Showing posts with label Politics. Show all posts
Showing posts with label Politics. Show all posts

Friday, May 12, 2023

Pakistan Now: Darkest Before Dawn?

Pakistan is experiencing one of the darkest periods of its history. Political instability is eroding confidence in the nation's future. Declining economic growth and high inflation are hurting the people of all strata of society, particularly the poor whose numbers are rapidly rising. Is there any hope left for the country? Is it a case of the "darkest before dawn"? How do investors see it? 

Ex PM Imran Khan (R) with President Erdogan

Writing in the Time magazine immediately after the recent arrest of former Prime Minister Imran Khan, American investor, author and commentator Zachary Karabell who has invested in Pakistani startups sees rare hope for Pakistan. He sees Pakistan where Turkey was back in 2001-2003, "when a series of elections brought Recep Erdogan to power even as he was repeatedly disqualified by a military that was determined to retain control". Here's an excerpt of his article titled "The Contrarian Case for Pakistan" published in the current issue of Time Magazine: 

"To some degree, this is an argument of “well, it’s not as bad as they say.” But it’s also a way of highlighting that Pakistan today may be a case of darkest before the dawn. With elections schedule for the fall, and with Imran Khan the most likely victor of said elections unless is his arrest leads to his disqualification as a candidate, Pakistan is in a very similar position to where Turkey was in 2001-2003, when a series of elections brought Recep Erdogan to power even as he was repeatedly disqualified by a military that was determined to retain control. Imran Khan has many of the same strengths and weaknesses of Erdogan, who after championing Turkish democracy and economic reform, then turned into the very type of corrupt autocrat that he had once fought against. But he nonetheless unleashed massive economic potential in Turkey and has left its 80 million people materially better off over the past 20 years, even as hyperinflation and Erdogan’s recent economic ineptitude is now eroding that. Should Imran Khan return to the head the government, he may well usher in a similar period in Pakistan, even as he has his own authoritarian and demagogic tendencies". 

Here are some of the key points Karabell makes in his opinion piece:

1. Pakistan has a real and dynamic private sphere that is not only seeing a start-up and new business ecosystem that has attracted hundreds of millions of dollars a year for the past few years but operates freely in a way that would be inconceivable in many other countries. Compare it to Egypt, for example, which receives far less negative attention and more foreign money yet is almost entirely dominated by a military dictatorship. Or Algeria. And then there are countries which barely function at all, dominating a whole swath of Sub-Saharan Africa but also dot central Asia (Tajikistan anyone?).

2. Pakistan is the fifth most populous country in the world with 230 million souls, a median age of barely 22 and two-thirds of the population under the age of 30. That means unlike most of the world, it has a favorable demographic future.

2. Unlike, say, Nigeria, where the ethnic divisions and decades of corruption mean that it well-nigh impossible to treat the country as one unified market for goods and services, Pakistan is one common market even with its various tribal divisions.

Pakistan Population Youngest Among Major Asian Nations. Source: Nikkei Asia

Karabell concludes with the following: 

Pakistan is on a cusp. We should honor the fact that whichever way the consensus believes it will go, the country is also poised to breakout on the upside. Which path will only be clear in retrospect, but we should pay more attention to the potential of things going right along with the legitimate focus on all that is going wrong.

Monday, January 23, 2023

Pakistan Is Not Collapsing!

Pakistan is currently facing major economic and political crises. These are partly of its own making but mostly the result of external shocks in terms of commodity prices that have exacerbated the nation's balance of payments.  The Pakistani military's unnecessary meddling in politics and resulting political instability have not helped either. The unprecedented floods in the country have further added to the severity of the challenges.  

US and China Compete For Influence in Pakistan. Source: Wall Street Journal


Pakistan's multidimensional crisis has spurred many in India and elsewhere to predict the Pakistani state's imminent collapse. Some disgruntled Pakistanis have also jumped on the doomsayers' bandwagon. What is often ignored in such oft-repeated dire predictions is Pakistan's size and its geopolitical importance in the world. Indian analyst Amit Bhandari has summarized it well in a recent Hindustan Times Op-ed: "Despite the severity of the challenges, Pakistan is unlikely to collapse — largely because of its geostrategic importance. A bailout by the IMF or friendly countries will happen".  Let me expand on Bhandari's comments:

1. The collapse of a large country like Pakistan will be very destabilizing for the South Asia region and the world. Pakistan is the world's 5th most populous country. It has a large military armed with nuclear weapons.

2. Pakistan's location is geopolitically very important. It borders Afghanistan, China, India, Iran and the Indian Ocean.  It has a coastline next to the sea lanes that transport the bulk of the world's oil. It is connected to multiple strategically important regions of the world:  Central Asia, Middle East, South Asia and West Asia.  

3. China, the United States and Gulf Arabs have expressed a strong interest in maintaining Pakistan's stability. All of them are offering assistance to Pakistan.  China will continue to support Pakistan as it tries to stabilize its financial situation, state media quoted President Xi Jinping as saying, according to Reuters. Prince Mohammad Bin Salman of Saudi Arabia has offered to increase loans and investments of over $10 billion to Pakistan, according to Bloomberg.  American officials have said they support the IMF assistance to Pakistan, according to Dawn newspaper

4. Pakistan has received pledges of $10 billion worth of loans and grants to rebuild after devastating floods last year, according to Bloomberg News. The amount pledged exceeds the $8 billion that Pakistan sought at the United Nations Donors Conference in Geneva, Switzerland. 

