The News on Sunday | Political Economy Section| January 09, 2011
Zubair Faisal Abbasi
Despite having some robust economic growth spurts of 6 percent to 9 percent, Pakistan can hardly be portrayed as a good example either of consistent rapid growth or enviable advances in human development and social protection.
In fact, the country needs to seriously consider overhauling and reengineering of social protection and human security machinery, which is both inadequately oiled and badly designed.
The economy, at present, cannot enable the state or vice versa to ensure people’s right to life with dignity, let alone build capabilities of society to function in a desirable fashion.
Some basic statistics make a case for policy interventions in the direction of increased social protection. Comparatively speaking, despite having better growth rates between 1990 to 2009 than Bangladesh, Nepal and Maldives, Pakistan could add 5 more years in life expectancy at birth while these countries added 13, 12, and 11 years respectively.
It must not be surprising that Pakistan is the lowest on social protection spending with 1.6 percent of GDP in South Asia while offering social protection to around 5 percent of its population who are mostly working in formal sector. In comparison, Sri Lanka is the highest 5.7 percent of GDP utilised for the purpose.
Pakistan, however, has shown some progress in decreasing gender disparity in net enrolment rate but disaggregated data shows much of the progress concentrated in Punjab with Sindh and Balochistan getting worse off while Khyber Pakhtunkhwa shows no major change. Such skewed developments for whatever reasons create disparities in the short run and conflicts in the longer run.
On another account, taking a global picture, the effects of Washington Consensus approaches religiously followed during last many years have not benefited a sizable majority of wage earners.
The share of incomes from labour has actually declined. Pakistan’s economy seems to be consistent with global trends of economic growth which have disproportionately benefited owners of land and capital more than owners of labour.
Even in the US, as in many parts of the world, the income share of labour has gone down relative to the productivity gains in the economy. Some analysts like Michael Lim Mah-Hui in his latest book, Nowhere to Hide have claimed that these trends have played a significant role in global economic and financial meltdown.
In Pakistan, while the industrial fortunes have not really created a robust turnaround for more jobs in the formal manufacturing sector, the plight of home-based workers has increased many folds.
Apart from inflation and increasing poverty, the 8.2 million poor women who are working as home-based workers have much to worry about in their lives. They are not recognised as workers so they do not qualify for formal social protection mechanisms.
Many of home-based roast pine nuts, stitch footballs, cut, trim, and stitch garments, make shoes and prepare fancy clothing. While they form 65 percent of total women workforce, they are the least paid and most exploited in the value chain of production processes being in an extremely disadvantageous social and cultural positions.
Likewise, a recent research by Pakistan Institute of Development Economics claims that trade liberalisation in Pakistan has adversely affected women in relatively poor households by increasing their workload, deteriorating capabilities, and increasing relative income poverty.
Talking of inequality generating effect, it claims that the effects remained gender neutral or favoured women in the richest group of households. Such researches ask policy makers to emerge out of the dream world of neo-liberal orthodoxy, which claims that free trade and free-markets can ensure the welfare function of economy by making everyone better off.
The above-mentioned examples argue that the government should try to build a national social protection arc by bringing together employers, workers, civil society organisations and government departments.
The monsters of disease, inadequate housing, poor water and sanitation, and expensive education and transportation all collectively put a premium on our national economic growth. We need to seriously address such issues. We should realise that national security lies in ensuring human security at the local and individual level and from such foundation emerges a successful and cohesive nation state.
Source: http://www.jang.com.pk/thenews/jan2011-weekly/nos-09-01-2011/pol1.htm#8
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January 10, 2011
November 29, 2010
Pakistan’s economy — in need of an ideology
The Express Tribune| November 29, 2010 | OpEd
Zubair Faisal Abbasi
It is argued that Pakistan’s economy was on the right track till 2007 and is now paralysed, like a healthy person dying of a sudden heart attack. It is argued that public policy changes were pushing the economy towards a welfare enhancing equilibrium whereas the current government has converted Pakistan into a beggar state. Such claims need to be reassessed.
