Pakistan's economic spectrum is a blend of characteristically different eras more popularly known as the early years (1947-58), the first military regime (1958-69), the ZAB period (1971-77), the second military regime (1977-88), structural adjustment era (1988-99), the third military regime (1999-2007) and the current democratic set-up (2008-todate). Approximately half of the tenure has been dominated by the military rulers and the other by the civilian governments.
After a careful and cautious analysis it becomes crystal clear that all the military regimes demonstrated high growth rates as compared to the so-called democratic set-ups. A quick glimpse at the economic performance of the different military and democratic arrangement is provided below:
The first military regime more popularly known as the 'Decade of Development' and revolutionary regime witnessed staggering growth rates. The country was at the top in Asia in terms of industrial production because industrial production grew by 72 percent over the period as compared to an average of 55 percent for Asian countries.
The country was optimistic about entry in the comity of the developed nations in the near future. In the second military regime Pakistan stood at the threshold of graduating into the middle income group of countries' on the per capita income ($400) criterion. In the third military regime Pakistan joined the Global Emerging Economies Club and won the distinction of being one of the four fastest growing economies in the Asian region, along with India, China and Vietnam in 2007 and inducted in the elite group of the "Next-Eleven" by Goldman Sachs. However, the first civilian set-up had seen a period of economic stagnation, the second civilian arrangement had been a decade of disaster, the third civilian set-up labelled as an economic and political debacle and the current is being dubbed as a complete failure. So what are the distinguishing factors that stimulated growth in military regimes and are not present in the democratic set-ups?
The decisive element is the continuity and consistency of economic policies because all military regimes enjoyed a time span of almost a decade so they were able to pursue their policies for a longer period of time. The tremendous growth achieved by our neighbour has been the result of consistency in policies pursued by all the stakeholders through national consensus. India on 24th July, 2011 celebrated 20 years of economic reforms. The second prominent factor of economic growth has been the generous flow of foreign aid and the critical role played by the private sector. The entire economic set-up in the 60s was heavily dependent on foreign assistance. Foreign aid in association with the private sector was the main instrument in Pakistan's economic growth in the 60s. The growth rate, during the 80s was bolstered by the massive amount of foreign assistance received by the country in the wake of Russian intervention in Afghanistan in December 1979, where the economic assistance rose from an average annual disbursement of $770 millions in five years preceding Zia's rule to $1201 in five years following Zia rule.
In the fifth plan 1978-83 an active role was assigned to the private sector in all the major industries. The significant feature of the sixth plan of Zia (1983-88) was the expanding role for the private sector according to the World Bank review. In the third military regime an open-door policy was initiated for the private sector. The war on terror proved to be a blessing in disguise for the regime that helped in terms of foreign flow of the capital of approximately $16.1 billion. So the generous flow of foreign capital accompanied by the critical role played by the private sector helped increase the GDP growth. Another hallmark of all military regimes has been the centralisation of powers. Ayub and Zia held three posts simultaneously, namely the Army Chief, President and the Chief Martial Law Administrator. President Musharraf had been occupying two of them. This thing strengthens the notion that the presidential system and the centralisation of powers have been more successful and favourable for growth in Pakistan.
But in the analysis for growth prospects of the military governments, one thing is clear that high economic growth of military regimes proved lacklustre in the long run. First, the saving-investment gap was filled through non-traditional source of foreign aid. United States, a major source of foreign assistance for Pakistan suspended seven times its aid during the last 56 years through different amendments (Symington, Pressler and Glenn). Moreover, the flow of the foreign aid had a negative impact on savings. According to one report one percent increase in foreign capital inflow cut savings by 0.21 percent. Second, all of the military regimes followed a wrong growth strategy and model. They followed order in their development schemes as first industry, second agriculture and then commerce. So they subverted the natural order of growth laid down by Adam Smith, ie, first development of agriculture, second industry and last of all commerce. In England, agriculture preceded industrial revolution. In the US industrial development followed agricultural development. Soviet Russia started its five-year plan with emphasis on heavy industry but by beginning of the second plan, it realised that industrial development could not proceed very far without substantial increase in the country's farm production. China accorded the highest priority in its development to increasing agricultural productions first.
So, for strong and sustained economic growth in Pakistan, all the political parties and other stakeholders should reach a consensus, the private sector should be assigned a primary role in the development process, the right growth strategy and model need to be adopted, continuity in economic policies should be given top priority. National savings and exports should be promoted to fill in the saving-investment gap. Political stability and an enabling environment must be ensured to put the economy on the track of development. (The writer is attached with COMSATS University)
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1st civilian 2nd civilian 3rd civilian 4th civilian
regime regime regime regime
(1947-58) (1971-77) (1988-99) (2008-todate)
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Average GDP growth 4.02 4.84 4.74 2.9
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1st military 2nd military 3rd military
regime regime regime
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(1958-69) (1977-88), (1999-2007) ?
Average GDP growth 6.77 6.45 5.4
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