Debt to GDP Ratios. India 91%, Pakistan 87%. Source: Visual Capitalist

Pakistanis are no strangers to forecasts of their country's collapse. There have been many such forecasts over the last 75 years, starting with its birth.  Western and Indian forecasts of Pakistan's collapse are not new.  Lord Mountbatten, the British Viceroy of India who oversaw the partition agreed with the assessment of Pakistan made by India's leaders when he described Pakistan as a "Nissen hut" or a "temporary tent" in a conversation with Jawarhar Lal Nehru.

Here's the exact quote from Mountbatten: "administratively it [wa]s the difference between putting up a permanent building, a nissen hut or a tent. As far as Pakistan is concerned we are putting up a tent. We can do no more." The Brits and the Hindu leadership of India both fully expected Pakistan to fold soon after partition.


1999 DoD Forecast: Pakistan Disappears by 2015

A 1999 US Defense Department study titled "Asia 2025" forecast Pakistan's collapse by 2015.  It further said that Pakistan would become part of a "South Asian Superstate" controlled by India as a "regional hegemon". Two of the study's contributors were "South Asia experts" of Indian origin. Much of the South Asia section of this study appears to be wishful thinking rather than serious analysis.  Resilient Pakistan has defied this and many other similar forecasts of its demise since its birth. 

Goldman Sachs Forecast Over Next 50 Years

Goldman Sachs analysts Kevin Daly and  Tadas Gedminas project Pakistan's economy to grow to become the world's sixth largest by 2075.  In a research paper titled "The Path to 2075", the authors forecast Pakistan's GDP to rise to $12.7 trillion with per capita income of $27,100.  India’s GDP in 2075 is projected at $52.5 trillion and per capita GDP at $31,300.  Bangladesh is projected to be a $6.3 trillion economy with per capita income of $31,000.  By 2075, China will be the top global economy, followed by India 2nd, US 3rd, Indonesia 4th, Nigeria 5th and Pakistan 6th. The forecast is based primarily on changes in the size of working age populations over the next 50 years.  

OpenAI's ChatGPT on Pakistan's Possible Collapse


There's no question that Pakistan is in the midst of very serious political and economic crises. The nation is deeply divided politically. The country's economic performance is dismal. It is of paramount importance for Pakistanis to come together to deal honestly with their internal political and economic differences. Doing so will help Pakistan's large young population realize their full potential to join the ranks of the world's top ten economies. 

Here's a Wall Street Journal video on US-China Competition in Pakistan:

https://youtu.be/wvw-85CC1t4


 

Saturday, September 13, 2014

Changing Face of Pak Protests: Containers, Drones, Music, Social Media

PTI's month-long sit-in led by Imran Khan is setting new standards for political protest rallies in Pakistan. Tens of thousands of urban middle class Pakistanis are joining in to enthusiastically listen to the PTI chief's speeches from the top of a shipping container, with pauses filled with music and dance while media drones hover overhead to cover it 24X7. Social media are abuzz with regular tweets and facebook posts from the attendees and their followers keeping millions more updated on the proceedings of PTI's month-long Dharna (sit-in) in Islamabad.


Urban Middle Class:

Historically, Pakistani politics has been dominated by feudal politicians who hold political rallies with their peasants in attendance who are guaranteed to cast their votes for their landlords in every election. The growth of the urban middle class in years 2000-2008 and the emergence of Pakistan Tehrik-e-Insaf (PTI) as a political force is changing all that. For the first time in the last 6+ decades,  Pakistan's middle-class city dwellers are now participating in the political process by voting in elections and attending rallies.

Shipping Containers:

Both the government and the PTI and PAT dharna organizers are making extensive use of shipping containers. The government uses them to try and block people's participation in Opposition marches and rallies while the Opposition uses them to house leaders and the container roofs as raised platforms for making speeches.

It seems that the containers have now become a must-have accessory for the modern politician in Pakistan. The cost of converting such containers into mobile homes and speech platforms can easily run into tens of thousands of dollars.


Journalism Drones:

Drones fitted with high-definition cameras are making history in drone journalism in Islamabad.

Since tens of thousands of supporters of Imran Khan and Allama Tahir ul Qadri marched into Islamabad a amoth ago, there have been continuous live aerial images and spectacular videos of Pakistan Tehrik-e-Insaf's and Pakistan Awami Tehrik's massive but peaceful sit-in protests broadcast directly from Islamabad by several Pakistani TV channels. This breathtaking live drone camera coverage of  a major media event has made drone journalism history in the South Asian country of over 180 million people.

Music:

Well-timed pauses in Imran Khan's speeches are filled with pre-selected music played by DJ Butt, a professional disk Jockey.  Thousands of attendees dance to the music drawing the ire of conservative right-wingers. Some of them dismiss it as just a concert while others pull out their well-worn fatwas declaring the whole thing "haram" (forbidden) in Islam. The government feels so threatened by it that they have arrested DJ Butt on terrorism charges.

DJ Butt plays national and devotional songs during speeches: from Nusrat Fateh Ali Khan to Junoon to Ataullah Eesa Khelvi to some tracks especially created by Yousaf Salahuddin. Songs played most often at Imran Khan's rallies include "Mein to dekhonga/ tum bhi dekho gai" by Bilal Maqsood, "Tabdeeli aagaye hai yaaro" by Waqqas Qadir Shaikh and Atif Ali, "Jab ayega Imran/ Banega Naya Pakistan" by Ataullah Eesa Khelvi and "Jitna Vi Imran Khan Jitna" by Abrar ul Haq.

