a ISSUES IN PAKISTAN'S. ECONOMY A POLITICAL ECONOMY PERSPECTIVE AWONOOD I S.NVLSIAVd NI SANSSI THIRD DITIO OXFORDN ISSUES IN PAKISTAN'’S ECONOMY A POLITICAL ECONOMY PERSPECTIVE THIRD. EDITION S. AKBAR ZAIDI M OXFORD . ir. Boo! UNIVERSITY PRESS Text Boal Seton Super Market, lslamabad Pro 2871363-2870919OXFORD Oxford University Press is a department of the University of Oxford Ik furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide, Oxford is a registered trade mark of ‘Oxford University Press in the UK and in certain other countries Published in Pakistan by Ameena Saiyid, Oxford University Press 0.38, Sector 15. Korangi Industrial Area, pas PO Box 8214, Karachi-74900, Pakistan ‘© Oxford University Press 1999 “The moral rights of the author have been asserted First Edition published in 1999 Second Edition published in 2005 $ ‘Third Edition published in 2015 . Al rights reserved. No part of this publication may be reproduced. stored in : a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press. or as expressly permitted by law, by licence, or under terms agreed with the appropriate reprographics rights organization. Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department. Oxford University Press, at the ‘ildress above You must not ciculat this wotk in any other form 4 and you must impose this same condition on any acquicer 4 ISBN 978-0-19-940183-3 a Printed on 6ogsm woodt-ree paper Printed by VW | Q A NyPreface to the first edition ing ths Book has been a challenging and often daumuing ase. The dea onginated Irom the sa of Oxford Unversity Press, who suggested that there mae a esd for a book ‘oa Pakistan's economy which could be understood. by graduate students researchers, scholars, academicians, and ‘he genecal public at larg, even without having a sound rounding in economic theory. This has indeed been the focus ‘of the book, targeting» wae spectrum of reader, in simple language, exploring processes, Ideas and trends. hope that "hs book will povige new insight en numerous home ruths ‘and myths which abourd in Paklsian, and allow the reader te question what is perceived to be conventional mrsdom ‘The most ambitious of the many aspirations of his book fs to stimulate the process of enulry smongst readers. 10 not expect al readers 10 agree with me, bur | hope they wil ee and welcome the different interpretation that is presented There. This, Vhope, wil generate debate whichis alter all the purpose of enquiry. Since there are no absolutes in soda ‘elence, ony interpretations and perspectives et this bok be 2 now and one hopes lesb, perspecave om the economy and scot in Pakisten This project started when 1 was an Assocate Professor’ Senior Research Economist at the Applied Economics Research Centre, University of Karachi, where 1 worked Tor almost teen years and taught 2 course called Issues ‘in Pakistan's Economy. All my profesional ife was spent at the Universiy, and 1 ove a debt of gratitude 10 the Ineinicon, and my former colleagues aid students, for shaping miy way of thinking. [tas forced ro leave the ‘Applied Economics Research Centre under rather sad and unfortunate cumstances. My departure was only partially voluntary. and was largely in llgust at the goings en at the Unversity and the Cenize at that tine. However, the ‘work on this book continued at home, and the end result Of this endeavour which has taken Tour and a hall year. Shows tbat reseach and scbolaly’pursult ake possible by “Independene-reseaichers noc necestaely aMiated. 1 any pneiculeorgenizeton or inettion. ‘Despite this independence’, however, one eannoc purse latelecual and academic interests without interaction and exchange of ideas with other scholats and academics. A ‘numberof fends have been a constant source of plessute {and iertaton, in the extended discasstons that Ihave had ‘with them aver the years Aly Erelawn, Asad Sayeed, Anum ‘Akal Ant Hasan, Jefe ABmed, Razin Roy Talat Aslam, And Shahzad asnjad have all spent hours and days over che last few yeas, arguing with me cect what I Thought were important issuer, We remain fronds despite our severe eagreerente, I often fused to accept thelt opinions, thinking thot Twas the one who was always ght. Honevee Tam mow more willing 19 accep! my aumeous Tals, shortcomings, and mistakes and to give crit where it Aue. Mo all hese fiends named above: who have inspired me fa tferent times for diferent reasons, I ge mo beatfett ‘hanks for beating with someone wo hes the reputation of being a dificult and stubborn person, prone 1 Jong bours of brooding. All Hasan, in pardcular deserves immense [rate for aking the effort to read through the ene T=" ‘manuscript and for hi generous encouragement. T acknowledge the persistence of the Oxford University res staff at Karachi in making me aceept and start this project. In particular, Yasmin Qureshi and Nighac Gaye were Instrumental n my taking on this assignment, Zoran Za who later managed this project from OUP Karachi i ako acknowledged for diecting my overly ambitious enthusiasm Inco concentrating on the tsk at had. Tis due to Zohrain that I completed this project an time. AltSough this has ‘been an enormous underaking, ene which Taney not have willingly accepced on ry one, Test fel the wiser for having ‘undertaken #2 ‘Alter 1 submited this manuscript to OUF Pekistan in ‘Aagust 1997, it as sent on t© OUP in Oxford forthe final Droducrion phase: Moreover while she manuscript was being ‘managed and edited 2¢ Ovlerd, [too was at the Unversity ‘of Oxford a8 a Vieng Scholar on the Seuth Asan sting Scholars Programme. My presence in Oxford at a critical stage of che eding and management of the manuscit allowed me wo imteract closely and frequentiy vith the editor of the manuscript and with the Oxford University Press salt handing the book 1 must acknowledge the great help and understanding offered 9 me by sally Rigg and Tony Dale of the International Edocation Unit at Oxford Unisrsity Press in Oxford. The editor of the manascipe, Chis Bassani, has quite remarkably traneformed the manuserpt into a book! to Chris | acenowiedge& huge debt for such a ighly linpressive achievement. 