Democracy and Prosperity at 75

Aqdas Afzal | 20 August 2022
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THOUGH it was a few years ago, I still vividly remember an elderly acquaintance telling me about his perilous journey from East Punjab to Multan during partition. The gentleman was 13 years old in 1947, but still seemed very uncomfortable. I later found out he had lost many close family members during partition. But he was thankful to have lived in Pakistan and to have heard Mr Jinnah address refugees like him at the Walton Refugee Camp in Lahore.

To be honest, it is bewildering to have come across people who were optimistic about the future prospects of the new nation despite witnessing the horrifying carnage. Unfortunately, the lack of improvement in our living standards has compelled many in our present generation to ask whether partition was a false dawn.

Despite the grim inheritance of partition, Pakistan did not lag behind in economic growth in the period before 1993. Pakistan’s economic growth only slowed down in the period between 1993-2020, with only two years of six per cent growth compared to India’s 18. It was only in 2007 that India’s per capita income surpassed Pakistan’s.

Economic growth does not tell the whole story, of course. There is also a need to look at the Human Development Index score, which measures improvements in literacy, heath and income. Data from the most recent Human Development Report shows that with an HDI score of 0.557, Pakistan ranks 154 out of 189 countries — Bangladesh and India come in at 133 and 131, respectively. This report further shows that Pakistan’s HDI score is 13pc below the average HDI in South Asia and thus Pakistan ranks at the bottom of the entire region.

Raising living standards in Pakistan is going to require a democratic turn.

Data visualisation provided by the Human Development Report reveals additional information. Pakistan saw improvements in its HDI score until 2015, but the pace of improvement became very slow after that. Though India always had an edge in HDI score over Pakistan, Bangladesh’s HDI started catching up with Pakistan’s in the mid-1990s and then leapt ahead from 2010 onwards. Pakistan’s economic growth not only slowed down in the 1990s, actual economic growth was also not inclusive — this can be seen through the rising inequality in Pakistan starting in the 1990s, according to the World Inequality Database.

A deeper analysis of Pakistan’s low HDI score reveals that this score is driven by poor performance in preventing under-five mortality and illiteracy, especially when compared to countries with the same income per capita. The inability to provide these basic facilities even when resources are available is a puzzle, indeed. Solving this puzzle is key to understanding why Pakistan has lagged behind in the South Asian region.

There are theories that offer solutions, but very few have actually focused on the lack of democracy.

The main problem in Pakistan remains that economic growth has been confined to non-productive sectors like real estate, where elites have been able to draw tremendous rents. Elites capture resources in other countries too, but in Pakistan’s case they have not reinvested in broad-based economic production, which could have helped boost exports and create solid, middle-class jobs.

This is perhaps one reason why Pakistan ends up with a balance-of-payments crisis every few years: because the elites purchase foreign imports with their rents, but the economy is not generating value-added exports to offset the imports.

Sadly, where Pakistani real estate-owning elites do not generate exports or jobs, they also actively lobby against policy initiatives that seek to redistribute resources to the poor, like inclusive growth, progressive taxation or the Benazir Income Support Programme. Pakistan’s elites, steeped in neoliberalism or market fundamentalism, have latched on to the language of ‘opportunities’, arguing that only opportunities should be made available through markets, while the state or the public sector, ideally, should not even exist.

In real life, the problem is that, often times, many people lack de facto abilities or what Amartya Sen calls ‘capabilities’, that enable them to make use of any market-supplied opportunities. For instance, simply having the opportunity of taking up a well-paying job in the city’s financial district is not enough; poor people need to have the capability of accessing those jobs through public transport. The work of William Julius Wilson has highlighted such problems of “spatial mismatch” in the context of concentrated poverty within American inner-city neighbourhoods.

The lack of incentives for Pakistani elites and their domination of the economy has much to do with regular and long interruptions in democracy.

First, these long interruptions have shielded the elites from democratic governments which, driven by pressures emanating from the street, would have forced the elites to divest out of rent-seeking ventures like real estate. Second, authoritarian or propped-up democratic governments have not felt the urge to make pro-people policies and invest in human capital — health and education, for instance — because these governments do not really depend on the electorate’s support for staying in power.

In a sense, there has been strong collusion between authoritarian forces and neoliberal elites in Pakistan; where the former have denied political rights, the latter have become a hurdle in the path of economic rights.

What the preceding analysis shows is that raising living standards in Pakistan is going to require a democratic turn. This means that we are going to have to make democracy the starting point for all social change for the next 75 years. Democracy will not only need to be consolidated; it will require deepening by introducing effective local governments in Pakistan.

We are also going to require democratic reforms, thereby introducing campaign finance reform, proportional representation and, perhaps, even quadratic voting. And, in the next 75 years, democracy must not remain a mere procedural idea — only confined to elections; rather, democracy must be given the room to become a substantive institution ensuring representation, responsiveness and accountability.

The writer completed his doctorate in economics on a Fulbright scholarship.

This article was originally published on Dawn.  
Views in this article are author’s own and do not necessarily reflect CGS policy.