ISSUES IN PAKISTANS ECONOMY A POLITICAL ECONOMY PERSPECTIVE THIRD EDITION S. AKBAR ZAIDI OXFORD UNIVERSITY PRESS

Transcription

1 ISSUES IN PAKISTANS ECONOMY A POLITICAL ECONOMY PERSPECTIVE THIRD EDITION S. AKBAR ZAIDI OXFORD UNIVERSITY PRESS

2 Contents Preface to the third edition Elite Farmer Strategy and 34 Preface to the second edition Capitalist Development Social and Political Effects 34 Preface to the first edition 3.2 Land Reforms 35 List of fiaures, araphs, and maps xiii The 1959 Land Reforms The Bhutto Reforms of List of tables xiv 3.3 Summary and Further Reading 39 Introduction xix Summary Further Reading 39 Chapter 1 Understanding Pakistan s Structural 1 Transformation: Chapter 4 The Nature and Direction of 42 i.l Structural Transformation 3 Agrarian Change 1.2 Decades and Epochs Explaining the Numbers Laying the Foundations: Data from the Censuses The Decade of Development: Changes Over Time What Do the Numbers Mean? The Bad Luck Years: Summary and Further Reading The Second Military Government: Summary Further Reading Neo-liberalism, Structural 8 Adjustment, and Praetorian Politics Chapter 5 Agriculture: Critical Issues Lifestyle Liberalism, Dictatorship, 8 War, and Subjugation: An Overview and Major Trends Another Democratic Transition? Agricultural Pricing Policy Onwards 5.3 Rural Financial Markets and Transformation and Development: 9 Agricultural Credit The Balance Sheet Informal Sources of Credit Conclusions II Formal Sources of Credit Mechanization 83 Part 1: Aqriculture Agricultural Income Tax The Water Crisis 88 Land Ownership, Power, and Land Reforms 89 Chapter 2 ls Pakistan Feudal? A Historical 14 Summary and Further Reading 94 Account of the Development of Summary 94 Agriculture in Pakistan Further Reading The Development of Agriculture before the Consolidation of British Rule The Impact of British Colonialism 17 Part 2: Industry and Trade Feudal or Capitalist? 19 Chapter 6 The Process of Industrialization in Populär Perceptions of Feudalism 21 Pakistan 1: Summary and Further Reading Summary : Exchange Rates, Trade Policies, Further Reading 24 and Import Substituting Industrialization The Impact of the Exchange Rate 112 Chapter 3 The Green Revolution and The Trade Policy Regime 113 Land Reforms The Consequences of Exchange 114 Rate and Trade Policy for 3.1 The Green Revolution 31 Industrialization The Issue of the Tube wells The End Result Tractorization : The Decade of Development Regional and Income Disparities 33 00

