Impediments to Growth

Impediments to Growth

The progress and prosperity of a nation hinges on strong and inclusive political and economic institutions; other factors namely geography or culture may contribute in one way or the other but without strengthening the key institutions, development remains a pipe dream. Inclusive institutions bring best individuals to the forefront in the political and economic arenas by providing all with a level playing field, thus benefitting both the individuals and the society. Inclusivity makes both the people and the society rich and prosperous.

Our political institutions are not inclusive; rather, they have gone highly personalized, rendering the political leadership to be the choice of only a few. The way political parties are run and elections are contested pave the way only for the affluent segment of the society to enter the political arena. High cost involved in general and even in local bodies’ elections leaves hardly any space for the common man to fit in. Political institutions are thus extractive by their very nature and the political elite that is harvesting the political dividends wants the continuation of the status quo because it favours and perpetuates their interests.

True leadership within a political party emerges from free and fair intra-party elections in tandem with the democratic spirit and strengthening the local governments. The ruling parties, barring PTI, have been reluctant to hold local bodies’ elections in their respective provinces and to devolve the power at the grass-roots level, thus restricting the way for the local leadership to emerge and to take control of the local affairs. Even after the local bodies’ elections, all the provinces with the sole exception of Khyber Pakhtunkhwa have denied transfer of power to the local, elected representatives. This is indicative of the fact how our political institutions are far from becoming inclusive which is sine qua non for development and democracy to take deep roots.

Leadership emerging out of the extractive political institutions is tempted toward minting money and creating economic institutions aimed at safeguarding their economic interests. Again these institutions are not inclusive. The political elite extract benefits out of them at the cost of the rest of the population, thus creating extractive economic institutions.

Daron Acemoglu and James A. Robinson in their book entitled “Why Nations Fail” have maintained that extractive economic and political institutions are inter-dependent. These are extractive institutions because they are designed to extract income and wealth from one subset of society to benefit a different subset. Resultantly, one segment of society makes fortunes at the expense of the others. Ever-increasing disparity between different segments of society and regions and the yawning gap between the rich and the poor indicate that much needs to be done to make our economic institutions inclusive.

Extractive economic institutions create poverty and illiteracy. A vast majority of the population finds it hard to make both ends meet, not to speak of access to education and healthcare facilities. According to Pakistan’s first-ever official report on multidimensional poverty, four out of ten Pakistanis are poor, with highest poverty rates in FATA and Balochistan.

Likewise, Pakistan has one of the lowest literacy rates in the world. According to UNESCO, it is 55% and Pakistan stands at 160th place in the world. Without equipping the youth with modern education and making it accessible to everyone, development will always remain elusive.

The solution of the problems regarding development lies in making institutions inclusive. such economic institutions can only be formed by inclusive political institutions. Through inclusive political institutions power is broadly distributed in a society thereby making its arbitrary use difficult. Such an arrangement also makes it difficult for those with the vested interests to undermine the very foundations of the inclusive institutions. Economic institutions thus created will help in achieving more equitable distribution of resources, benefitting all the segments of the society.

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