1 snus also mention Aditya Nigam and Anand vo other selars with me on the South Asian ising Scholars Programme a the Unisersty of Oxford. for ‘making me reconsider namerous biases which [held under the gue of convictions, Had I met adiiya and Anandht {eye years eae, ths book would probably have Laken on a aiferen: fora, ‘The specal contribution made by Qaiser Anjum and by -ukaram Fare) In ping apd producing the manuscript is beyond praise, They have produced mork of exceptional ually under unselending. pressure fom me to meet a ‘Coamtany shilting dendlie. Ty dhem, my wholeheavted and sincere thanks. ‘Although i is customary to thank one’s family for chest inspiration and sent conbarion, sn my case things are a litle more complicated. Both my sons Faz and Amar sll ‘wonder why ther father does not go to wark: hope when They ate in 3 position co rea ris book, hey will understand ‘hat ane can "go €9 Work sitting i the next room. Kabab. too, hasten et tna spend to mueh time doing academic work and not making lis of money, to he. shanks are doe for being patient, supportive and understanding, and for not ‘complaining too much. 5. Akbar Zaid Karachi, August 1996Preface to the second edition ‘The feedback from stodents. teachers, and researchers, om the first edition of wet i Pate? Bena, published tx 1999, i that it has done remarkably well. Very soon after it was fist published it became the standaca tex fr students and researchers on Pakistan's economy, both in Pakistan and At universities abroad. The book is being used for courses ‘on Sovth Asis developmen, economic history. and on its paltical economy at the uaiversies of London, Cambridge, fand Oxford ond at uiversities in the US. tn Pehistan, ses thas become the main tet for students studying the county's economy at a postgzduste level in numerous colleges and universes. and has, in fact even had specific courses Gesigned around it. For researchers on Pakistan's economy. this book has become ther main text for eference. T have been @ Tile surprised by tow well the book thas done. Part of the reason for is success has been, not because of 51s per se, but due 0 the lack of other quality publications on Pakistan's economy. tis rather sad and ‘lsappoining. that even after to many generations af sia sentists— particularly economists—having made their mark ar rescarchers and tcachers, there aze very few good academic books availabe in the market and even fewer books that are scant for serous siden In an era when economists fe ‘ow exclusively consultants or work forthe pate and NGO Secor, scholars and academies no longer have the desi (or ‘ed) fo poblish. uty has done well because there ae 30 few" Iooks availabe ‘This second edition isa considerably expanded. updated, and revised version of the earler text Te contains large amount of new material, all tables and dats ave Deen Updated to the most recent avaiable, and. new chapter: fd themes have heen added an, While The second eation (of Ises an Bakistn's Economy is written and presented ia ‘uch the manner a5 the fist, in a politcal economy context ‘and. framework—with boxes, appendices, summaries of ‘chapters, and suggested futher readings contemporary. row, and emerging issues have now algo been discussad and analysed. Along with substantial revision, sgniican, Uthice new chapters have been seniten and added on to this second edition. Chepters on Poverty in Pakistan—one of Pakision’s most pressing problems—on the pola economy ‘of economic and wade relatioas between ina and Pakistan. ‘and on macroeconomic developments since 1998, ate the thee new additions. Along with this, there are substantia ‘new additions on Globalisation, WIO, Pakistan’s new Locel Goverament system—that of District Governments—and particularly on'a re-evaluation of the Pliical Economy of the Pakistani State. In fact. Chapter 22 on ‘Class Sate. Power ‘and Transition” (wich was Ckaprer 19 in the Tit editian) has been completely reformulated Since 1997, 1 have lived 2 Me largely of voluntary ‘unemployment, which at times turns into sel-employment ‘whenever work comes my way. I have chosen to continne ‘ring doing research, lectring at universies in Pakistan and, abvoed, end publishing books and jownal artes ‘working from home, Ihave survved nancial, although 2 some cost, by dolng the few consulting assignments that have come my way. Rather than become a fultine ‘consult, the new wend amongst economists and socal scientists. Thave prefered to continue with my academe ‘and research interests. 1e/has tot been an easy existence, but! feel thac have accomplished a huge amount i. terms ‘of research, oaiput, and publications, ant have received ‘considerable recognition lar my work. Given the demise of the scademe and the absence of 3 community of scholar in. Pakistan, the feedback that one receives for such pursuits, at smes, compensates for che rather lonely intellectual Me of 3 selfrmotivated independent social scientist A number of trends and other readers deserve thanks for encouraging ane to continue my wesearch and for their responses (0 les when it was Best published. Ant Hasan, singularly, deserves thanks forbs triengship, encouragement, ‘wisdom, and exthusiasm for what I do. Professor Mehroud Hasan Khan has been another source of inspiration and Fearing and vo him, my thanks oo. Sadiga Salahuddin was 42 great enubusiast when Esucs was fist published in 1999, ‘and publicized che book endiesely, Aunarna Shabbic whe taught at Hamdaré University end at the TBA in Karechh ‘als deserves thanks for using the book and for propagating ‘it amongst students of basiness states, Riz Riudin fof the State Bank of Pakistan, asked me to a some neve eas, whieh ave been incorporated. My thanks also go (out 19 Zahir Riaz an oldschool frien and now an eminent lawyer simply because he bought dhe book something tha suggested 19 me, that pernaps there Is an audience out there {or warn one should connie to wre 1 no longer remember why 1 virote des én Potion eanumy, except that it was Nighat Gaya then at OUP Karachi eho called me up one day in 1994, and said thot bok on these lines was needed | ended up giving four and haf years of my ife to sling the book. Yasmin Quresh! fand Zohain Zafar then marshalled me wits completion “Altiough I 2s tld by many readers thatthe book sequzed new vesion—expanded, revised, updated—somcthing that I realised very wel. for many reasons, I was reluctant to start work on it again, However, OUPs Samael Ray in his reassuring and soothing tone, cisied my arm into doing $0, sething for which Tam now very grateful. believe that the one year that [have spent revising and expanding Ks, zhes made the second edition even eter than the Sst. Akbar Za Karachi, 6 Jamaary 2008Preface to the third edition Se eee Uo crits) ways ths, the Thid Raion of Bsus Paki Economy, i a very diferent book frm the fst nwo published. in 1999 and 2005, Rather tban merely revise and expand the Second Faliion, the Third ition undertakes 2 consierable rethinkingand efecusing ofissues hichconshtute Pakistan's ‘economy. Importantly 2 the new itleaso suggest, dhe cus This me around has shifted to fr shaper pial cmomy pectin, Since my eraning a interes 1 nail i pica ‘scanomy father than just mainstream economics, both the Fist and Second Editions were also heaviy influenced by ‘his perspective. Nevertheless, while both the earlier Faiions Focused mate on economic history in telling Pakistan's stony of economic development and stractural tansformation, th Thizd Bion builds an the ease Edinions but conceneates fr more on political economy, This Is particulary so, singe wile much f the story of Pakistan's economy has been mote fof the same for some decades new, wih all governments following neo-iberal