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Political Corruption and Economic Development in Pakistan
  By: Hamid Sultan Dawoodi
   
 
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The corrupt politicians in Pakistan put the nation in severe economic crisis and the nation is still looking for a growth strategy. Our Economic planners look towards the International Monetary Fund (IMF) and other multilateral donors for guidance to spur growth. The experiences of countries such as Brazil, China, and India can provide alternative views about development, and these experiences may at times be more relevant than the pathways advocated by developed countries. None of the three countries have the ideal transparency or governance that the economists from developed countries state vital for sustained growth. All the three countries, though, ha

ve slightly better rating in the corruption perception index of Transparency International. Nonetheless these countries are classified among the corrupt nations in the world.

Not all the three have democracy. In fact, in economic freedom or in case of doing business , India and China are rated below Pakistan by the Heritage Foundation of United States and the World Bank.

   
 

But, these ratings look meaningless when we compare the performance of these three countries with that of Pakistan. The major difference between these three countries and Pakistan is that they have better institutions that may be as slow in taking decisions as ours are in achieving quick results, but they rarely deviate from the rules. In our case, we award contracts worth billions of rupees without even adopting the required procedures. Our bureaucracy simply does not implement
the policies.

They bend rules to please the political government of the time. Brazil, China and India have not only become powerhouses in terms of population, food production, and economic strength. Even though these three countries have followed three significantly different development pathways, all have experienced noteworthy growth and development in recent years. China adopted a gradual "firing-from-the-bottom" approach toward reforms that started in the agricultural sector and later moved to manufacturing and services, spurring private investments and rural nonfarm growth and employment. With its accession into the World Trade Organisation, China introduced a more open and export-oriented trade system that included reduced agricultural protection policies.

   

Agricultural productivity in China was below Pakistan's level in late seventies but now it is many times higher. In industrial production we were not far behind in the 1960's but now we are no where near.

India employed a top-down reform process that started with macroeconomic policies and the services sector and then moved to manufacturing. Partial policy changes related to agriculture focused primarily on agricultural trade liberalisation, with the sector retaining many distortions. As a result, the service and manufacturing sectors are performing much better than the agricultural sector, with poverty reduction driven largely through trickle-down effects.
We failed both in harnessing our agricultural and industrial potential. In fact we did not take advantage of our strategic position as being the cheapest gateway to Afghanistan and Central Asian markets. India is making inroads in these markets by importing raw material from these regions and exporting finished products. More than 80 per cent of the coal mines Afghanistan have been leased to Indians who would dispatch the coal through Wagah border to India, courtesy latest Pak-Afghan Trade Agreement. Brazil implemented policies promoting budgetary restraint, market deregulation, and an increasingly export-oriented economy. These reforms benefited Brazil's large scale commercial farms, largely leaving small-scale farms behind. Economic liberalisation policies have thus been accompanied by expanded and better-targeted social protection programs to tackle food insecurity and extreme poverty.

Strong economic growth in these three countries has translated into more dominant positions in the world economy. In fact, the three countries have been among the top 10 largest economies in the world since the 1990s, and their share of global gross domestic product (GDP) is predicted to increase in the coming years, with China edging ever closer to the dominant position held by the United states. The three countries' performance in reducing poverty and hunger has been mixed, however. China has made remarkable progress in reducing poverty, cutting the share of people living on less than $1.25 a day from 84 per cent of the population in 1981 to 16 per cent in 2005 and reducing the number of poor people from 835 million to 208 million. Yet poverty reduction has been uneven over time and across China's regions and has been accompanied by a steep rise in inequality.

The share of undernourished people in China fell from approximately 15 per cent to 10 per cent of the population between 1990-92 and 2004-06, or from 178 million to 127 million undernourished people. China's reform process highlights the importance of a sound investment and institutional climate and support for agricultural and rural development. China's reforms were implemented through a pragmatic trial-and-error approach that entailed testing pilot programs, evaluating results, and scaling up successful ideas. In India, despite a significant reduction in the proportion of people living in poverty (from approximately 60 per cent to 42 per cent between 1981 and 2005), the number of people living on less than $1.25 a day increased from 420 million to 456 million between 1981 and 2005. In India, however, despite a modest drop in the proportion of undernourished (from 24 to 22 per cent), the number of hungry increased from 210 million to 252 million during the same time period. Moreover, India accounts for 42 per cent of the world's undernourished children.

India 's experience with subsidy policies shows that public spending allocation choices and impacts need to be viewed as dynamic rather than universal and permanent. Another lesson comes from India's experience with increasing the targeting and efficiency of rural public works programs through extensive participation of village councils and civil society. Brazil reduced the number of poor from 21 to 15 million (from 17 per cent to 7 per cent of the total population) between 1981 and 2005. Brazil experienced a decline in the rate of under-nourishment from 10 per cent to 6 per cent (16 million to 6 million undernourished) during the same period. Developing countries can also learn from Brazil's social protection policy experience with conditional cash transfer programs, which achieved more efficient targeting through more reliable systems of information gathering and more rigorous evaluations. Brazil's experience has also shown, however, that agricultural growth can bypass smallholders and the landless, highlighting the need to complement social protection policies with productivity-enhancing interventions for smallholders.


 
 
 
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