Technocrats: Member of a technically skilled elite especially one in a managerial or administrative position.
Gulfam presentatio.ptx 5
The Political Economy Of
Muhammad Gulfam Arshed
Sartaj Aziz is an eminent economist
and politician. He was born on 7th
February, 1929 in Mardan.
• He raised in Peshawar and Abbotabad.
• After arrival at Lahore, he got
admission in Islamia College Lahore.
• After this, Mr. Sartaj Aziz obtained a
Degree in Commerce from Hailey
College of Commerce (Punjab
University) in 1949.
• In 1962, he proceeded to Harvard
University (USA) where he earned a
Master's Degree in Public Administration
• He also got training and acquired
expertise in development planning and
1st phase of career; Civil Servant
• He joined Government service in 1950,
held various posts and rose to the level of
a Joint Secretary in the Planning
Commission in 1967.
• He was one of the principal contributors
to the Third and Fourth Five-Year Plans
2nd phase of career; International Career
• Mr. Sartaj Aziz started his international career in
1971 in Rome, Italy and held important positions
in the United Nations, Food and Agriculture
Organization (1971-75), World Food Council
(1975-77) and International Fund for Agricultural
• He participated in a number of international
conferences and was an active participant in the
North-South dialogue and South-South
3rd phase of career; Political Career
• Mr. Sartaj Aziz started his political career in April
1984 when he returned to Pakistan and joined the
Federal Cabinet as Minister of State for Food,
Agriculture and Cooperatives.
• He was elected as a Senator from KPK in 1985
and returned again to the Senate of Pakistan from
the Federal Capital Territory in March 1988 for a
• He was again elected as a Member of the Senate
from the KPK Province in March 1994 for
another six-year term.
3rd phase of career; Political Career
• He served as Federal Minister for Finance,
Planning and Economic Affairs from August 1990
to July 1993, a position he rejoins from February
1997 to August 1998.
• After it, he took over as Minister for Foreign
Affairs till October 1999.
• He performed above mentioned duties in the
regime of Mian Nawaz Shareef.
• In July 1993, Mr. Sartaj Aziz was appointed as
Secretary General of Pakistan Muslim League
4th phase of career; Education Sector
• Mr. Sartaj Aziz currently working as Vice
Chancellor of the Beaconhouse National
• As well as he is professor of economics
and management sciences.
• Mr. Sartaj Aziz wrote in his book
“Between Dreams and Realities” He is
much satisfied this phase of career.
• Hunger Politics and Markets (1975).
• Rural Development: Learning from
• Report of the National Commission
on Agriculture (1988).
• Agriculture Policies for the 1990s
• Privatization in Pakistan (1996)
• Between Dreams and Realities:
some milestones in Pakistan’s
• Mujahid-e-Pakistan Medal (1947).
• Tamgha-e- Pakistan (Medal of
• Sitara-e-Khidmat (Star of Service)
• The UNDP;s Human Development
Report 1996, explored the linkage
between economic growth and human
development and pointed out five types
of policies and intuitional failures.
• Economic growth is not accompanied by an
increase in employment or income earning
opportunities for the poor because the
expansion is based on capital intensive
investment primarily in urban areas.
• It is the growth that does not create new
employment opportunities with it.
• Economic growth also increases inequalities
because the benefits of growth do not flow
equitably to all sections of society.
• It is the growth that only benefits the rich, and
leaves the poor in their poverty.
• Economic expansion occurs without
simultaneous improvements in participation
opportunities for people, rendering the process
• It is the growth without improvement in
democracy or social inclusion.
• Economic expansions disregards the need to
the nature the averment.
• It is the growth at the expense of cultural
identity, or the loss of minority identity.
• Economic growth failed to succeed as a result
of disregarding the local socio-cultural context.
• Growth that undermines future generations by
depleting resources or destroying biodiversity.
Causes of poverty
• The root cause of poverty are deep and
complex and spring from the power structure
of a society, with its skewed distribution of
assets and an economic system often
dominated by feudal, tribal and ethnic elites in
most developing countries.
• In most developing countries policies are
urban biased, positive incentive for industry
and negative protection to agriculture.
• Policies in developing countries have negative
impact on poor by cutting down expenditures,
reducing subsidies, raising taxes and utility
• These policies lead to rising unemployment,
growing inequality and shrinking social
• The MDG,s of halving poverty by 2015 will be
difficult to achieve unless these obstacles and
negative policies are fully explored and
“Development first , Democracy later”
Some experts support this statement by arguing
that a stable democratic system requires
universal literacy, liberal attitudes, strong
judicial system and free media and it can be
achieved only through the process of
• Some experts give empirical evidence against
this statement .