economic polices and regardless of y differing “deciogy all continuing (o depend on the IMP aad other donors #0 bail them out, i cleat tat Issues central co Pakistan's political economy —such as class. Dower, the state trnsion have all undergone considerable «Change since the publication of the Second Editon in 205. Hence this novceable sbift and reworking of (sues in Pakistan's esonamy, with a far greater politieal evonomty perspective ‘AS Iwrote in she Pelace to the Second Faithon, continue to be surprised by how well chs Book nas done ard that it hha become the Standard text for students and researchers. ‘on Pakistat’s economy, oth in Pakistan ard at universities ‘broad. The book is bring used fr coures on South Asia's evelopment, ecoaemic history and on its political economy, tt the universities of London, Cambridge and Oxford and 1 momerous unhersities in Ge US. In Pakistan, Hues has become che main text for studenss studying the countrys sconomy at 4 posgradnate level In numerous colleges and ‘universities, and has. i fact. even had. speatic courses (esigned around it For researchers on Pakistan's economy, this book has become thes main tent fr reference. ar ofthe rearon for this sucress has been, not because of Asser per se, but due tothe lack of ether quality pidbatons fon Pakistan's economy. Iti rather sad and dlsppointing. ‘that even after so many generabons of social i Part 3; Fiscal Policy 247 (Chapter 10 Resource Mobilization and tho 2B Structure of Taxation 11 ‘The Sinxcture of Government and Taxation 248 101 Legisatve Funeions 2a, 1012 IntcrCovernmental isl 251 Relations Prior to 2010 102 ‘The Structure of Taxation 2ss 1021 Understanéing Pakisian’s 255 ‘Taarion Stncture 103 Public Finance: The Basic Fuels 261 0s Key Issues in Faction 268 1041 Federal Taxes 268 104.2 Resource Mobilization tthe 276 Provincial Level 1043 Local Goverment Revenues 283 wos Summary and Further Reading 2 1052 summary 285 1052 Further Reading 285 Debt and Defltts 290 Does the Fiscal Dell Mater? 298. TLL Should Budgets Alnays be 300 Dalanced? 42 ns ua 11,12. The Preblem of Measuring Deficit 300 1113 Fecal Deficit, Intertemporal 301 Equity and Disetbaton 1.4. “Macroeconomic implications 302, riial Concerns Regarding Pakistan's 302 Fiscal Deficit N12, The IMEAWerld Bank View ef 309 Pakistan's Fea Deficit, 1980-97 11.22. Re-examining Cical Concerns 310 ‘The Domestic and Foreign Debt Crises 310 Summary and Further Reading 310 141 Summary 3 1142 Further Reading 319Contents ix Part 4: Devolution and Fiscal Federalism © 329, Chapter 42 ma ne 23 na ba {Local Government and the Potitcal 330 Economy of Decentralization {Local Government in Pakistan x TLL The Radke Demecracesef 331 the 19608 12.12 Local Government in the 19805 334 (and 19905): uiban Pakistan ans the idle Classes 12.13 Devolution inthe New oe Milles Financing Local Government Mo 1221 Financing Under the 1979342 {Local Government System 1222, Financing Under the 200138 {Local Gosernment System ‘Thee Military Rulers and Three ocal 348, Government Systems 1 Local Government the Answer? 350 1241 The Contribution of Municipal 330 Gavernment in Development 1242 Pocetial fcr Development by 330 {ocal Goverrments 1243 Is Loca Goveenment the Answer? 351 Suramary nd Fares Reading 331 1251 Summary 35 2.52 Further Reading 33 ‘Fiscal Federale in Pakistan: 62 Emerging Dynamics, issues, and Prospects ‘re-Independence Fvlution and ser Development 1311 The Orto Niemeyer award 1938 363, 131.2 Posteindepencence Evolution 363, and Developments NFC Awards a Reospert ‘The Natfona Finance Coxamisston Avard: 363, ‘An Intodetbon 1321 The aisman Award 1951365, 13.22 The National Finance 563 ‘Commission 1951-62 1323. The National Finance 367 ‘Gomnission Award 1966 13.24 The National Finance 309 Commitee 1970 1525. ‘The Rational Finance x0 Gomnision Award 1974 1526 The National Finance x0 ‘Commision Awards, 79 and 1985 1327 The National Finance om Commision Award 1990 18.28 The National Finance om Commission Award 1997 1229. The National Finance on ‘Coromission Award 2006 be ‘The National Finance Commission 373. Aavsard 2010, 133.1 Population criteria am 1332 Poverty or Backwardness Criteria 377 1333 Revenue Collection and wr Generation Giteria 1334 Tax Collection and Distribution 375 acs Feerating Gait of Pakistan 1335 averse Population Density 379 itera 18 Some Issues Relating to as Jerpoverimental Fiscal Teansters and the NEC 2010 Award 1341 Vertical Fiscel Imbalances 382 HAZ Multiple cites and the Wey 381 ferward 153 Sales Tax and Provinces sa 1384 Subsinution of Fiscal Effort by 382 ‘Sub-National Governments 1345 Conditional verene as Unconditional Grants 134.6 Fiscal Federalism and Poverty 383 Reduction Bs “The Case of Fiscal uatization 383 135.1 Fiscal Equalization Index (FED) 383, 352. Fiscal Equalzaion with 385 Dominance of Indirect Taxes snd Distribution of Resources Sn Real Terms 136 The 18th Amendment: The Way Forward 386 10 Devolution? 137 Summary and Further Reading 388 BI Somoary a8 1372. Further Readings 389 Part §: Monetary Policy and Financial and 391 ‘Capital Markets Chapter 14 Financial and Capkal Morkats 392 14a The Development of the Banking Secor 395. 14.h The Fist Phase: 1947-74 3 14.12 The Reladonship between 398 Economic Growth and the Development of Banking 14.13 Nationalization in the 19705 39% 14.14 Islamic Banking 397 L415 Developments since 1988398 4.6 Banking Trends: 1964-2012 399 HLL? Development Finance ot Institons (DFTs) ane Non Dank Financial Inativtions (Bry 14.8 Some Salient Tsuesin the 402 Banking Sector 4.9 Excluding the Majority: Umned 405 ‘Access to Finance in Pakisan K42— The Feuities Marker 7 1D Summary and Further Reading nox Contents 343.4. Summary 1832 Turther Reading ‘Chapter 15 Monetary Poloy, Savings, and Inflation 151 ‘Monetary Policy nd Monetary ‘Management in Pakisan 12 ‘Money Supply and Monetary Expansion 133 Inflation and its Causes 134 ‘The Low Savings Rate 155 ‘Summary and Farther Reading 1551 Summary 1552 Further Reding Part 6: Neouliberalism, Stabilization, and ‘Macroeconomics: From ESAFS to PRSPs to SBAS—1988 to the present CChapter'16. Structural Adjustment Programmes: ° Composition ana Ettects 16 ‘The Development and Export of Developenent Thinking 162 From Stuctual Adjustment Loans 10 ‘Structural Adjusunent Proprames 163 ‘Structural Adjustment Programmer: Composition 16s ‘Structoral Adjustment Programmes: Implemencation and Eftecs 165 Economic Literalization and Openness: Some Questionable Asserions 165.1 The Conexcuality of Poly 185.2. International Capital andthe ors of National Autonomy 166 Summary and Further Reading 16) Summary 162. urther Reading 5 (Chapter 17 The IMF and Structural Adjustment Programmes in Pakistan wa Wiscory m2 Implementation ofthe Structural “Adjusrment Programmes in Pakistan: ‘An Examination of the 1988 Programme W721 Racal Paley 1722 Trade 3723 Financial Setor ey ‘Was the 1988 Structural adjustment Prograrome a