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Is Pakistan Losing Another Decade Like the Lost Decade of 1990s?

@RiazHaq it is well known that you are a supporter of dictatorship and that you keep coming up with miscellaneous stories for the sake of nostalgia.

I will take 4.1 percent any day over 6% during dictatorship, because a day comes when dictatorship ends, then the lack of systems hurts us like hell.

...

The only examples of industrialized prosperous democracies in the developing world are Asian Tiger countries like South Korea, Taiwan, Malaysia, Indonesia which grew rapidly under benevolent dictators before becoming democracies. The economic and industrial development under dictators in these countries produced large middle class before democracy took roots.

Pakistan needs to go through a similar process to become a functional and responsive democracy.

Haq's Musings: Asian Tiger Dictators Brought Prosperity; Democracy Followed

global-gdp-growth-to-2013.png
The graph shows the world recovered quickly but Pakistan did not.

Here's Pakistan's history:

Pak%2BGDP%2B1951-2009.png


Pakistan economy has consistently done better under military rule.

Haq's Musings: A Brief History of Pakistani Economy 1947-2010
 
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Pakistan economy has consistently done better under military rule.

Then why does military rule always collapse in spectacular catastrophes in Pakistan, leaving the nation to clean up the disastrous aftermath?

It must be that military rule is always an illegal edifice built on lies that must crash.
 
Then why does military rule always collapse in spectacular catastrophes in Pakistan, leaving the nation to clean up the disastrous aftermath?

It must be that military rule is always an illegal edifice built on lies that must crash.

Military rule has ended like that everywhere....there's a period of chaos that followed in South Korea, Taiwan, Indonesia etc.

But the gains in human and economic development remained, helping the nations make the transition.

The difference between Asian Tigers and Pakistan is that the Asian Tigers had continuous 30 years of military rule with continuing high growth. In Pakistan, the growth in both human and economic development was interrupted by poor civilian governance in alternate decades.

Haq's Musings: Musharraf Accelerated Financial and Human Capital Growth in Pakistan
 
People seem to forget that GDP also took a dive in 2007-8 when Musharaf was still in power. Looking at the trend Every single Dictator took Pakistan in a temporary economic bubble with inflow of Aid. When they become unpopular for foreign power they put a foot on that money flow hence a decline. Musharaf ruined pakistani economy bymaking it dependent on IMF andUS Aid.
 
The Main reason Pakistan has been with exception of Musharaf Sahib , most of the Military Generals did not had the background to run business.

Its one thing to run an organization that gets aid or money annually regardless if you sit on your bum or are out in field
vs running a business where you have to earn your dollars. Marketing , hiring , human resource development etc

The argument is not of professional conduct or decipline but rather the basics of reality , that Military personnel are not equipped to run Civilian posts.


Pakistan in general has suffered mostly in both hands of Military and Civilian rulers with exception of Musharaf , where economy actually developed to a respectable shape.

Pakistan's major issue is "Taking Money" and not having a plan to repay
Weak Taxation Net , and dependence on Donation funds.

Due to Debt , our currency tanks and when we sell our goods we get less back in exchange market

Those BILLION dollar road infrastructure project , will not feed the family of poor guy who has no car

I notice that Pakistani institutes have Habbit of doing alot of "FEASABILITY" STUDIES .. and wasting Millions in that process 25% of budget for Pakistan railways is "FEASABILITY" studies
 
People seem to forget that GDP also took a dive in 2007-8 when Musharaf was still in power. Looking at the trend Every single Dictator took Pakistan in a temporary economic bubble with inflow of Aid. When they become unpopular for foreign power they put a foot on that money flow hence a decline. Musharaf ruined pakistani economy bymaking it dependent on IMF andUS Aid.

It was the pre-election political turmoil starting in 2007 that caused a slow down....mostly under an interim govt set up to hold elections.

Total aid to Pakistan was less than 1% of GDP, far less than the savings of 18% and FDI of 3.5% that drove GDP growth.

Aid to Pakistan in fact tripled after 2008 under Kerry-Lugar bill the GDP growth plummeted. So clearly it was not aid driving Pakistan's economy in Musharraf years. It was investments.

US+Foreign+Aid.jpg


Haq's Musings: Can Pak Tell US: "Take This Aid and Shove It!" ?
 
Musharaf was an exceptional Leader....

During his term , he could have lead pakistan to be come what Malasia has become

  • He kicked out all the PPP trash
  • He kicked out the Sher Da Punjab sent him packing to Royal Jail
  • He cleaned house !!!

