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Role of Politics and Governance
in Socioeconomic Development
By
SUGAT RATNA KANSAKAR
1
THE UNIQUE NEPAL
• Nepal is among very few countries in the world, never
colonized
• Nepal has legendary Gurkha soldiers, many consider
bravest in the world
• History of mankind has only 4 mass-based religions-
Hinduism, Christianism, Islamism & Buddhism. Among 200
countries of the world, Nepal is one, where one of theose
religions originated. Buddha was born in Nepal.
• Nepal has one of the biggest hydro-power potentials in
the world. Nepal has 6000 rivers.
2
THE UNIQUE NEPAL….
• Nepal has tremendous tourism potential with
Switzerland-like scenic beauties and heritage sites,
traditional cultures and above all high potential for
religious tourism (Hinduism and Buddhism).
• Excellent climate, fertile land, hard-working rural
population and above all increasing numbers of
skilled “knowledge workers” and educated youths are
other factors, for which we should be proud of.
• Nepalese society has “willing to change” culture, a
huge advantage.
3
WHERE WE STAND
• Pattern of growth in Per Capita Income of few countries in US$ are as
follows:
Nepal India China Afghan Indone
sia
Botsw
ana
Pakist
an
Zimba
bwe
2011 607 1528 5439 586 3495 8533 1182 695
2005 303 735 1777 240 1258 5468 688 495
2000 235 444 957 155 773 3204 493 603
1990 198 374 360 278 679 2688 429 1121
1980 139 264 318 257 526 854 357 981
1970 87 111 114 146 82 96 205 388
4
LOOKING BACK
• Looking back at Nepal's socio-economic development
scene in the past six decades, it will be a futile exercise to
try to prove that we have had "good" governance.
• It is altogether a different matter that few politicians, who
were responsible in the governance in the past, used to
defend their "rule" by trying to prove that country
developed satisfactorily using yardsticks totally different
from universally accepted norms.
• Presently, it is crystal clear that Nepal even lagged behind
countries like Ethiopia, Vietnam, Cambodia, Laos, Bhutan
and many other countries in Africa and Central America.
5
WHO RULED THE COUNTRY?
• Million dollar question is what went wrong and who were
responsible for this state of affairs. Those responsible for running
our country could be broadly classified in two groups- rulers (kings
& politicians) and bureaucrats.
• Obviously, rulers will be at the helm of affairs, so they are mainly
responsible for governance. Next to politicians, second biggest
responsibility lies with bureaucrats.
• Although private sector, that is trade and industry, and social
organizations like NGOs and INGOs play substantial role in socio-
economic progress of the society, they have minimum role in
governance of the country.
• Quite often people, in general, are also blamed by few
intellectuals, politicians and journalists for nation’s problems. This
is absolutely rubbish judgement.
6
CRITICLAL JUNCTURES
• Few historical turning points, critical junctures, of
Nepal & world are:
– Revolution in England in 1688AD, Prithvi Narayan Shah
did unification of Nepal in 1743AD
– Steam-powered ships & railways started from 1712AD,
and industrial age started from 1750AD
– French revolution in 1789AD & USA civil war in 1860, Jung
Bahadur became Prime Minister in 1846AD until 1877
– Advanced industrial age kicked off from 1870 onwards
with invention of electricity, telephone, steel ,chemicals,
electronics, pharmaceuticals, automobiles, airplanes etc
7
CRITICAL JUNCTURES….
– Rana rule ousted in 1950AD (Information Age started
from 1946AD, when 1st computer ENIAC was made)
– Absolute monarchy started from 1960AD, Singapore
became an independent state with Lee Kuan Yew as
President in 1965 & China got leadership of Deng
Xiaoping in 1977
– India also could not take off after independence until
1992,.
– Democracy with constitutional monarchy restored in
1990AD, but Narasimha Rao, Man Mohan Singh, &
Chidambaran team changed Indian economy from 1992
onwards
8
WORLD & NEPAL
• When western world was making great inventions and
moving forward with massive industrialization during
second half of 19th century and first half of 20th century,
Rana rule was busy with internal squabbles and tackling
British ruler in India, or just enjoying money and power
only.
