the powerful. Thus the Pak model disenfranchises the common man from capital stock and it creates a rentier class with easy money that propels demands for imported/ luxury goods creating false impression of prosperity. This prevalent state capture has to end to prevent going the way of Sri Lanka/Lebanon/Venezuela; and no prime minister installed under the present system can reverse the state capture in vogue which all the more makes proportional representation an unavoidable option for Pakistan to adopt.

Moreover, Pakistan is economically dysfunctional because its policies are formulated without undergoing the prescribed process of public policy formulation. The public policy process requires passing through a sequence in the minimum of four phases: which are agenda setting, formulation, implementation, and evaluation of which non-official outside expert input/vetting and policy audit is an integral part.

Pak economic policies are framed without the process of public policy formulation thus are rigged in the jargon of political economist R. Reich being interest driven/ prone to powerful group pedaling. Pak independent power policy was rejected outright by the Asian Development Bank (ADP) as per its Study (Yun H KIM Report No.66). IPP policy of 1994 was termed unaffordable by ADP but this report was ignored and Pakistan today is facing an unaffordable energy sector with circular debts of more than Rs 2.5 trillion. Similarly, the foreign direct investment policy is without any precondition of export while export up to 50 to 85% for FDI units is prescribed in other countries. In the Ayub era, Pakistan surrendered 3 rivers to India without any ecological study, which has converted Pakistan into a food-deficit country and this is the case on and on. Thus, Pak policies framed non-professionally are rigged and a sure recipe for economic meltdown which ordains adoption of prescribed public policy formulation process across the board.

Further, the World Development Report concludes that “states run on meritocracies have higher rates of economic growth.” Studies covering up to 52 countries (Dahlstrom) & others hold that meritocracy works to reduce corruption, better public financial management and higher economic growth of which Singapore is just one example. Pakistan is not run on meritocracy but it is based on quotas/cronyism. Pakistan is an anti-thesis of Macaulay who recommended meritocracy for the subcontinent. The post-1857, recruitment to the ICS was on merit and was called ‘the steel frame of India. The ICS Cadre inherited by Pakistan was the backbone of development of the first two decades. Pakistan is suffering from “poor grasp of basic economic issues” by high level government officials’ (Paul Krugman). The fall in capacity and quality of the available high level official cadre has promoted financial mismanagement/corruption and thwarted growth. Even in India there are 27% reserved seats at the lower levels and merit at the central higher cadre, why it cannot be so in Pakistan and the decision making positions need to be filled purely on merit.

The mounting Pak public debt or poverty are not the root cause but are symptoms. These symptoms have the root cause in the forbidden Pak governing/economic models and lack of meritocracy which ordains basic remodeling of the system and adoption of proportional representation .These reforms are unavoidable. There is, therefore, the need for a national government formation as this reform agenda cannot be undertaken by any cabinet installed under the present system.

Muhammad Afzal, "Debt trap—II," Business recorder. 2023-05-28.
Keywords: Economics , Real estate , Economic growth , Political institutions , Public policy , Development Bank , Pakistan , Sri Lanka , Lebanon , Venezuela , ADP , ICS , GDP , UNDP

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