Current definitions -- as GDP per capita -- are misleading and deceptive. Striving for imaginary goals leads failure. Correcting goals required understanding how dominant ideas help the rich and powerful, and hurt interests of the poor and weak. Change of mindset and paradigm, acquisition of right knowledge, has power to transform our thinking, and the world

1. Economic Development
Dr. Asad Zaman
VC, PIDE
17 Nov 2017
NATIONAL INSTITUTE OF MANAGEMENT:
MODULE – 3
ECONOMIC AND FINANCIAL MANAGEMENT AT OPERATIONAL LEVEL

2. Scope of the Topic
What is economic development?
How Theories of Economic Development deceive us about the nature of development, causing us to make the
wrong plans and policies. How these policies further the interests of the rich and powerful, and damage our own
interests.
Time of Lecture: 14:00 to 16:00 hrs.
Day/Date: Friday 17th Nov, 2017
Venue: NIM, Peshawar

3. Meanings of Development have Varied
British: Sea-Power, Coal Mines, Industry, Climate, Race

4. Continued…
USA: Democracy, GNP per capita

5. Continued...
Oil Economies  Income Distribution

6. Continued…
Switzerland, Japan  Infrastructure

7. Continued…
Turkey: European Culture. Contrast With Japan.

8. History is Conquest Song of Victors
• Which is the RIGHT meaning of development? Does it Matter?
For summary/writeup/video of this lecture, see:
http://bit.do/azwid

9. Criteria we choose MATTERS A LOT!
• Current Priorities: Economic Growth is EVERYTHING:
• Once Growth Occurs, everyone will benefit –Trickle Down Theory.
• Mahbubul Haq, with Harvard Group, implemented this theory in Pakistan.
• There was growth, but also 22 families.
• Growth oriented policies implemented by IMF/WB in Russian.
• Millions malnourished, Many billionaires created.
• Same results in Chile, under Pinochet, with advice from Chicago Boys – Friedman.

10. Phase II Mahbubul Haq
• Human Development Index – Focus on Education, Health
• Politicians target criteria – claim success on basis of criteria.
• Malnutrition, Unemployment, Health, Education IGNORED

11. Phase III: MH:
Human Beings are Means and Ends of Development
Conventional Wisdom
• Human Beings are resources for
use of production of wealth.
• FIRST produce wealth, THEN
distribute to the poor.
• Social Welfare is Burden on Budget
MH & Amartya Sen
• Wealth is resource to be used to
create satisfactory lives.
• Improve Human Lives and THEY
will create wealth.
• Social Welfare is ESSENTIAL for
development.

12. Wrong Development Theories Dominate
Disastrous Development Outcomes!
• In the USA, since 1980’s all economic growth captured by the rich.
• 2010 – 380 people own half the wealth
• 2015 – 62 people own half the planetary wealth.
• 2017 – 8 people own half the planetary wealth
• 7 Trillion in Official flows from poorest countries to richest.

13. Do we benefit from learning the truth?
• Massive social change due to small number of dedicated individuals
• We live in a world of ideas – not of bricks and stones.
• We only live once.
• Every human being has infinite potential!
• Illusion: I am ordinary, unable to affect change
• Reality: Every human being is unique. Every moment is precious.

14. Given the power to change the world:
• What would you do?
• What are the goals worth striving for?
‫ى‬َ‫ع‬َ‫س‬ ‫ا‬َ‫م‬ َّ‫َّل‬ِ‫إ‬ ِ‫ان‬َ‫نس‬ِْ‫ْل‬ِ‫ل‬ َ‫س‬ْ‫ي‬َّ‫ل‬ ‫َن‬‫أ‬َ‫و‬(53:39)
That man can have nothing but what he strives for; i)

15. Unique Development Episode:
• How did backwards Arabs become leaders of the world?
• Compare with Persia, India, Rome, Egypt, China
• Today, we study Rostow’s Stages of Development, to learn how to develop in
three hundred years on pattern of England.
• But we do not study how prophet Mohammad SAW created world leaders in
30 years.

16. What was the secret of success of Islam?
• Everyone acknowledges success – The 100 by Michael Hart
• DISPUTE: The formula for success was time-bound.
• VERSUS: The formula is still applicable.

17. What is development?
Accumulation of wealth
Human lives subordinated to creation
of wealth
Destruction of society, environment,
Enrichment of human lives
Use of wealth to feed clothe house
everyone
Social interactions
Community building
Preservation & protection of habitat

18. From Outcome to Process!
A radical approach to thinking about ourselves and about the world
Winners Talk, Losers Walk
• Ideal State:
• Wealth, Luxury for all
• Peace, Harmony, Justice
• IMPOSSIBLE TO ACHIEVE
• FRUSTRATION
Its how you play the game
• How can we work to bring change
• The journey is what matters.
• Success is achieved INSTANTLY

19. From External Goals to Internal Goals
How can the world be changed
• It is too big. The task too difficult.
How can I change myself.

20. Development is Human Development
Economic Paradigm
• Humans are resources for
production of wealth
• Human lives can be sold and
purchased
Islamic Paradigm
• Wealth is resource for production
of humans
• Humans are infinitely precious.