3 viii Contents Trade Policy Directing 118 Indus trialization Foreign Aid, the Private Sector, 120 and Inequalities : The Bhutto Years Bad Luck or 124 Bad Management? Economic Policies and 125 Performance The Bad Luck Factor Summary and Further Reading Summary Further Reading 129 Chapter 7 The Process of Industrialization in 131 Pakistan II: The Zia Years: The Nature and Extent of Growth Industrial Policy The Public/Private Sector Divide Deregulation and Liberalization Causes of High Growth and the 138 Success of the Zia Regime 7.2 The Age of Structural Adjustment: Onwards The Principles of the Programme Assessing the Impact on the 142 Industrial Sector 7.3 Summary and Further Reading Summary Further Reading 146 Chapter 8 Key issues in Industry in Pakistan Numbers and Trends in Industry The Small-Scale Manufacturing Sector Numbers and Characteristics Emergence and Growth Issues Affecting the 160 Small-Scale Sector 8.3 The Textile Industry and its Crisis Has Public Sector Industry Been a Failure? The Privatization Process The Debate over Efficiency in the 176 Industrial Structure 8.7 The Energy Crisis Summary and Further Reading Summary Further Reading 190 Chapter 9 Balance of Payments and 199 Trade Regimes 9.1 Pakistan's Foreign Trade: Basic Facts Trade Policy and Trade Regimes The Early Years: Trade Policy and the Decade of 210 Development A New Country: The Beginning of a Liberal 213 Trade Regime: Trade Liberalization Under 214 Structural Adjustment: 1988 Onwards 9.3 The Debate Over Efficiency and the 216 Trade Regime 9.4 The Exchange Rate Dealing with Globalization and 222 World Trade Organization (WTO) Some Political Economy Issues Globalization and WTO's Impact 224 on Pakistan 9.6 Summary and Further Reading Summary Further Reading 231 Part 3: Fiscal Policy 247 Chapter 10 Resource Mobilization and the 248 Structure of Taxation 10.1 The Structure of Government and Taxation Legislative Functions Inter-Governmental Fiscal 251 Relations Prior to The Structure of Taxation Understanding Pakistan s 255 Taxation Structure 10.3 Public Finance: The Basic Facts Key Issues in Taxation Federal Taxes Resource Mobilization at the 276 Provincial Level Local Government Revenues Summary and Further Reading Summary Further Reading 285 Chapter 11 Debt and Deficits Does the Fiscal Deficit Matter? Should Budgets Always be 300 Balanced? The Problem of Measuring Deficit Fiscal Deficits, Intertemporal 501 Equity, and Distribution Macroeconomic linplicalions Critical Concerns Regarding Pakisian's 302 Fiscal Deficit The IMF/World Bank View of 309 Pakistan s Fiscal Deficit, Re-examining Critical Concerns The Domestie and Foreign DeLn Crises 3) Summary and Further Reading Summary Further Reading 319

4 Contents ix Part 4: Devolution and Fiscal Federalism Chapter 12 Local Government and the Political Economy of Decentralization Local Government in Pakistan The Basic Democracies of 331 the 1960s Local Government in the 1980s 334 (and 1990s): Urban Pakistan and the Middle Classes Devolution in the New 338 Millennium 12.2 Financing Local Government Financing Underrthe Local Government System Financing Under the Local Government System 12.3 Three Military Rulers and Three Local 348 Government Systems 12.4 Is Local Government the Answer? The Contribution of Municipal 350 Government in Development Potential for Development by 350 Local Governments Is Local Government the Answer? Summary and Further Reading Summary Further Reading 353 Chapter 13 Fiscal Federalism in Pakistan: Emerging Dynamics, Issues, and Prospects Pre-Independence Evolution and 362 Development The Otto Niemeyer Award Post-Independence Evolution 363 and Developments NFC Award s in Retrospect 13.2 Commission Award 363 An Introduction The Raisman Award 1951 Commission Commission Award 1964 Committee 1970 Commission Award 1974 Commission Awards, 1979 and 1985 Commission Award 1990 Commission Award 1997 Commission Award Commission Award Population Criteria Poverty or Backwardness Criteria Revenue Collection and 377 Generation Criteria Tax Collectiori and Distribution across Federating Units of Pakistan Inverse Population Density Criteria Some Issues Relating to Intergovernmental Fiscal Transfers and the NFC 2010 Award Vertical Fiscal Imbalances Multiple criteria and the Way forward Sales Tax and Provinces Substitution of Fiscal Effort by Sub-National Governments Conditional versus Unconditional Grants Fiscal Federalism and Poverty Reduction The Case of Fiscal Equalization Fiscal Equalization Index (FEI) Fiscal Equalization with Dominance of Indirect Taxes and Distribution of Resources in Real Terms The 18th Amendment: The Way Forward to Devolution? Summary and Further Reading Summary Further Readings Part 5: Monetary Policy and Financial and Capital Markets Chapter 14 Financial and Capital Markets 14.1 The Development of the Banking Sector The First Phase: The Relationship between Economic Growth and the Development of Banking Nationalization in the 1970s Islamic Banking Developments since Banking Trends: Development Finance Institutions (DFIs) and Non-Bank Financial Institutions (NBFIs) Some Salient Issues in the Banking Sector Excluding the Majority: Limited Access to Finance in Pakistan 14.2 The Equities Market 14.3 Summary and Further Reading

