Fooling pakistani ppl With Fudged Economic Figures and Frivolous Fantasies

indianguy4u · 07-11-2005, 11:49 AM

Fooling Ourselves With Fudged Economic Figures and Frivolous Fantasies
By Ahsan Iqbal

http://www.satribune.com/archives/200507/P1_ahsan.htm

Quote:

ISLAMABAD, July 4: The economic managers of the present Government have made startling claims about state of the economy in the recent annual economic survey and budget. The outgoing fiscal year has been termed as an eventful year for Pakistan’s economy with the claim of posting several multi-year “firsts”.

Pakistan’s real GDP growth of 8.4 percent in 2004-05 is shown to be the fastest in two decades; the fifth time in the country’s history that it exceeded 8 percent growth mark; Pakistan projected as the second fastest growing economy after China in 2004-05; its per capita income claimed to have crossed $700 mark; and exit from the IMF Program is shown as an end to the borrowing era with the objective of making us believe that Pakistan is in the midst of an economic upturn.

This reminds me of Callender, Guy S. who wrote in "The position of American economic history, American Historical Review, October, 1913": "The chief economic writers of our day are as innocent of any thorough knowledge of history in the broad sense as ever were Ricardo and his followers. Moreover not a few of them show even less familiarity with the concrete facts of economic life of their own time and quite as great a liking for abstract treatment of the subject".

I will not go into challenging the claims of the Government because much has been written about them to show very clearly that Government's own numbers simply don't add up to what is being claimed.

It has also been pointed out that despite Government's lofty claims poverty, unemployment, and inflation have increased in the country bringing greater pain and hardship to vast majority of people living under poverty line and in middle strata of society.

While savings and investments rates remained low, it is hard to believe that such growth can be generated through productivity alone when there was no productivity related worth while investment and initiative in the previous year?

Similarly, according to reports, Pakistan has obtained about $10 billion worth foreign loans in last four and a half years. Besides the loans, the country raised $1.10 billion debt from the international financial markets. The inflow of foreign loans, obtained by Shaukat Aziz-led economic team, belies the Government claims that it has forsaken begging bowl and reduced reliance on external borrowings.

Without questioning the reality of the economic miracle, I would go a step further and say that even if one were to accept Government's figures and believe that macro economic stability has set in, the claim that Pakistan is in the midst of an economic upturn is devoid of any understanding of development economics framework.

The economic survey admits that it is not the first time but for the fifth time that we have hit eight percent growth mark. Our dilemma then is not achieving the eight percent growth level; but in sustaining and maintaining the rate.

If we look at the economic history of Pakistan, we can easily draw a pattern of a roller coaster ride. Pakistan's GDP growth rate average was under 4 percent in 50s, it was 6.8 percent in 60s, it was 4.8 percent in 70s, it was 6.5 percent in 80s, and it was 4.6 percent in 90s. One doesn't need to be a trained economist to predict the average for 2000-2010 and the following decade which even a school kid can easily do by reading the simple pattern.

The clue to understanding Pakistan's development predicament lies not in boosting high growth rates but in analyzing the cycle of low growth decades following every high growth decade. The puzzle to solve is why high GDP growth rates of 60s and 80s could not be sustained in 70s and 90s.

Interestingly, the high growth decades were witnessed under military rulers and low growth rates under democratic periods, which lead some people without background knowledge to infer that military eras are more conducive for economic development than democratic eras. As a matter of fact, military and democratic eras can't be matched because both operated under different set of conditions.

On examining 60s and 80s growth decades, one finds that military led growth model was not driven by endogenous factors, improvements in productivity linked to a faster pace of innovation and extra investment in human capital with Government and private sector institutions and markets nurturing innovation and central role for knowledge as a determinant of economic growth, instead it was generated by "exogenous factors".

Therefore, when these favorable exogenous factors disappeared the growth cycle also crashed. The 60s era was driven by massive injection of foreign and US Aid in recognition of Ayub Khan joining frontline role against communism, 80s period was driven by Zia's enlistment in Afghan war against Soviet Union which was rewarded in shape of liberal multilateral assistance and US aid along with peaking of remittances by overseas Pakistanis in the same period.