21. Obstacles to Development:
Illusion of Foreign Expertise
• Learned Helplessness
• Dis-information
• Perkins: Confessions of an
Economic Hit-Man
Remedies
• Knowledge – Neo-Colonial
Mechanisms of Debt-Traps
• Courage to Act
• Desire to Act

22. Bad Ideas ARE dominant
• Fama: Rational Expectations – cause of GFC – Nobel Prize
• Bernanke/Greenspan – ridiculed possibility of bubble and speculation.
Rejected warnings. – Re-Appointed
• Queen of England, US Congress investigated failure of economic theories to
predict crisis
• World Bank: Washington Consenus failed all over the world – We don’t have
recipes for development.

23. Good Ideas suppressed
• East Asian Miracle – sustained growth at 7% for thirty years – Lifted a huge portion
of mankind out of poverty
• NO NOBEL PRIZES
• NO mention in economics textbooks!
• Japan, Brazil – many spectacular success stories
• Germany models: community banking, re-integration of east Germany. Industrial-
education partnership, putting human beings at center of growth models

24. How should govt earn money?
• Do not tax productive activities
• Tax wealth earned by non-productive activities
• Like prices appreciation of stocks, land
• Difficult Solution – develop respresentative government
• Easy solution: Print Money
• Obstacle: Political & Corruption

25. How to spend?
conventional
• Minimize consumption
• Maximize investment
Mahbubul haq experience in
implementing this strategy
Consequences: HDR
islamic
Spend on:
• Essential consumption
• Productive investment
Don’t spend on
• Wasteful consumption
• Unproductive investment
Lead Simple Lifestyles

26. Colonial structures & mindsets
Revenue extraction
• Purpose of govt is revenue
extraction
• Institutional structures designed for
this purpose
• Hierarchical, top down
• No feedback
Sharing & caring
• Govt provides services & justice
• Police service (not force)
• Local government
• Communities
• egalitarian
Good Policy requires change of mindset!

27. No Lack of Resources for Development!
Wrong Priorities & Deep Misconceptions
• Social Responsibility: Service Orientation: Live to Serve
• Story of Ibn-e-Abbas and Aitkaf –
• They feed others out of the love of Allah, and do not ask for gratitude.
• Re-orienting Education.
• Re-orienting provision of Health Services.

28. Tough requirements
• Good honest sincere people who wish to serve, don’t ask anything for
themselves!
• Clearing mind of fallacious and deceptive theories
• Smart technical analysis of cost benefit for different projects
• Creation of thousand points of light – community led development

29. Talk at NIM ended here – remaining slides were not covered. For 55min video
recording of talk, and writeup of summary and key points, see link to my “Islamic
WorldView Blog”
Post on What Is Development, with links to Video-Recording of Talk at NIM,
on my Islamic WorldView Blog

30. Secret to Rapid Growth:
Community Driven Development
Akhtar Hameed Khan
• This creates millions of engines of growth.
• REVERSES current paradigm; WE create growth & share fruit with the
poor
• INSTEAD: Support communities, and LET THEM be drivers of growth.
• Lesson has been learned repeatedly
• The RICH have buried this lesson under carpet repeatedly.
• Domestic Demand, instead of FDI, Exports, Taxes.

31. We HAVE many un-sung Heroes
• Mahbubul-Haq; Created radical alternative to Weath, Capabilities approach of
Amartya Sen.
• Akhtar Hameed Khan: Comilla Project: Community Driven Development
• Mohammad Yunus: Grameen Bank – microfinance for the poor, global.
• Fazle-Hussain Abid: BRAC: graduation out of poverty.
• Abdus-Sattar Edhi: Life of Service to poor.
• SUIT, Indus Hospital – first models of private free modern hospitals.
Above have made GLOBAL IMPACT. Local Heroes are by thousands.

32. Life is not about wealth, power, fame

33. Circumstances are training grounds
personal development is the goal
• Realize the infinite potential buried within you – this is development.
• Serve in a way to ALLOW others to achieve their potentials. – this is the
strategy for development.
• Put all your efforts into serving others, and ask for nothing for your self
from others. This will open the channels to receiving from God, who can
give a lot more, and from where you cannot expect.

34. Secret to Rapid Growth:
Community Driven Development
Akhtar Hameed Khan
• This creates millions of engines of growth.
• REVERSES current paradigm; WE create growth & share fruit with the
poor
• INSTEAD: Support communities, and LET THEM be drivers of growth.
• Lesson has been learned repeatedly
• The RICH have buried this lesson under carpet repeatedly.
• Domestic Demand, instead of FDI, Exports, Taxes.

35. We HAVE many un-sung Heroes
• Mahbubul-Haq; Created radical alternative to Weath, Capabilities approach of
Amartya Sen.
• Akhtar Hameed Khan: Comilla Project: Community Driven Development
• Mohammad Yunus: Grameen Bank – microfinance for the poor, global.
• Fazle-Hussain Abid: BRAC: graduation out of poverty.
• Abdus-Sattar Edhi: Life of Service to poor.
• SUIT, Indus Hospital – first models of private free modern hospitals.
Above have made GLOBAL IMPACT. Local Heroes are by thousands.