Good Governance, A Panacea (Remedy of All Diseases) I Dr. Ishrat Hussain — Transcript

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1. 0:00the first 40 Years of Pakistan's history
2. 0:03economic history
3. 0:05when Pakistan was one of the fastest
4. 0:09growing developing countries with an
5. 0:12average growth of 40 Years of six
6. 0:16percent
7. 0:18as compared to the next 35 years from
8. 0:221990 to
9. 0:242022 when it has gone down to less than
10. 0:29four percent
11. 0:30while our competitors like India have
12. 0:34gone from 3.5 growth rate 40 years to
13. 0:39seven percent and Bangladesh which was
14. 0:42almost uh considered a Basket Case by
15. 0:46Henry Kissinger at the time of
16. 0:481971. uh is now growing at six to seven
17. 0:52percent consistently
18. 0:54so what wrong what went wrong between
19. 0:58these two periods
20. 1:00and I took the
21. 1:03opportunity of the accessing Library of
22. 1:06Congress
23. 1:07to figure out what the literature about
24. 1:11Pakistan depicts
25. 1:14and there were four or five hypothesis
26. 1:17one was the Garrison State hypothesis
27. 1:20that this has been dominated by the
28. 1:23military and because the military has
29. 1:26been one of the major beneficiaries of
30. 1:30the economic development therefore the
31. 1:33country didn't do so well
32. 1:37from
33. 1:401990 onwards when it's interventions
34. 1:43were not direct but indirect now I look
35. 1:46at the data and I found that the peak of
36. 1:52the defense expenditure was in 1980
37. 1:55which was six percent and it was from
38. 1:581950 onwards and particularly after 65
39. 2:02War the defense expenditure had gone up
40. 2:04and now over 1990 to
41. 2:082022 it is now below three percent
42. 2:12so that cannot explain the crowding out
43. 2:15effect and the share of the defense
44. 2:20expenditure in the total current
45. 2:22expenditure of Pakistan is now 17
46. 2:24compared to almost 50 percent previously
47. 2:28the second
48. 2:30hypothesis was that all the years of
49. 2:34growth were dependent on eight floors so
50. 2:3860s 80s 2000 to 2007.
51. 2:42and I compared the 1960s flows because
52. 2:47there was Data available
53. 2:51with 1970s and I found that the annual
54. 2:54flows in the 1970s was much higher than
55. 2:57the 1960s although the composition had
56. 3:00changed it was not the Western countries
57. 3:02but it was the OPEC countries and the
58. 3:06Islamic countries which came to help
59. 3:08Pakistan after particularly after the
60. 3:10oil shock
61. 3:12then I completed 1980s when people say
62. 3:15that because the Afghanistan war we took
63. 3:19a lot of money from the US and compared
64. 3:23with 1990s in 1990s despite the fact
65. 3:28that the U.S was not a major funder of
66. 3:31Pakistan Japan had overtaken and was the
67. 3:35largest single bilateral and the World
68. 3:37Bank and other institutions continued
69. 3:40and the balance of payment
70. 3:43was financed by the resident and
71. 3:47non-resident deposits of 11 billion
72. 3:50dollars
73. 3:51and that flows if you take them
74. 3:53normalized then that also is lower than
75. 3:561980s and 2000 2007 against Evan War you
76. 4:02have flows coming back to Pakistan but
77. 4:05they carry Luger bill which came from
78. 4:072009 to 2014 had much higher
79. 4:11appropriation and disbursements compared
80. 4:15to what happened in 1980 so this
81. 4:17hypothesis was also empirically not
82. 4:20validated
83. 4:22the third one was the fact that you know
84. 4:26International uh
85. 4:28economic environment was not very
86. 4:30conducive in the 35 years
87. 4:34the facts are
88. 4:36that the developing countries
89. 4:39have actually had the fastest growth
90. 4:42during the 1990 to 2020
91. 4:47and the share of the developing
92. 4:51countries in the global trade was much
93. 4:54higher growth rate was much higher than
94. 4:57that of the advanced countries and it
95. 5:00was the same time India was able to
96. 5:03increase its share from 0.5 percent of
97. 5:06the world exports to 1.5 percent and
98. 5:09Bangladesh from 0.1 percent to point
99. 5:13four percent and ours declined from 0.2
100. 5:16percent to 0.1 so the international
101. 5:20environment also does not explain this
102. 5:24particular phenomena
103. 5:26so what does it explain
104. 5:28a new
105. 5:30insight has been provided
106. 5:34by a very rich literature on
107. 5:37institutional economics
108. 5:39which looks at
109. 5:42how the institutions of governance
110. 5:45actually deliver the basic goods and
111. 5:48services
112. 5:49how they help in the rise of
113. 5:53productivity
114. 5:54how they affect the distribution of
115. 5:57income so you can have an inclusive
116. 6:01growth rate
117. 6:03in the contrast between the institutions
118. 6:07which made Pakistan so strong despite
119. 6:11four shocks
120. 6:13settlement of 8 million refugees in a
121. 6:16country which didn't have a single penny
122. 6:19in the coffers because Reserve Bank of
123. 6:22India
124. 6:23did not release
125. 6:25Pakistan's share at the time of
126. 6:27partition and if you look at the balance
127. 6:29sheet of the State Bank of Pakistan
128. 6:31today we still consider that receivables