Internet Stats Source: World Bank

Social Media:

PTI activists, and to a lesser extent PAT supporters, have dominated the social media in Pakistan for at least a month to get their messages and news out to millions of Facebook and Twitter users in the country and across the world.

Summary:

Regardless of the outcome of the PTI-PAT month-long dharna (sit-in), the protest movement has already broken new ground in terms of the demographics of the participants and the effective use of shipping containers, drones, music and social media. The 24X7 TV coverage has also served to start a  broad public discussion of corruption, nepotism, misrule and abuse of power by Pakistan's ruling politicians.

Here's a video of "Jab Ayega Imran" sung by Ataullah Esakhelvi:


jab aye ga imran by bastichawli

Related Links:

Haq's Musings

Nawaz Sharif Guilty as Charged but Still PM

Pakistan Middle Class Growth

Pakistan's Protest Music

Drones Inspire and Outrage Pakistanis

Pakistan Media Revolution

Drone Journalism Lab

Military Contingency Plans For Escalating Political Crisis

Pakistani Drones in America

Imran Khan Draws Inspiration From Allama Iqbal

Kudos to Qadri

Saturday, December 31, 2011

Pakistan's Year 2011 in Review

“You tend to hear the worst 5% of the Pakistan story 95% of the time.” Pakistani Entrepreneur Monis Rahman


Most of the reviews of Pakistan's Year 2011 fit the above description of how Pakistan's story is told by foreign and domestic media engaged in the 24X7 news cycle.

So let me get the worst 5% of the story out of the way before telling you the rest of the 95% of it.

The Worst 5% of Pakistan's Story in 2011:

Pakistan added to the list of multiple serious crises of energy, economy, education, security and the worst ever governance by adding one more--a civilian-military conflict created by the hubris, incompetence and corruption of the ruling Peoples' Party leadership. This ongoing crisis now threatens to discredit and derail democracy yet again with the rapidly declining popularity of the Zardari-Gilani government and growing favorability ratings of the Pakistani military and its leadership.

Now the Rest of the Pakistan Story in 2011:

Politics:

1. The current PPP-led coalition reached a key milestone of becoming the longest-serving elected civilian government in Pakistan's history.

2. Deep dissatisfaction with PPP-PML(N) duopoly gave rise to a credible third option with the emergence of Pakistan Tehrik-e-Insaf (PTI) party, led by the popular cricketer-turned politician Imran Khan. PTI particularly gained considerable momentum with successful political rallies in Lahore and Karachi.

Education:

1. Early childhood education received a significant boost with the launch of Sim Sim Hamara, Pakistani adaptation of the popular Sesame Street TV show for pre-school children.



2. Pakistan continued to be ahead of India in graduation rates at all levels, according to 2011 update published by Harvard researchers Robert Barro and Jong-Wha Lee.

3. Pakistan achieved the distinction of having the world's largest Fulbright Foundation program in 2011, with about 200 scholarships for advanced degrees during the year.

4. Punjab government launched elite Danish School system for high-achieving but poor college-bound students in Southern Punjab region. Public-sector Danish schools are intended as an alternative to the best available private schools which are beyond the reach of the poor rural students. There are currently two schools each in Chistian, Hasilpur and Rahim Yar Khan, and ambitious plans for over 600 such schools in the future.

5. The Citizens Foundation (TCF), a private foundation, continued to expand its network of schools, reaching a total of 730 well-equipped schools as of April, 2011, serving over 100,000 mostly underprivileged students. 71 of these TCF schools have been built are being operated with funds from Pakistani-American donors.

6. The British government announced $1 billion in aid for improving primary education in Pakistan over a four year period. The money will fund education for up to 4 million students, train 9,000 teachers, purchase 6 million new text books and build 8,000 schools by 2015.

Healthcare:

1. Pakistan's lady health workers were described as "the best in the world" by a Boston University researcher and author of a community-based health care delivery study in Pakistan.



Women at Work:

1. The year 2011 saw a silent social revolution in Pakistan with rising number of women joining the workforce and moving up the corporate ladder. "More of them(women) than ever are finding employment, doing everything from pumping gasoline and serving burgers at McDonald’s to running major corporations", said a 2011 report in Businessweek magazine.

2. Women now make up 4.6% of board members of Pakistani companies, a tad lower than the 4.7% average in emerging Asia, but higher than 1% in South Korea, 4.1% in India and Indonesia, and 4.2% in Malaysia, according to a February 2011 report on women in the boardrooms.

3. In rural Sindh, the government started granting over 212,864 acres of government-owned agriculture land to landless peasants in the province. Over half of the farm land being given is prime nehri (land irrigated by canals) farm land, and the rest being barani or rain-dependent. About 70 percent of the 5,800 beneficiaries of this gift are women. Other provincial governments, especially the Punjab government have also announced land allotment for women, for which initial surveys are underway, according to ActionAid Pakistan.

