In 1975 the New York Times said about Pakistan that it “has unexpectedly emerged as the most economically buoyant nation on Asian subcontinent following its defeat in the ‘71 war with India. Foreign economists here—Europeans, Americans, those with the World Bank—are impressed. It’s much more hopeful than India or Bangladesh.”
Pakistan’s economy will survive in the long run, but it’s not because of Ishaq Dar or because of great economic management. There’s something that has kept Pakistan afloat all these years, from crisis to crisis and it’s had to pinpoint. Economics and analysts call this “resilience”- a stubbornness that is not born out of good planning but private and state interests coming together to create something that just refuses to die.
Economists also said this in 1975: “Given some decent weather and political stability, they’ll be self‐sufficient in food in two or three years. They have none of the hang‐ups asking for foreign aid. They have none of the ungodly restrictions that limit investment and production. You don’t have people begging for licenses to expand their cement plants.”
Political stability and food sufficiency were things we were never able to secure, but the rest is still true. It was easier to set up shop in Pakistan in the 70s that it ever was in Bangladesh. There is an inherent flexibility that allows Pakistan’s economy to survive. It may not thrive, it may not be the biggest or worst, but always has some form of stability that enables it to wade through wars, dharnas, coups and whatever else its leadership had to throw at it.
While Pakistan’s religious fervour and strange ideological makeup have never really been accepted globally, its economy is based on a very mainstream version of economics that is happy to take IMF loans, aid and policies from the west. The IMF and World Bank give credits, not to the poorest of the poor countries but middle to lower income countries where it has a good chance of getting returns. Pakistan has been a good investment.
Probably, that is how China sees it too. Apart from the security concerns China may have with India, there’s too much political and economic hoop jumping that it would have to go through in India as compared to Pakistan. Pakistan’s strong bureaucracy matched with an even stronger and more controlling military influence makes it easy for the buyer to talk straight to the top man than have to deal with the whole economic system where entry is at the middle or bottom. The same structure that led to the creation of the 20 families in the 60s is what creates an attractive space for international investments today. Pakistan may not be the next great economic oasis likes of Dubai, but the investment of the top dog is always safe here, and returns are stable.
We are talking about long-term stability here, not mass prosperity. Stability comes from ad hoc policy-making. Khurram Hussain writes this week for Dawn that the economy is adrift, and the fault lies with the Finance Minister Ishaq Dar. He is right in saying so and cites real sector growth and the external sector deficits. We have always had these deficits, and the money we make never seems to fill these gaps sufficiently. His article in Dawn is a case in point that the economy has grown after 2013 not because of an excellent policymaker at its helm, but from its own inertia.
Resilience is not enough. While the economy eventually rode out the shock of the rupee depreciation in July this year, we know that the economy was not strong enough to keep the rupee strong. We have debts, energy shortages and food insecurity that is creeping up on a sleeping nation despite our resilience, and old policies to beg or borrow no matter the cost (for example the super expensive LNG from the Gulf). While there is hope the China plan will work out to give us roads, food and lots of money; no one knows what the CPEC plan is because of a lack of transparency. There are no precise economic projections we can make from the mega-project, and the people just have to trust the state that this is all a good idea. It may well be, but if it’s not the shock may be greater than what we have yet seen.
Our resilience is a consequence of our economy not being too tightly integrated with western markets. The 2007 economic crisis in the US and the 2010 Eurozone crisis caused a global downturn, but in South Asia, it was pretty much business as usual. We are now very closely integrated with China, and China is a safe bet for now. But there will be no protection for us when a recession hits the Chinese economy. We have not been this close economically to another country since the British Raj, and during that time the Great Depression of the 1930s did hit us like a ton of bricks. Resilience is not enough and stability is not a good thing. It has made policymakers lazy, and the time that has passed has just created unhealthy precedents like consistent foreign borrowing and a lack of care for distributional justice and poverty alleviation.
The writer is studying South Asian history and politics at the Oxford University and is the former Op-Ed Editor of The Nation.