Success? Achievemen's and Failures V7.1 Fiscal Poi 1732 Trade and Balance of Payments 1733 Financial Sector 1734 betalizaton and Privatization 1735 Other ateas 174 The World Bank/LMF’s Overal [valuation ofthe 1988 Strcural Adjustment Programme nis ‘Toe 2008 Stand Agreement 410 423 a3 a2 $2 9 457 400 465 407 409 an 373 an ap a5 483 oo ass a9 489 489 290 a1 491 41 a2 494 16 Chapter 18 18h m2 83 isa as 186 187 sa he Political Economy of Suuctusal ‘Adjustment Programmes in Pakisan 184 1762 1793 Pakistan's Dependence an ‘iashington or are Governments Autonomous? Di Pakistan Need to Goto the IMF in the 19905? ‘why Does Pakistan Accept IMF Programmes? ‘Summary aud Further Beating 178 w72 ‘Summary Further Reoding Macroeconomic Developments: 1998-201 13 Before and Alter May 1998 1 September 200 the Bay the World Changed ‘What Happened t the Deb CisK? The Growing Forex Reserves id the Economy Turnaround? ‘Musharat an After: 2004-2008 ‘The Pakistan People's Party's Economic Policies 2008-2013: Bad Lack or Bad Management? ‘Summary and Farther Reading 1881 1882 ‘summary Further Reading, Part 7: The Social Sectors: Institutions and Governance ‘Chapter 19 192 193 194 3 “The Social Sectors I Interntional Comparisons, Eduestion, Population, Urbanization, and Housing Some incernational and Regional ‘Comparisons ‘The Impac of Economic Growth 2002-07 yaa Finally co Track? évearion mor m2, 933 ‘Statistics “The Issues Suramarizing the Issues in dveaton Population Welfare and Family homing: ‘The Demographic Tanson Wat waa waa aaa bona 1931 1952 1953 los4 ‘The Evolution of the Population Welfare Programme Knowledgeand Usage ‘Some tesies Pakistan's Demography: Dividend or Disaster? son and Housing ‘The Extent of Uroanizaton Rethinking Urban and Ral Housing in cities ‘The Demand for Low Income Housing in Pakistan 509 310 ste sia 522 wu 528 532 535 538 3a 585 555 559 56t set 503 566Contents xi 18.7 Summary and Further Reading 582-2440 Summary and Further Reading 6 1971 Summary 582 21.104 Surnmory 6 197.2 Further Reading 582 21.102 Further Reading 46 ‘Chapter 20 The Social Sectors I MDGS, Gender, $89 Part 8: Poverty and Inequality 648 Environment, NGOs, institutions, and Governance ‘Chapter 22. Poverty: Tends, Couses, and Solutions 650 201 Atleantum Development Gos (MDG!) S89 221 What Does Povety Mean? 650 202 Gender Inequality ava Women 58132 Trends in Povety oz 2021 Statistics 581 25 Who area Toor and Where Do 056 2022 Some Isues 395 They ie? 2025 Finding Some Options 596 224 Explaining the Tends in Poverty 1950-88 658 203 The Eovronmest 97225 Peventy in Fictan: 1988-2013 62 203 Intittional (sues inthe Social Sector 604226 paverty Allenton 6 203 Governance Decentralization, and 60227 0 : {ecal Level Delivery 218 Cam Poverty be Fhinigated in Pakistan? 672 205.1 Government and Development 607 229 Summary and Further Reading om in Pakistan 2291 Summary 4 206 NGOs and Community arcipation 69 2292 Further Reading om 207 Suramaryand Further Reading 63 207.1 Summary 613 Ghepter 23 Regional and income inequalities 687 2072 Further Readlng a1 Regional neqalites: Discs ami 687 Chapter 21. The Social Sectors The Heath 624 Provinces sus 211 Methodology and Results $88 Seetor and the Heaith-Poverty We 23.12 The sues a a Health and Rovety 624 252 —_eaional nequltesasro- 51 Farms, and Average Size of Farms: 1990, 2000, and 2010 Comparative Analysis Tenwie Clasication ofthe Farms 334 by Provinces ‘Tenure Classiliation of the Farms’ Area 54 by Provinces Tenuee Clasieation of the Fans apd 56 ‘Area by Provinces (Index 2000=100}, ‘Average Size of Operational Holding: 57 1960-2010 ‘Summary Data 00 Number, sie. Area, 58 ‘and Operational Status of Faro by Tenure Dated on Agriclteral Census Dat: 1960-80 Land Uae: 1947-2012 6 Indes of agricultural Production: 6 1959-2012 ‘ea under Major Crops: 1950-2012 66 Production of Major Crops: 1950-2012 57 Viel of Major Agriculture Crops: o 1950-2012 ‘Area Tigated by Different Sources: 6 1950-2012 er Capita Avallabliy of Maia Food 68 tems! 1986-2011 able $8 Table 59 ible 510) Table 5.1 ible 52 Table 13 ble 54 ible 6.1 Table 62 able 63 Ible 6 Table 65 Table 65 ble 67 able ible 69 rable 410 able 6.11 Table 12 Table 6.3 Table 64 Tbe 615 Table 616 Soures of Loans by asset Quinte 7 Distribution of Ineitutional Loans 3 8" 77 Percentage of All Loans by Categories and Size of Farm: 1973 and 1983 ‘Agricultural Cedi Disbursed in Pakistan 78: by Agencies: 1955-2012 Number of Hovschous under Debt 2 by Tenure an by Type of Household ‘Agrculeure Census of Pakistap—2010 Amount of Ouscending Debt from 8 Institutional and Non-Instiutional Source by Tenure and by Type of Household Farms Reporting Use of Important ca Agsiculeual Machinery ‘Number of Private Trators % by Horsepower Annual Growth Rate 1950-58 at 2 1959760 Factor Cost Does Terms of efor m2 ‘West Pasta (Three‘ear Moving Averages): 1951-64 ‘Average Rate of Duy on imported Goods 4 by Types of Commodity: 1955-61 Soares of Growth in Manutacuring 16 vale Added: 1951-¢4 Balance of Payments of Trade: 1949-38117 “Amual Grow Fate 1998-70 at 1959/80 118 Factor Cost Rate of Growth of Manufacturing Ouxput: 121 1860-70, (Growth Rate of Tora Racor roductsitg: 121 1940-70 ‘Total Factor Productivity in Mamufscuring Re Soleted Countics Income Distribution in Pakistan: 1965/4 123 and 196970 er Caplta GDP in Eat and West Palstan 123 at 1959/00 Consiant Prices Index of Disparity in Per Capita ncome 323 ‘Anmual Growth Rate 1971-77 at 1959/00 128 Factor Cost Inflation Rates in Pakistan: 1970-80125 “Tale Pater 1970-7 126 Invertcent and Growth Rates im the 127 Large-Scale Manufictaring Sector 1909-80 at Constant Price Level of 1969100List of Tables xv Table 617 able 71 ‘eble72 “be 73, ‘able 74 ‘bie 75 ‘bie 76 ‘able 77 ‘able 81 ‘able 82 ‘Teble 83 ‘ables ‘able 85 Thies ‘able 87 ‘abe as able ‘bie #10 ‘ie st whiesi2 ‘ble 813 Tubie aie ‘able 85 sabe S16 Table 817 ‘able 18 Dilerrsil Grom Rates of Money 128 Supply. GDF snd Comamodiy-Prodsicing Sectors: 196980 Grow Rates of Output, Yabour capil 152 Stock, and Total Fector Producti ioe Average Annual Geowth Rates of Vale 133 of Outpar: 1978-88 Decomposition of Manufacturing Growth: 13 loss Growth and Statue of Manufsetaring 135 Employment: 1975-86 ‘Shate of Public Industrial Enterprise 137 “orl Large Seale Manufacraring: 178-88 Sectoral Contnbutions ce GDP Growsh: 14 1981-72 ey indicators the industrial Sector: 148 19bo-2012 Groth Rates ii Manofecuring: 10 1950-2012 Gross Fixed Capital Formation in Bivate, 152 Public and Gen. Govt. Setar at Caerent ‘Maske Prices: 1963-2012 (Provisional) Produktion Index of Manufacturing: 155, 1965-2012 ‘Census of Manufacturing Industries (25. m) (CRI Value of Valne-Added: 19878 and 154 9901 Growth of Selected Industral ems: 156 1939-2012 (rovisional) ‘Acre Dally Employment by Major 137 Industry Sector Estimates of the Shate of the Informal 157 Sector Urban Employment by Industry Esomates ofthe Size af the Informal 157 Sector in Orban Employment by Industey