Suchergebnisse

Pakistan was one of the top 10 fastest growing developing countries between 1960 and 1990 recording an annual average growth rate of 6 per cent. The structure of the economy was also transformed during this period with the share of agriculture coming down from 50 per cent to 20 per cent. The subsequent 25 years have, however, brought about a significant decline in growth rates and in more recent seven years, it has lagged behind other South Asian countries. A combination of political instability and disruption of evolving democratic process, lack of continuity in policies and poor governance have contributed to this outcome. Pakistan has also not utilized its geographic location to take advantage of intra-regional trade and investment. Many promising opportunities were lost due to lingering tension with India. The future potential can only be realized if Pakistan is able to position itself for meeting the future challenges of integration into the regional and global economy, reaping demographic dividends because of youthful population and moving up the ladder of technology. The realization of these goals will depend upon sound macroeconomic policies, strong institutional and governance framework, investment in infrastructure and human development and political stability.

In 1998 I was invited by Dr Sarfraz Qureshi, the then Director
of PIDE to deliver a lecture on "The Political Economy of Reforms: A
Case Study of Pakistan".1 This lecture was subsequently published by
PIDE as a monograph. A year later, in December 1999, I had the honour of
becoming the Governor of the State Bank of Pakistan and actually
participated actively in the formulation and implementation of economic
reforms. During the six year period of public policy making I realised
that my knowledge about the political economy as manifested in my PIDE
lecture was incomplete. The narrative was more complex than I had
developed as an outsider. Now, six years later after my retirement from
the State Bank of Pakistan I again reflected upon this topic as an
observer and analyst rather than a participant. I realised that my
learnings have become much richer by applying these different
prisms—those of an international development economist, a public
policy-maker and now an independent analyst. I am grateful to Dr Rashid
Amjad and Dr Musleh ud Din and their colleagues at PIDE for providing me
this opportunity to share these learning with my colleagues, peers and
other scholars present here today. The political economy of economic
reforms and structural adjustment has become focus of growing attention
in the literature drawing at the inter-disciplinary tools of analysis
and cross-country comparative perspectives. Detailed case studies of
country situations do throw useful insights which are not captured
through cross-country studies. The key question that is explored by this
group of researchers is: if policy and institutional reforms are
associated with high economic pay offs, then why are these reform
programmes not sustained and implemented consistently? Why are they
derailed? I would like to focus the discussion on Pakistan only and
address the following questions:

Governance and Institutions are not ends in themselves but it
is well known by now that good governance and effectively functioning
institutions are required, along with sensible policies and well
designed public investment, to improve resource allocation and
comparative advantage, enhance productivity, facilitate more efficient
markets and distribute the benefits of growth more equitably in any
economy. How do Governance and Institutions interact? Governance refers
to the manner in which power is exercised in the management of a
country's economic and social resources. Good governance requires checks
and balances in a country's institutional infrastructure, such that
politicians and bureaucrats have the flexibility to pursue the common
good, while restraining arbitrary action and corruption. The state's
monopoly on coercion, coupled with access to information not available
to the general public, creates opportunities for public officials to
promote their own interests, or those of friends or allies, at the
expense of general interest. The probabilities for rent seeking and
corruption are considerable

Large scale manufacturing has been the fastest growing sector
in the economic development of Pakistan during the last two decades.
Starting from almost a scratch, this sector has been able to show
spectacular performance in terms of rate of growth. The overall annual
growth rate in West Pakistan during 1960-68 was 11.4%, well in excess of
the target rate of 7.0% laid in the Second and Third Five Year Plans.
The share of manufacturing in the Gross Provincial Product (GPP) of West
Pakistan rose from 12.3% in 1960 to 16% in 1968. Not only has the share
of this sector risen in the GPP but major structural transformations
have also taken place within the sector. Consumer goods industries which
contributed about 76% of the total output in 1954 are no-longer as
important and accounted for only 57 % of the total output in 1968. The
distribution of the fixed assets has also moved in the same direction as
output during this period.

Employment has been one of the major explicit objectives of
all develop¬ment plans in Pakistan. The Third Five Year Plan estimated
[3] that at least 255,000 additional employment opportunities would be
created in West Pakistan in large-scale manufacturing sector. Although
complete reliance on the date reported about employment in the C.M.I, is
not recommended, the orders of magnitude can easily be seen. It appears
from the statistics available that employment in this sector has
increased by approximately 90,000-100,000 only during these eight years.
The average annual rate of growth of employment between 1954-1959/60 was
16.8%, slightly higher than 15.6% annual rate of output growth but this
rate declined to 3.1 % between 1959/60 and 1967/68 while output at
factor cost rose by about 11.4%. The output elasticity of demand for
labour thus works out to be 0.27 for this period. Implicit in these
growth rates is the fact that labour productivity was increasing at an
average of 8 % per year.