The question of the effectiveness of a democratic system in Pakistan has raised its head once again. Subversive voices are going as far as to fondly recollect the heady days of political and economic stability under military regimes. The contrarians, however, plead for persisting with the oft-maligned democratic set up. Democracy’s value as a purveyor of human rights, social justice and freedom of expression is recognised world over, but can it deliver economic progress to a diverse and divisive nation? This debate is not going to go away any time soon. It is, therefore, worthwhile to evaluate the economic performance of the country during democratic and military regimes.
In terms of macroeconomic performance, the country has fared considerably better during military rule. Economic growth during military regimes averaged 6.1 per cent compared to four per cent during civilian regimes. Just to comprehend the quantum of this seemingly small difference, the flood of 2010 that affected two-thirds of the country’s districts, is estimated to have affected GDP growth by two percentage points. Although all three sectors of the economy — agriculture, industry and services — performed better during military regimes, the industrial sector has been the biggest beneficiary of the military muscle and has recorded twice as much growth compared to that achieved under civilian rule. Similarly, the current account balance has historically been healthier during military regimes.
The effect of the stronger macroeconomic performance during military regimes did, in fact, translate into something more meaningful for ordinary citizens. The average level of inflation during civilian rule has been almost double that under military rule. However, the percentage of population living below the poverty line did not differ significantly.
On the matter of resource generation (tax as a percentage of GDP), civilian governments have posted better results, which is contrary to the general myth perpetuated by opinion-makers. In spite of better resource generation, the real problem arises due to resource utilisation where the the poorly-disciplined approach of civilian governments led to higher non-development expenditures.
Military regimes have usually been ushered into the country on the pretext of out-of-control corruption under civilian leadership. Transparency International’s Corruption Perception Index, although not a tool for systematic temporal comparison, is the most widely accepted metric to measure the level of corruption. Pakistan’s scores on the corruption index during military and civilian governments are more or less the same. This goes against the commonly-held belief that matters of the state are more susceptible to financial wrongdoings during civilian rule.
The metrics discussed above are important in the sense that they provide an insight into the economic performance of the country. Yet, the area that is truly representative of a government’s priorities is social sector development. Expenditure on public health and education programmes during civilian rule has been slightly higher compared to that under military rule. However, irrespective of the form of government, public expenditure on health and education remains very low compared to international benchmarks.
The efficiency and organisation of the government apparatus during military rule has certainly brought dividends to the country on the macroeconomic front. It can, however, be argued that this is partly due to the stability and longevity of the military tenures; a luxury not afforded to the civilian leadership in the country. Owing to the nature of dictatorial rule, one would expect the military leaders to initiate politically unpopular, yet economically desirable projects — a difficult proposition in democratic regimes that are susceptible to political pressure of allies and interest groups. Furthermore, the effect of economic performance during military rule did not filter through into the civilian rule indicating that the performance was an anomaly rather than a structural trend. The biggest insight of political priorities lies in the social sector, which has seen very little credible development irrespective of the identity or form-factor of the government in power.
The country’s current misfortune is due to both the civil, as well as the military leadership, who have demonstrated no appetite for sustainable change, economic or social. Alternating between the two power groups has not helped either. Although democracy is the way forward for the country, it needs an agreement on basic framework for economic and social management. The onus is on the mainstream political forces to define the fundamentals of a sustainable and effective framework for Pakistan’s economic management. This is a prerequisite to creating future dividends, both at macroeconomic front and for the people of Pakistan.
Published in The Express Tribune, February 14th, 2012.
COMMENTS (11)
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ
1731329418-0/BeFunky-collage-(39)1731329418-0-405x300.webp "article")
The 40 odd years of military rule that Pakistan has been subjected to since independence has not translated into any structural gains in the economy that can enable sustained, long-term growth. So the measures of economic performance that you use (inflation, gdp growth) have been transient and driven by external factors (such as aid, remittances, etc), military expenditures and salary hikes and consumption. A useful indicator is savings and investment ratios -- these have been abysmal throughout Pakistan's existence.
Has a military government succeeded in opening up a whole new sector of the economy that didnt previously exist? No. Military governments may have established bakeries, wedding halls, fertilizer plants and trucking businesses -- but these have just replaced private sector enterprise and not been a new direction for Pakistan's industry. On the other hand, civilian governments have been consistently destabilized and none to date has served their full term. So the only conclusion that can be drawn from the analysis is that the establishment's destabilization of civilian governments stunts economic growth and hence the rest of us should get out of the way and let the military run the country. Some of us are taking this a step further and getting out of the country.