5 x Contents Summary Further Reading 411 Chapter 15 Monetary Policy, Savings, and Inflation Monetary Policy and Monetary 423 Management in Pakistan 15.2 Money Supply and Monetary Expansion Inflation and its Ganses The Low Savings Rate Summary and Further Reading Summary Further Reading 444 Part 6: Neo-liberalism, Stabilization, and 457 Macroeconomics: From ESAFs to PRSPs to SBAs 1988 to the present Chapter 16 Structural Adjustment Programmes: 458 Composition and Effects 16.1 The Development and Export of 459 Development Thinking 16.2 From Structural Adjustment Loans to 460 Structural Adjustment Programmes 16.3 Structural Adjustment Programmes: 465 Composition 16.4 Structural Adjustment Programmes: 467 Implementation and Effects 16.5 Economic Liberalization and Openness: 469 Some Questionable Assertions The Contextuality of Policy International Capital and the 473 Loss of National Autonomy 16.6 Summary and Further Reading Summary Further Reading 475 Chapter 17 The IMF and Structural Adjustment 483 Programmes in Pakistan 17.1 History Implementation of the Structural 488 Adjustment Programmes in Pakistan: An Examination of the 1988 Programme Fiscal Policy Trade Financial Sector Was the 1988 Structural Adjustment 489 Programme a Success? Achievements and Failures Fiscal Policy Trade and Balance of Payments Financial Sector Liberalization and Privatization Other Areas The World Bank/IMF's Overall 492 Evaluation of the 1988 Structural Adjustment Programme 17.5 The 2008 Stand-By Agreement The Political Economy of Structural 498 Adjustment Programme: in Pakistan Pakistan s Dependencc on 500 Washington, or are Governments Autonomous? Did Pakistan Need to Go to the 502 IMF in the 1990s? Why Does Pakistan Accept 504 IMF Programmes? 17.7 Summary and Further Reading Summary Further Reading 510 Chapter 18 Macroeconomic Developments: Before and After May September 2001: The Day the World 522 Changed 18.3 What Happened to the Debt Crisis? The Growing Forex Reserves Did the Economy Turnaround? Musharraf and After: The Pakistan People's Party s Economic 538 Policies : Bad Luck or Bad Management? 18.8 Summary and Further Reading Summary Further Reading 545 Part 7: The Social Sectors: Institutions 555 and Governance Chapter 19 The Social Sectors I: International 556 Comparisons, Education, Population, Urbanization, and Housing 19.1 Somc International and Regional 556 Comparisons 19.2 The Impact of Economic Growth Finally on Track? Education Statistics The Issues Summarizing the Issues in 566 Education 19.4 Population Weifare and Family Flanning: 568 The Demographic Transition The Evolution of the Population 568 Wellare Programme Knowledge and Usage Some Issues Pakistan s Demography: 571 Dividend or Disaster? 19.5 Urbanization and Housing The Extent of Urbanization Rethinking Urban and Rural Housing in Cities The Demand for Low Income 580 Housing in Pakistan