Formal and Informal Sector Employment 158 ln Usben Sindh and the Punjab: 19845 (Characonisties of oumal and Mnfoemsl 158 ‘Manulacearing Sectors ia Urbs Pakistan: aya ‘Annual Real Growth Rates inthe Formal 158 fn Tifonet Manufacturing Sectors in ‘Usben Pakistan’ 197677 and 19858 Major mustees in Terms of Epployment 158 tn the Foumal and Informal Manufacturing Sectors im Unban Pabstan: 198514 Distbusion of Employment within Mjor 159 Industries by Fermal and loreal Manufacturing Sectors: 19834 Industria Categriation: Formal, 159 Informal, an Mixed Eryployment Elasbciies 160 Labour Preductvity (01) and Wet (Captal-Output Ratio, Smal-Scale and Lage-Scale 1983/4 and 19878, for Selected Industries Coton Tene Seatistice: 1955-2012 164 ‘ble 819 able 5.29 vrble 821 ‘ble 823 able 623 Table 824 Table 625 Table 626, Table 9 Table 92 able 93 ‘Teva Table 95 ‘Thies able 97 ‘Tohle 98 Table 99 Tle 910 Table 911 Table 012 ‘Table 93 ‘Teble 918 Table 815 Table 916 Tle 917 ‘hte 101 Tle 102 Table 103 ‘able 104 Table 105 Table 10.6 Table 07 Indices for Production ef Yara ard Cloth: 164 1960-2012 (Provisional) (Overview of the Cotton Textile Industry: 168 1988 Constant Maret Share Analysis: Pakistan, 166 South Kore and Hong Kong: 1973-87 ‘hate ofthe Public Sector sm Yetious—— 170 etivies:1960-88 ‘Output, Empoyinent. and Productivity 170 Indies of Pub Secor Industries and ‘the Manufacturing Secne: 1972-82 Privatization of State-Owned Bmerprises 174 {Capital Uellaton in Manfactaring 180 Idustees of Pakisten Dnpact of Trade Reform on Effecive 181 Protection and Praftabity Balance of Payments, Selected Years 202 Exports, lmpowts, and Made Balonce: 203 193-2012 Balance of Payments Growth Rates: 208 970-2002 Components of Balance of Fayraents: 204 1980-2012 (Frovsional} Economic Classification of Exports and 208 Imports Pakistan: Major Exports 1 206 Pakistan: Major Import I 205, Major Exports and loports: 20022 and 207, amine Pakistan: Direction of Trade 207 iorkers’Remitances: 1972-2012 208 ‘Main Sources of Workers’ Remittances 200 Rate of Duty on imported Goedsby 200 ‘Type of Commodity: 1955-60, ‘Change in Import Paitems from Licences 212 to Bonus Youchers in the 19605 ‘Unweigted Average and Frequency Dist of Nominal Tats Pakisan: 198577 Rate-Wise Vale of Imports and Duties: 216 wo Effective Exchange Rates for Exports ‘and Imports, oa heir Ratio Value and Depreciation ofthe Rupee 222, since Apa 1972 ae a Direct and trict Taxes at Diferent 250 “ers of Government Share of Provinces in Fedral Revenue 252 Recep Revenue. Sharing Arrangements under 253 various NFC aveards Summary of Revenue Receipts 1 259 Summary of Revenue Receipts It 259 Principal Sources of Revenue and 260 Expenditure for United Pakistan Summary of Public Finances: 198718, 268 2002/8. a08 2011/12xvi List of Tables ‘able 10.8 Consolidated Federal and Provincial" 265 Table 12. oaal Tax and NonTox Sources under 344 Government Revere 1987/8, 20020, Disict Governments, 2002 and 2011/12 ‘able 122 Expendiure Responsbilites of Disrcs, 348, able 10.9 Consolidated Fedetal and Provindal 265, ‘Tehsil, and Union Counc 2002 Government Expedite: 19878, ‘Tuble 123 Comparison between the Basle 346 20021, end 2011/12 Demosracies System, 160 1979, and ‘able 10.10 Summary of Public Finance: 265 the Devolution Plan, 2001 Consolidated Federal and Provincial Governments: 1978-2013 ‘Rble 13.1 Average Divisible Pol Wansfers during, 364 Table 10.1 Consolidted Federal and Provindal 266 ‘aris NFC Aveards Government Expense: 1971-2001 ‘Table 13.2 Average Straight Tansfets during 365 Table 10.2 Composition of Government's Total 268 Nanous NFC Awards Expenditure: 1971-2003 ‘Table 133 Average Noa Development Grants 365 ‘able 1013 Key Publi Financial Ratios and 269 ring Varlous NEC Awards Selected Years Toble 134 Average Development Grants during 369, Table 10.4 share of Diflerent Levels of Government 200 ‘aris NPC attatds in Revenues ad Expenditures Table 135 Henzonta Revenue Distibuian— 368, Pakistan: 1979/80, 19907, and 2001 asman Award 1981 Table 10.15. Federal Tax Receipes (net): 1963-2012 270 Tale 13.6 NEC Awards in Histofcal Fespecve 366 Table 10.16 Takes and the Distbution: 1985-2012 271 Table 13.7 itera for Herzontal Dsuibution of 367 Table 1017 Disirbuson of Direct and indiect Taxes: 271 [isisibie Pol under National Finance 183-2013, Commission NEC Pakistan Table 10.18 Level and Compostion cf Tax Revenues 273 TDC 15.8 Yercal Revenve hating Arrarwements 365 Ja Developing Countries and In Pakistan between Federal and Provincial Table 1019 Tax/GDP Ratios of individual Taxes in 273, Governments under Varioes NFC Awards Pakistan ‘Toble 13.9 Average Verial Fiscal Imbalance 369 ‘Table 1020 Elasticity and Buoyancy of MajorTawes 274 between Fedetal and Provincial wr. tncome (GDP) Government’ —NFC Award Ferod ‘Table 1021 Decomposition of Buoyancy of 295 Table 13.10 Trends in Repional Distribution of sn Major Taxes Population among Federating Units of ‘Tble 1022 Key Financial Ratios ofthe Provinces: 275, Pakistan 1990-1995 ‘Teble 12.1 Fle Subvention rothe Provinces: 372 Table 10.23 Share of Diflerent Levels of Government 276 NEC 1990 In Expenditure on Soca Sectors in ‘Table 13.12 Net Bifec of Muliple Crteris 2010as 373, Pakistan: 193091 {Compared to opulaton based Crerion ‘able 10.28 Anal Compound Growth Rate Tax 276 Table 13.13 Hontontal Revenve Shaving: Provinea| 374 Revenue by Province: 1950/1 10 1994/3 ‘Share in NFC Awards 1971 10 date ‘able 10.25- Total Revenue and Taxes: 1961201 277 Table 13.14 Trends in Position of Federating Units of 374 Table 1026 Taxation and Fxpenditure Proposals 278 Pakistan Annual intercensal Population acrording to the Structural Adjustment Gromth Rates Programmes: 1988-1991 and 1993-199 ‘Table 15.15 Incidence of Perry in Pakistan ” : ‘able 13.16 Predicted Poverty Incidence: 2010-11378, Table 111 Dorestie Dex Outsionding’ 1960-2013 303 Table 13.17 Province-wise Pecentage Revenue 39. Table 11.2 Domest Debt Outstanding at Bnd of 303 Colleccons: Trend Analysis erie: 1980-2013 ‘able 15.18 Gntera for Harzontl Distburton of 380 able 113. Debt Servicing: 1985-2012 304 side Pol under the indian Finance Table 114 Sources of Financing the Fiscal Defic’ 305, Commission 978-1995 ‘ble 13.19 Population Density by ProvincestMegions: 380 Table 115. Summary Fiscal Policy Statistics 306 1951-1995 Censuses Data Table 11.4 Gross Domestic Produc, Inflation, 308 Table 13.20. Cetera of Horizontal Dstribation among 38K ‘GurrentAecoune Deft, and Budget Deft ‘Sub-Navensl Governments Table 11.7 Profle of Domestic and External Debt: 312 Table 13.21. Federal Transfers wo the Prosines 383 1993-201 sable 13.22, lative er Capita Transfer by Province 383, Table 118 Costs of Bortowing and interest Rates 313. TAM 13.23 ow Inergoveromental Fiscal Transfers 383 (Dorsestic Debt) Dove been Equalizing in Pakistan? Table 11.9 Dyzamics of the Extawal Debe Bueden 317 Table 13.24 Development Rankings of Provinces 784 Table 1110 _A.Cross-Counny