On the eve of the third real election

Published: January 27, 2013
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The writer is a former caretaker finance minister and served as vice-president at the World Bank

The writer is a former caretaker finance minister and served as vice-president at the World Bank

On my way from Pakistan to Washington, I had a chance meeting with a Pakistani economist of considerable repute. We met at Karachi airport’s departure lounge. I have known him for years and have highly valued his work on the Pakistani economy. He surprised me by suggesting that the country was in a much better shape than suggested by some of my writings and those of several others who thought like me. He was of the view that the situation did not warrant the kind of pessimism reflected in our assessments. “Macro numbers may look bad but the real economy is doing reasonably well — in fact very well”, he said. Since he lives in Karachi and worries about his own safety and that of his family, he could, therefore, understand why so many people have begun to despair. “When I send my children to school every morning I too worry about their wellbeing. But we should not be overly influenced by the immediate. We should also reflect on the long-term.”

He told me of a recent visit he and some other economists had taken to Faisalabad — arguably the hub of Punjab’s industrial economy — and came across extraordinary enthusiasm about the future of the country and its economy. “The industrialists and traders we met at the city’s Chamber of Commerce were looking forward to the opening of the economy with India. There was nothing but good in that for them and the country”. But it was not only the entrepreneurs operating in large urban centres of the country that look upon Pakistan’s economic future with hope. “The countryside was booming with consumer durables being sold at rates never seen before”, said my economist friend. “I have traveled up and down the country in recent months and seen with my own eyes what numbers don’t tell. The recent commodity boom in the international market place has done wonders for the Pakistani producers in the countryside and also for rural consumers. There is palpable prosperity in the country’s towns and villages”.

This cheerful interpretation of the state of affairs in Pakistan was very different from the gloomy picture being painted by a number of economists, including those of the international financial institutions. The visit to Islamabad of the International Monetary Fund in mid-January made it clear to the authorities in Pakistan that they were not satisfied with the economy’s performance. A number of prior actions would be required before any support could be provided to the country. Which of these two views is right? This is an important question and the answer to it will matter as Pakistan heads for its third real election. Why only the third real when the country has held many more — in 1970, 1977, 1985, 1988, 1990, 1993, 1997, 2002 and 2008? With the exception of those in 1970 and 2008, all the others were deeply interfered with by those who held the reins of power. They were designed and managed to produce the results desired by the establishment. But 1970 and 2008 elections were different. They brought to the surface the forces that lay just below, kept there by authoritarian rulers or by the military. Both sought to impose their will on the Pakistani society.

The coming election will also be a game changer. It will provide answers to the many questions that are being raised about the evolving political and economic orders in the country. Some of the more important ones relate to what has happened to the economy under the current political dispensation. Is Pakistan doing as well as it could or should it do better? Are all segments of the society and all areas of the country benefiting from the small increase taking place in the gross domestic product? Is the quality of governance satisfactory or is extensive corruption slowing down the economy and worsening the distribution of income?

Once — or if — the political structure becomes accommodating, it will also change the economic landscape. While there may be differences in the way different people see how change is affecting many segments of the population, few would argue that the present political structure serves mostly those who occupy the top rungs of the economic system. For the last five years, Pakistan has had a representative form of government but the representatives people have sent to the various legislative assembles have served mostly vested interests. Would that change? The tens of thousands of people who followed the preacher-politician Tahirul Qadri to Islamabad did so in the hope of widening the system by including those who are prepared to work for others.

The question of making the Pakistani system more inclusive is not unique to Pakistan. For instance, US President Barack Obama’s in his second inaugural address presented a sharper vision of the role of the government: first, “that preserving our individual freedoms ultimately requires collective action”; second, that “our country cannot succeed when a shrinking few do very well and growing many may barely make it.” These words were spoken oceans away from Pakistan but they also apply to the country that wants desperately to see a better future for itself.

Published in The Express Tribune, January 28th, 2013.

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Reader Comments (5)

  • John B
    Jan 27, 2013 - 11:56PM

    PAK industries need market and the voracious neighbor to the east is waiting for a longtime. Unfortunately protective policies of old era is keeping the productivity of PAK down; while one sector wants open market, the other still wants protectionism.

    Pak should focus on what is driving the economy even under this chaos and make it better to boost it further and then step into the new energy demanding and intellectual capital requiring market in a phased manner.

    Of course everyone knows that it requires a social and political consensus which are the chronic pressing issues of PAK.

    Engines of economy are the small scale sectors and they require a large market.

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  • Noor Nabi
    Jan 28, 2013 - 9:17AM

    SJB, as an economist you know that in most economies, especially the ones that are developing, there is an “underground” economy. This really is that part of the economy that is not recorded in the books and serves the interests of the tax evaders. If there is such activity going on, and I have no doubt there is, it is bad for the country as it already has an extremely low rate of tax collection. Where will all of this take a 180+ million people will soon be found out. The day of reckoning is just around the corner.

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  • Farhan.
    Jan 28, 2013 - 10:03AM

    Above said information based on fictions. As I belongs to faisalabad industry. We are facing challenges that neither experienced nor predicted by such economists. When you are producing only 20 to 30 percent to your capacity than How can you survive, or compete your competitors with same region. It is very unfortunate to write such things on such big platform. I think Mr. is going to grounding for Govt for upcoming Elections.

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  • Logical
    Jan 28, 2013 - 4:48PM

    During energy crisis we will only be exporting raw material to eastern neighbor and then import back finished products. How will this improve our economic condition? We just don’t want import and export we also want buying power are both in balance?

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  • Asim
    Jan 29, 2013 - 3:33AM

    In my recent visit to Pakistan I come to same conclusion that the Pakistan countryside is booming. I have traveled extensively from Peshawar to Bhawalpur, DG Khan, Muzzafargarh, Okara, Jhang, Khanewal etc.. and found small towns and villages have unprecedented economical activity, multiple crops (from Sugar cane to cotton, wheat, maize (even that in November), and many more) and extensive road networks that connect villages to towns and cities. Living standards are getting better in southern Punjab as well, not yet to Pothohar’s scale, mud houses were hard to find and bathroom facilities were everywhere (If anyone of you traveled that part of world only a decade ago would understand it). So overall my understanding is that rural Pakistan is booming and even if it does not translate in higher GDP number, it has definitely transformed living standards everywhere.

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