6 Contents xi 19.7 Summary and Further Reading Summary and Further Reading : Summary Summary Further Reading Further Reading 646 Chapter 20 The Social Sectors II: MDGs, Gender, 589 Part 8: Poverty and Inequality 649 Environment, NGOs, Institutions, arid Governance Chapter 22 Poverty: Trends, Causes, and Solutions Millennium Development Goals (MDGs) What Does Poverty Mean? Gender Inequality and Women Trends in Poverty Statistics Who Are the Poor and Where Do Some Issues 595 They Live? Finding Some Options Explaining the Trends in Poverty The Environment Poverty in Pakistan: Institutiohal Issues in the Social Sector Poverty Alleviation Governance, Decentralization, and Poverty and Bonded Labour 669 Local Level Delivery 22.8 Can Poverty be Eliminated in Pakistan? Government and Development Summary and Further Reading 674 in Pakistan Summary NGOs and Community Participation Further Reading Summary and Further Reading Summary 613 Chapter 23 Regional and Income Inequalities Further Reading Regional Inequalities: Districts and 687 Chapter 21 The Social Sectors III: The Health 624 Provinces Sector and the Health-Poverty Nexus Methodology and Results The Issues Health and Poverty Regional Inequalities: Agro-Climatic Zones Examining Health Data: Health Status, The Case of Karachi: Economic, Social, 701 Health Spending, and the Poor and Demographic Aspects Health Status Economic and Social Aspects Examining Health Data Revenue Collection Utilization of Health Facilities An Economic Appraisal of Health Spending and Health 630 Karachi Expenditure Implications for NFC Transfers Health Outcomes and Non-Medical Demographic Trends 707 Interventions Karachi as a Province? The Poor and the Socio-economic Impact Income Inequalities 710 of Communicable Diseases 23.5 Conclusions The Issues of Price, Cost, and Access to Summary and Further Reading 714 Treatment Summary How Much Does it Cost to Cure Further Reading 715 Tuberculosis? 21.6 The Impact of Public and Private 636 Part 9: Poiitical Economics 721 Provision of Health Care on the Poor 21.7 The Role of Government in the Control 637 Chapter 24 The Poiitical Economy of Neighbourly 722 of Communicable Diseases Relations The National Health Policy The Extended Programme of India and Pakistan: A Brief Comparison 724 Immunization 24.2 Theorizing Trade, War, and Peace The National Tuberculosis Trade with India 728 Control Programme 24.4 The Benefits and Constraints of Trading The Lady Health Workers 640 with India Programme The Simple Benefits of Trade Intervening in the Health-Poverty Nexus: Complicating Simplicity: The 734 The World Health Organization Interests of the Military Commission on Macroeconomics and 24.5 Constraints and Possibilities: A Matter 736 Health of Survival 21.9 Rethinking Intervention in the Health The Importance of Trade with India 736 Poverty Nexus: Health, or Poverty? 24.6 Summary and Further Reading 750

7 xii Contents Summary Further Reading 750 Chapter 25 War, Destruction, and Aid The Costs of the War on Terror War and Aid: Who Benefits from US Aid 754 to Pakistan? Fifty Years of Aid to Pakistan The Complicated Issues of US Aid 758 after 9/ The Purpose of Aid Has the Purpose of Aid Seen 758 Achieved? Economic and Humanitarian 760 Aid and Assistance 25.4 The Consequences of Aid The Nature of Recent US Aid to Pakistan Who Benefits from US Aid to Pakistan? Summary and Further Reading Summary Further Reading 769 Chapter 26 Political Economics: Class, State, 782 Power, and Transition 26.1 Civilian Bureaucracy and 783 Industrialization: Civil and Military Bureaucratic 784 Capitalism: A Shift in Emphasis: A Military State and the Middle Classes: Elections Without Democracy: The Return of the Military: 1999 Onwards Issues in Pakistan's Political Economy Pakistan's Middle Classes The Pakistan) Military's 790 Economic Interests and Their Consequences Pakistan's Praetorian Democracy 791 and Technocrats as Apologists Pakistan's State and Society: 791 Croups, Fractions, and Influence Urbanism as a Way of Life Is Pakistan a Failed State? Summary and Further Reading Summary Further Reading 798 Chapter 27 A New Political Economy? Transitions The View in Mid-2011: Was 803 Pakistan Near Collapse? The Old and the New in Naya 807 Pakistan: Elections The Changing Character of the 810 Pakistan! State Theorizing the Pakistan! State A State Without Power? The 812 Fracturization of Power in Pakistan 27.4 Conclusions 816 Selected Bibliography