Silly me I thought the courts were running the economy/
Very well researched article ... there is definitely a need to agree on fundamentals of economy that should sustain no matter which party is in power.
One important piece missing from this analysis is the huge aid military governments have been able to procure. Zia got the intial $3.2 bln package in 1983 which was a fortune in those days followed up by large fees on supporting the afghan mujahedeen. Mush and Shaukat did the most one-sided renegotiation of debt ever in the history of Usury and also recieved huge largesse. No democratic government has got anything similar to the above.
Nice article. In our recent history, most of the economic reforms came in civilian era (1990s market liberalization reforms). In fact, contrary to expectation, military rulers failed to bring and implement any substantial reforms. Examples are Zia era and Mush era where they rode on substantial foreign inflows and did not undertake significant reforms (power, gas, tax, etc). Whatever we are going through now may have been averted, had Mush government undertook any action then. We all knew in 2002-3 that there will be shortage of electricity and gas in second half of the decade. Issue of political stability is also important as in military era, people know that these guys are here to stay.
I have problem with title you guys selected, autocracy and democracy. There is only autocracy and autocracy in country you can divide it as autocracy lead by military or a civilian autocrat. Second thing we should prefer a autocratic rule lead by civilian, because it is only way out for poor to merge into autocratic economic theater by gaining some political rights. You ignore the foreign aid we received during military regimes, a factors which allowed military rulers to take up some corrective financial measures and bail out poor through subsidies.Here is unconfirmed data figures for comparison of aid during military and civilian regimes your should also consider. http://www.guardian.co.uk/global-development/poverty-matters/2011/jul/11/us-aid-to-pakistan .
All comparisons listed in the article are misleading because we never had,in our entire history,a truly representative civilian set up elected through a popular vote arranged by a clean,independent and fair electoral process.Always vested interests made elaborate and fool-proof arrangements to bring in the type of civilian set up which met their requirements.We are all aware how the current civilian set up emerged under abnormal circumstances through an election which can hardly be described as a normal event.One representative election in our history resulted in splitting the country and an infamous war.I,therefore,do not see any substantial merit in this writing.
You seem to have listed the facts and the differences that both systems have brought upon the country in the past. This is not to say which is better than the other but if we are to see what can be done going forward, where I do believe that democracy is the way to move forward, but a system where there are heirs to political party leadership would hardly be called a democratic system. When the aim of the ruling (as well as opposition) parties is to have equal stakes in a power sharing agreement then such a system would have a different set of priorities other than sustainable economic and social development. I believe that if the common man is getting his basic requirements he would not care if it is an autocratic system or a democratic system. When there are mouths to be fed all such systems become irrelevant for the person that needs to feed.
Great research Tahir and Masroor. I think lack of transfer ability of economic progress from military to civilian era sums up it all...most of the progress that occurred during military rule was shallow (except that of Ayub's tenure) because it didn't build out the economic engine through structural reforms. Furthermore, the costs of their political decisions and institutional atrophy have carried over through decades suppressing macro-economic indicators. So truly, we ended up paying higher costs for that temporary economic growth than is evident from tenure-based metrics.
The GDP seems to be better during military rules vs. civilian rules only because almost all of the military rules from Ayub to fake commando mush, had large infusion of cash by the foreign donors , mostly beloved uncle sam (this includes green flag to international donors by dear uncle sam to lend $$$ to the dictatorial governments). Our economy runs on two wheels, injection of $$ by Uncle Sam and repatriation of $$ from the foolish ex patriots pakistani like myself and others. Without these two, pakistan's economy will be worse than north korea's. It is very disgusting to see that the money sent home by the pakistani abroad are wasted by politicians and useless khakis alike!
How can you compare inflation between periods of military and civil rule when the causes of inflation are not constant over time?
What is meant by: poorly-disciplined approach of civilian governments?
The effect of the stronger macroeconomic performance during military regimes did, in fact, translate into something more meaningful for ordinary citizens -> Given that Musharaf regimes refusal to adjust energy prices in the face of soaring energy prices in 2007 laid the foundation for the "circular debt" and increased government borrowing, comparison based on inflation is impossible. What is meaningful change based on? Stock market and property speculation? Put a mobile phone in everyone's hand?
On the matter of resource generation (tax as a percentage of GDP), civilian governments have posted better results. Well if you argue that inflation is higher during civil rule then tax revenue should increase?
Average GDP growth averaged 6.1%, but what of the quality of that growth? That growth was based on an expansion of consumption.