Likewise, the present macro economics is driven by post 9/11 scenario and Musharraf's recruitment in Bush's war against terrorism in shape of liberal multilateral lending, US aid, central bank buying over $ 14 billion from open market and huge remittances of Pakistanis due to crackdown on hundi and growing insecurity abroad.

As soon as the international political realities will change, the growth cycle will come crashing down, because it is neither based on a holistic development framework nor driven by endogenous factors, forcing military to withdraw from politics and hand over the country to weak and battered political institutions. Precisely for this reason, Gul Hasan couldn't fill Yahya's shoes and Aslam Baig couldn't impose Martial Law after Zia in the past.

Though this military led growth model brings temporary jump in our growth rates but it also harbors social inequality and regional disparity (SIRD) syndrome. The distribution of resources is monopolized by the ruling elite comprising of civil and military bureaucracy, rent seeking businessmen, and feudals. The rich become richer and poor become poorer. Similarly, regions and provinces not represented in the ruling structure are left out.

The effects of these distortions later produce major political and social upheavals. There are some examples of sustainable growth under benign authoritarian regimes in the world but those have worked only in societies with ethnic homogeneity.

The return to democracy in our case is plagued by the contradictions and distortions of previous military era. Corrupt political practices and authoritarian tendencies are inherited; borrowing has to substitute for cut off in foreign aid, liberal lending by multilateral agencies gets tied to harsh conditionalities which politicians find difficult to accept, and the pie starts shrinking.

The poverty rises, ethnic and regional strife grows due to deprivation under military era, and economic infrastructure is unable to adjust to new competitive mode of business. The politicians working with weak institutions and limited jurisdiction are left squabbling over meager space and resources. This leads to political instability which drags economic growth further down.

During my meetings with senior Chinese and Malaysian leadership, I repeatedly asked them about the key factors behind their economic success. Nobody mentioned numbers. The Chinese said: "Its political stability and social solidarity, which are pre-requisites for development. If you achieve these, you create conditions for sustainable economic development."

Dr. Mahatir said: "We created political stability and social harmony by making everyone believe that it is better to have a share in a growing pie than have a whole of shrinking pie." He said, "We formulated vision 2020 and translated it into concrete 5, 10 year targets, invested in human resources, forged a public private partnership, and facilitated private sector to take a lead role in economic development".

Any model of sustainable economic success rests on pillars of political and social stability and is driven by an enabling environment, without which it remains very shaky. One political or social upheaval can easily destroy the gains of over a decade just as it happened in case of Indonesia.

Development is composed of many things, not just macroeconomic indicators. It involves organization of society and its productive sectors, resources, infrastructure, markets, investment, distribution, quality of institutions, politics, culture, and values etc, which are related to one another.

Therefore, it has to be seen in a broader and coherent framework of political economy, which is over and above the narrow view of development as purely an economic entity or a game of numbers. Political economy attempts to merge economic realities with practical politics to view economic activity in its political context. It goes beyond traditional economics and among other things it studies how the social and institutional processes influence the allocation of scarce resources. It looks at choices, regulations, and rules, with special emphasis on the role of power and distribution in the economic decision making.

And in an international context, its underlying formulation is that no economic system can exist without some sort of political and social order. In my view, it is in the area of political economy that answers to our problems lie. Pakistan is without any doubt endowed with one of the richest economic resource base but its weakness is in a fragile politics and economic link. Under military rule, this linkage is further weakened.

As opposed to official view, therefore, development has to be viewed as a multi dimensional process that involves social, political, and cultural phenomena, whose ultimate goal should be to improve the quality of life, which comprises the following objectives; to increase the availability and widen the distribution of basic life sustaining goods, to raise the level of living including in addition to higher incomes, the provision of security, shelter, food, education, healthcare, jobs etc, and to expand the range of economic and social choices available to individuals and groups.

During Musharraf's years, allocation for education has gone down from 2.4 per cent of GNP to 1.7 per cent. Pakistan's ranking on Human Development Index (UNDP) dropped from 135th to 142. On Human Poverty Index it ranks 71 out of 91 developing countries, and its public institutions according to World Economic Forum rank at 102 out of 104 countries.