• Similarly, after ousting of authoritarian Rana regime also,
we missed “good governance” and progress in science and
technology.
• In the past 63 yrs, kings, political leaders and bureaucrats
did not or could not grapple with real institutional causes
of slow growth before 2007BS itself. So, they did mistake
exactly as India did after independence.
9
HOW BAD IS THE SITUATION NOW
• The man-on-the-street, especially younger generation, knowingly or
unknowingly, has already become “world-citizen” in the “flat-world-
platform” and is increasingly aware of the outside world due to dozens
of TV channels made possible by satellite technology, with
unprecedented digital connectivity regardless of distance and unlimited
access to contents through Internet & in addition fueled by shock of
Darchula to Dubai and Malangwa to Malaysia syndrome.
• The man-on-the-street is asking emotionally with total frustration: what
then is the solution? Who is going to take leadership to save the country
from falling in the ditch of “failed state”?
10
CIRCUMSTANCE vs. PERSONALITY
• From ancient time, one intellectual debate is going on :
whether circumstance or personality shape a society or
country. In case of Singapore, it is being said that fast
growth is due to both circumstance and extraordinary
personality of Lee Kuan Yew.
• Lee sought advice from Japan, who advised him to make
Singapore “a center for knowledge & information”. Lee,
then, instructed to give emphasis on science, mathematics
& computer in all schools.
• A prominent US businessman: “You talk to the leadership
in China, and they are all engineers, and they get what is
going on immediately. The Americans don’t, because they
are all lawyers.”
11
CIRCUMSTANCE vs. PERSONALITY..
• In 1961, Deng, in a conference in Guangzhou, said “No
matter whether the cat is black or white, if it catches
mice, it’s a good cat”. In fact, that time he was trying to
convince Mao that it did not matter whether the policies
appeared communist or not, China needed policies that
would encourage production so that it could feed its
people.
• After Deng came to power in 1977, grain output increased
by 33% within 6yrs (1984).
• India had both democracy and political stability, but
growth and prosperity did not happen until 1992. In 2009,
LKY commented “Gandji’s idea was to give them back
village, the spinning wheel. Well, I mean, that’s going to
get you nowhere in this industrial age”.
12
CIRCUMSTANCE vs. PERSONALITY..
• Rana rule from 1846 to 1950, it was golden chance for
them to develop country, as British was taking leadership
in science, technology and industrialization in the same
period
• King Mahendra and Birendra also got opportunity to do
something for the country in 30 yrs of their absolute
power
• After democracy in 1990, NC & UML had ample time to
make things happen as India did in the same period
• 6 years of LOKTANTRA, growth almost stagnant
• In addition to reform, “Some luck is key, because history
always unfolds in a contingent (uncertain/accidental)
way.”
13
WRONG EXCUSES
• Many say that main reason for Nepal’s slow growth is
India factor. But Nepal is not the only country in the
world with a big brother neighbor.
• In 1979, Deng Xiaoping visited USA, ignoring Taiwan
issue for national benefit. Nepal is talking nonstop for
past 63 yrs about big brother India, 1950 treaty,
Koshi, Mahakali etc.
• Land-locked country. But look at Botswana. In 1895, 3
tribal chiefs showed their courage & leadership
capability by going all the way to London to meet PM.
• Rana rule and Panchayat system. What about slow
growth even in democracy and Loktantra?
14
WRONG EXCUSES….
• Political instability. Does democracy and political
stability go together? How come garment
industry flourished in politically unstable
Bangladesh?
• It is due to our culture! What about pace of
development of India before and after 1992?
• Ignorant and unintelligent politicians! How can
all PMs & 26 ministers in the past 63 years be
ignorant and unintelligent?
• Predominant communist parties. What about
growth in China compared to India?