Amartye Sen’s words,
“No democracy with a free press has ever
experienced a major famine”
The pre-requisites for poverty reduction in the light of the
experience of several Asian countries would include
1. The pattern of land ownership, the degree of skewness
and prospectus for land reforms.
2. The political power base of the Government in power
and the actual nexus between the power structure and
major stake holders and the extent to which country
elites are committed to development.
3. Extent of decentralization of governing structure and
4. Extent of power sharing and participation of the
poor in governance and the process of
development at different levels.
5. The degree of tribal, religious and ethnic
polarization in the country.
6. Capacity of the administrative structure to
implement economic and pro-poor reform
7. State of political rights and civil liberties in the
country as whole and for the segment of the
society including the effectiveness and
independence of institutions like the judiciary
and the media.
8. The relative term of trade for the agriculture
sector in relation to the industrial and urban
sectors including the share of credit flowing to
the rural sector.
9. The proportion of budgetary sources for social
sectors expeditors like education and health
that actually reach the poor.
LESSONS OF EXPERIENCE
This section of the handbook tries to identify the political factors
that have facilitated seven Asian countries to adopt pro-poor reforms
and policies. These countries are
3. South Korea
The main lessons that throw some light on the complex relation
between politics and poverty reduction are summarized as follows
• China has achieved a sustained GDP growth rate of 10.1% from
(World bank stats.)
• According to Human Development report of 2013. China is ranked
101 out of 186 countries securing a medium category in human
development. China’s HDI for the year 2012 is 0.699
(UNDP Report 2013)
• China's Gini coefficient, an index used to indicate a given country's
wealth gap, reached to 0.474 in 2012, down from 0.477 in 2011 and
from a peak of 0.491 in 2008
(National Bureau of Statistics China)
• China has successfully lifted 600 Million people out of poverty.
Population in china living below poverty line was estimated to be
49% of the population in 1980 which had been reduced to 13.1% in
• Main features of china’s success are as follows
• Strong commitment of Chinese leadership towards broad
base development and pro-poor reforms.
• Land reforms of 1950’s enabled farmers to pool their
resources and rural industrialist to generate additional
• It was then followed by the priorities that were set in
1977-78 towards poverty reduction along with economic
• Vietnam, a socialist country has achieved a sustained GDP
growth rate of 7.1% from 2000-2011
(WORLD BANK STATS.)
• According to human development report of 2013 vietman is
ranked 64 out of 186 countries securing a high category in
human development. Vietman’s HDI for the year 2012 is 0.769
(UNDP report 2013)
• About 28 million people are estimated to have been lifted out
of poverty over approximately two decades from 70% of the
population to 35%. Vietman’s poverty rate was reduced to
12% in 2011
• Like China, Vietman’s success story also started off with
the land reforms
• Which was then followed by the policy of economic
renovation and liberalization in 1986
• Their success was made possible by the social
transformation through equitable distribution of land
which was preceded by the process of economic and
• South Korea which is an emerging economy has achieved
GDP growth rate of 4.0% from 2000-2011
• According to Human development report of 2013 South
Korea is one of the developing countries to place a high
category position in Human development and is ranked
12 out of 186 countries . Its HDI for 2012 is 0.909
• South Korea a country with limited mineral and naturel
resources has done remarkably well in poverty reduction
by investing in EDUCATION
• They focused on their human resources and have
achieved 100% literacy rate combined with 34%
enrollment in sciences mathematics and engineering.
• South Korea improved terms of trade for agriculture
which ensured wide industrial growth may not lead to
wide disparities between rural and urban areas
• Malaysia a country in which state has played a significant
role in guiding economic activity through macroeconomic
plans has achieved GDP growth rate of 5.0% from 2000-
(World bank stats.)
• According to human development report of 2013
Malaysia is ranked 64 out of 186 countries securing a
high category in human development. Its HDI for the year
2012 is 0.769
(UNDP Report 2013)
• Malaysia success towards poverty reduction comes from
promoting national unity and by adopting practical
strategies for power and wealth sharing.