Economy:

1. Middle class consumers started spending again in 2011. over 10,000 more units of locally assembled cars were sold in July-November 2011 with sales hitting 62,353 units compared with 52,200 units in the same period of 2010. Auto sales in Pakistan hit a two year high, jumping 61% in July, 2011 to 17,563 units from 10,942 units in the same month of last year. Pak Suzuki Motor Company led the auto sales up with 116 percent rise to 11,997 units from 4,503 seen in the same period last year.



2. Away from the violence and the troubles of the big cities, the economy of rural Pakistan experienced a boom. Flush with cash from bumper crops at record commodity prices, the farmers spent on tractors, cars, motorcycles, mobile phones, personal grooming items, packaged foods and beverages and other consumer products like never before. Higher crop prices increased farmers’ incomes in Pakistan by Rs. 342 billion in the 12 months through June, according to a government economic survey. That was higher than the gain of Rs. 329 billion in the preceding eight years, according to a report by Bloomberg News. Companies like Millat tractors, Honda Atlas Motorcycles, Pak Suzuki Motors, Engro Foods, Telnor, Nestle, Colgate-Palmolive, and Unilever have been big beneficiaries of the rural consumption boom.

3. Pakistan's key share index KSE-100 dropped about 5% in 2011, significantly less than most the emerging markets around the world. Mumbai's Sensex, by contrast, lost about 25% of its value, putting it among the worst performing markets in the world.



Energy:

1. Significant new investments were announced in the renewable energy sector, particular hydroelectric power plants and wind farms. WAPDA announced 28% completion of the 969 MW Neelum-Jhelum hydroelectric project, and ADB took the lead financier role in the 4500 MW Diamer-Bhasha dam project. Pakistan has about 1000 MW of wind power plants at various stages of planning and construction, and another 498.5 megawatts of wind programs announced, mostly in Jhimpir, Gharo, Keti Bandar and Port Qasim wind corridors along the Arabian Sea coast in Sindh.

2. In addition to billions of tons of coal deposits in Sindh, exploration confirmed the presence of upwards of 60 trillion cubic feet of shale gas in Pakistan, enough for 20 years or more.

Declining Violence:

1. As US-Pakistan relations sank to new lows, there were tentative signs that Pakistan's fight against Tehrik-e-Taliban Pakistan (TTP) is beginning to succeed. There have been no major terrorist attacks in Pakistan since the the Mehran Naval Base siege in Karachi in May, 2011.

2. Death toll from terrorism declined for the third year in row, according to South Asia Terrorism Portal. After hitting a peak of 11,704 in 2009, number of deaths fell to 7,435 in 2010 and 6,048 in 2011.

3. Huge political rallies in 2011 passed off without violence, helping boost confidence in the security situation in major Pakistani cities.

Conclusion:

While deep concerns remain about Pakistanis' ability to overcome the myriad crises they face today, the year 2011 showed that the people continue to be undaunted and resilient. A significant number of them, like Edhi Foundation, The Citizens Foundation, Pakistan Lady Health Workers and others are showing the way by lighting candles rather than cursing darkness.

Related Links:

Haq's Musings

Auto Sales Jump in Pakistan

64 Years of Pakistan

British Aid for Pakistani Schools

Pakistan Plans 1000 MW Wind Farms

Light a Candle, Don't Curse Darkness

Tuesday, December 20, 2011

Culture of Theft on Display at Imran's Kasur Rally

Imran Khan, who often rails against kleptocracy in Pakistan, finds himself increasingly surrounded by the kind of people he fervently denounces. A large number of chairs stolen at his Kasur rally today by attendees in broad day light are Exhibit A for his critics' case against him.



In his defense, PTI Chief Imran Khan argues that the culture of corruption in Pakistan affects all strata of society from top to bottom, and he is forced to work with people, not angels, to achieve his noble goals of clean and competent governance. What happened in Qasur only reinforces Khan's argument.

It would be wrong to dismiss the crime committed in Kasur as an isolated incident of petty theft. In my view, it is symptomatic of the much larger problems of impunity that pervade in Pakistani society. A manifestation of such problems is the widespread power theft in Pakistan which accounts for as much as 40% of the revenue losses suffered by the power sector. These financial losses are partly responsible for the crippling electricity crisis that is badly hurting the nation's economy.

The electricity theft and other forms of corruption plague Pakistan but it is generally only poorer or less influential people who are occasionally held responsible for it. Last year in March, former Prime Minister Nawaz Sharif's night rally in Lahore, the capita of the province his party governs, was lit by power stolen by what is commonly called "kunda", a metal hook illegally connected to live wires to secure the electricity supply. In response to embarrassing media reports, the BBC reported that a low level official at the Lahore power supply company was disciplined for it.

Corruption in Pakistan is highly organized and systematic. It stems from the politics of patronage which trumps everything else. The deep dysfunction of civil and police bureaucracy and the massive red ink flowing at state-owned enterprises ranging from PIA to Pakistan Railway to Pakistan Steel are the result of political favors doled out by the ruling politicians to their corrupt and incompetent family members, friends and cronies in exchange for monetary contributions and political support. Here's how Prof Anatol Lieven, author of Pakistan-A Hard Country explains political patronage in Pakistan:

"Rather than being eaten alive by a pride of lions, or even torn apart by a flock of vultures, the fate of Pakistan's national resources more closely resembles being nibbled away by a horde of mice (and the occasional large rat). The effects on the resources, and on state's ability to do things, are just the same, but more of the results are ploughed back into the society, rather than making their way straight back to bank accounts in the West. This is an important difference between Pakistan and Nigeria, for example."