That is why you see the graph going "UP"

His only error was annulment of NRO & Listening to Supreme Court Cheif Justice which really was biggest mistake


If we had 20 Year of Musharaf Rule we would be prosporous as Singapore or Malasia

Our Tragic moment was that we got our Best Leader at time when we faced the GRAVEST of eocnomic and social unrest due to war next door ... so his history contributions were not fully appreciated

If I was a Dictator , and who know one day I could be elected to be one
My number one move would be as follow

a) Deport all Politicians and deport them out
b) Seize all farm land impose tax
c) Change the country to Kindom of Pakistan
d) Close all funding for Madrassa , and instead setup proper schools
e) Folks like M Fazal Ur Rahman etc would be put in jail unless they took care of their hygene
and stopped living of donations of public and lost some of his fat

Start Tuxedo Dynasty of Pakistan enough with Democracy, and ever Saturday woud be mandatory Tuexdo wearing day
 
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Haq's Musings: Pakistan GDP Grew Just 4.1% in 2013-14: Is it Another Lost Decade?



Musharraf Era:

Under President Musharraf's leadership, Pakistan became one of the four fastest growing economies in the Asian region during 2000-07 with its growth averaging over 6 per cent per year for most of this period. As a result of strong economic growth, Pakistan succeeded in reducing poverty by one-half, creating almost 13 million jobs, halving the country's debt burden, raising foreign exchange reserves to a comfortable position and propping the country's exchange rate, restoring investors' confidence and most importantly, taking Pakistan out of the IMF Program.




Pakistan experienced rapid economic and human capital growth in years 2000 to 2008 on President Pervez Musharraf's watch. Savings, investments and exports hit new records and the rate of increase in human development reached new highs not seen before or since this period.

Haq's Musings: Pakistan GDP Grew Just 4.1% in 2013-14: Is it Another Lost Decade?


High growth rate between 2000-2007 was a global phenomena not just restricted to south asia. Attributing the growth rate of above 7 percent during this period to Musharaff is giving too much credit to one person.
 
It was the pre-election political turmoil starting in 2007 that caused a slow down....mostly under an interim govt set up to hold elections.

Total aid to Pakistan was less than 1% of GDP, far less than the savings of 18% and FDI of 3.5% that drove GDP growth.

Aid to Pakistan in fact tripled after 2008 under Kerry-Lugar bill the GDP growth plummeted. So clearly it was not aid driving Pakistan's economy in Musharraf years. It was investments.

US+Foreign+Aid.jpg


Haq's Musings: Can Pak Tell US: "Take This Aid and Shove It!" ?

Zardari was one of the biggest beggar of all. Unfortunately he didnt get a single dime durring his tenure due to standoff between Pakistan Army and US. US congress never cleared that Aid as some condition mentioned in that were unacceptable for pakistani establishment. Infact pakistan only once got a tranche of 170 million dollar durring his tenure. US has already linked release of Aid with Release of Shakeel Afridi. Downward trend of GDP growth started after musharaf launcheD an operation in FATA. Security situation also played a major role in the distruction of our economy. Energy situation also sparked in his time. I am not an analyst but in my observation he was too focused to stay in power and lacked the required team of economists.
 
The graph shows the world recovered quickly but Pakistan did not.

I am an equal opportunity abuser when it comes to criticizing the military generals and the civilian rulers.

I believe Pakistan's biggest enemy are not these leaders, but the middle/upper class people of Pakistan themselves. Pakistani society is addicted to corruption, nepotism, and flagrant violations of law.

Pakistani society does not want its leaders held accountable because accountability is a double-edged sword. The same institutions that hold leaders accountable may one day turn their sights and come after the fat cats and middle class businessmen who pay no taxes, yet enjoy lavish lifestyles. A society which is addicted to bribery -- to get things done and to get out of trouble -- does not want accountability, no matter what people might say at the dinner table.
 
High growth rate between 2000-2007 was a global phenomena not just restricted to south asia. Attributing the growth rate of above 7 percent during this period to Musharaff is giving too much credit to one person.

Growth doesn't just happen because it's happening elsewhere. If that were the case, the poorest countries of Sub-Saharan African would all be rich by now.

Growth requires savings, investments and pro-growth policies. In Pakistan;s case there has been a big drop in savings and investments as well as poor governance since 2008.

Pakistan+Savings+Rate+2012.jpg


FDI+Percent+of+GDP+Pakistan+1998-2012.jpg


Pakistan needs investment of 20% of GDP to achieve 5% economic growth, a capital-to-output ratio (COR) of four, according to Mohsin Mushtaq Chandna, economic minister at the Pakistan Embassy in Washington, DC.

Haq's Musings: Declining Investment Hurting Pakistan Economic Growth

Zardari was one of the biggest beggar of all. Unfortunately he didnt get a single dime durring his tenure due to standoff between Pakistan Army and US. US congress never cleared that Aid as some condition mentioned in that were unacceptable for pakistani establishment. Infact pakistan only once got a tranche of 170 million dollar durring his tenure. US has already linked release of Aid with Release of Shakeel Afridi. Downward trend of GDP growth started after musharaf launcheD an operation in FATA. Security situation also played a major role in the distruction of our economy. Energy situation also sparked in his time. I am not an analyst but in my observation he was too focused to stay in power and lacked the required team of economists.

