OVER Rs2 trillion were announced for the next Five-Year Plan (FYP)(2005-10) by the prime minister at the National Economic Council meeting held early this month. While the expected goal remains as lofty as equitous development, it remains unclear how the plan will be able to accomplish it. The prioritized areas include the development of water resources, energy sector, infrastructure, and human resources. The importance of the development of each one of these sectors notwithstanding, the approach is activity-centred for as long as it remains unclear how these emphases together will be able to target equitous development in the foreseeable future. For example, an organization may be having the best concrete infrastructure, excellent sources of supply of raw materials, qualified staff, and best technology but if the will to manage effectively is lacking, an organizational philosophy missing, an organizational climate conducive for turning the inputs over into desired outputs absent, poor governance rampant, managers at various helms more concerned about interests that are at odds with the overall organizational interest, and shared values non-existent; none of the above investments in organizational hardware would work in the interest of organization’s sustainable success as long as the essentially required software is non-existent or scarce.
Similarly, water, energy, infrastructure, and human resources are all exceedingly important to develop but their development, by itself, does not ensure equitous development for as long as the manner of their combined utilization towards the overall end of socio-economic distributive justice is not spelled out.
Until then the FYP document will remain a plan to execute the above activities falling short of being called a development plan in the strictest sense. Construction of roads, waterways, and bridges is not development per se unless they are a part of an integrated system of measures that are taken to expedite progress of all and not just that of a select few.
For, the development of the latter would not be tenable unless reinforced by the development of all. Nor is development of the energy sector in itself development unless there is a demand for the same to propel all inclusive development. Human resource may be developed but unless the economy develops an absorptive capacity for the same, we will have both surplus hands and surplus skills seeking migration abroad.
The emphasis in the FYP is more on building the supply-side of the resources than on also creating a demand for the same in the march towards development. Once again, the assumption is that supply of the above will create its own demand. The 1993-96 Benazir government had negotiated power projects ambitiously in the hope that it will pull up demand for industry which assumption did not materialize. As history repeats itself in the form of yet another emphasis on the supply side, the issues that continue to inhibit demand on the various fronts continue to elude the agenda as always.
The key issues that have perennially plagued the economy need to be identified officially as issues to be dealt with to make headway towards equitous development by also heeding the other prong of the scissors that is demand. So, while issue awareness in the country has increased tremendously, issue formulation at the policy-making level is still awaited failing which we will have plans to spend without being clear about how the spending pattern will attain the goal as the latter part of the process is assumed.
For development to be equitous, it should be people-centred and not just people-oriented that the FYP smacks of. People at the centre implies their involvement in strategy formulation instead of making a strategy that claims of being good for the people whether or not the people see it that way. This also is tantamount to a behaviour pattern typical in our society whereby we have a penchant for rolling out “solutions” even before determining what the issue or problem is.
Or, some amongst us tend to mention the issues but in passing and then quickly go on to their pre-determined pet solutions which they attempt to fit forcibly to the reality on the ground. For example, in Pakistan there are no two opinions on the issues of socio-economic inequities and poverty. So, we find these issues on the lips of the policy-makers too. The solution, however, is a predetermined pet one borrowed partly from the financiers in the free-world and one that relies heavily on growth.
In essence, this trickle-down pet model is “grow now, distribute later.” However, growth emphasis is spelled out loud and clear with the “distribute later” part said under the breath and on the surface replaced by emphases on inequalities and poverty. This emphasis is, however, verbal as policy emphasis on the same remains conspicuous by its absence.
For, if equitous development were to be the real goal of the next FYP, the slogan would have been “growth-with-equity” and not grow now, distribute later through the trickle-down approach. Why the benefits are expected to “trickle” and not “flow” down obviously shows that the pipeline or conduit is choked which is why it allows for only a trickle to pass through and hinders a smoother flow of benefits in the foreseeable future. The issue of equitous development is, therefore, one of cleaning up this pipeline so that “growth-with-equity” occurs and the flow of benefits is not restricted to a mere trickle.
It was this pipeline that was cleaned up first by the late developing Southeast Asian countries that we view as only an example of export-led growth by reading their economic history only partially. Many of us do not want to see that their export-led growth was facilitated by an entire gamut of policy reforms that overturned the paradigm of governance in these countries. Their reform effort started with land reforms and went on to what is called guided capitalism on the basis of strong business-government relationships. It also included infrastructure development including the human resources.
Starting with a labour-intensive emphasis, they eventually became highly competitive in the international export markets and experienced a long period of sustainable growth. While we wish to remember only their export-led success, we must not look the other way from their various stages of development that built up to export-led growth. In the process, they overturned the inverted-U hypothesis of growth now, distribution later as they grew with equity. Their empirical experience further developed the theory of development and the trickle-down model stood debunked as the clogged passages through which benefits flow were opened up in their march towards equitous development.
On the eve of yet another FYP, we stand at the same crossroads as we did before. While we are enthusiastic about very high rates of growth, it is only a trickle that we promise to the people and that too in the future. For, there is no intention to clear up the jammed up pipelines that block a healthy flow of benefits to the people.
The upshot is that the demand side of the scissors remains bogged down in issues that are not dissected enough in the policy corridors where they may see the effect in the form of poverty but not its sources and causes. Unless the sources and causes are addressed, FYP will remain a fancy paper document unable to impact the reality on the ground.
Against the above dismal backdrop, silver lining appears in the statement of Mr Francois Bourguignon, chief economist and senior vice president of the World Bank. While he emphasized on sustained high growth to reduce poverty, the World Bank official went on to contextualize his above statement. He said, “Redistribution of income may be necessary to compensate for the regressive distributional effect of growth but it would be costly and temporary. On the other hand, redistribution to accumulate assets and opportunities in the hands of the poor may be beneficial to growth both directly and indirectly.”
He further said that distribution in Pakistan may have worsened and inequality of opportunities including ownership of productive assets, access to education, health, and other services “seem high and decreasing only slowly.” Similarly, landless households constituted 60 per cent of rural population and 76 per cent of those in the bottom quintile in 2001-02. While the World Bank official may have viewed the above distributional measures as essential for growth, we believe these are essential for growth with a human face, that is, equitous development.
So, just like out of the Southeast Asian development experience, we choose to borrow one leaf of export-led growth; similarly, out of the above World Bank advice, we probably choose to borrow only growth and education/health sweeping distribution of assets and incomes under the rug. Even education and health are borrowed more for form than in substance. The issue boils down to one of the dominant paradigm in the country. That is, is it governed for the many or the few who influence policy direction mostly in their favour leaving the FYPs as a mere addition to library collections?