Pakistan is probably better than Nigeria in terms of corruption, but I don't see this characterization by Prof Lieven as a compliment. What Pakistan needs now is someone to lead a process of social change to fight its widespread culture of stealing. Among the choices open to the people at this juncture, Imran Khan as Mr. Clean stands out as the best choice to lead this social change to reduce the level of corruption and spur the badly needed economic and human development in the country.

Here's a video of the rush to steal chairs after PTI's rally in Kasur, Panjab:



Related Links:

Haq's Musings

Pakistan's Culture of Corruption

Imran Khan's Lahore Rally

Pakistan's Politics of Patronage

Pakistani Judges' Jihad Against Corruption

Incompetence and Corruption in Pakistan

Zardari Corruption Probe

NRO Amnesty Order Overturned

Transparency International Rankings 2009

Transparency International Corruption Index 2010

Wednesday, July 20, 2011

Political Patronage Trumps Public Policy in Pakistan

Pakistan's economy is suffering from stagflation, a very unhealthy combination of very slow growth and high inflation, since 2008. These three years have also seen significant turnover in the nation's top economic management team.

Pakistan is now on its third finance minister, Dr. Hafeez Shaikh, in three years. Mr. Shahid Kardar, the third central bank governor since 2008, has just quit amid serious policy differences with the PPP-led government. Kardar is the second central bank governor to leave in just over a year and the third senior policymaker to quit in less than 18 months. During this period, the IMF has also suspended its loans to Pakistan on concerns about lack of progress on budget deficit reductions through revenue enhancements committed by the government in 2008.

"Differences of opinion on policy actions and on the implementation of certain directions that I, in my best judgment, did not consider to be judicious have compelled me to resign from office," Kardar told Reuters in response to questions about the reason for his resignation less than a year after he was appointed.

"Such differences are impeding the State Bank from discharging its mandate to safeguard its own integrity and autonomy, to ensure prudent conduct of monetary policy and to maintain the safety and stability of the banking system."

In simple terms, the biggest problem Mr. Kardar had with the government was sustained and excessive borrowing from the central bank to fill the large gap between revenue and spending. This has fueled inflation, and made a mockery of the central bankers' tight monetary policy. Rather than accept the advice of his own team of experts, it seems that President Zardari has essentially been following his own economic policy of "print the notes", a quote attributed to Mr. Zardari by the New York Times in a 2008 story.

In February 2010, there were rumors that the ruling PPP politicians, particularly President Zardari and his inner circle, ignored former Finance Minister Shaukat Tarin's key recommendations to address the acute power shortages in the country. Zardari's insistence on pushing rental power projects, rather than fix the huge circular debt problem in the energy sector first, specially frustrated the outgoing finance chief, when he first reportedly threatened to quit 2009.

To put it all in perspective, let's recall how late Dr. Mahbub ul-Haq, the renowned Pakistani economist who is credited with the idea of UNDP's human development index (HDI), explained the corrosive impact of political patronage on economic policy in Pakistan.

In a 10/12/1988 interview with Professor Anatol Lieven of King's College and quoted in a recent book "Pakistan-A Hard Country", here is what Dr. Haq said:

"Growth in Pakistan has never translated into budgetary security because of the way our political system works. We could be collecting twice as much in revenue - even India collects 50% more than we do - and spending the money on infrastructure and education. But agriculture in Pakistan pays no tax because the landed gentry controls politics and therefore has a grip on every government. Businessman are given state loans and then allowed to default on them in return for favors to politicians and parties. Politicians protect corrupt officials so they can both share the proceeds.

And every time a new political government comes in they have to distribute huge amounts of state money and jobs as rewards to politicians who have supported them, and short term populist measures to try to convince the people that their election promises meant something, which leaves nothing for long-term development. As far as development is concerned, our system has all the worst features of oligarchy and democracy put together.



That is why only technocratic, non-political governments in Pakistan have ever been able to increase revenues. But they can not stay in power for long because they have no political support...For the same reason we have not been able to deregulate the economy as much as I wanted, despite seven years of trying, because the politicians and officials both like the system Bhutto (Late Prime Minister Zulfikar Ali Bhutto) put in place. It suits them both very well, because it gave them lots of lucrative state-sponsored jobs in industry and banking to take for themselves or distribute to their relatives and supporters."


To summarize, there is insufficient revenue collected by the state of Pakistan, and the diversion of this very limited revenue to political patronage fosters dependence on foreign aid and impinges on the nation's sovereignty. It also seriously harms Pakistan's ability to invest in education, health care and infrastructure development in terms of school and hospital buildings, roads, rails, and water and energy projects for Pakistan's future.

Discussing the politics of patronage in Pakistan, Professor Lieven, the author of "Pakistan-A Hard Country", sees a silver lining to it by describing the difference between Nigeria and Pakistan in the following words:

"Rather than being eaten by a pride of lions, or even torn apart by a flock of vultures, the fate of Pakistan's national resources more closely resembles being nibbled away by a horde of mice (and the occasional large rat). The effect on the resources, and on the state's ability to do things, are just the same, but more of the results are plowed back into the society, rather than making their way straight to bank accounts in the West. This is an important difference between Pakistan and Nigeria, for example."


I personally see no better explanation for the boom under President Musharraf in 2000-2007, followed by current economic crisis since 2008, than the prevailing system of political patronage continuing to trump good public policy almost 23 years after late Dr. Mehboob ul Haq described it so well.

