Spotlight on Pakistan: A nation under the microscope – Perspectives, Prospects and Problems.

Mohsin Zeb presents a detailed analysis of the current state of affairs in Pakistan.

Since the advent of the War on Terror, Pakistan has been amongst the most discussed and analyzed countries in the world. Yet it remains perhaps the misrepresented and misunderstood country in the western press. This article draws upon my doctoral research to try and give a more nuanced perspective of Pakistan today, analyse its prospects for the near future and highlighting its core problems. Having the good fortune to study Pakistan at a high level of academic commitment, I feel obliged to provide a balanced perspective.

Two thousand and seven served as a fulcrum in time for Pakistan. The decision by the Musharraf regime to confront radical Wahabbists in the capital of Islamabad served as a trigger for an insurgency that has killed scores of thousands of Pakistanis, almost all civilians, and tarnished the global image of the country. Islamist radicals continue to wage an ill conceived struggle against the state, seemingly oblivious to the fact that countless high profile Islamic scholars, drawing from ideological orthodoxy, has declared that such wanton terror takes one out of Islam and is wholly contrary to Islam’s principles. In any case, I am not a theologian, and will revert back to political analysis. Since then, Pakistan has gone through a turbulent period of violence, insecurity and stunted economic growth.

In the years immediately prior to 2007, Pakistan had enjoyed growth rates of 7 percent and as such the terrorism (coupled with global economic downturn later) have served to cut short a period of extreme productivity. Since that fateful year, Pakistan has come to be seen as something of the regional ‘bad boy’ or nutcase, a narrative that is devoid of fact or sophisticated analysis. I am here to shatter these misconceptions about Pakistan. Indeed the data shows that for from being a regional madhouse, Pakistan has in many ways emerged as a regional front runner in numerous traditional and modern measures of success.

Perspectives

The routine narrative of South Asia suggests that Pakistan is far behind its giant neighbour India on any measure of success and that the gap continues to widen. Sadly for those who have a vested interest in that line, research shatters their ignorance. I aim here to provide from perspective on the issue. Take poverty – the rates of which are classic, globally recognized measures of progress. A 2010 report by the Oxford Poverty and Human Development Initiative calculated that India’s rate of poverty at rates of $1.25/day and $2/day are 42 and 76 percent respectively. Contrasted to that, Pakistan’s rates of such levels of poverty, still painfully high, are as per the UN are 22.6 percent and 60.3 percent. Horrendously high, but reflective of far greater success in poverty alleviation then ‘shining’ India, which houses more absolute poor then all of sub-Saharan Africa and has poverty rates akin to those of Sierra Leone!

>Furthermore, this being the information age, incidents of technological penetration are key indicators of infrastructural and societal development. If one takes internet penetration rates as detailed by the International Telecommunications Union, one finds that Pakistan which has 17.6 percent internet penetration [about 30 million people] enjoys rates greater than twice that of India which has merely a 7.5 percent internet penetration rate. Yet this is the regional basket case? [The other mainland South Asian state Bangladesh lingers at 3.5 percent.]

Indeed more generally, Pakistan’s success in digitalizing its society and connecting it to the world is unmatched in the region. It has a sophisticated telecommunications infrastructure that sees cell phone penetration at rates approaching 70 percent enjoys a nationwide wi-max network and continues to develop all these facets of industry. An indeed cell phone penetration rate is the only indicator of technological penetration in which India enjoys parity.

It is true that India is enjoying tremendous economic growth, and long may that continue, but anaemic growth in the short term (Pakistan is expected to grow at 3.8 percent this year [IMF]) and an insurgency should not cloud the entire picture of regional development. India’s middle class is huge in sheer numbers and continues to rationally attract inward investment in a more stable climate. However, if one looks at percentages as Goldman Sachs is want to do, some interested data becomes manifest. A 2009 study by GS which defined “middle class” as those who earn between $6000 and $30,000 in PPP terms, estimated the proportion of such earners for various emerging economies.

In 2009, it estimates 6 percent of Indians to be in that bracket, compared to 9 percent of Pakistanis (GS study). Admittedly, projections show India bringing more people into that bracket as time goes on [2015 estimates are 16 percent to 13 percent in India’s favour], but even the projected figures are hardly a world apart. The key is that 13 percent of India is about 150 million people, almost Pakistan’s entire population. Obviously the larger market is more attractive, but people must not lose sight of the overall picture which shows proportional income ranges are similar and indeed today even in Pakistan’s favour.

I hope the above, drawn from credible sources such as the UN, IMF, Goldman Sachs and Oxford Poverty and Human Development Initiative brings an order of sanity and informed debate on the Pakistan issue. Troubled times indeed face the land of the Indus, but a basket case or regional backwater it is not.

