Another 159 years? Syed Mohammad Ali
Will Pakistan be able to secure development faster with the mentioned World Bank reform agenda, or will the Commission add another few decades to the estimated time period by when Pakistan can hope be a developed country?
The development sector has grown exponentially over the past few decades in terms of importance, resource allocation, and the number of multilateral, governmental, and civil society organisations involved in it. It thus makes good sense to begin gathering information about the most effective means to promote sustained economic growth and poverty reduction, so as to devise prescriptions for existing policymakers.
However, extracting workable recommendations based on analysis of on-ground realities is not as easy as it sounds, and even the most credible attempts in this regard can sometimes produce surprising results, as this article will soon indicate.
Two years ago, the World Bank launched its Commission for Growth and Development to fulfil this exact role of providing sound development advice based on emerging experiences from around the world.
The Commission is supported by the governments of Australia, Sweden, the Netherlands, and the UK, in addition to being backed by the World Bank itself. Michael Spence, a Nobel Laureate and former Dean of the Stanford Graduate Business School, heads the Commission. Several other relevant governmental, business and policymaking personnel, especially from the developing world, are also involved in the research and analysis that is undertaken by the Commission. The repute of the professionals working for it, and the sound institutional backing enjoyed by the Commission, lends its findings a certain air of authority.
Among other work, the Commission has estimated time-periods required by different countries to achieve the status of being developed. What is surprising to note in this estimation, for people in our part of the world at least, is the amount of time Pakistan is said to require in order to be at the same level of development as todays industrialised nations: 159 years! At best, Pakistan may reach this milestone by 2050 if it can maintain an annual growth rate of 8.3 percent.
However, growth rates in Pakistan do admittedly remain unstable. The average national growth rate plummeted to less than 4 percent per annum in the 1990s, compared to the earlier decades rates of more than 6 per cent per annum. The fairly high growth rates during the earlier years of the current decade also seem quite unsustainable at the moment. The Commission calculated that Pakistan had maintained a growth rate of 4.8 percent from 1996 until 2006, which is why the country was said to require another century and a half to become developed.
China, which in 2006 not only had impressive growth rates, but a per capita GDP of over well over $6,500, was estimated to be at par with industrialised countries in about two dozen years. India still needs about fifty years to catch up with China and other developed countries. On the other hand, Malaysia seems to be doing well despite the East Asian financial crisis of the past decade, since it is thought to need only 35 years to achieve the milestone of becoming developed.
In support of its assessment, the Commission points out that out of about 150 developing countries in the world, 25 of the largest countries account for about 90 percent of the GDP of the entire developing world. However, the performance of these 25 countries has been uneven over the past five decades, and less then half of them have been able to perform well enough to have improved circumstances for their citizens, instead of further worsening them. In fact per capita incomes in many developing countries are lower today than they were a few decades ago. In 1960, for example, Pakistan was ranked 20th among the developing nations, whereas now its human development indicators have pushed it down to a much lower position.
Any such projection of development trends is bound to provoke criticism, particularly from countries whose future prospects have not been assessed too positively. Avoiding the urge to become defensive however, let us try to neutrally assess the Commissions estimation concerning Pakistan.
First of all, while the Commission has focused on indicators like cumulative incomes and productive capacity of nations, assuming that poverty cannot be reduced in isolation of economic growth, it is hard to deny that there are also various other economic and social forces underlying rapid and sustained growth, which seem much less understood or accounted for.
Factors like the political climate which determines development aid flows, or environmental factors which may seriously impede the process of development, or else the introduction of new technologies which may place countries on much faster trajectories of growth, have not been factored in adequately into the Commissions estimation.
The Commission does however stress upon steps which can be taken now to boost economic growth even in countries which have not been listed amongst rapidly growing economies. Moreover, the Commission shows some sobriety in this regard by recognising that fast and sustained growth requires more then short-term quick-fix efforts, but instead long term diversification of the economy which enables a smooth and mutually beneficial integration into the larger global economy.
Yet problems facing countries with slower rates of growth are not easy to overcome. Consider the challenges being faced by Pakistan at the moment for example. After several years of over-enthusiastic growth projections and poverty reduction estimates, there are now acknowledged concerns of a mounting fiscal deficit and a falling currency, which imply many other problems. The current threat posed by rising food prices calls for prompt action to protect poorer people from price increases, or else malnutrition and reduced incomes could seriously reduce long-term growth prospects.
The new Prime Minister of Pakistan has been discussing a $500m loan from the World Bank to help achieve the newly laid-down priorities of overcoming energy, water and food shortages through construction of new dams and other related projects.
But the World Bank implies taking potentially unpopular steps, including ending subsidies on oil imports and cutting development expenditure. One wonders what impact these steps will have in the estimation of the Commission.
Will Pakistan be able to secure development faster with the mentioned World Bank reform agenda, or will the Commission add another few decades to the estimated time period by when Pakistan can hope be a developed country?
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