Musharraf's Government abandoned Social Action Program (SAP) started by PML-N Government in 1990-91 for country's social uplift. Despite some problems, it provided a major jump in social development by building extensive infrastructure. In December, 1999 Pakistan Social Summit was scheduled to develop a new social sector development paradigm for the next decade shifting focus from infrastructure to governance and service delivery.

Unfortunately, six years have passed without any coherent vision and framework for social sector development. Musharraf's keeps saying that threat to Pakistan's security is no longer external but internal. But, the expenditure on external front keeps increasing. There is just Rs 19 billion for internal security against Rs 250 billion for external security.

Each year, the expenditure on military overshoots target while development budget undershoots. As Todero says, "in addition to improvements in incomes and output, it typically involves radical changes in institutional, social, and administrative structures as well as in popular attitudes and in many cases even customs and beliefs".

Therefore, in case of analyzing and understanding development and its issues for any country or society, the numbers from economics and realities of politics should be unified under a comprehensive political economy framework. By just boosting economic numbers while social poverty and disharmony grows and political process bleeds there can not be any real and sustainable development.

In today's age of globalization when the economic and political interests inter mingle on global scale to shape new realities, it becomes critical to take a political economy approach towards development because when taken separately they lead to inadequate, over simplified, and arbitrary analysis, the result of which is that policies designed to increase the levels of development are limited in scope, susceptible to upheaval and discontinuity, and gap between rich and poor widens.

The new emerging economic and political regimes of global governance pose serious challenges for developing countries requiring major changes in social, economic, and political spheres in order to remain competitive and relevant. This can't be accomplished with a narrow numbers approach. These issues have to be debated and implemented in the domain of political economy.

An abstract on a web site about Pakistan's economy summarized the paradox of development very precisely as "Pakistan economy salient features: Low-income country with promising growth but transition to middle-income nation held back by chronic problems including rapidly rising population, sizable Government deficits, heavy dependence on foreign aid, large military expenditures, and recurrent Governmental instability."

We need to ask ourselves whether the projected growth is on account of growing political stability in Pakistan, is it due to any breakthrough in human development and training, is it due to increase in entrepreneurial dynamics of our people, is it due to better security, rule of law and stronger and business friendly institutions, is it due to modern and efficient infrastructure, is it due to change in attitudes and values of people, is it based on a broad across the board economic activity or is it mainly driven by exogenous macro economic factors because we are part of a limited time geo-strategic operation.

Let us not once again fool ourselves with a passing phase and instead try to build a genuine socio-politic-economic foundation by fixing our political economy problems through genuine national reconciliation to construct a balanced social, political, and economic platform and sustainable path towards prosperity and development.

The writer is a Former Deputy Chairman Planning Commission and a prominent leader of the Pakistan Muslim League (Nawaz Group) Email: betterpakistan@gmail.com

Who was saying people in pakistan are millionaires, u will find in every street corner.

indianguy4u · 07-11-2005, 11:51 AM

Oh forgot the cartoon,

vicky007 · 07-11-2005, 13:21 PM

Well no Big Deal everyone, including the Pakistani's on this Forum know what the real picture is.
Anyone who believes the Pakistani "Official" Figures has to have His/Her Head examined.

indianguy4u · 07-12-2005, 04:37 AM

Pakistanis know but deny it publically

.

Samudra · 07-12-2005, 06:42 AM

Asim

Where art thou ?

Neo · 07-12-2005, 11:16 AM

Quote:

Originally Posted by indianguy4u

Fooling Ourselves With Fudged Economic Figures and Frivolous Fantasies
By Ahsan Iqbal

http://www.satribune.com/archives/200507/P1_ahsan.htm

Who was saying people in pakistan are millionaires, u will find in every street corner.

Did you notice that this guy belongs to PML-Nawaz Group?
As a critic, he has the right to have an opinion..but I don't see any fact's there either!

By the way, Nawaz was co-responsible of the downturn of economic figures during the ninties...Pakistan almost defaulted under his government!

Neo · 07-12-2005, 11:25 AM

Quote:

Originally Posted by vicky007

Well no Big Deal everyone, including the Pakistani's on this Forum know what the real picture is.
Anyone who believes the Pakistani "Official" Figures has to have His/Her Head examined.