Comparison of External $18 Tab 13.28 average Fiscal Equalamion Indices 285 Debe Indicators liberal Structural Adjestment Programme, impose Upon aksscan by the IMF and World Sank, and so vilinghy accepted id endorsed by Pakistan’ lies. after explaining ‘in Chapter 16 what consstutes the Sirucaral Adjsment Progeamoe and the consesjences it hae for the countries ‘hat have endorsed and implemented i in Chapter 17xxii Introduction we (UFR to HIS impact on Pakistan. The history of IMF land Goverment of Pakistan relations shows thatthe tw ‘comprehensive progransmes of 1988 and 1993-4 were bot Degotitel and enferced by unelected eatetaker governments lan had 10 be ratified by the incoming demorratcally lees fovernments—in both cases, interertingh, of Ms. BenaZit Bhutto. The chapter shows that, since the advent of the peoprorome, the economy’ peramance has declined rather Sharply, eausing a sigificant Iss in social lft, espesaly for the poorer social classes, We emphasize the point, that in 1838. when the first major Sauetural Adjastnent Programme as implemented, Pakisan di not ely net such a prograrome, whichis usally reseried for those counties thet, sconding tthe IMF, are in deep cconomic criss and ‘sagnation. tn 1986, Pakistan eas actually booming and one ofthe consequences of following the programme may have been to dampen the high growch performance of tbe 1980S. We suggest that, although restructuring ofthe economy i cvsential, # needs o be dane on more friendly terms than. thoze enforcee by the IMF and World Bank, The reasoat why Pakistan's governments run to the IMF to barrow on any pretext i$ that they. along with the ruling élite, are ot walling (0 undertake the extensive reforins needed to feswucture the economy, for those reforms wail hurt dhe forests ofthis ruling Bit. Iis far safer to bono delay the ‘nevtable, and pass on the debe buxden to the unsuspecting seneral public, Chapter 18 looks at macroeconomic issues Since the mid-1990s, parviarly sine the General Pervez ‘Musharraf takeover of October 1999 nd atthe consequences to Pakistan’ economy after 911 1aso evaluates the dismal performance of the PPP government of 2008, acknowledging the claim thet numesous deep-seated political and ecanomie Issues were beyond the aby of the PPP government to ‘adress or reform, yt ako holds che government secauncable for mismmanaging the economy. ‘Chapters 19-21, which constitute Fart Vit of the book, ‘uy to understand Paksian’s development paradox, Wich impressive growth in diferent sectors of tae exouomy. the performance ofthe stil sctes has been visibly poor The evelopment paradax has 2 dual meaning here, since nat only has economic development not tanslted into socal "tctor development, Bot the fact that impressive economic evelopment has taken place wathou an adequate social and ‘human capital base i ket perplexing, Ditfrent subsectors in the socal sector, such as health, eduction, housing, aad population, are analysed in Chapters 19 and 20, We question "he assertion that population just like te fiscal eft, sone fof Pakistan's major problems, and we find that this is not necessarily the eave. Moreaver, the poration rate seems 10 be fang now as economic austenty ane hardships increase, and it unafiordable to have large families. Thre is also a Section on gender and women, where we argue Lat, whe Cosmetic changes and positive discmination may address some of the issues facing Wmen in Pakistan. the deep rooted scructares that eause gender bias must be cnfiented economic, seca cultural and judicial emancipation of women is to take place. The third chapter in the part on ‘he social sectors, Chapter 21 om instiutionl sue, looks at Instiuuonal (acters and consuains that have inhibited Socal development. Often finances are net the sle problem fectng a sector but sues of management, administration fand delivery are equally iaportat.Isues Ike community Darscpation, tae role of non-government organizations (NGOS), poremance, and decentralization ae also evaiated Inthe ight of pat experience are curren propaganda. We also question the belt that NGOs provide an eer 2nd productive development paraigm Tn Part Vill, Chapter 22 deels with Pakistan's most pressing issu, that of poverty. Despite high rates of growth Pakistan continues to havea poverty rate with onesthitd of popalation 80 milton indviduale—ving below a meagre poverty line With one-third of the contry’s population Ling in abject povery. ary assessment of high growth, rowing financial eserves and economic ‘stability. will nes to be re-evaluated. chapter23 highlights the issue of reyional ‘and came inequality in Poksian bn both « histor and Contemporary context ‘The Ist four chapters of the book, Jn PAE TX, look at the Impact af the ecanoeny an politcal formations, the state and lasses. on wat ai and teror, and on the politcal ecomomy ‘of neighbeurly relations. We argue that much of the evidence reseed inthis beck suggests that Pakistan's midele asses ae beginning 10 asser themselves cllecivey, not {st in economic terms, but also a6 politcal class. While Fakistan kas along way to go to become a mosern, dynamic, cedocated, and vibrant soci; me may see the Beginning of ‘uch developments. In the Foltical Ecoaomics sections of ‘the book, we also examine Issues related to South Asia more sReneraly, and trade and economic relations or ‘heir lack ‘of-berween India and Pakistan. We show that hale there ‘are no real and substantive ene arguments which ought to restrict greater cooperation betseeo India and Pakistan. pola! ane instinetnal interests overide such economic foacems. Trade and economicarrangements are examined in the Ught of laiger poliel factors. An attempt is also made {in the end, co understand how the onravelling of Pakistan's sate has occurred, Issues related co state callapse and the relationship between plidcal clsses and ev society on the ‘one anand the emiprsent military on the otber Ferm 3 key pao his evaluation, Pu IX ‘ellows the nararve of the evolution of Pakistan's social, economic, and, even political dspeasations over many decades, highlighting kay developments ard evenis ‘Asbs happened so many times in Pakistan’ istry events ‘wich unintended consequences have shaped Falistn’s ‘developments. Yet, social and econnle change has also boeen somewhat anticipated and predictable, ving rise to somewhat more certain outcomes. The immense growth fof unbanization, that of a mide clas, a hugely buoyant Informal secon, ad the breakdown of state aahority and of state instiutions has been unfolding slmost expectant ‘The previous trend of the ‘urbanization of everybody, seems (© have morphed into an ‘urbanization with Informalizcon’, with the co-movemenis of urbanization ‘and informal relations of production and exchange perhaps omninating. social and political interaction, What thisIntroduction xxiii means for subsequent developments remains uncerain and one can merely (hesitantly) speculate