• This eventually helped them to overcome the racial and
ethnic divide within their country
• They adopted policies to provide equal opportunities to
all communities and religions by protecting the rights and
interests of the weaker segments of the society including
• Indonesia according to WTO the 27th biggest exporting
country in the world in 2010 has maintained the GDP growth
rate of 7% for three consecutive decades (1967-1997)
• 1997 economic crisis of Indonesia turned to serious political
crisis with led to breakdown of the governing structure.
• There GDP fell down by 14% in 1998 and poverty doubled to
28% of the total population.
• Indonesia has been trying to regain its momentum and has
achieved a sustained GDP growth rate of 5.3% form 2000-
• Poverty rate of Indonesia for the year 2012 is estimated
11.9% of the population.
Badan Pusat Statistik (Statistics Indonesia)
• According to UNDP report of 2013 Indonesia’s HDI is
0.629 placing in medium human development by securing
121 out of 186 countries
(UNDP Report 2013)
• Main reasons of success of Indonesia is the presence of
strong institutions and stable political system
• India, one of the world’s fastest growing economy, has
achieved GDP growth rate of 7.1% from 2000-2011 and have
ranked 136/186 countries in human development placing
medium category. Its HDI for the year 2012 is 0.554
• An estimated 29.8% of Indians live below the country's
national poverty line (2010)
• Success of India mainly lies in the strong democratic system
which provides scope for empowering poor.
• Having strong institutions like free judiciary independent
election commission and media has helped India to uphold the
rule of law and basic human rights.
• Indian experience shows that its economic progress is based
on solid foundations of education science and technology
creating vast employment opportunities for educated youth and
expanding the scope of growth for civil society
• Pakistan is a rapidly developing country. Its economy
grew by an average rate of 5% between 1950 to 2000
• From 2000-2011 it has achieved growth rate of 4.4%. It
is ranked as low human development country its HDI for
the year 2012 is 0.515 (146/186)
• Decentralization and transfer of power and resources to
grass route level helps creating better results in poverty
• This is partly the case of Pakistan. We shall discuss that in
• If we summarize the success stories of these Asian
countries we end up with the following conclusions
1. All the countries which have substantially reduced the
level of poverty have had an average growth rate in per
capita income which was atleast 3% per anum. 60-70%
reduction in poverty can be attributed to the growth in
per capita incomes.
2. These countries were able to achieve macro economic
stability through fiscal discipline. They expanded their
public sector investment in infrastructure and also
increased the social spending on education and heath.
EMPOWERMENT AND COLLECTIVE ACTION
• Empowerment of the poor becomes sometimes difficult in
countries where political system is neither genuinely
socialist nor truly democratic.
• Reason for that is, power structure is often pro-rich in its
policies through hidden subsidies and by fiscal policy
serving upper income groups
• Also because organizations representing the poor can’t
easily challenge the monopoly power and resources hold
by these politically dominant groups
• In Author’s view, these obstacles can be overcome by
organizing collective actions. Collective actions can be
organized by building powerful coalitions based on the
1. Evolving a legal framework for including “the right to
development” in the concept of basic human rights
2. Extending the human development perspective into
broader and more meaningful concept of human security
3. Enforcing the principle of democratic governance, by
supporting leaders committed to development and
building participatory institutions that are responsive to
the needs of the poor
• The concept of right to development leads us to the path
of adopting “rights approach”
• It is important in a sense if it is applied through coalition
of supportive political parties and civil society
• it leads us to a coherent framework of laws, rules,
standards and enforcement procedures which is capable of
influencing national policies and actions
• Author has pointed out two main pre-requisites for
extending the concept of human rights approach to
development. There must be a national level consensus on
at least following two approaches
1. Right of food and right to basic education
2. Strong coalition in support of the poor
Right to food and right to basic education
• World food summit which was held in ROME in June
2002 the international community has reaffirmed “the
right of everyone to have access to safe and nutritious
• If the two rights are accepted and gradually enforced
through a series of policies structure and monitoring
system other elements of the broader concept of
development can be added to the package
• On part of education, to make elementary education a
fundamental right India has done a constitutional
amendment in 2002
• They encouraged their states to insert this right into their
respective education laws.
Strong coalition in support of poor
• The second pre-requisite towards human rights approach
is the strong coalition of all stake holders in support of the
• Even if pro-poor laws are there they don’t lead to the
desired policies and actions without awareness in general
public and public pressure.
• Policy makers should be shaken into action along with the
power of public pressure from civil society to force
government to adopt pro-poor policies.
• This interaction will ensure participation of poor and will
lead to empower them.
• As it was mentioned earlier that in countries where political
system is neither genuinely socialist nor truly democratic the
state is generally dominated by governing elites in other words
political power structure is highly centralized.