Dude,

Take my advise...go to Pakistan and see for yourself what progress is being made and get the real picture.
And have your head examined befor going there...prejudice won't give you a clear picture

Samudra · 07-12-2005, 11:49 AM

Wont the new 'moral' police come hunting for us , Neo ?

Neo · 07-12-2005, 12:21 PM

Quote:

Originally Posted by Samudra

Wont the new 'moral' police come hunting for us , Neo ?

Seriously Samudra,
Problem between Indians and Pakistani's here is deep rooted prjudice, take that away and you'll see so much more...find issues to discuss that really matter!

It's so easy to find a topic, get some reference from google and start another anti-Pakistan thread...Indians seem to have a lot of spare time to do that by the way....but what contributions have these guys made to help viewers get the real picture.
Nothing but bs!
I've travelled throughout India...my vieuw changed after that and like most Pakistani youth I'm not against India..
Unfortunately I can't say the same to you guys

Jay · 07-12-2005, 12:28 PM

Quote:

Unfortunately I can't say the same to you guys

Not entirely true. It goes both ways.

Neo · 07-12-2005, 12:38 PM

Quote:

Originally Posted by Jay

Not entirely true. It goes both ways.

True...but Indians are in the majority here...so are the anti-Pakistan threads! Ofcourse, I'm not speaking in general,
there must be liberal thinking Indians somewhere who think as well of Pakistan as I think of India

Jay · 07-12-2005, 13:02 PM

Quote:

Originally Posted by Neo

True...but Indians are in the majority here...so are the anti-Pakistan threads! Ofcourse, I'm not speaking in general,
there must be liberal thinking Indians somewhere who think as well of Pakistan as I think of India

we had quite a few here, but coz of certain Pakistani members, they had to change!!

visioninthedark · 07-12-2005, 14:32 PM

Quote:

Originally Posted by Jay

we had quite a few here, but coz of certain Pakistani members, they had to change!!

let me re-introduce myself ....

Jay · 07-12-2005, 15:01 PM

Quote:

Originally Posted by visioninthedark

let me re-introduce myself ....

That will not change anything, fcuk off! Werent you the one, who said that you will feed Indian new born to dogs?? a**hole !!

Aryan · 07-12-2005, 15:02 PM

Did anyone here actually bother reading the article, or did everyone just read the title of the thread and then post their opinions?

The author is saying macroeconomic inicators are not a valid way to measure the success of a country...virtually every economic publication uses figures such as GDP, GDP growth to indicate growth, either over a year or a number of years. True macroeconomic indicators are not a accurate tool to measure poverty or the health of a nation, but that isn't whats being asked here. The author is deliberately playing with the two entities to try and create an artifical link between them.

Then there is the basis of his analysis of GDP growth. He's using historical patterns to suggest growth. This argument is so ridiculous, the fact he's chosen to use it destroys the credibility on this subject as a whole. In the 80s there was no large scale privatisation of inefficient nationally owned companies such as PIA and PTCL, creation of tax free trade zones, liberalisation of economic policy, there has been under the present regime. There is no or little correlation with foreign loans, as loans were given throught the 70s and 90s, yet economic growth in these years was small. The transfer of power of Ayub Khan to Bhutto reduced economic growth not because a lack of foreign loans, but because the socialist policies of the Bhutto administration pushed away investors and business.

The author also talks about a social action programme. No wonder he missed out the details. It was partially funded by foreign organisations in the form of loans 20%. Data originally suggested that is had worked and school enrolment had increased, but these were government figures. NGOs actually found a decrease in enrolment and literacy over this period, despite the increase in spending. I'm sure you can all guess where the money was going to....

This article does a good job of summarising the SAP:

http://www.yespakistan.com/people/sap.asp

The present region has increased the development spending to more than any other occasion in history, and for the first time school education is free. The SAP hindered NGO work in improving education (one of the reasons for a declining enrolment rate). NGOs generally are better administrated and have better experience in working in poverty striken areas than any government body. The present regime has liberalised the policy and now NGOs are free to operate in Pakistan. Enrolment and literacy rates have improved and are higher than at any other time.

The author also makes a number of factual mistakes in his article:

"During the Musharraf years, allocation for education has gone down from 2.4 per cent of GNP to 1.7 per cent. "

Wrong. Education spending has increased since the Sharif regime (see above), and has become more efficient. 5% of the GDP is spent on social development now, more than any other time before.