15
RECIPE FOR PROSPERITY
• According to MIT Professor/economist Daron &
Harvard political scientist Robinson, there is strong
synergy between economic & political institutions.
Both institutions should encourage economic growth.
• They write that the result of faulty institutions is
“economic stagnation and – as the recent history of
Angola, Cameroon, Chad, the Democratic republic of
Congo, Haiti, Liberia, Nepal, Sierra Leone, Sudan and
Zimbabwe illustrates- civil wars, mass displacements,
famines, and epidemics, making many of these
countries poorer today than they were in the 1960s.”
16
RECIPE FOR PROSPERITY…
• Key is to “bring in” broad cross-section of society
within political as well as economic activities
• Political power must be vested broadly across the
society, to establish strong and effective economic
institutions that enforce property rights, create a level
playing field & encourage investments in new areas to
fuel innovations
• Economic growth and technological change are
accompanied by “creative destruction” in the words
of great economist Joseph Schumpeter, replacing old
with new.
17
RECIPE FOR PROSPERITY…
• New sectors attract resources away from old
ones. New firms take business away from
established ones.
• New technologies make existing skills &
machines obsolete.
• New laws, rules, procedures replace traditional
TIPPANY culture.
• Creative destruction creates “losers as well as
winners in the political arena and in the
economic market place”. Hence, bulldozing is a
must to make forward-looking new institutions.
18
RECIPE FOR PROSPERITY…
• In a World Bank study of “Doing Business”, they
found that for a country to develop, the
government must make easy to
– Start a business in terms of rules, regulation, license
fee etc
– Hire and fire workers
– Enforce a contract
– Get credit
– Close a business that goes bankrupt or is failing
• Do we need new constitution to make “doing
business” easy?
19
The New Begining
• Let us try to make a difference in the governance of the
country.
• Let us put pressure on politicians and top bureaucrats to
go for “creative destruction” to take country to a new
height to move faster towards New Nepal.
• Let us try to bring positive environment & energize others,
to enable country to move forward through resistance &
chaos and above all to have heartfelt, deep and authentic
excitement about whatever work, we are doing
Thank you
20

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Role of politics and governance in socioeconomic development

  • 1. Role of Politics and Governance in Socioeconomic Development By SUGAT RATNA KANSAKAR 1
  • 2. THE UNIQUE NEPAL • Nepal is among very few countries in the world, never colonized • Nepal has legendary Gurkha soldiers, many consider bravest in the world • History of mankind has only 4 mass-based religions- Hinduism, Christianism, Islamism & Buddhism. Among 200 countries of the world, Nepal is one, where one of theose religions originated. Buddha was born in Nepal. • Nepal has one of the biggest hydro-power potentials in the world. Nepal has 6000 rivers. 2
  • 3. THE UNIQUE NEPAL…. • Nepal has tremendous tourism potential with Switzerland-like scenic beauties and heritage sites, traditional cultures and above all high potential for religious tourism (Hinduism and Buddhism). • Excellent climate, fertile land, hard-working rural population and above all increasing numbers of skilled “knowledge workers” and educated youths are other factors, for which we should be proud of. • Nepalese society has “willing to change” culture, a huge advantage. 3
  • 4. WHERE WE STAND • Pattern of growth in Per Capita Income of few countries in US$ are as follows: Nepal India China Afghan Indone sia Botsw ana Pakist an Zimba bwe 2011 607 1528 5439 586 3495 8533 1182 695 2005 303 735 1777 240 1258 5468 688 495 2000 235 444 957 155 773 3204 493 603 1990 198 374 360 278 679 2688 429 1121 1980 139 264 318 257 526 854 357 981 1970 87 111 114 146 82 96 205 388 4
  • 5. LOOKING BACK • Looking back at Nepal's socio-economic development scene in the past six decades, it will be a futile exercise to try to prove that we have had "good" governance. • It is altogether a different matter that few politicians, who were responsible in the governance in the past, used to defend their "rule" by trying to prove that country developed satisfactorily using yardsticks totally different from universally accepted norms. • Presently, it is crystal clear that Nepal even lagged behind countries like Ethiopia, Vietnam, Cambodia, Laos, Bhutan and many other countries in Africa and Central America. 5
