Imagine Pakistan as an Asian Tiger

[Riaz Haq]

Taiwan, Singapore and South Korea  experienced a dramatic rise under authoritarian regimes from 1960s through 1990s. The dictators who led these states also showed the way to fellow Asian dictators in Indonesia, Malaysia, Thailand and China who also industrialized and prospered using the same formula that rejected the Washington Consensus of democracy and free markets as the basis for development of all nations.

Per Capita GDP (Constant 2000 US$) Source: World Bank

East and Southeast Asia:

The Asian Tigers have managed their massive growth mainly through export-driven economies that catered to the industrialized West. Each of them has built huge trade surpluses to fund their growth. These countries have invested in  improving education and training to build significant human capital in a couple of decades.

The improved productivity of the workforce, coupled with relatively low wages in Asia's developing economies, have resulted in enormous foreign investments. The large amount of foreign capital has allowed for massive growth. Their export-driven industry has spawned finance and service based industries that we now see, allowing the Tigers to maintain their high GDP. With rapid economic growth and human development, each has built a large middle class, paving the way for democracy to take root. As a result, dictatorships have given way to democracy in recent decades in most of these nations.

South Asia's Performance:

South Asia has been a laggard in economic development when compared with countries in East Asia and South East Asia. No South Asian nation has seen comparable growth in human and economic development. China, a country of 1.4 billion people run by one-party system, is far ahead of India, an equally large country run as a multi-party parliamentary democracy.

Source: Where Are the Poor and Where Are the Poorest?

A billion people were lifted from abject poverty between 1980 and 2010. China accounts for nearly three quarters of these, or 680 million people brought out of misery, by reducing its extreme-poverty rate from 84% in 1980 to 10% now, according to a report in The Economist.  The report adds that with "poorer governance in India and Africa, the next two targets, means that China’s experience is unlikely to be swiftly replicated there".

India: 

As China's share of the world's extreme poor (living below $1.25 per day per person level) has dramatically declined, India's share has significantly increased.  India now contributes 33% (up from 22 % in 1981). While the extreme poor in Sub-Saharan Africa represented only 11 percent of the world’s total in 1981, they now account for 34% of the world’s extreme poor, and China comes next contributing 13 percent (down from 43 percent in 1981), according to the World Bank report titled State of the Poor.

The share of poverty in  South Asia region excluding India has slightly increased from 7% in 1981 to 9% now, according to the report. India now has the world's largest share of the world's poor, hungry, illiterate and sick who still lack access to very basic sanitation.

In a recent book "Street Smarts", a hedge fund Manager Jim Rogers makes some important points to explain how East Asians have succeeded in rapidly developing while others have failed:

 "Many Asians say that the Asian Way is first to open your economy, to bring prosperity to your country, and then, only after that, to open up your political system. They say that the reason the Russians failed is that did it the other way around. Russia opened up its political system in the absence of a sound economy, everybody bitched and complained, and chaos inevitably ensued. As an example of the Asian path to political openness, they point to South Korea and Taiwan, both of which were once vicious dictatorships supported by the United States. Japan was at one time a one-party state supported by the US military. Singapore achieved its current status under one-party, authoritarian rule. All these countries have since become more prosperous and more open. 


Plato, in The Republic, says that the way societies evolve is by going from dictatorship to oligarchy to democracy to chaos and back to dictatorship. It has a certain logic, and Plato was a very smart guy. I do not know if the Asians ever read The Republic, but the Asian way seems to suggest that Plato knew whereof he spoke."

Not only is the Asian model different from that of the Soviets, it stands China in marked contrast to those thirty-year dictatorships previously mentioned. Chinese leaders have put a high premium upon changing the country's economy, presumably to seek prosperity for the 1.3 people who live there." 


"And yet,in 1947, when it achieved independence, India was one of the more successful countries in the world, a democratic country. But despite democracy, or maybe because of it, India has never lived up to its potential. China was a shambles as recently as 1980. India was far ahead of it. Bt since then China has left India, literally in the dust....As China rises, India continues to decline relatively. Its debt-to-GDP ratio is now 90 percent, making a strong growth rate virtually impossible."

1960s Pakistan:

Pakistan was on a similar trajectory as the Asian Tigers during 1960s under Gen Ayub Khan's rule. GDP growth in this decade jumped to an average annual rate of 6 percent from 3 percent in the 1950s, according to Pakistani economist Dr. Ishrat Husain. Dr. Husain says: "The manufacturing sector expanded by 9 percent annually and various new industries were set up. Agriculture grew at a respectable rate of 4 percent with the introduction of Green Revolution technology. Governance improved with a major expansion in the government’s capacity for policy analysis, design and implementation, as well as the far-reaching process of institution building.7 The Pakistani polity evolved from what political scientists called a “soft state” to a “developmental” one that had acquired the semblance of political legitimacy. By 1969, Pakistan’s manufactured exports were higher than the exports of Thailand, Malaysia and Indonesia combined."