Alternative views argue that the economy was performing well in dimensions not relevant for a less-developed economy. In fact, it did not fulfil the requirements of a real turnaround in the economy. This view doubts the longer term growth impacts of increase in portfolio investment and highly concentrated foreign direct investments in a few sectors, such as oil and gas and telecom. Rather, it emphasises the importance of the role of the state in governing markets and regulating investments in the direction of the development needs of society.
Another view argues that, for an economy to take a steady growth path, it needs to look into ‘imbalances’ which go beyond traditional macro-economic imbalances, emphasising that equalities such as income and assets must be taken into account for the robust development of the buying capacity of as many people as possible. It must be noted that imbalances in income and wealth are serious issues for longer term economic growth and development — the global financial crisis has shown this to the world.
Looking at the economic performance of Pakistan over the years, it seems the distribution side of the economy became weaker with a worsening tax-to-GDP ratio which caused imbalances, including a fiscal deficit, over the years. However, while the economy started faltering during 2007, the tax base was not expanded. Instead, simmering problems, such as regulatory capture by special interests, were handed over to the new regime, though the managers remained the same — neoliberals. The argument was simple: to increase the pie, downward distribution of welfare gains of economy must be put on hold. But for how long? No one knew.
Alternative perspectives also argue that the economy has never been triggered to catch GDP growth from increasing innovation in products and processes. At best, it has tried to utilise more land, capital, and labour as sources of increase in production of goods and services. The result is that the economy never became an enviable enterprise in international trade and industrial competitiveness, while integration in the global economy did not expand its range of products.
To fix the economy, as the alternative perspective says, we need to reorganise our economy which goes beyond Washington Consensus type policy prescriptions. We need to build the capacity of the state to function — it needs reforms in entitlements as well as possession of assets and skills of the bottom 40 per cent. In fact, Pakistan needs to create a new economic ideology and restructure its public finance.
Source: Express Tribune
Zubair Faisal Abbasi
It is argued that Pakistan’s economy was on the right track till 2007 and is now paralysed, like a healthy person dying of a sudden heart attack. It is argued that public policy changes were pushing the economy towards a welfare enhancing equilibrium whereas the current government has converted Pakistan into a beggar state. Such claims need to be reassessed.
Alternative views argue that the economy was performing well in dimensions not relevant for a less-developed economy. In fact, it did not fulfil the requirements of a real turnaround in the economy. This view doubts the longer term growth impacts of increase in portfolio investment and highly concentrated foreign direct investments in a few sectors, such as oil and gas and telecom. Rather, it emphasises the importance of the role of the state in governing markets and regulating investments in the direction of the development needs of society.
Another view argues that, for an economy to take a steady growth path, it needs to look into ‘imbalances’ which go beyond traditional macro-economic imbalances, emphasising that equalities such as income and assets must be taken into account for the robust development of the buying capacity of as many people as possible. It must be noted that imbalances in income and wealth are serious issues for longer term economic growth and development — the global financial crisis has shown this to the world.
Looking at the economic performance of Pakistan over the years, it seems the distribution side of the economy became weaker with a worsening tax-to-GDP ratio which caused imbalances, including a fiscal deficit, over the years. However, while the economy started faltering during 2007, the tax base was not expanded. Instead, simmering problems, such as regulatory capture by special interests, were handed over to the new regime, though the managers remained the same — neoliberals. The argument was simple: to increase the pie, downward distribution of welfare gains of economy must be put on hold. But for how long? No one knew.
Alternative perspectives also argue that the economy has never been triggered to catch GDP growth from increasing innovation in products and processes. At best, it has tried to utilise more land, capital, and labour as sources of increase in production of goods and services. The result is that the economy never became an enviable enterprise in international trade and industrial competitiveness, while integration in the global economy did not expand its range of products.
To fix the economy, as the alternative perspective says, we need to reorganise our economy which goes beyond Washington Consensus type policy prescriptions. We need to build the capacity of the state to function — it needs reforms in entitlements as well as possession of assets and skills of the bottom 40 per cent. In fact, Pakistan needs to create a new economic ideology and restructure its public finance.
Source: Express Tribune
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