• In such cases the right moment will have to follow a
decentralized approach based on different issues like lack of
good quality schools non-avaliability of clean drinking water
• Community organizations should concentrate on the needs of
special interest groups like minorities and women.
• Efforts should put to organize the poor to compete in the labor
and product markets and the right to buy their minimum
requirement of good and other essential products at reasonable
price which would place them on high moral grounds
Safeguarding Human Security
• The concept of human development by UNDP is
now widely accepted as a more meaningful
framework for formulating and implementing
development strategies and policies at the
national and international levels.
• But in practice and in most countries the
concept has had a limited impact on
• With the spread of diseases like AIDS,
continuing environmental degradation and the
threat of international terrorism the concept of
• The concept of human security encompasses a
broader set of development objectives, namely
“an expansion of human capabilities, a
widening of choices, an enhancement of
freedoms and a fulfillment of basic human
rights and the security of all the people
everywhere in their homes, jobs, streets and
in their communities.”
• The pursuit of these objectives will lead not
only to new criteria but new policy
• These goals of human security cannot be
reached without the empowerment of the
• At the community level, empowerment
comes from social mobilization through
which effective community organizations
can create awareness and generate political
and moral pressure to protect the rights of
the poor and the deprived.
• At the national level all the threads of
empowerment if they are strong enough
can converge into strong coalition in
support of the poor.
Securing Democratic Rights
• A peoples movement to secure their democratic
rights cannot be suppressed.
• Once such movements gather momentum they
can lead to far reaching political changes just
like in Egypt.
• There are many views on the main elements of
a genuine democratic system but three
ingredients are universally accepted:
• The ability of the population to elect their
leaders through periodical free
• And Fair elections
• In such a system the flow of information
through many channels encouraged by the free
media also leads to a free exchange of ideas
and debates on alternative policies.
• Different regions, provinces or communities can
highlight their needs through a gradual process
of administrative and political decentralization
of the governing structure.
• In the past two decades many countries under
a democratic dispensation have not only
actively pursued pro poor policies to increase
agricultural yields, improve education and
health services, provide clean drinking water
The International Dimension
• The international community has taken a giant
historical step by adopting the Millennium
Development Goals of halving hunger and
poverty by 2015.
• But it has not yet adopted policies to move
towards those goals.
• In fact the incidence of poverty if Chinese
figures are excluded seems to have increased.
• What needs to be done to achieve these
• The cold war ended 15 years ago and the
incident of September 11 changed the geo-
political landscape of the world and effectively
shifted the focus from the war against poverty
to the war against terrorism.
• This focus can be brought back if it is realized
that in the long run the two wars are
• There is also a moral obligation which should
require the international community to modify
in the interest of equity and justice policies like
agriculture subsidies that discriminate against
poor countries and poor people.
• After the commitment of halving the poverty and
hunger by 2015, the prospect for achieving this goal
do not look very promising in fact if Chinese figures
are excluded the poverty has actually increased.
• Global civil society will have to intensify pressures on
donor governments to honour their commitments, the
developing countries themselves have to evolve and
implement with the support of civil society and
participation of the poor, pro-poor policies and
• Regarding MDGs with few consequences attached to
their non-fulfillment, states are under little incentive to
comply and seldom challenged.
• Malaysia is a multi-racial country which faced a
set of challenges:
Achieving rapid economic growth
Promoting racial harmony.
• A masterful strategy evolved and Malaysia
achieved a sustained increase of 4.1% in per
capita GDP and improved its HDI rank and also
its gender related development Index.
• Malaysia’s policy framework for equitable growth
and poverty reduction has evolved through three
medium term plans supplemented by a series of
sectoral plans and as a result problems of poverty
and hunger have been virtually overcome.
• The core policies were incorporated in the New
Economic Policy (NEP) for 1970-90 aimed at
national unity through:
Rapid and continuous economic growth with
Eradication of poverty
Restructuring of society
• The main thrust of the poverty reduction strategy
of Malaysia was on increasing the productivity of
the poor and diversifying the sources of their
• This core poverty reduction strategy was
supplemented by special programmes to target
the poor and by providing welfare assistance to
the disabled and the handicapped.
• Every effort was made to maintain stable food
prices trough government intervention in the
production and marketing of essential items.
• Malaysia’s success in poverty reduction seems
to be the importance of overcoming racial or
ethnic strife through an active policy of
promoting power sharing and wealth sharing.