129. 6:34which you haven't received so far
130. 6:36and our civil servants were paid by
131. 6:39khabibs and Adam Chiefs they didn't have
132. 6:41the money
133. 6:42second shock 1965 War
134. 6:45third shock the separation of East
135. 6:47Pakistan 1974 fourth shock the
136. 6:51nationalization of Industries
137. 6:53universities colleges and insurance and
138. 6:57banking fifth shock devgan War despite
139. 7:01these five shots
140. 7:03Pakistan had very strong institutions
141. 7:07and I will give you just four and I
142. 7:10would say the Planning Commission was
143. 7:13one of the strongest institution at that
144. 7:15time and you I leave it to you to judge
145. 7:18the performance of the first 40 Years of
146. 7:21Planning Commission starting from Mr
147. 7:23Zaid Hussain who was the first
148. 7:26Deputy chairman who wrote The First
149. 7:28Five-Year Plan till today I wouldn't
150. 7:30comment on that but I'll leave it to
151. 7:33your judgment as to what has happened to
152. 7:36the equality and the strengths of the
153. 7:39Planning Commission
154. 7:41second
155. 7:42was the pidc Pakistan didn't have any
156. 7:46big industrial houses it didn't have any
157. 7:49industry worth its name except one
158. 7:51cement factory and few Carriage
159. 7:53factories and cotton tuning factories by
160. 7:561969
161. 7:58and this is not my
162. 8:00saying but the development policy review
163. 8:03of the World Bank set in 1969
164. 8:07Pakistan's manufactured exports were
165. 8:10higher than those of
166. 8:12Thailand Philippines Malaysia and
167. 8:15Indonesia
168. 8:16that was the pidc which established the
169. 8:21industries
170. 8:22but said that the government is not in
171. 8:25the business of running businesses
172. 8:27the private sector was short of capital
173. 8:31so pick and idbp finance these companies
174. 8:34these Enterprises
175. 8:36and they would then transfer to the
176. 8:40private sector which managed them quite
177. 8:43well and made them competitive for
178. 8:46exports
179. 8:48third agriculture Development
180. 8:50Corporation
181. 8:52we were unable to meet the food needs of
182. 8:573 million 30 million pakistanis at 1950.
183. 9:033 million tons of wheat was produced
184. 9:07then
185. 9:08we had the Maxi Park seat for wheat the
186. 9:12Erie for Rice the fertilizers they were
187. 9:16all
188. 9:17managed and distributed by agriculture
189. 9:21Development Corporation
190. 9:22I was an assistant commissioner in a
191. 9:26subdivision and we got a Target
192. 9:28that so much land
193. 9:30has to be shifted from the traditional
194. 9:33varieties to the new varieties
195. 9:36how much fertilizer will be allocated to
196. 9:39your subdivision
197. 9:41the the sea level they were targeting
198. 9:43and that was the work of the agriculture
199. 9:45Development Corporation
200. 9:47the third was wapda
201. 9:50Pakistan lost Ravi and beyas
202. 9:53and we were short of water
203. 9:57they
204. 9:59undertook the introspection Works
205. 10:02program and all the link canals barrages
206. 10:06and the two dams were all constructed by
207. 10:09wabta the entire engineering staff
208. 10:14of
209. 10:15wabda who supervised
210. 10:18the Indus Basin Works headed by Mr Salah
211. 10:21kirmani were and block recruited by the
212. 10:25World Bank
213. 10:27and sent all over the world saying that
214. 10:30if you want to learn irrigation these
215. 10:32are the people who will teach you
216. 10:33irrigation
217. 10:34since 1972 we never had one single
218. 10:38Reservoir
219. 10:40and finally I'll give you the example of
220. 10:42Pia
221. 10:43Pia was the only Airline which was doing
222. 10:47trust Atlantic
223. 10:49and had
224. 10:51you know flights to all over the world
225. 10:56and this was the airline which
226. 10:58established the Singapore Airlines
227. 11:02the Jordanian Royal Airlines and later
228. 11:05on the Emirates Airlines
229. 11:08last time
230. 11:10I was asked to
231. 11:12restructure the Pia and the cumulative
232. 11:16liabilities of Pia
233. 11:18today are 450 billion rupees
234. 11:23so you can contrast where is pidc
235. 11:26they have an ugly looking building which
236. 11:28they can't even whitewash that
237. 11:31and it looks so hideous
238. 11:33ADC is no longer existent
239. 11:36wabda has just woken up and started some
240. 11:40reservoirs
241. 11:42and the Pia
242. 11:44is where it is and this Planning
243. 11:47Commission which was actually the
244. 11:50supplier of most of the people to the
245. 11:53World Bank and IMF this stands where it
246. 11:55is today
247. 11:56so I'll close my remarks because I'm now
248. 12:01conscious that I have exceeded my time
249. 12:03but I leave this thought to you that
250. 12:07institutions of governance
251. 12:09do matter and if you go behind any
252. 12:12crisis
253. 12:13whether it is disaster management
254. 12:15whether it is the delivery of Education
255. 12:18whether it is the health service or the
256. 12:22irrigation canal
257. 12:24thefts and shortages
258. 12:27and
259. 12:28inefficiencies in any government
260. 12:31Department
261. 12:32these can all be attributed
262. 12:35to the decay of the institutions
263. 12:38thank you very much foreign
264. 12:42[Applause]