  • 6. WHO RULED THE COUNTRY? • Million dollar question is what went wrong and who were responsible for this state of affairs. Those responsible for running our country could be broadly classified in two groups- rulers (kings & politicians) and bureaucrats. • Obviously, rulers will be at the helm of affairs, so they are mainly responsible for governance. Next to politicians, second biggest responsibility lies with bureaucrats. • Although private sector, that is trade and industry, and social organizations like NGOs and INGOs play substantial role in socio- economic progress of the society, they have minimum role in governance of the country. • Quite often people, in general, are also blamed by few intellectuals, politicians and journalists for nation’s problems. This is absolutely rubbish judgement. 6
  • 7. CRITICLAL JUNCTURES • Few historical turning points, critical junctures, of Nepal & world are: – Revolution in England in 1688AD, Prithvi Narayan Shah did unification of Nepal in 1743AD – Steam-powered ships & railways started from 1712AD, and industrial age started from 1750AD – French revolution in 1789AD & USA civil war in 1860, Jung Bahadur became Prime Minister in 1846AD until 1877 – Advanced industrial age kicked off from 1870 onwards with invention of electricity, telephone, steel ,chemicals, electronics, pharmaceuticals, automobiles, airplanes etc 7
  • 8. CRITICAL JUNCTURES…. – Rana rule ousted in 1950AD (Information Age started from 1946AD, when 1st computer ENIAC was made) – Absolute monarchy started from 1960AD, Singapore became an independent state with Lee Kuan Yew as President in 1965 & China got leadership of Deng Xiaoping in 1977 – India also could not take off after independence until 1992,. – Democracy with constitutional monarchy restored in 1990AD, but Narasimha Rao, Man Mohan Singh, & Chidambaran team changed Indian economy from 1992 onwards 8
  • 9. WORLD & NEPAL • When western world was making great inventions and moving forward with massive industrialization during second half of 19th century and first half of 20th century, Rana rule was busy with internal squabbles and tackling British ruler in India, or just enjoying money and power only. • Similarly, after ousting of authoritarian Rana regime also, we missed “good governance” and progress in science and technology. • In the past 63 yrs, kings, political leaders and bureaucrats did not or could not grapple with real institutional causes of slow growth before 2007BS itself. So, they did mistake exactly as India did after independence. 9
  • 10. HOW BAD IS THE SITUATION NOW • The man-on-the-street, especially younger generation, knowingly or unknowingly, has already become “world-citizen” in the “flat-world- platform” and is increasingly aware of the outside world due to dozens of TV channels made possible by satellite technology, with unprecedented digital connectivity regardless of distance and unlimited access to contents through Internet & in addition fueled by shock of Darchula to Dubai and Malangwa to Malaysia syndrome. • The man-on-the-street is asking emotionally with total frustration: what then is the solution? Who is going to take leadership to save the country from falling in the ditch of “failed state”? 10
  • 11. CIRCUMSTANCE vs. PERSONALITY • From ancient time, one intellectual debate is going on : whether circumstance or personality shape a society or country. In case of Singapore, it is being said that fast growth is due to both circumstance and extraordinary personality of Lee Kuan Yew. • Lee sought advice from Japan, who advised him to make Singapore “a center for knowledge & information”. Lee, then, instructed to give emphasis on science, mathematics & computer in all schools. • A prominent US businessman: “You talk to the leadership in China, and they are all engineers, and they get what is going on immediately. The Americans don’t, because they are all lawyers.” 11
  • 12. CIRCUMSTANCE vs. PERSONALITY.. • In 1961, Deng, in a conference in Guangzhou, said “No matter whether the cat is black or white, if it catches mice, it’s a good cat”. In fact, that time he was trying to convince Mao that it did not matter whether the policies appeared communist or not, China needed policies that would encourage production so that it could feed its people. • After Deng came to power in 1977, grain output increased by 33% within 6yrs (1984). • India had both democracy and political stability, but growth and prosperity did not happen until 1992. In 2009, LKY commented “Gandji’s idea was to give them back village, the spinning wheel. Well, I mean, that’s going to get you nowhere in this industrial age”. 12