about alternative ‘The sim ofthis book isto provide. analyse, and interpret something called fects”. There i usually, amongst students, 4 deste for prescriptions and definite answers. Zbis book foes no: provide then. Waat the book does, however is (o reinterpret accepted dogma, home truths, and myths about the econemy and about society. It is important to emphasize that this is one of may interpretations, and readers are invited to contest the claims by challenging preconceived notions. ‘The empbesis in Gus book is on proces. We examine facts od issues and developments over Gime. placing them in their specific contents. Wis not possible to understand the present without recourse to the post, Pakistan's economy find development today—the word ‘development implies ttenstion and a process—need to be traced back in ime: ‘only then can we beter understand the resent and poss) attempt (o Look into dhe furure. Nevertheless, che book also ‘seknowledges that such transitions ate incomplete, complex wayward, often built on unintended consequences, and hence one avoids the popular Pakistani pastime of offering advice and making predictions, tf one has Teemt one ching from Pakistan’ recent petal istry i hat there 00 inch that we de not know al here ae eo many "unknown ‘unknowns’ ro ole forth on probabilities. The purpose ofthis. ‘cok isnot to offer any solutions or prescriptions, bot mesely help in explaining Pakistan's considerable structural aud seelal wanstormasion, ata on Pakistan are notoronsy poor of dubious quality and often fabricated to suit the needs ofthe government in power Moreover a readers will ee for themselves, diferent bial eourcee contradict each other. While most of the data onginate fom offical sources, yescarchors do manage (o get around the numbers. For example, the growth tate of dhe small-scale manufacuring secor has been reported by government to be a constant 84 per cant for mone than decade: as any observer ofthe Pakistani seene knows, the [sourh rare har at times been almost vice or ven three ‘imesthis ate ‘One of the features of this book is that ic tlies on, and uses, extensive quoracons fram numerous published aries and books. This, we fel, will epresenc the arguments made by the authors themselves, rather chan our understanding and interpretation of what the author ie sexually trying to Sa}, Moreover one hopes that dhese quotations and the use of references will whet the appetite of the seader 10 go 10 ‘he sources and read thet works In the origina. Also worth ‘menrtoning is he fat thar the change In nomenclatae of the former North West Frente? Province NWFP} ro the current -nyber Pakeunhwvaprovines, has meant that oth names are used interchangeably. although an attempt is made ro ‘only use Khyber Fakhcunkhwa for references after 2010, (Other organizations and institutions have also been dealt soit in che same manner I his book can convince the reader thar thee are many ways of looking at wat consitues conveational wisdows, and if it stimulates the proces of enquty and questioning it ‘illachieve what is probably its greatest ambition.Understanding Pakistan’s Structural Transformation: 1947-2014 This book is about understanding Pakistan's structural transformation over six decades in 2 poliucal economy Framework, where the main purpese Isto examine how and where such transformations hove taken place, the economy, in soiery i class and gender relations, in manifestations of ‘onsumeria and eultoe, and ather dimensions of being i the world. and to asess Pakistan's uajctory of ecanomic and poltcal development over this period Mow does one begin t evaluate the performance of & country ver & period of more than siande-hall decade? Do we choose some Key economic indicators of sixty-six Years ago and tofay, and simply make comporbons, of are tere other ways of looking a ecnditons and situations over ‘more than six decades? Docs comparing 2 snapshot of L947 ‘with one of 2024, the near impssibie task as that is, reveal Anything of value, other than the obviows fast that over six Aecades there has been extraordinary change? And. fe es, tye must chen ask the more Important question; how as ‘that change Deen brought abont? What has been the pees of development or growth or progress over the last Saji ~ ‘ear? Fenaps many eralunt the try se, the oes thi mechanism of change. the cecins. developments fo dimensions of he recess oe the st ieesting nd relevant acters ened the sive of fow one looks at change and devloment. ste cial ste of wha? one looking How cane matte dat shat Pitan cy eter cf at ea exon han ain 947, fideo at $ihe cae someshing bic inceasingly mony eeoomiss Question? bre one vc vom et isa show tat Saute they are iphernter so Bethe conc and Ms orl? 3 snaphoteompenson of 47 wath 201 ces not EXumly conf te aseron that Pitan i ery mich fever off nthe second cade ofthe senyfnt cent thas was 47 Inport ater sso wees one comparing the ptt a prt Present. Tor exe Swany in akan dng the 2097-07 ale bom prod fe that Patan’ economy ad tamed sod erapentiy Src that was este Gr ees a ven Cina Inaghable though ft row sounds. Maeve dlrs high ecoomiegowth, evn ces stot der tilt dtetorshiprmar 9 often bay i Pit Syuboloe afore Tor a cumin when. demoercy and paricpstoy frm of goremment hae beceme te cae of Toone wordile? Clay haw one emis ele se erststin, who ane eos to value suc iene, whe one peges ver mumeraoendeton-cenomc Sosa pial, etl 0 uses pose, teal Sterne any assessment of 2 county's development. In many cass, fone would arzue that many cous ae fax better off over the lst iy or tty year, coumtres euch ¢¢Malaysie, South oreo, Ching India, and even Bangladesh, al hove evlved stable and prosperous esoncmies, with most counties inthe ‘world having evolved as diferent forms of democracies. Can ‘one make similar statements about Pakistan which has had. fa woller-coaster economy. interspersed with extensive and ‘oppressive military dietaorships and praetrian derpocracy? Even after the first democratic hangover Berween two elected ‘governments In 2013, one is hesitant to predict certains} in Pakistan's democratic prospects ot = dine when the public lscourse stil evolves around the question of whether Pakistan Is fate state ora falling one. The only suitable manner In which 8 county can be evaluated is to examine ity own particular history and co Tek at how certain features have evalved through cevtaln processes and the dzecion in which chese developments have taken place. Companions with ofher development ‘roceeses in eter cous ace always Nef and welcome, ‘but pethapsa beter understanding of one particular county is beat tld by its owe deepen rt, rather than seme seneral presumed generic lan of developmentor governance, fs has become the glatal fashion these days. The story of {deeipoent is more important than a mete comparison of the ‘numbers atthe beginning with those atthe end However, ‘numbers do provide some insight ato the