Looking Back!

How Pakistan
became an Asian Tiger in
2050
Nadeem Ul haque
http://development20.blogspot.com/
Email: nhaque_imf@yahoo.com
Podcast: https://nhaquepod.podbean.com
Twitter: @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 • Problem Policy and govt.
and opportunity
• Entrepreneurship through • Volatile growth
migration and informal • Long run growth falling
economy ranges between • Productivity decline
30-80%
• Remittances great
equalizer
• Growing middle class
• Poverty declining
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
All
outsourced
No Process policy to Donors

Analysis Research Data

Government of day
Army plots perks

plots perks/
DMG control devices
appointments transfers

Industry/Agri/Rich SROs subsidies licenses

Unproductive avenues of social mobility

 Continued
rent
No
Crisis Bailout seeking
Reform
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