• Secondly chronic disparities were narrowed
through pro-active policies to provide equal
• Malaysia’s rapid growth is its ability to innovate
to plan and to implement its plans effectively.
• Malaysia had regular five year plans, long term
20 year perspective plans and even a 30 year
vision in the future.
• These were not idle dreams but were clear and
practical road maps which were all seriously
• It is this ability to plan innovatively and
implement the plan on a practical and realistic
basis that enabled its multi-racial population to
overcome serious inter-racial disparities and
become stable and to achieve remarkable
• The currency traders can not blamed for the
damage done to these countries.
• The blame is put squarely on the shoulders of
• An important lesson is that Malaysia must
always be careful in the management of its
• It must never allow to be weakened by
carelessness in the maintenance of its financial
and economic strength.
• Only with absolute vigilance can we ensure that
its rate of growth will be sufficient to achieve
developed country status as envisaged in vision
• From 1967 to 1997 Indonesia’s GDP grew by an
average of 7 percent per annum.
• Rapid growth was accompanied by significant
gains in the development of human capital and
a diversification of the economy away from
• Poverty fell from 70 percent in the mid 1960’s
to 11 percent in 1996.
• The economic miracle was built on strong
macroeconomic policies, support for
agriculture, investment in physical and human
• In Indonesia continuing institutional weakness
made the country vulnerable to shocks.
• Lack of appropriate controls and regulation for
example had weakened the financial sector and
increased external vulnerability, while
corruption undermined the credibility of
• When the Asian crisis hit , the absence of
strong institutions compounded the crisis and
made recovery more difficult and more costly
for Indonesia than other crisis affected
• The absence of a functioning political system
Economic policies 1967-97
• Macroeconomic stabilization the first phase of
economic liberalization proceeded through several
o Restoration of external viability: debt rescheduling,
adoption of a unified, fully convertible fixed
o Fiscal constraints: severity measures, including
reduction in government spending and subsidies to
state-owned enterprises, elimination of most price
controls and adoption of a balance budget policy.
o Restoration of the banking system: creation of a
strong central bank, improved access to credit,
rules for the establishment of foreign bank
• After import substitution and the public
financing of a limited number of capital-
intensive mega projects in the public sector,
Indonesia’s system began to develop into a
kind of “bureaucratic capitalism”, in which
powerful public figures especially in the military
• Private sector resources were misallocated and
price distortions depressed the overall level of
• Over the next decade as oil prices fell,
Indonesia faced a rapid decline in government
and export revenues, triggering a series of
• New order asserted that a strong state capable of
suppressing hostility based on ethnicity, religion, or
geography was a precondition for industrialization.
• The military became the key instrument for
eradicating “revolutionary and destabilizing” forces
within society and the administration severely
limited popular participation in politics.
• New order led to total breakdown of the core
• A system of merit-based personnel management
and continuous internal assessment was
• A scarcity of skilled and experienced technicians
• 1997 currency crisis in Indonesia rapidly turned
into a financial crisis, an economic crisis and then
a political crisis.
• GDP fell by 14 percent in 1998, poverty doubled
to almost 28 percent, inflation peaked at 80
percent and much of the banking system and
corporate Indonesia was left in bankruptcy.
• The first democratically elected president came
• After the crisis Indonesia’s GDP has not yet fully
recovered to pre-crisis levels.
• The country has continued its difficult transition
from a centralized, autocratic regime to a more
The crisis and the clean-up
• The people of Indonesia and particularly the
poor have suffered enormously from these
economic, political and ethnic crisis. In terms of
poverty reduction, Indonesian development
experience offers many lessons:
• Without the rule of law and strong institutional
reforms an increasingly complex economy is
hard to manage
• Without a clean, efficient civil service
implantation of those policies and their effects
may diverge strongly from the intentions and
targets of policymakers.
• Without an independence regulator the
• Indonesian experience illustrates the
consequences of weak political system.
• Longer term political stability and a responsive
democratic set up will require sustained
commitment and a lot of hard work in the years
• The rate of economic growth has recovered to
• The unpopular decision of cutting the fuel
subsidy on domestically consumed oil has
saved a part of amount which is being used for
a programme of welfare payments to 16 million
poor households covering quarter of the
• India’s economic record for 1990’s and 2000 onwards is
quite promising. It has achieved an average annual GDP
growth rate of 5.8% from 1990-2003. From 2000-2011 its
GDP growth rate was 7.1% .Last year its GDP grew by
• Gross primary enrollment in India has crossed 100% and
adult literacy has moved up to 58% ,70% for male and
47% for female.
