Looking Back! How Pakistan became an Asian Tiger in

2050Nadeem Ul haque

http://development20.blogspot.com/Email: nhaque_imf@yahoo.com

Podcast: https://nhaquepod.podbean.comTwitter: @nadeemhaque

Join: https://www.facebook.com/groups/SochBichar/World bank doing a study Pak @ 100

Content analysis 1992

• Foreign policy +security • Domestic. Speculation dynasties +civil military

• Birdies and conspiracies

• Missing economics +systemic issues

What this session is about

• Economics not politics• I am not negative on Pakistan. On the contrary• Fresh approach and understanding

• A new way of analyzing understanding.

• Not the only way. • So please let us try to discuss and stay on topic

Econ books• Boring. Impress by numbers even if wrong and meaningless.

Hayek

• Lengthy descriptions little analysis

• Mostly donors—fiscal some social sectors lament poverty corruption and stress more taxes.

• Engineering econ. Pilot FM. Puff him up strutting about

But there is better economics

• Later

• My purpose here offer new narrative new approach

• Much can be explained if we look at pakistan through this lens rather than mere foreign policy, speculation

• First joke

• Then story

2050

• Pakistan PCI $12000. 20 yrs 10% growth • Booming --multinationals • Exports 45%• Middle class 90%• Govt well run budget balanced debt 20%• Tourism up globalized• Beautiful cities. Autonomous. Centers of commerce • Units for profs students. Contributing to policy• Peaceful. Modernized Terror gone

UN commission 2050

• They note in 2020 • Divided –terror and fundamentalism• Stop go development• missing youth dividend• Bad and ill thought out govt projects not leading to growth • Poor social sector performance• Ratings (competiveness, governance, EODB corruption, fragile states)

paint a picture

People find a way--positive

• Young population threat and opportunity

• Entrepreneurship through migration and informal economy ranges between 30-80%

• Remittances great equalizer • Growing middle class • Poverty declining

• Problem Policy and govt.

• Volatile growth• Long run growth falling• Productivity decline

Prelude to Reform• How Policy Was Made Before 2021 –

• Old model---aid—infrastructure-taxes • Fragmented Policy, • Owned by Nobody

• Austerity• Talent Leaves Government In Austerity,• Thinking Shrinks First

• Projects and Programs Did Not Work

Agents of change—what is your theory of change. • Top down—wishing for benevolent dictator or great leader

• Here bottom up --Crowd-Sourced Agenda • Freewheeling Growth of Networks Flat Organization: • No power, No Perks

• Explain Networks later

• A new kind of economics complexity evolutionary.

CAS

• Evolutionary—non equilibrium• Deep (model) uncertainty• Unpredictable----No targets • Policy nudges or finding attractors • Policy depends on deep knowledge and understanding

Networks emerged by 2023-5 and noted

• Footprint of government =70+%• Limited investment/saving

• Is govt benevolent –will do right thing—all it needs is guidance• But govt a rent distributing agency

• The belief in markets• Where is competition –the success norm.

Govt no research or thought

• Budget and Circular debt• Energy---Now NS asks for audit after 10 years• 1 Constitution ave and KHI buildings

• Roads metros aping West

• Reko Diq• Privatization

Government

No Process

Analysis Research

policy

Data

All outsourced to Donors

Gove

rnm

ent o

f day

Army plots perks

DMG plots perks/

control devices appointments transfers

Industry/Agri/Rich SROs subsidies licenses

Unproductive avenues of social mobility

Crisis No Reform Bailout

Continued rent

seeking bad

policies

Austerity Fragility

Social mobility and Incentives

• No merit or competition • Dynasties in politics Cheema + Ayesha ali• Industrial structure –no entrepreneurship

• Markets over or badly regulated Competition limited. CCC• SROS, cartels entry

• Rentseeking—SROs, land grants, kickbacks• Then there are government contractors

Solution evolved. Debated discussed 2025-30

• 2025—reform period 2028-30• Build State for Development (2028)

• Adapt the Constitution (1935)• More electoral competition-entry• Checks and balances

• The Role of the State—Strong and Caring • Decentralization At Last! Evolving Local Governments

Islamabad has been Cut Down to Size (commission)• Developing Due-Process. (Commission)

Dispensing with the Colonial legacy (2029)

• Colonial Extraction • Captured by the Elite Enter the IMF: Budgets Out of Control • Increasing Concentration of Power --ROB• Debate on Reform Flattening the Pyramid --UPS• No More Transfers! • Well Paid But With No Perks • Union Busted

Breaking the Back of Rent-Seeking

• “Success Norm?” • The Problem of Land • Cities Held Hostage to the Central Bureaucracy (2030)• ‘Feudal’ Stranglehold on Agriculture • Land Markets Not ‘Land Reform’ (2029-31)• SROs and industrial estates

• Neoliberal. Govt v market

Mercantilist Policies and Distorted Development (2029-31)• A Brief History of Industry • The State of Markets • Entrepreneurship and Innovation • Family Run Businesses • The Forgotten Domestic Market • The Informal Economy Grows Mercantilism Must End!

Missing: A Cauldron of Change (2029-30)

• Development is a City Phenomenon • How the Cities were Managed • Giant Unmanageable Sprawls • No Room for Economic Activity or community • 90% of city space for rich in 2020• Autonomous Vibrant Cities Required

The pernicious role of perks and plots

• Unevenly distributed as performance reward• Tax free compensation• Used to game new entrants• Enclosure mentality-symbols • Put all into land development • Ruined cities

Inclusive Society

• Build Systems Not Sectors • Taxing Inheritances Not Everything Else (tax reform 2027-9)• Don’t Measure the Poor, --Give Them Opportunity • Taming the Automobile and Making Space for the Poor (2026-9)

A Secular Pakistan• Cities and public places • Commerce and leisure• The Rise of a Local Public Intellectual • Regulating the Mulla. (2032)

Emergence

• Entrepreneurship• Opportunity • A Better Social Policy • Education is Now in Demand • Women are Finally Included • The Forgotten Community

The Results Are Visible

• A Deep Change! • Government for the People • Regulation is a Serious (Not Bureaucratic) Business • The New Macro-Framework • Booming New Markets

Lessons

• Think Systems, Not Sectors • State-Building Must be a Priority • Cities are the Unit of Development • Donors Must Stand Back and Not Set the Development Agenda• ‘Best Practice’ Suppresses Local Creativity • Agents of Change Must Be Supported

What do we learn?

• Avoid mimicry and external experts• Think systems and markets not sectors• Innovation, experimentation and creative destruction• Global knowledge pool, open societies but local solutions• Human interaction and network formation—social capital• Interventions--Nudges