Prospects

Long years ago as I wrote my master’s thesis, I studied the correlation between economic development and democracy amongst other factors in democratic development. Undoubtedly there is a strong correlation between the free market and political freedom. The point was to try and track or predict with informed accuracy the trajectory of Pakistan’s fragile democracy. As I type a civilian administration of comical incompetence sits in power and will probably see out its term. A good development, I suppose. The point is that as Pakistan’s democracy strengthens, its economy should too, and vice versa. It is a mutually beneficial relationship. The IMF predicts that Pakistan should return to growth rates of 5 percent plus, a key barrier to achieving development goals, by 2014, with 2013 seeing a rate of 4.5 percent. Extrapolating the latest IMF data forward, even assuming lower rates of 4-4.5 percent per annum, Pakistan will become a trillion dollar economy by purchasing power in the middle of the next decade. Today, as per the Pakistan Economic Survey 2011, it has a PPP GDP of $534 billion, the 25th largest economy in the world. [Nominal GDP is estimated to be $210 billion, ranked 43rd]. By 2025/6, it will be a midteen ranked economy by purchasing power- which reflects economic ground realities as items cost different amounts in different states- and should be a low 20’s economy in nominal terms. Indeed IMF calculations expanded, assuming a 4.5 percent rate will give Pakistan a nominal GDP of $361 billion in 2020 [PPP estimates are $759 billion]. The prospects for Pakistan are not too gloomy, indeed if security can be achieved and investment returned to rates of the first decade of this century, Pakistan could register far greater growth.

Thus, even by pessimistic standards, lower even then IMF estimates, Pakistan stands to expand into a sizable economy. The key is that economic prosperity and political freedom are the benchmarks of progress to most and as one increases so should the other. Therefore, one has grounds for optimism as relates to the economic future and democratic future of Pakistan. Of course IMF projections are not set in stone, but I have no reason to assume the IMF just pulled their data from thin air. As the economy growths, the middle class too will expand and democracy and liberalism will find more champions, one hopes. Challenges remain – immense challenges that could threaten to derail any progress and bring to pass the near cartoonish caricature of Pakistan one has come to see in the gutter press, and I shall address these next.

Problems

To any fair mind, the information provided has media portrayals of Pakistan to be grossly false. Anyone who has been to that country can testify that it is neither as dangerous nor as lagging relative to its region as is portrayed. However, Pakistan faces three crucial challenges that it must overcome should it wish to take its rightful place amongst the community of nations. The first is corruption, the second a type of economic and educational apartheid that stops progress from trickling down to the masses. The third, I believe in part a product of the first two coupled with ideological narrowness, is radicalism or extremism which tarnishes a fine land and the name of an incredibly warm people.

Corruption is rational enough as a highlighted problem. As in all developing states, corruption occurs when parties think it represents an easy option or a financial benefit. It undermines the writ of state and weakens the social contract. In Pakistan, elements of the state such as the police and tax board are notoriously corrupt. The latter of the two, tax corruption is a core issue facing Pakistan. A weak tax base undermines the state’s ability to provide or insure and the tax base must be expanded. Whilst tax revenue has been increasing in recent times, huge work needs to be done to bring it to acceptable levels. For one, two-thirds of Pakistanis live in rural settings which are rarely well documented or registered for tax purposes. That and the elites not paying up must be dealt with. Broaden the tax base and hit the rich for a fair share. Imran Khan, lion that he is, aims to do both and I wish him every success.

Secondly, the issue of educational and resource apartheid undermines the state by undermining the union. Punjab and Karachi (not the rest of Sindh) represent 60 and 20 percent of GDP respectively. That means the rest of the country, territorially more than half, represent an output of just 20 percent of GDP. With such inequality, the development of the state and commitment to its perpetuation are weakened. Per capita [PPP] incomes in Punjab are about a third above the national average and in Karachi about 2 and a half times the national average (obviously Karachi’s stat is skewed by a very rich top 1-5 percent).

When development is so unequal, it can cause tremendous strain and disharmony. Whatever middle class exists in Pakistan, be it the 9 percent GS calculate or the 20 million people Time Magazine estimate it to be exists in the big cities in Punjab and in the financial hub of Karachi. This small elite are entrenched and enjoy all the trappings of material success, but are loathe to distribute power and resources more fairly. There bubble of affluence shields them from ground realities facing most Pakistanis, and until this entrenched elite which includes the political ruling class, opens up opportunity for all Pakistan shall never achieve its full potential. Be it 9 or 10 percent, or even 5 percent, a subset of x million people is enough to create a cocoon within which the haves are detached from the mainstream of Pakistan.

Finally, I recognize radicalism as a huge threat to Pakistan. It is the primary cause of Pakistan’s bad press, of its image problem and or domestic disharmony. Radicals who try to force warped ideas of religion on the moderate majority are always troublesome. In Pakistan, they combine this spiritual bankruptcy with weapons and hate and have killed thousands. Increasingly, one recognizes the very real economic element to the anti state movement up North. It is the poor who attend madrassas, the poor who join the TTP and the poor who fall victim to these idiots. Is radical violence in part a cry for redistributive economics within the state? Surely, that must be a part of the solution. Fed stomachs and nourished minds tend not become radicalized.

The final part of this article, problems, is worthy of an article or two itself. For now, I included a snippet just to bring a sense of long term perspective in what is a tiny snapshot into my doctoral research coupled with a desire to set the record straight as relates to Pakistan. I will address any questions that arise from this as best I can.