• India’s HDI which was 0.590 in 2002 has decreased to
0.554 in 2012 but still ranks in medium category of
• Decline in poverty in India has been relatively slower.
From 1991 to 2003 India has lifted 70 Million people out
• Population living below national poverty line has
decreased form 36% to 26% from 1991-2003
• An estimated 29.8% of Indians live below the country's
national poverty line (2010)
• There has been two different schools of thoughts with
respect to the policies and approaches to poverty
reduction in India
• Some of the economists argue that sustained annual GDP
growth rate of 7-8% is the only cost effective route to
• While some argue that poverty should be addressed
through direct intervention programs and safety nets for
• As mentioned above, India has achieved a sustained GDP
growth rate of 7.1%. This paper highlights the main
features of second approach that how did India
implemented direct intervention programs to address the
poverty. These are as follows
1. India has successfully implemented the democratic
decentralization of power to empower poor.
• They introduced “Panchayati-rat” to institutionalize
the third tier of government in 1992 constitution
2. India implemented mid-day meal program in schools.
• Supreme court of India ordered government to use its
large reserve stock of wheat and rice to reduce hunger to
provide cooked meal in all the country’s school.
• It has immensely decreased the school dropout rate
particularly for girls
• Congress the current ruling party in India started
Common Minimum program with emphasis on poverty
• Common Minimum program is a National employment
guarantee program for which an allocation of Rs 110
billion was announced by the ministry of finance in 2005-
• Under this program at least one member of every rural
household will be guaranteed employment of 100 days a
• The village itself is expected to design a program of
preferred work according to their local priorities
• The National employment guarantee program for the first
time gives the right to work in principle for the poor rural
population of India
• But without improved governess at the local level the
desired impact in terms of poverty reduction will be
difficult to achieve
• A National rural health mission is also being launched in
India to strengthen primary health care.
• The total allocation for this program in 2005-2006 was Rs
103 Billion and allocation of Rs 47 billion for national
• India with having a strong political structure the prospects
for poverty reduction is much promising if these points
are be considered
1. There has been substantial decentralization of the state
structure from province to district and then down to
2. The allocation of financial resources for social services
and pro-poor expenditures is very substantial and has
been rising at a rapid pace.
3. India has maintained an average growth rate of over 6%
in its GDP over last 15 years. With a declining trend in
population growth which means that per capita increases
by 4.5% per annum (2005)
• Pakistan is a rapidly developing country. Its economy
grew by an average rate of 5% between 1950 to 2000
• From 2000-2011 it has achieved annual GDP growth rate
(world bank stats)
• According to Human Development report of 2013.
Pakistan is ranked 146 out of 186 countries securing a low
category in human development. Pakistan’s HDI for the
year 2012 is 0.515
(UNDP report 2013)
POLITICAL SYSTEM OF PAKISTAN
• Political system of Pakistan is very uncertain. In the
history of 66 years 31 year have been ruled by Military
dictators rest 35 years were left for civilian governments.
• It has been examined that under Military rule a higher
GDP growth rate has been achieved in Pakistan. This is
because of the fact that Military regimes are
competitively stable then the civilian governments.
• In terms of policies it is difficult to see any major
revolutionary changes because military led growth
models are not driven by investment in human
development but is relied largely on foreign assistance.
• Each of the military rule is linked with some important
international developments in which Pakistan has played
a role and in return received benefits in the form of
foreign assistance like
1. Membership of defense pacts like Cento and Seato
during Gen. Ayub Era (1958-69)
2. Active support of Mujahidins in Afghanistan after 1979
Russian invasion under Gen. Zia (1977-1988)
3. Participation in the international campaign against war
on terror after 9/11 under Gen. Musharraf (1999-2008)
• By contrast during democratic rule foreign assistance
THE RISE OF POVERTY
• Total number of population living below poverty line in
1980 was 40% which went down to 26% in 1990 partly
due to accelerated agriculture growth.
• It went high again 35% by 2003 largely due to a decline
in net flow of foreign assistance and decline in
• According to world bank stats number of population
living below poverty line in Pakistan is 21.12% in 2008
• It is evident that accelerated GDP growth is a necessary
condition for poverty reduction but Author holds the view
that its not just sufficient.
• Poverty reduction also requires improved income or asset
distribution and sustained human development.