"Meanwhile, the expenditure on the external front keeps increasing, with Rs19 billion for internal security against Rs250 billion for external security. Each year, the expenditure on military overshoots the target while the development budget is not large enough. This shows how necessary it is to unify numbers with political realities in the context of a comprehensive political economy framework."

Some truth, but the military spending this year as a porportion of the GDP has decreased. Funny how the author didn't mention that.

I could go on...but there's no point.

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07-11-2005, 13:21 PM	#3 (permalink)
vicky007 Banished Join Date: 06-10-05 Location: Pittsburgh,USA Posts: 703	Well no Big Deal everyone, including the Pakistani's on this Forum know what the real picture is. Anyone who believes the Pakistani "Official" Figures has to have His/Her Head examined.

07-12-2005, 04:37 AM	#4 (permalink)
indianguy4u Real Madrid CF *Senior Contributor* Join Date: 03-07-05 Location: Mumbai Posts: 3,213 Country:	Pakistanis know but deny it publically .

07-12-2005, 06:42 AM	#5 (permalink)
Samudra *Senior Contributor* Join Date: 09-01-04 Location: North London Posts: 4,272 Country:	Asim Where art thou ?

07-12-2005, 11:49 AM	#8 (permalink)
Samudra *Senior Contributor* Join Date: 09-01-04 Location: North London Posts: 4,272 Country:	Wont the new 'moral' police come hunting for us , Neo ?

07-12-2005, 15:02 PM	#15 (permalink)
Aryan Banished Join Date: 05-02-04 Posts: 1,532	Did anyone here actually bother reading the article, or did everyone just read the title of the thread and then post their opinions? The author is saying macroeconomic inicators are not a valid way to measure the success of a country...virtually every economic publication uses figures such as GDP, GDP growth to indicate growth, either over a year or a number of years. True macroeconomic indicators are not a accurate tool to measure poverty or the health of a nation, but that isn't whats being asked here. The author is deliberately playing with the two entities to try and create an artifical link between them. Then there is the basis of his analysis of GDP growth. He's using historical patterns to suggest growth. This argument is so ridiculous, the fact he's chosen to use it destroys the credibility on this subject as a whole. In the 80s there was no large scale privatisation of inefficient nationally owned companies such as PIA and PTCL, creation of tax free trade zones, liberalisation of economic policy, there has been under the present regime. There is no or little correlation with foreign loans, as loans were given throught the 70s and 90s, yet economic growth in these years was small. The transfer of power of Ayub Khan to Bhutto reduced economic growth not because a lack of foreign loans, but because the socialist policies of the Bhutto administration pushed away investors and business. The author also talks about a social action programme. No wonder he missed out the details. It was partially funded by foreign organisations in the form of loans 20%. Data originally suggested that is had worked and school enrolment had increased, but these were government figures. NGOs actually found a decrease in enrolment and literacy over this period, despite the increase in spending. I'm sure you can all guess where the money was going to.... This article does a good job of summarising the SAP: http://www.yespakistan.com/people/sap.asp The present region has increased the development spending to more than any other occasion in history, and for the first time school education is free. The SAP hindered NGO work in improving education (one of the reasons for a declining enrolment rate). NGOs generally are better administrated and have better experience in working in poverty striken areas than any government body. The present regime has liberalised the policy and now NGOs are free to operate in Pakistan. Enrolment and literacy rates have improved and are higher than at any other time. The author also makes a number of factual mistakes in his article: "During the Musharraf years, allocation for education has gone down from 2.4 per cent of GNP to 1.7 per cent. " Wrong. Education spending has increased since the Sharif regime (see above), and has become more efficient. 5% of the GDP is spent on social development now, more than any other time before. "Meanwhile, the expenditure on the external front keeps increasing, with Rs19 billion for internal security against Rs250 billion for external security. Each year, the expenditure on military overshoots the target while the development budget is not large enough. This shows how necessary it is to unify numbers with political realities in the context of a comprehensive political economy framework." Some truth, but the military spending this year as a porportion of the GDP has decreased. Funny how the author didn't mention that. I could go on...but there's no point.

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