Related Links:

Haq's Musings

Pakistan's Tax Evasion Fosters Aid Dependence

Finance Minister Shaukat Tarin Resigns

Musharraf's Legacy

US Fears Aid Will Feed Graft in Pakistan

Pakistan Swallows IMF's Bitter Medicine

Shaukat Aziz's Economic Legacy

Power and Patronage in Pakistan

Pakistan's Energy Crisis

Karachi Tops Mumbai in Stock Performance

Friday, August 20, 2010

Pakistan's Growing Middle Class Responds to Challenge

Over the last two decades, Pakistan has continued to offer much greater upward economic and social mobility to its citizens than neighboring India. Since 1990, Pakistan's middle class had expanded by 36.5% and India's by only 12.8%, according to an ADB report on Asia's rising middle class released recently.

The simplest definition of the middle class is a group of people in a society who are neither rich nor poor. The middle class has always been considered vital to a country's political stability and economic growth. The rich and the poor simply distrust each other too much to let the other govern. Nations with large middle class populations find it easier to reach consensus on sustaining good, democratic governance.

Unfortunately for Pakistan, the size of the middle class was very small when it came into existence, and the country was dominated by a small powerful feudal elite created by the British rulers to sustain their colonial rule. And the urban middle class remained small for decades. The situation has, however, finally begun to change in the the last decade of 1999-2009 with a combination of increasing urbanization and faster economic expansion that fueled significant job creation in the industrial and services sectors to enable middle class growth.

An ADB report on Asia's rising middle class released this month confirms that Pakistan's middle class has grown to 40% of the population, significantly larger than the Indian middle class of about 25% of its population, and it has been growing faster than India's middle class. The other significant news reported by Wall Street Journal today says the vast majority of what is defined as India's middle class is perched just above $2 a day, making it vulnerable to various shocks. This is also true of Pakistan.

Here are the details of income levels in India, Pakistan and China as reported by ADB:

Daily Income....Under$2..$2-$4.......$4-$10........$10-$20....Over $20

India............76%...20.45%......4.15%........0.45%........0.10%

Pakistan.........60%...32.94%......6.56%........0.62%........0.15%

China ..........36%....33.97%......25.17%.......3.54%........0.68%

Pakistan has continued to offer much greater upward mobility to its citizens than neighboring India. Since 1990, China's middle class population has expanded by 61.4%, Pakistan's by 36.5% and India's by 12.8%.

In terms of education, average number of years of schooling in Pakistan is 13 years, 3 years more than India's 10, according to an education comparison published by Newsweek recently. An average Pakistani is, therefore, better educated and more capable of earning higher income than an average Indian.

In terms of absolute numbers in millions of people, China and India are naturally the biggest contributors to the rising population of Asia's middle class that is driving increasing consumption. They are followed by Indonesia and Pakistan vying for the third place.

The ADB report discusses in some detail the impact of Asia's rising middle class on a whole range of social, political and economic developments in the world. The report argues that "Asia’s large population and the rapid expansion of its middle class during a period of global economic rebalancing is fundamentally important as a driver not only of the Asian economy but also the global economy. However greater middle class wealth and consumption is only one factor in the region’s increasing importance. The rise of its middle class is likely to aid not only the growth process, but also result in substantial social, political, and environmental changes. Thus, the contention is that, building on strong growth and continued progress in reducing poverty in Asia, developing a stable middle class requires governments to formulate and implement middle class-friendly policies. In turn, this requires understanding and analyzing the characteristics of the middle class, the factors contributing to its growth, and the various implications—positive and negative—of its rise. These are some of the issues this special chapter addresses".

Here are some of the key points of the ADB report:

1. While 56% of developing Asia’s population, or nearly 1.9 billion people, were already considered part of the middle class based on an absolute definition of per capita consumption of $2–$20 per day in 2008, nearly 1.5 billion Asians were still living on less than $2.0 per day. Moreover, the majority of the Asian middle class still falls in the $2–$4 range, leaving them highly vulnerable to slipping back into poverty due to economic shocks. Thus, for the middle class to become a prominent force it will likely depend on its size and spending levels and characteristics. It will require governments to introduce policies that bolster the incomes of those already in the middle class. It will also require social policies to expand the middle class—such as through greater spending in education and health. Through these, it is possible to build a strong and stable middle class that continues to grow.

2. According to the “political economy” argument, societies with a small middle class are generally extremely polarized, and find it difficult to reach consensus on economic issues; they are overly focused on the redistribution of resources between the elite and the impoverished masses, each of which alternates in controlling political power. Societies with a larger middle class are much less polarized and can more easily reach consensus on a broad range of issues and decisions relevant to economic development (Alesina 1994).

3. Besides helping to reach consensus, Banerjee and Duflo (2008) have discussed three mechanisms through which a large middle class could promote development. First, the middle class may provide the entrepreneurs who create employment and productivity growth in a society. Second, “middle-class values”—that is, the values of accumulation of human capital and savings—are critical to economic growth. And third, with its willingness and ability to pay extra for higher-quality products, the middle class drives demand for high-quality consumer goods, the production of which typically presents increasing returns to scale. This encourages firms to invest in production and marketing, raising income levels for everyone.