• That is why high growth rate in 1960’s around 6.8% per
annum was not accompanied by a corresponding decline
in poverty, but there was some decline in poverty in
1970’s despite a slower growth rate of 4.8%
• Following are the key features of Pakistan’s economy
which are trapped with the high incidence of poverty, low
employment and growing inequality.
• The present structure of Pakistan economy is so skewed
that any increase in per capita income automatically leads
to greater inequality.
• As per study conducted by Social policy and development
center Karachi in 2004 shows:
• Out of every increment of Rs. 100 in GDP 48 rupees
accrues to richest 20% of the population, while the
poorest 20% gets only 7%
• The poverty reduction strategy that was formulated in
2001-2007 focused mainly on growth and stability and
did not include any policies to reduce inequality and
promote greater equity
• As per target of UNESCO (4%) Pakistan’s public
spending on education increased from 2.2% in 2003-04 to
just 2.5% in 2007-08.
FUTURE PROSPECTS FOR PAKISTAN
• Future prospects for Pakistan are both positive and
• Positive factors for poverty reduction includes
acceleration in the rate of growth, favorable terms of trade
for agriculture sector and rising budgetary resources
allocated for poverty reduction
• Whereas negative factors include skewed pattern of land
distribution, extensive religious, ethnic and sectarian
polarization in the society, limited participation of poor in
• In order to take poor out of vicious circle of poverty, author
suggests a more meaningful poverty reduction strategy which
should be implemented by considering following policies and
1. Ownership to land in rural areas through land reforms or
allotment of new land to poor households
2. Ownership of livestock through micro-credit on a substantial
3. Greater home ownership for low income households
4. Further improving agriculture terms of trade that the prices
that farmers pay for agriculture inputs do not rise faster then
the prices which farmers receive for their output
• Process of decentralization through transfer of power and
resources to local layers helps a lot to empower poor.
• Pakistan introduced “local body system” in 2001 under
which 6400 district and union councils have been created
with 142000 elected officials.
• 25% of the seats were reserved for the women
• Nazism's (Administrators) have been given responsibility
for providing services like education and health and to
address the problems of population
• The system of local bodies was disapproved by the newly
elected government in 2008 and restored the old
commissionaire system which clearly indicates that we
need to have perpetual forms of institutions.
• Efforts to address the poverty continued in Pakistan when PPP
government came into power in 2008
• They introduced the a social safety net for poor by introducing
Benazir Income Support Program.
• BISP was initiated in Oct. 2008 with an initial allocation for Rs. 34
billion for the financial year 2008-2009
• The allocation for financial year 2012-2013 is 70 billion rupees to
provide cash assistance to 5.5 million families which constitutes
almost 18% of the entire population and 40% of the population
below poverty line
• The enrolled families are paid cash assistance of Rs. 1000 per month
throughout the country
• BISP was not a big success because it addressed the victims of
poverty not the factors which causes poverty.
• Political factors especially political instability has been a key issue
for growth and poverty reduction in Pakistan. Since political
instability causes inability to realize it full development potential.
• Since its creation in 1947, Pakistan has been in clash with India
throughout past five decades. Because of this undue favor has been
given to military regimes which has destabilized the political system
of the country
• Large role assigned to military in managing state affairs has
weakened the democratic foundations of the country somehow
weakens the federal structure of state and threaten its unity
• For poverty reduction and sustained economic growth we need to
empower the poor through genuine democracy.
Annexure - ǀ
• First phase (1978-1985),the focus was on rural
reforms through institutional changes in land
holding such as the house hold responsibility
system, liberalizing procurement prices and
quotas and an active research and extension
programs in support of agriculture. This led to
an accelerated pace of development and a
sharp reduction in rural poverty from 250
million in 1978 to 125 million in 1985.
• Second phase (1986-1993),
The focus shifted from rural to urban and
industrial growth, especially in the coastal
• Third phase (1994-2000)
The government initiated the National Plan
for Poverty Reduction. It will lift 80 million
people from poverty within 7 years, this plan
also called “8-7 plan "it focused on three main
programs subsidized loans, food for work and
government budgetary grants.
• After “8-7 Plan” the chins government
launched a “New Centaury Rural Poverty
Alleviation Plan” for the period 2001-2010.
• The new plan targeted the 50,000 poor
• This includes poor villages in non poor
• Other policies included increased agriculture
price, reduced agriculture taxes and more
liberal migration policies.