process sell For ‘example, one can sce in abeolute and relative rms the extent ‘of growt, develepatent and progress thot hove tke place in {he economy, as well asthe strucara transformation which has taken place—n the economy. socety. las structure 4m polics—perhaps the single most important ouscome showing change. For example, the thiee-Tol increase ta pet. ‘capita income over more than six decades may suggest ta, fat lees according 19 one important indcatos, the people of {an ayea oc community ae beter off and thet standard of ing in economic and material tems has cebied and hat thes way of ling ard being in tbe word as consierebly hanged. Ifthe Ieracy vate has also increased cve-fld ‘ver the seme period histo shows that the county ands People are better off than previously and now engage with the wot differently baving a significant sempact on soci fcomoral, and caltaral relations amongst and berween ex ther Ts, pethaps, more important 10 assess whit the Rey rpurnbers and indicators coulé have. become, i.e. the poteatal—‘uliled or unfulfed—of the count, While 5 per een! of GNP growth per annum may sound UnDrESSve,2. Issues in Pakistan's Economy pethaps here wer condtons wick cold hate mea that the cara should have ahisned or pet cnt growth dow hence, 5 percent suggests unfulfedpotetal ad ‘xpesains, Thas, ipes eed to bese a with espe teu pont nod oe a well, Another ele son ttich cold rmestie succes or achievement fora county isome comparison with mer counutes I a number of fountes were a sina elo one detent fay thee or fur cence ag ar al of them hve so own memendees growths abet tems gh Be teetsry 10 lek ot bow clatvey ell ure cunts have patesed. The comurion ttwcen Seth Kore Politon 9 adh ced ese re bth were conned {0 be ta snr lee of development and roth nthe Joe Site bot have show impressive eomomit prow ‘rer the las ve decades. tap South Korte GAP Per Captain tts that of Fastan Ths inde on xtreme teling state. Even nie teling for fav, 's Banglees’s continued prosperity xh economic and lmao: a county which ws cal 9 ashe casein 1973s today eng sen as. posible net Chin’ Paka sn compaison as rcety Ree compared th te ts of Somalis Sadan and Alphas. ‘While thre area numer of important tses that one seeds to esate of hen cau the eo of como row over more than sty eas te storys ncompete ‘oot nadeqate unless ane exanies the oes ‘ot of economic goth Does oanty with ih ats OF economic gronth messured by Ser capita ince avr Sie decade, wth dre ile educated, only opulavon, cet progress? An in conse, des a Pott fovniry with low inetme growth bt ts higher sal And man capital with iterate, testy, seated popolaten resent progrss? Or armestre ql Ielevan??Poltan's comic ocr has always teen ontasted wits it smal perfornance othe ei tr, Imabolte es anda lave compa conntriee ‘neon, counnes ike Cabo and Vetam have eeomic Stats that seem 0 be less impresive than tho fe Pokistn. Hut Bath eorires hae eradicated iirc so hove statics int heath sector hat re earl with ‘mon developed courts One mut thn ak the custo onomic develpment how andor won? Mf cone {ron Geetonenent ad prosperity ar marfest ay Syne ns pending beyond one's mene en defence, and pooping pare nnn exasbeven all the expense St eapondtoe inthe acl sete an the peopl hen to ater hoe dynam the econamie grow te sly {uke meainglemneMorcover the cueton of eqae snbiton of eouees portant where gh in GNF Dereaptia may not be reeds ho haw many bene {rom that growth 1 important emphasis tht the sor moment in which one cues and eats isis tat hve ele teste alia mates For exam. nthe 195s and 1860 coum sce vt dependent ame xcs pon srowth rates, regardies oftheir composition, dstibuton,” forimpact A high growth rte suggested suceess. while those ‘counties that had different parameters 0° priorities and if not come up to some acceptable gronth exvsion were Considered poor achievers, or ought fates, Sn the 1970s, redsubution with growil and socal sector performance became important cela for success, and now. in che cwenty-first coneary, “mederniztion, openness, and indices of favolverent and participation of the rivate sector bave emerged slongsvde growth as important inicatrs. There hive alto been important shifts in pokical ideoiogy an in ways of achieving the trges set. When growth was the onlv thing that mattered for econemiss. conventional wisdom Ihdld hat itd ot mater how one achieved high growth, for it would eventually fiter down to tie people. These ‘cconomie pundits went so far as to suggest that strong. Suthoritaron sates ere necessary to oversce high growth ‘ates and adequate economic performance. Perhaps many of the mltry dieteorships that emerged in the Third World In the 1950s, 1860s, an 1970s foand justiatin fom this argument. The foreign policy and diplomatic manceurnng oF {he nwo superpowers, che United States and the Soviet Unica, in those decades eeflete this inking when both counties ‘ropyed up ane supported highly dicttoial and eppressive regimes. ‘Today. intheneo liberal era ofthe newmilenniom, progress and developnent incorporate mary more qualities than they may perhaps have ever dane in The pest, Today economic evelopment must supposedly be swine pariatoy ‘nvranrertaly reponse, and debut. The single-minded focus en growth hes been replaced by «ver arge mumber of other equally important criteria Just asthe way of bringing about this gronth and development fas dove. ebiough ‘conventional wisdom sil grants, probeby incorrectly that igwth matteys most. Hence, when we evaluate an ecanary fF country, Iooking back afew decades, our evaluation it talnted by the times in which we write and by the new ‘conventional wisena that dominates dhe historcaljancrure Yo abst purely scientific. universal methodology can help fevahuating 4 leng-drawn bistoncal proces, and concepts and meibous Used are relaue, contextual, aid a Ure very Subjective ‘The long presmble above has been made necessary by the ‘ced to guard against the pital that alc us when we value economies ar societies whether Ou oh or someone ‘else’ in the case of Pakistan, tis very ensy adopt a before ad-afer approach. shawing what was and what But an ‘evalusclon cannot be even half ecmmlete una one studles the roceses of econo development of change, of transition, and of structural Wansfosmation, in order to understand where we were, where we are and sthere we may possibly be healing. Teo points in tme do not provide that way of ooking at socket “This book sabour the pacts of exgnemic developement in Pakistan since atleast 1947, not a itis ever This eapter presen a largely state piure of what was and oihat is The details of what happened during these sixes years sre to be found ip the chapters ofthis book, The numbers, the informatica and the analysis tn this chapte asi Che est of the book, Should be studied with caution, and al the arguments Isted above, about the dangers af staying and ‘evaluating socedss and ceenomies, mast be kept mind