Bangladesh:

Some argue that it was Ayub Khan's rule in 1960s that resulted in the loss of Pakistan's eastern wing and the creation of Bangladesh. I strongly disagree with this view. I believe that ill-conceived general elections of 1970 gave the opportunity to Pakistani politicians to lie to mostly poor and illiterate electorate of the time to win their votes. Shaikh Mujib exploited normal regional economic disparities that can be found in any country, including India and US, to argue that Bengalis were unfairly treated. Just look at the income data for various states in US or in India and you'll see huge gaps in incomes and standards of living. Indian Punjab's per capita income of Rs. 88,783 is 1.4 times higher than West Bengal's Rs. 62,831. Bihar's per capita income of Rs. 28,317 is less than a quarter of Haryana's Rs. 122,660. New Jersey's per capita income of  $53,628 is much higher than Mississippi's $33,073. 

In the end, Zulfikar Ali Bhutto refused to sit down and talk with Shaikh Mujib and forced the split. Here's how one of Bhutto's friends late Gov Salman Taseer offered his view in his book "Bhutto: A Political Biography"

"Blame can never be satisfactorily or finally apportioned to the major players in this grisly drama, but that Bhutto, Mujibur Rahman and Yahya Khan share responsibility there can be no doubt. Many, indeed, are inclined to the view that Bhutto, as the most sure-footed politician of the three and thus the best equipped to assess the consequences of his actions, must accept the lion's share of the blame. Argument on this point will remain one of the central themes of Pakistani politics, perhaps for decades."


The fact is that economic gap between former East Pakistan and Pakistan has grown over the last 40 years, and the per capita income in Pakistan now stands at more than twice Bangladesh's in 2012 in nominal dollar terms,  higher than 1.6X in 1971.

 Here are some figures from Economist magazine's EIU 2013:

Bangladesh GDP per head: $695 (PPP: $1,830)

Pakistan GDP per head: $1,410 (PPP: $2,960)

Pakistan-Bangladesh GDP per head Ratio: 2.03 ( PPP: 1.62)

Pakistan's Economic History:

Since 1947, Pakistan has seen three periods of military rule: 1960s, 1980s and 2000s. In each of these decades, Pakistan's economy has performed significantly better than in decades under political governments.

In a 10/12/1988 interview with Professor Anatol Lieven of King's College and quoted in a book "Pakistan-A Hard Country", here is how eminent Pakistani economist Dr. Mabubul Haq explained lower economic growth under "democratic" governments:

"..every time a new political government comes in they have to distribute huge amounts of state money and jobs as rewards to politicians who have supported them, and short term populist measures to try to convince the people that their election promises meant something, which leaves nothing for long-term development. As far as development is concerned, our system has all the worst features of oligarchy and democracy put together.

That is why only technocratic, non-political governments in Pakistan have ever been able to increase revenues. But they can not stay in power for long because they have no political support...For the same reason we have not been able to deregulate the economy as much as I wanted, despite seven years of trying, because the politicians and officials both like the system Bhutto (Late Prime Minister Zulfikar Ali Bhutto) put in place. It suits them both very well, because it gave them lots of lucrative state-sponsored jobs in industry and banking to take for themselves or distribute to their relatives and supporters."

Human and Economic Development under Musharraf:

Pakistan saw yet another confirmation of accelerated economic and human development under military rule in years 2000-2007.
Pakistan's HDI grew an average rate of 2.7% per year under President Musharraf from 2000 to 2007, and then its pace slowed to 0.7% per year in 2008 to 2012 under elected politicians, according to the 2013 Human Development Report titled “The Rise of the South: Human Progress in a Diverse World”.

Source: Human Development Report 2013-Pakistan

 At 0.515, Pakistan's HDI is lower than the average HDI value of 0.558
for South Asia which is the second lowest among the various regions of the world tracked by UNDP. Between
2000 and 2012, the region registered annual growth of 1.43% in HDI
value, which is the highest of the regions. Afghanistan achieved the
fastest growth (3.9%), followed by Pakistan (1.7%) and India (1.5%),
according to the United Nations Development Program.

Overall, Pakistan's human development score rose by 18.9% during Musharraf years and increased just 3.4% under elected leadership since 2008. The news on the human development front got even worse in the last three years, with HDI growth slowing down as low as 0.59% — a paltry average annual increase of under 0.20 per cent.

 Who's to blame for this dramatic slowdown in the nation's human development?  Who gave it a low priority? Zardari? Peoples' Party? Sharif brothers? PML (N)? PML (Q)? Awami National Party? Muttahida Qaumi Movement?  The answer is: All of them. They were all part of the government. In fact, the biggest share of the blame must be assigned to PML (N).