• In pursuing its successfully development
oriented poverty reduction program for rural
China at the end of the 20th centaury, China
has however increased the degree of
inequality between urban and rural areas and
especially coastal areas of South East China
and remote areas of central and western China.
• The Chinese president Hu Jintao, in a land
mark statement on 16 April 2006 admitted the
structural weakness of china high speed of
growth model and said;
“We concerned about the pace of development
and the quality and the effect of our growth.
We are also concerned about saving our
resources, environmental protection and
improvement of our people livelihood.”
Annexure - ǀǀ Vietnam
Strategy for Socio economic Stabilization and
Before this strategy, in 1990 Vietnam economy
was suffering multi dimensional economic
and social crises with 70% poverty and
inflation rate 100 to 200% a year.
After this strategy, from 1991 to 2000 Vietnam
reduced the poverty level from 70 to 35%,
average growth rate 7.6%, average growth rate of
industry was 11.2% and agriculture 4.2%.
inflation was gradually brought down to 5%.
Vietnam’s HDI has improved from 0.582 in 1985
to 0.688 in 2001.
It was due to land reform and economic
In 2002, Vietnam adopted its poverty reduction and
growth strategy as a part of the comprehensive
socio economic development strategy for the
period 2001 to 2010.
Major Factors to Reduce Poverty
The most important factor was land reform in
the late 1980s.
The doi moi policy initiated in 1986introduced
more fundamental reforms and substantially
liberalized the agriculture sector.
This reform led to a sustained increase in
agricultural out put , created demand for
more rapid industrial growth and also reduced
poverty at very raped pace.
The second important factor was the
liberalization of the markets and prices the open
• This expanded opportunities for trade and small
enterprises in the private sector.
• The open door policy attracted the large number
of foreign companies in Vietnam.
• These new industries are able to meet growing
domestic demand and take advantages of low
wages for export.
• Foreign investment stabilized at the level of about
2 billion a year.
The third factor was the reform of public
administration and decentralization of
• It enhance the quality and efficiency of
governance and simplify administrative
• The decentralization has been underway for
some time, but is now being extended on a
more systematic basis.
The fourth factor was the acceptance of a
broader concept of human development that
goes away from incomes, education and
health to enlarging choices and the
opportunities the people.
• This broader concept flows directly from
Vietnam’s socialist philosophy of a rich people,
a strong nation and lays the basis for
institutional and governance structure, that
have broad popular support.
Effective implementation of these factors was
due to political stability.
• The cautious approach adopted by Vietnam
towards the pace of reform was very likely
influenced by the experience of many of
former Soviet Union countries that attempted
speedy transition without taking adequate
time to develop the necessary supporting
• Vietnam will be able to maintain an average
GDP growth rate of 7% in the decade 2001-
• Growing inequality between and rural areas.
• Pace of poverty reduction will be low than the
pace of GDP growth of 7%.
Annexure-ǀǀǀ South Korea
We take over look of South Korean economy
from 1975 to 2001.
• Rapid economic growth
• Significant reduction in poverty
• Per capita income grow at an average of 6.2
percent per annum
• Human developed index has moved up to the
high category with a score of 0.879
Major Factors to Reduce Poverty
• Land reforms
• High agriculture prices
• Low price of agriculture inputs
Due to these factors yield of rice increased by
• South Korea have 25% cultivated land and
very few natural recourses. But Korea cover
this problem through an active policy of
human and skill development i.e 99.8%
Productive Welfare Approach
• The Korean model for poverty alleviation on
this approach which seeks
“improvements in the lives of all low income
households, promote programs for human
development to create opportunities for self
reliant development and guarantee a basic
living standard by expanding the coverage of
social insurance to all people”
Four Major Policies of Production
1. National basic livelihood security act.
2. Expansion in the coverage of social insurance
including two health insurance schemes.
3. Human resource development programs to
enhance the access of vulnerable groups, to
the labor market and protect the rights of
4. Extending the policy of minimum wage.
Factors of success
• In the short period of 18 month, South Korea
came over the economic crises of 1997.
• Investment in human resources was another
important ingredient in Korea’s success..
• One of the main achievement of the Korean
government during the 1950’s was the eradication
of illiteracy through a rapid expansion of
• Major research programs to upgrade and
incorporate a higher level of technology, it created
vast employment opportunities for the educated
youth of country.
South Korea played a constructive role in
promoting regional stability by maintaining
strong economic links with its neighbors North
Korea, Japan and China.
“They do what they said, it is not
only lip service like Pakistani political leaders”.