4. Middle class is not inimical to the interests of the poor. Indeed, Birdsall (2010) argues that “… in the advanced economies the poor have probably benefited from the rule of law, legal protections, and in general the greater accountability of government that a large and politically independent middle class demands, and from the universal and adequately funded education, health and social insurance programs a middle class wants and finances through the tax system… A focus on the middle class does not exclude a focus on the poor but extends it, including on the grounds that growth that is good for the large majority of people in developing countries is more likely to be economically and politically sustainable, both for economic and political reasons.”

Talking about Pakistan's growing middle class, Professor Rasul Baksh Raees, head of social sciences at the Lahore University of Management Sciences, told the Christian Science Monitor that "the reach and influence of civil society has grown as Pakistan’s middle classes have become more affluent, organized (thanks in no small part to the Internet age), and confident".



The years 2007 and 2008 saw increasing political activism in Pakistan as many members of the nation's newly expanded middle class, most of whom rose to middle class status during Musharraf's economic boom, left the comforts of their homes for the streets to march against the suspension of civil liberties and the firing of Pakistan's chief justice by former President Musharraf. A test of the middle class now is how it responds to the current crises ranging from political instability, poor governance, rising corruption, economic stagnation and the massive flooding that is taking its toll on the nation. At this moment, the greatest need of the hour in Pakistan is greater social activism by the middle class to help their unfortunate fellow citizens devastated by the unprecedented floods sweeping the nation's rural landscape. Early media reports are encouraging, indicating that some Pakistani middle class networks are mobilizing to provide assistance to the flood victims. As the support efforts move from rescue and relief to reconstruction and rehabilitation, my hope is that Pakistan's middle class will be engaged in helping their fellow citizens for the long haul. Such sustained engagement will be a part of Pakistan's defense against religious extremism and radicalization of some in its alienated young population.

Here's a video clip on Pakistan's middle class:



Related Links:

Haq's Musings

Pakistan: a modern history By Ian Talbot

Disaster Dampens Spirits on Pakistan's 63rd Independence Day

Pakistan's Decade of Middle Class Growth

Comparing India and Pakistan in 2010

Indian poverty

Pakistan Wage Structure 1990-2007

Middle Class Clout Rising in Pakistan

Urbanization in Pakistan

The Rise of Mehran Man

Industr ial Sector of Pakistan

India Has No Middle Class

Pakistan's Foreign Visitors Pleasantly Surprised

Escape From India

Reflections on India

After Partition: India, Pakistan and Bangladesh

The "Poor" Neighbor by William Dalrymple

Pakistan's Modern Infrastructure

Video: Who Says Pakistan Is a Failed State?

India Worse Than Pakistan, Bangladesh on Nutrition

UNDP Reports Pakistan Poverty Declined to 17 Percent

Social and Cultural Transformation in Pakistan

Pakistan's Choice: Talibanization or Globalization

Pakistan's Financial Services Sector

Pakistan's Decade 1999-2009

South Asia Slipping in Human Development

Asia Gains in Top Asian Universities

Pakistan's Industrial Sector

Pakistan's Multi-Billion Dollar IT Industry

India -Pakistan Military Comparison

Food, Clothing and Shelter in India and Pakistan

Pakistan Energy Crisis

Thursday, November 19, 2009

Pakistani-American Elected Mayor

Pakistani-American has been elected mayor of a town in Washington state by a landslide. The 54-year-old Mayor-elect Haroon Saleem admits that running the Timberline Bar and Cafe, with beer ads plastered everywhere, is not exactly a pious following of Islam, which forbids alcohol consumption.

The big win for a Muslim Pakistani-American is all the more surprising because Granite Falls is a small mining town of 800 mostly blue-collar whites, a result that residents say would have been inconceivable not long ago.

After 911 attacks in New York and Washington, Saleem told the Associated Press that community members reached out, letting him know he was one of them. No one seems to notice that his wife, Bushra, attends social events wearing a traditional shalwar-kamiz.

While Saleem is only the second American mayor of Pakistani origin after Dr. M. Ali Chaudry of New Jersey town of Basking Ridge elected in 2001, others have been elected to public offices in different parts of the country. Masroor Javed Khan, a fellow NEDian and a friend, serves on the city council in Houston, Texas. Saghir Tahir is a member of the New Hampshire State Assembly. Saqib Ali is a legislator in Maryland State.

Since the growth of immigration from Pakistan and other non-European nations starting in 1965, the Pakistani American community has not been particularly politically active, but this is now changing, with the community starting to contribute funds to their candidates of choice in both parties, and running for elected office in districts with large Pakistani American populations. In recent times, Pakistani American candidates have run for various offices across the nation. Because the community is geographically dispersed, the formation of influential voting blocs has not generally been possible, making it difficult to for the community to make an impact on politics in this particular way. However, there are increasing efforts on the part of community leaders to ensure voter registration and political participation.

The U.S. Census Bureau has indicated that there are about 210,000 U.S. citizens of Pakistani descent living in the United States, including permanent residents. The Census Bureau, however, excluded the population living in institutions, college dormitories, and other group quarters from all population groups. The Pakistani embassy estimates the number of people of Pakistani origin living in United States to be much higher, closer to 500,000.