Aid doesn't cause growth; investment does.

Speaking at a recent international judicial conference in Islamabad, Dr. Ishrat Hussain, current dean of the Institute of Business Administration and former governor of The State Bank of Pakistan, said there has not been a single privatization deal in Pakistan since the Supreme Court's 2006 decision voiding the steel mill transaction.

Dr Hussain said that despite fulfilling the legal requirements, the fear that the country’s courts may take suo motu notice of the transaction, and subsequently issue a stay order, deters businesses from investing in Pakistan, according to a report in The Express Tribune. “A large number of frivolous petitions are filed every year that have dire economic consequences. While the cost of such filings is insignificant the economy suffers enormously,” he added.

Pakistan's activist judges like CJ Chaudry killed investment deals by unnecessary intervention in complex economic matters.

Haq's Musings: Pakistan's Chaudhry Court Scared Investors Away
 
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The only examples of industrialized prosperous democracies in the developing world are Asian Tiger countries like South Korea, Taiwan, Malaysia, Indonesia which grew rapidly under benevolent dictators before becoming democracies. The economic and industrial development under dictators in these countries produced large middle class before democracy took roots.

First, we are different. We are not East Asia. We are at the cusp of South Asia, Central Asia, & Middle East. We are very different from East Asians as a people. You would be better off looking closer to Pakistan for more appropriate examples.

Second, your list does not fit. Indonesia does not belong in the group. You just put it there for bolstering your argument. It has been a democracy for the last three decades and its growth has been remarkable, as opposed to the former times. I do not know why Malaysia has also been included by you? Do you mean to say that Dr. Mahatir Muhammad was not an elected leader? And that political stability was not a major contributing factor?

Third, their engagement with USA was different. The remaining two countries have been consistent recipients of US aid, military and otherwise. The US was very supportive in developing their economies by providing them market access. South Korea and Taiwan were in direct conflict with Communist states. Hence USA propped their regimes, and spent considerable amount to subsidize their defense expenditure. It was imperative that these countries be successful economies as opposed to their communist neighbors.

Fourth, these countries' encounter with democracy was substantially different. Unlike Pakistan, these countries did not have election-based genesis. For both South Korea and Taiwan, their governments were established in the midst of catastrophes, not elections. These countries do not share Pakistan's political and constitutional history.

Fifth, you are ignoring the issue of ethnicity. South Korea is a uni-ethnic country. I am not aware of Taiwan suffering from ethnic tensions between indigenous people and Hans who escaped Communism. Pakistan is however a multi-ethnic country where such issues have cropped up from time to time and incidentally these issues have assumed alarming proportions during military rule.

Sixth, you are finding 'evidence' to fit your views. You ignore India's rapid growth in the last two decades because it does not fit your views, even though Pakistan shares more similarities with India than East Asia. You are certainly not a dispassionate observer. You are consistent in your portrayal of dictatorship as something desirable as opposed to Constitutionalism. Musharraf is ever your favorite, even though his antics are there for all to see and judge. You expect to be taken seriously?

Seventh, you ignore the fact that our problem has consistently been an obssessive security mind-set, well exacerbated by military dictatorships. Just look at economic over-reach of our security apparatus. You expect dictators to spend on 1. Health & education, 2. Social welfare, 3. Economic infrastructure, when in fact they are ill-equipped to do so and have always preferred to spend on security?

Eigth, care to look at military disasters wrought by our military dictators? From Operation Gibraltor, to Kargil, to nurturing likes of LeT, etc... Now you might say that you have qualified your perspcription by inserting the word "benevolent" - but that does not quite work. We have yet to see a 'benevolent' anyone. The best we can hope for is a systems approach.

So you see, you have no basis for your assertions. You are just seeing what you want to see. You ignore any facts that are inconvenient.

System-based argument trumps (hoped-for) efficiency argument every time and everywhere. You can wait for a benevolent dictator forever, I am going to vote for system today and tomorrow. You want Pakistan to live under martial law, I want Pakistan to be known as a stable democracy.


Pakistan needs to go through a similar process to become a functional and responsive democracy.

Pakistan will lurch from one dictatorship disaster to the next per your perscription.

The graph shows the world recovered quickly but Pakistan did not.

Here's Pakistan's history:

Pak%2BGDP%2B1951-2009.png

1. I did not see Pakistan going through recession. Did you? There is more to it.

2. In the last decade and a half, our problems are rooted in Musharraf's decision making:

First blunder was staging a coup to save his skin because of Kargil - after 1998 nuclear tests and aftermath, Pakistan's economy was on the mend, there was no compelling reason for Musharraf to stage a coup.

