Suchergebnisse

It is always a pleasure for me to participate in these annual
meetings. The knowledge and the talent displayed are immense. The
quality of discussion is high. I had never thought however that I would
have the honor of delivering the Aalama Iqbal lecture. To prepare for
this lecture I read extensively from Iqbal's poetry. Of course I read in
translation, but even so I was overwhelmed by the beauty of the ideas
and the expression. My search for an apt couplet or set of lines for
this paper was in vain. Iqbal was speaking to his people and although he
was expansive in his view of society, it is still not meant for me to
carry the word of Iqbal to you. Nevertheless I do display at the
beginning of this paper three lines from Iqbal. He is clear on the
importance of doing for oneself and for ones country. At least in the
modern world ones efforts are so much more productive if government
provides a favourable environment for individual effort. And he would
embrace the brotherhood of mankind, leaving some potential for us to
help each other. He was very clear that learning from the West was
desirable, and he was very selective about that—science and technology
in particular. My paper is about what government must do, and
specifically the government of Pakistan must do, to create an
environment in which not just a few gather dew but in which all people
gather dew. As soon as ones concern encompasses the bulk of the
population food security comes to the fore. My paper can be seen as
addressing how all rural people can gather the dew. It has a prominent
place for science and technology.

It has been evident for some time that Pakistan's debt burden
is extremely onerous. The danger of external debt default first emerged
in 1996 towards the end of the second Benazir government. Following the
nuclear explosions by first India and then Pakistan and the subsequent
imposition of economic sanctions by the Western countries in mid-1998,
Pakistan froze the foreign currency deposits, a major source of balance
of payments financing in recent years, and went into a technical default
on external debt. Following a fresh agreement with the IMF in January
1999, Paris and London Clubs provided substantial debt relief in the
form of rescheduling of debt payments due in 1998-99, 1999-2000 and the
first half of 2000-1. Despite debt relief, the burden of external debt
remains extremely heavy and the danger of default has not disappeared.
In any case, the access to international financial markets has been
greatly curtailed, if not eliminated, especially because The Paris Club
has applied the 'comparability of treatment' to claims of private sector
investors. On the domestic side, the heavy burden of servicing public
debt has made the much needed fiscal adjustment both difficult and
disorderly. The rise in interest payments from 2.2 percent of GDP in
1979-80 to 4.9 percent in 1988-89 and to the peak of 7.3 percent in
1998-99 made reductions in fiscal deficit hard to achieve. As interest
payments now account for over 45 percent of government revenues, the
fiscal deficit reduction has come mainly at the cost of development
spending. Clearly the debt overhang is a major factor in the decline in
the investment rate to 15 percent of GDP in 1998-99 and 1999-2000, the
lowest level in more than two decades. Unless the debt burden can be
brought down to more manageable levels, macro-economic management will
remain problematical and growth prospects will remain
clouded.

Pakistan has been facing a deep-seated economic and financial
crisis and seemingly intractable governance issues for the last few
years. Factors such as international sanctions and global economic
slowdown, which have worsened Pakistan's economic difficulties, were
beyond Pakistan's control. But by and large, the country's economic and
financial difficulties are the result of economic mismanagement in key
areas over long periods. Bad governance, as reflected in widespread
corruption and poor delivery of public services, and especially poor law
and order have given birth to a crisis of confidence in the state. It is
argued here that despite this scenario, a long and arduous process of
building institutions, setting the policies right, and enforcing a
rule-based governance stressing both merit and accountability can put
Pakistan back on the road to shared prosperity. Resolving financial
problems, accelerating demographic transition, exploiting tremendous
agricultural potential, improving both availability and quality of
education, increasing competitiveness and bringing about structural
change in exports and industry, and reforming the government are crucial
policy actions that can help shape a better future for the country and
end the economic drift.

In some ways, Pakistan's economic growth since 1947 has been
remarkable. The country's economic viability was considered, in some
quarters,1 in serious doubt at its emergence, but it has managed,
despite a quadrupling of the population, to bring about significant
improvement in the average living standards. Per capita GNP growth, on
average around 2 percent per annum over a long stretch of nearly fifty
years, has been the best among countries of the subcontinent. This
growth has meant an increase in average income of about 150 percent over
1950–96. But Pakistan, like many other developing countries, has not
been able to narrow the gap between itself and rich industrial nations
which have grown faster on a per head basis. Also, Pakistan has lost
substantial economic ground to the rapidly growing economies of East
Asia notably China, South Korea, Thailand, Malaysia and Indonesia. In
1960, South Korea's per capita income was only marginally ahead of
Pakistan's. In the short period of one generation, Korea had an income
level which on purchasing power parity basis five times that of Pakistan
in 1995. On the same basis, Thailand and Malaysia enjoyed a per capita
income advantage of 200 to 300 percent over Pakistan (Table
2).

This study seeks to analyse developments in Pakistan's balance
of payments during the period 1948-60. The first section attempts to
give a definition of the payments problem and briefly discusses the
various causes of balance of payments disequilibrium in the light of the
accepted theory. Against the theoretical background thus provided,
Sections II to VII review the major phases in Pakistan's balance of
payments and highlight developments. The final section summarises the
main conclusion emerging from the study.

This paper is divided into four sections. The first provides a quick overview of the current political and economic situation, focusing in particular on the stagnation of growth and deepening macroeconomic imbalances, and a fast approaching balance of payments crisis. The second section focuses on ways to improve macro-economic balances especially public finances not only by increasing revenues but restructuring expenditures including reductions in subsidies to the non-poor and increasing the effectiveness of public spending. The third section focuses on critical elements in reviving growth. The paper argues for a comprehensive growth strategy which focuses on governance as a central issue. Reversing the decline of public institutions and improving the quality of governance will provide confidence in the country's economic future and will result in increasing domestic investment. Other elements of the strategy must involve improving the energy situation; correcting the long neglect of exports and using international trade as a driver of growth (including opportunities that may become available by the intended normalization of trade with India); reversing the decline on growth rate of agriculture both by supporting diversification in the cropping pattern; processing of agricultural products, and more economical use of inputs (especially water); a new push on human development including quality of education in public schools, skills training and a new emphasis on adult literacy; and, a new compact with the private sector that phases out economic rents, reduces the burden of unnecessary or ineffective regulation not excluding labor legislation, and strengthens incentives for investment and productivity improvements especially in moving up the value added chain. Finally, the fourth section presents a summary of key actions that government could take along with a timeline for implementation.

Hewlett, Sylvia A.: The cruel dilemmas of development: twentieth century Brazil. - New York/N.Y. : Basic Books, 1980 + Korea: policy issues for long-term development / Hasan, Parvez ; Rao, D. C. (Eds.). - Baltimore/Md. : The Johns Hopkins University Press, 1979 + Griffin, Keith ; James, Jeffrey: The transition to egalitarian development: economic policies for structural change in the Third World. - New York/N.Y. : St. Martin's Press, 1981