According to estimates published by the Wikipedia, 50% of Pakistani Americans have origins in the Punjab Province of Pakistan. About 30% are Urdu-speaking "Muhajirs" and the rest is made up of other ethnic Groups from Pakistan. The most systematic study of the demography of Pakistanis in America is found in Prof. Adil Najam's book 'Portrait of a Giving Community' (Harvard University Press, 2006), which estimates a total of around 500,000 Pakistanis in America with the largest concentrations in New York and New Jersey states, each with around 100,000 Pakistani-Americans.

Here are a few demographic snapshots of Pakistani-Americans in different parts of the United States:

California:

A 2008 LA Times survey of Pakistani-Americans, conducted on the basis of 2000 Census, found that Californians of Pakistani descent numbered about 28,000, double the population of 1990. Community members say the figure now surpasses 40,000.

The data showed that 56 per cent had undergraduate or graduate degrees, the second-highest rate after Indian-Americans among 16 Asian subgroups examined. Nearly half were home-owners, with the median household income about $49,000, on par with the state-wide average. Two-thirds were immigrants, with a 46 per cent naturalization rate, and the majority were fluent English speakers.

Based on my own knowledge and experience of living in California for decades, the estimate of $49,0000 median household income of Pakistani-Americans appears to be too outdated and too low, particularly for the San Francisco Bay Area where I conservatively estimate it to be higher than $100,000.

New York:

Unlike California, New York City’s Pakistani Americans are mostly newer and less-educated immigrants. They tend to experience greater poverty, earn less, speak less English and live in larger households than city residents as a whole in 2000, according to a census analysis by the Asian American Federation of New York.

Key profile statistics (involving 2000 census data unless stated otherwise) include the following:

1.From 1990 to 2000, New York City’s Pakistani American population grew from 13,501 to 34,310, or 154 percent – surpassing increases of 9 percent for the city overall and 71 percent for all Asian New Yorkers.
2. More than one-third (34 percent) of Pakistani American children and more than one-fourth (28 percent) of all Pakistanis in New York City lived in poverty – exceeding 30 percent of all children and 21 percent of all residents in the city.
3. Pakistani New Yorkers’ per capita income was $11,992 – about half of the city-wide figure ($22,402).
4. Two out of 3 elderly Pakistani Americans (67 percent) and nearly half (48 percent) of all Pakistani adults in New York City had “Limited English Proficiency” – markedly surpassing 27 percent of all elderly New Yorkers and 24 percent of all city adults.
5. New York City’s Pakistani American households averaged 4.1 occupants – far more than 2.6 city-wide.
6. Almost one-third (32 percent) of Pakistani American adults in New York City had not finished high school – compared with 28 percent of all adult New Yorkers.
7. With a 79 percent foreign-born population, New York City’s Pakistani Americans were more than twice as likely to be immigrants as city residents overall, of whom 36 percent were born outside the United States.
8. Most Pakistani Americans in the city lived in Queens, with 45 percent of Pakistani New Yorkers (15,604 people), or Brooklyn, with 41 percent (14,221). The rest of the city’s Pakistani population was distributed about evenly among the Bronx, Manhattan and Staten Island.

Chicago:

According to the New York Times, the stretch of Devon Avenue in North Chicago also named for Muhammad Ali Jinnah, the founder of Pakistan, seems as if it has been transplanted directly from that country. The shops are packed with traditional wedding finery, and the spice mix in the restaurants’ kebabs is just right.

The 2000 federal census counted over 18,000 Pakistanis in metropolitan Chicago, one of the largest concentrations of Pakistanis in the United States. According to the Encyclopedia of Chicago, community estimates in the late 1990s, however, ranged from 80,000 to 100,000, most of whom were either Urdu- or Punjabi-speaking Muslims. Like other South Asians, Pakistanis have commonly tended to settle in and around major urban areas, especially on the two coasts near New York and Los Angeles. Chicago and other inland cities such as Houston have also developed large and visible Pakistani communities.

Nationwide, Pakistanis appear to be prospering. The census calculated that mean household income in the United States in 2002 was $57,852 annually, while that for Asian households, which includes Pakistanis, was $70,047. By contrast, about one-fifth of young British-born Muslims are jobless, and many subsist on welfare.

Hard numbers on how many people of Pakistani descent live in the United States do not exist, but a book published by Harvard University Press on charitable donations among Pakistani-Americans, “Portrait of a Giving Community by Professor Adil Najam,” puts the number around 500,000, with some 35 percent or more of them in the New York metropolitan area. Chicago has fewer than 100,000, while other significant clusters exist in California, Texas and Washington, D.C.

New York Times estimate of 109,000 Pakistani-born American workers' occupations include salesmen, managers or administrators, drivers, doctors and accountants as the top five categories.

Pakistani-Americans political participation remains woefully inadequate. But it's good to see some signs that it is starting to happen at various levels starting from from local communities to state legislatures.

Related Links:

Edible Arrangements--Pakistani-American's Success Story

Pakistani-Americans in Silicon Valley

HDF Fundraiser in Silicon Valley For Pakistan

Pakistani Diaspora in America

Asian-Americans: Contemporary Trends and Issues

New York City's Pakistani Population

Pakistani-Americans in NYC

NED Alumni Convention Draws 400

NEDians Convention 2007 in Silicon Valley

Muslim Demographics in America

Pakistanis in America

Pakistani-Americans Wikipedia Entry

Illegal Immigration From India to America Hits 125%

Pakistanis Find US Easier Fit than Britain

Portrait of a Giving Community

India's Washington Lobby

Occupations of Pakistani-Americans--New York Times