Sharif brothers weren't part of the ruling coalition at the center. So why should the PML (N) share the blame for falling growth in the nation's HDI? They must accept a large part of the blame because education and health, the biggest contributors to human development, are both provincial subjects and PML(N) was responsible for education and health care of more than half of Pakistan's population.

Pakistan R&D as Percentage of GDP Source: World Bank

Going further back to the  decade of 1990s when the civilian leadership of the country alternated between PML (N) and PPP,  the increase in Pakistan's HDI was 9.3% from 1990 to 2000, less than half of the HDI gain of 18.9% on Musharraf's watch from 2000 to 2007.



Acceleration of HDI growth during Musharraf years was not an accident.  Not only did Musharraf's policies accelerate economic growth, helped create 13 million new jobs, cut poverty in half and halved the country's total debt burden in the period from 2000 to 2007, his government also ensured significant investment and focus on education and health care. In 2011, a Pakistani government commission on education found that public funding for education has been cut from 2.5% of GDP in 2007 to just 1.5% - less than the
annual subsidy given to the various PSUs including Pakistan Steel and PIA, both of which  continue to sustain huge losses due to patronage-based hiring.

Source: Pew Surveys in Pakistan

Summary: 

Looking at examples of nations such as the Asian Tigers which have achieved great success in the last few decades, the basic ingredient in each case has been large social sector investments they have made. It will be extremely difficult for Pakistan to catch up unless similar investments are made by Pakistani leaders.

Had Pakistan's development continued on the 1960s trajectory, it is quite conceivable that Pakistan would be a prosperous democracy like the Asian Tigers today.

Related Links:

Haq's Musings

Challenges of Indian Democracy

Pakistan's Economic History

Comparing Bangladesh with Pakistan

Economic and Human Development in Musharraf Years

India's Share of World;s Poor Up from 22% to 33%

Why is Democracy Failing in Pakistan?

Musharraf Era Higher Education Reforms in Pakistan

Comparing 30-Year Dictatorships in Indonesia and Pakistan

[Riaz Haq]

Here's a Deccan Chronicle Op Ed by Kuldip Nayar:

That India is an economic mess is known all over the world. What is not yet public is that the malaise was because of the wrong decisions which president Pranab Mukherejee took when he was Union finance minister from January 2009 to mid-2012 and also when finance minister P Chidambaram was heading the ministry nearly till the end of 2008 and before.

Mukherjee lives in the luxuries of Rashtrapati Bhavan and Chidambaram shields himself behind tall promises he still makes to mend the economy. Both of them are accountable. They should tell why they took the steps which disturbed the rhythm of progress. Because of lack of transparency in the affairs of government, only a handful of people know about the blunders the two committed.

One of the decisions taken by Mukherjee was to impose the Rs 1200 crore tax with retrospective effect on a foreign mobile company. After having lost the case in the Supreme Court on September 8, 2010, the government promulgated an ordinance before amending the Finance Act 2012. The retrospective clause in the act has scared away foreign investment which India badly needs. A bagful of concessions has not brought the Walmart yet to the Indian soil. Foreign investors have withdrawn a large sum of money which they had invested. In a few weeks, as much $ 200 billion has reportedly gone out. The outflow has not stopped yet.

Prime minister Manmohan Singh did not anticipate the repercussions. In fact, after seeing the mess Chidambaram had created in 2008, the prime minister should have taken over the finance ministry himself because of his expertise in economic matters. Unfortunately, his own record as coal minister does not hold promise but the prime minister would have done better in finance. India should have been exporting coal, as it did, instead of importing it. Manmohan Singh may not be personally responsible for the corruption in the allotment of coal blocks. But the bungling runs into thousands of crores of rupees. The full story may not yet come out because some files are missing. The government has admitted this before the Supreme Court.

According to CBI as many as 157 files are missing. The missing files reportedly have some letters and noting on the allotment of coal blocks. The prime minister cannot absolve himself of the responsibility that he was not the custodian of the files. He was in charge of the coal portfolio. A top CBI official, who is probing into the scandal, has said that there may be a need to ‘examine’ the prime minister, who was in charge of the ministry from 2006 to 2009. Could the prime minister have connived at what the ministry had been doing because his personal integrity is beyond reproach?

http://www.deccanherald.com/content/355537/is-india-story-over.html

[Riaz Haq]

Rethinking Civil-Military Relations in a Pakistan: Some Lessons from
Turkey


https://www.longdom.org/open-access/rethinking-civilmilitary-relati...


