From Trickle-down to Poor-led Development
Economically and politically, Pakistan has largely followed elitist policies which exploit, discriminate against and marginalize poor and vulnerable people since independence, based on the trickle-down philosophy of development. Economically, this approach argues that the state’s goal should be to make the rich richer by giving them tax, subsidies and other breaks as this will lead to greater investment by them and hence more jobs for the poor. Politically, this approach argues that power must be concentrated in the hands of educated elites since the poor are uneducated and do not know what is good for them, hence undermining arguments for devolution and even democracy.
Politically, this trickle-down philosophy has led to long periods of unelected military and civilian dictatorships punctuated by brief periods of highly centralized, non-participatory and non-transparent elected governments. Not only is state power in Pakistan highly centralized vertically at the federal level, but even horizontally, power is highly centralized in individuals, dynastic political families and kitchen cabinets. This centralization of state power has produced social, political and economic policies which favor the rich and the powerful and ignore the weak and the poor. Furthermore, accountability of politicians and public officials is weak
Economically, this trickle-down philosophy and the heavy influence of national elites like large landlords, traders and industrialists and multilateral institutions like the IMF on state economic decision-making has led to policies which harm laborers, peasants and poor consumers. Economically, this trickle-down approach has resulted in the following problems:
Having taken 19 IMF loans since 1958 to overcome perennial foreign exchange crises, IMF-backed, supposedly home-grown, reform plans have been Pakistan’s de facto development paradigm. Since rather than aggressively increasing growth to overcome foreign reserve crisis, IMF plans defensively reduce growth to do so, reforms have impeded long-term growth too. Thus, not just on progressive concerns like poverty and equality, IMF reforms have failed even on mainstream economic criteria.
Partly under the pressure of the IMF and western donors, Pakistan has adopted a very liberal regime with respect to foreign trade, foreign direct and portfolio investments and foreign exchange policies. This openness has exposed Pakistan to the vagaries of the international economy’s unpredictability and has also undermined its manufacturing sector.
Major projects like dams, freeways and embankment programs have often resulted in displacement of people and loss of their lands and have made poor people more vulnerable to disasters.
Direct taxes contribute less than 40% of Pakistan’s tax collections with the result that indirect taxes, which are often regressive and target the poor more, contribute 60%. Large segments of the economy controlled by elites are lightly taxed, e.g., agriculture, real estate, capital gains, and misreporting to avoid taxes is common by rich people.
Despite two attempts to undertake land reforms, land inequities in Pakistan are high regionally and a small percentage of households control the majority of agricultural land. Peasants often engage in sharecropping with rich farmers at unfavorable rates.
Labor rights have steadily eroded due to poor implementation of labor laws. In addition, industrialists use the practice of informalization and sub-contracting to avoid labor laws. As a result, the percentage of labor protected by labor unions and labor laws is steadily shrinking
Pakistan’s spending on social sectors like health, education, poverty reduction and disaster risk management is among the lowest in the region, with the result that its social indicators rival those of low-income countries. Government facilities in the areas of health and education provide poor quality services. The government has also recently adopted a policy of handing over schools and clinics to the private sectors without a clear strategy and rigorous impact assessment of such a move.
To overcome these problems, Pakistan must to adopt a development paradigm which focuses on increasing the capacities and incomes and hence buying powers of the poor. This will expand domestic demand and market, production, taxes, jobs and again people’s incomes under a continuous virtuous circle. Hence, poverty-reduction would constitute not a residual welfare aim to help the poor, but a creative national development strategy. This conscious main focus on the poor would go beyond pro-poor growth and represent poor-led development.
Under this paradigm, all state economic and political policies will be designed to enhance poor-led development. Fiscal policies would increase poor people’s capacities, avoid regressive taxes. Governance would emphasize devolved and responsive local bodies. Land reforms would be undertaken. Professionalization of boards and management, establishment of employee-owned, labor-intensive firms and transparent, sensible privatization would replace crony-capitalism-style privatization. External flows strategies will insulate Pakistan from frequent global boom-busts cycles.
A number of highly progressive community-based civil society institutions exist in Pakistan. There are also a handful of national-level progressive institutes working on specific issues like labor or urban slums. However, there is no progressive national civil society initiative covering a broad range of political economy, governance and grass-roots development issues from a people-centered perspective. INSPIRING Pakistan has been formed to fill this gap. The new initiative will link the intellectual capacities of progressive academicians (Pakistani BRAINS) and the grass-roots reach of progressive agencies (Pakistani VOICES) to encourage people-centered progressive polices and outcomes in the following areas from the lens of the poorest::
INSPIRE Pakistan will undertake the following types of activities:
The Express Tribune > Pakistan > Sindh ‘Local government system virtually abolished in Sindh’ ‘Local government system virtually abolished in Sindh’ Speakers point out flaws in functioning of local bodies at launching ceremony of research study By News...
Islamabad-Advocating further political, administrative and financial devolution, experts on Wednesday pointed out several flaws in the Islamabad local government (LG) system. A review report launched by INSPIRING Pakistan and Pattan Development Organisation, Islamabad called for legislative...