Second blunder was ignoring investment in energy infrastructure.

Third blunder was preoccupation with survival of own power rather than deterioration in economic conditions driven by lack of foresight.

Fourth blunder was NRO and its aftermath that left Zardari in power.

3. Your own graphs in your very first post show that post-1998 nuclear tests and their aftermath, the economy was on the mend. After Kargil, our elected government was preoccupied with survival and even then our economy was showing improvement.

4. Post September 2001, the scenario could and would have been handled much better by a legitimate political government. The aid would have come regardless, but perhaps NS would have done a better job of creating a better energy infrastructure for better sustainable growth.

Pakistan economy has consistently done better under military rule.

That is a big fat lie. Pakistan has been brought to verge of failure by military dictators and civilians have often pulled it back. Our history clearly shows this. I gave you examples to illustrate that systems argument is much more compelling and credible than growth-with-dictatorship theory, but you have ignored them all. That just shows that you are obssessed with your unidimensional world and are not willing to look at the broader picture.
 
Growth doesn't just happen because it's happening elsewhere. If that were the case, the poorest countries of Sub-Saharan African would all be rich by now.

Growth requires savings, investments and pro-growth policies. In Pakistan;s case there has been a big drop in savings and investments as well as poor governance since 2008.

Pakistan+Savings+Rate+2012.jpg


FDI+Percent+of+GDP+Pakistan+1998-2012.jpg


Pakistan needs investment of 20% of GDP to achieve 5% economic growth, a capital-to-output ratio (COR) of four, according to Mohsin Mushtaq Chandna, economic minister at the Pakistan Embassy in Washington, DC.

Haq's Musings: Declining Investment Hurting Pakistan Economic Growth



Aid doesn't cause growth; investment does.

Speaking at a recent international judicial conference in Islamabad, Dr. Ishrat Hussain, current dean of the Institute of Business Administration and former governor of The State Bank of Pakistan, said there has not been a single privatization deal in Pakistan since the Supreme Court's 2006 decision voiding the steel mill transaction.

Dr Hussain said that despite fulfilling the legal requirements, the fear that the country’s courts may take suo motu notice of the transaction, and subsequently issue a stay order, deters businesses from investing in Pakistan, according to a report in The Express Tribune. “A large number of frivolous petitions are filed every year that have dire economic consequences. While the cost of such filings is insignificant the economy suffers enormously,” he added.

Pakistan's activist judges like CJ Chaudry killed investment deals by unnecessary intervention in complex economic matters.

Haq's Musings: Pakistan's Chaudhry Court Scared Investors Away
gdp india pakistan world.png

I agree that growth does not happen in vacuum but you need infrastructure in place and right policies in place to capitalize the capital flows. Musharaff to his credit maintained a stable environment which attracted FDI. High saving imply you don't have to borrow for your investment needs. But capital was free flowing during the boom period, saving was not a major factor for growth. Your economy was riding the wave and you should not confuse that to one trick pony by Musharaff.

If you look at the graph both India with its high growth momentum and Pakistan which was a laggard for past one decade could not disassociate from world economy. When the world economy crashed we both crashed. When the rest of the world economy picked up in 2009, you took little longer because of your internal problems.

I strongly believe that when India with its massive economy starts growing it will pull up rest of south asia too. More you are tied with our economy more you will benefit in the process.

It is in your interest too to make peaceful overtures with our present govt. and lift up your economy as well.
 
Military rule has ended like that everywhere....there's a period of chaos that followed in South Korea, Taiwan, Indonesia etc.

But the gains in human and economic development remained, helping the nations make the transition.

The difference between Asian Tigers and Pakistan is that the Asian Tigers had continuous 30 years of military rule with continuing high growth. In Pakistan, the growth in both human and economic development was interrupted by poor civilian governance in alternate decades.

Haq's Musings: Musharraf Accelerated Financial and Human Capital Growth in Pakistan

Did the developed countries of the world have dictatorships when they were developing? And what in your opinion is the time frame of development? How many of the developed countries of the world had dictators?

The arguement you make of continuous military rule can also be turned on its head and said, if the military had not stepped in every now and then Pakistan would be much better place. And for this, I would place USA, England, France and the rest. From developing to developed, could you please highlight when they had dictatorships?
 
Biggest blunder of Musharaf was indeed ignoring energy infrastructure to support GDP growth after sanctions were lifted soon after 9/11. And PPP also didn't do anything to correct this.

Think like this, N have initiated many huge projects that will start generating electricity in 3-4 years. So lets assume next time PTI or PPP win election. From 2018 onwards because of projects completed GDP growth will be higher, and load shedding less.

PPP inherited poor energy infrastructure but they didn't do much to change that like N is doing, basically they were only thinking short term.
 

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