Volumes of literature exists explaining the reasons of military
intervention in domestic politics, however, the special aspect of
Pakistani military intervention in politics has not been widely debated
in Pakistan, partly because of the reason of military enjoying a status of
“sacred cow” at home and any objective criticism directed towards
military establishment is regarded synonyms with un-patriotism and
may bringing reprisals through formal as well as informal means.
Samuel P Hungten proposed the theory of separation for keeping the
military under the supremacy of civil control on the pattern of Western
democracies. Hungten’s formulations were based on post world war-II
civil-military relations of America. Rebbeca 6chiوٴ has given the theory
of concordance for civil-military relation. Military interventions in
domestic politics occur only where there is discordance between the
three partners. Нe author further elaborates the three partners of
concordance as the military, citizenry and political elite to agree over
four indicators such as military recruitment, political decision making
and military style [2]. Another view of military’s intervention in state
politics is described by Nordlinger with a tripartite clDssificDtion based
on the powers exercised by intervener and the type of goals pursued
[3]. Нe lowest level of interventionists is the “Praetorian Moderates”
who act as pressure groups mostly and avoid indulging in direct
government. Нe\ return power to the civilian rule Dіer “displacement
coups”. Нe second category is of “Praetorian Guardians” who share the
values of moderates but willing to take over the power usually for two
to four years and preserve the system which serves the military
interests. Нe last category is of “Pretorian Rulers” who deeply involve
in governance and extent their rule. Нe\ embark on an ambitious
economic and political agenda and when they handover power, they
maintain the status of praetorian moderates, keeping watchful eye on
the civilian government. In an another discourse on democratizing

[Riaz Haq]

Ex Dictator Chun Doo Hwan is dead! Dictators Park, Chun and Roh helped turn South Korea into an Asian Tiger. #Economy via
@NYTimes

https://www.nytimes.com/2021/11/23/world/asia/chun-doo-hwan-dead.am...

During the three generals’ combined rule of 32 years, South Korea rose from the ruins of the 1950-53 Korean War to become one of Asia’s Tiger economies, overtaking rival North Korea in industrial output and national income. While Mr. Chun was in office, South Korea tamed its chronic inflation, and its economy was among the world’s fastest growing, expanding an average of 10 percent a year.

His government also overcame huge odds against Japan, its historical enemy, to win the right to host the 1988 Olympics, widely seen as a coming-out party for the once war-torn nation.

-------------------

Chun Doo-hwan, South Korea’s most vilified former military dictator, who seized power in a coup and ruled his country with an iron fist for most of the 1980s, dispatching paratroopers and armored vehicles to mow down hundreds of pro-democracy protesters, died on Tuesday at his home in Seoul. He was 90.

His death was confirmed by South Korea’s national police agency.

In 1996, eight years after he left office, Mr. Chun was sentenced to death on sedition and mutiny charges stemming from his role in the 1979 coup and the massacre of demonstrators at the southwestern city of Gwangju the following year. But he was pardoned in 1997 in a gesture of reconciliation, shortly after Kim Dae-jung, a former dissident whom Mr. Chun’s military junta had once condemned to death, was elected president.

Mr. Chun, who ruled from 1979 until early 1988, was also convicted of collecting hundreds of millions of dollars in bribes from wealthy, politically connected families known as chaebol, whose businesses expanded into conglomerates with the help of tax cuts and other government favors.

Unapologetic to the end, Mr. Chun was the last to die among South Korea’s three military general-turned presidents.

As an army captain, he took part in Maj. Gen. Park Chung-hee’s coup in 1961, a move that secured his place in Mr. Park’s military elite. When Mr. Park’s 18-year dictatorship abruptly ended with his assassination in 1979, Mr. Chun, by then a major general himself, staged his own coup to usurp control. He later handpicked his friend Roh Tae-woo, also a former general, as his successor. Mr. Roh, president from 1988 to 1993, died in October.


-----------------

“Among South Koreans, his name is synonymous with a tyrannical military dictator,” said Choi Jin, director of the Institute for Presidential Leadership in Seoul. “His positive achievements are far outweighed by his negative legacies — the illegitimate way he came to power and the dictatorial streak that ran through his term.”

Chun Doo-hwan was born on Jan. 18, 1931, to a farming family in Hapcheon, in what is now southern South Korea. Korea was a colony of Japan at the time.

While his father, Chun Sang-woo, ran from debt-collectors and Japanese police officers (after pushing one off a cliff), his mother, Kim Jeom-mun, had high expectations for Doo-hwan, one of four sons. When a Buddhist fortuneteller predicted that her three protruding frontal teeth would block the boy’s path to glory, she rushed into her kitchen and yanked them out with a pair of tongs, according to “Chun Doo-hwan: Man of Destiny,” an authorized biography published after his coup.

After finishing vocational high school, Doo-hwan gave up going to college because he could not pay tuition. Instead, he joined the Korea Military Academy, where he practiced boxing and captained its soccer team as a goalie. (As president, he used to call the head coach of South Korea’s national soccer team in the middle of a match to dictate game strategy.)