  • 13. CIRCUMSTANCE vs. PERSONALITY.. • Rana rule from 1846 to 1950, it was golden chance for them to develop country, as British was taking leadership in science, technology and industrialization in the same period • King Mahendra and Birendra also got opportunity to do something for the country in 30 yrs of their absolute power • After democracy in 1990, NC & UML had ample time to make things happen as India did in the same period • 6 years of LOKTANTRA, growth almost stagnant • In addition to reform, “Some luck is key, because history always unfolds in a contingent (uncertain/accidental) way.” 13
  • 14. WRONG EXCUSES • Many say that main reason for Nepal’s slow growth is India factor. But Nepal is not the only country in the world with a big brother neighbor. • In 1979, Deng Xiaoping visited USA, ignoring Taiwan issue for national benefit. Nepal is talking nonstop for past 63 yrs about big brother India, 1950 treaty, Koshi, Mahakali etc. • Land-locked country. But look at Botswana. In 1895, 3 tribal chiefs showed their courage & leadership capability by going all the way to London to meet PM. • Rana rule and Panchayat system. What about slow growth even in democracy and Loktantra? 14
  • 15. WRONG EXCUSES…. • Political instability. Does democracy and political stability go together? How come garment industry flourished in politically unstable Bangladesh? • It is due to our culture! What about pace of development of India before and after 1992? • Ignorant and unintelligent politicians! How can all PMs & 26 ministers in the past 63 years be ignorant and unintelligent? • Predominant communist parties. What about growth in China compared to India? 15
  • 16. RECIPE FOR PROSPERITY • According to MIT Professor/economist Daron & Harvard political scientist Robinson, there is strong synergy between economic & political institutions. Both institutions should encourage economic growth. • They write that the result of faulty institutions is “economic stagnation and – as the recent history of Angola, Cameroon, Chad, the Democratic republic of Congo, Haiti, Liberia, Nepal, Sierra Leone, Sudan and Zimbabwe illustrates- civil wars, mass displacements, famines, and epidemics, making many of these countries poorer today than they were in the 1960s.” 16
  • 17. RECIPE FOR PROSPERITY… • Key is to “bring in” broad cross-section of society within political as well as economic activities • Political power must be vested broadly across the society, to establish strong and effective economic institutions that enforce property rights, create a level playing field & encourage investments in new areas to fuel innovations • Economic growth and technological change are accompanied by “creative destruction” in the words of great economist Joseph Schumpeter, replacing old with new. 17
  • 18. RECIPE FOR PROSPERITY… • New sectors attract resources away from old ones. New firms take business away from established ones. • New technologies make existing skills & machines obsolete. • New laws, rules, procedures replace traditional TIPPANY culture. • Creative destruction creates “losers as well as winners in the political arena and in the economic market place”. Hence, bulldozing is a must to make forward-looking new institutions. 18
  • 19. RECIPE FOR PROSPERITY… • In a World Bank study of “Doing Business”, they found that for a country to develop, the government must make easy to – Start a business in terms of rules, regulation, license fee etc – Hire and fire workers – Enforce a contract – Get credit – Close a business that goes bankrupt or is failing • Do we need new constitution to make “doing business” easy? 19
  • 20. The New Begining • Let us try to make a difference in the governance of the country. • Let us put pressure on politicians and top bureaucrats to go for “creative destruction” to take country to a new height to move faster towards New Nepal. • Let us try to bring positive environment & energize others, to enable country to move forward through resistance & chaos and above all to have heartfelt, deep and authentic excitement about whatever work, we are doing Thank you 20