A COUNTRY groaning under the burden of a self-serving, parasitical, non-taxpaying elite. Hyperinflation, rampant poverty, a looming default on debt. A powerful military, goaded on by a superpower, battling a growing insurgency.

Disappearances of journalists, university professors, student activists, trade union leaders and ordinary citizens are rampant. Extra-judicial killings are on the rise. Reports of special right-wing 'death squads' working with elements of the armed forces are pervasive.

Nearly 30 years of wrenching history later, the country in question barely manages to find a measure of solace. Wobbly, but finally on its feet again and traversing a different path, facing a more hopeful future — but only after sacrifices from nearly two generations of its citizens.

Pakistan? Wrong (for now). This “state of hallucinated idiocy” (Gabriel Garcia Marquez) befell Argentina in the 1970s and 1980s. Unfortunately, going by events of the recent past, Pakistan has opted for a slice of Latin American history. A growing army of 'missing persons' and extra-judicial killings the daily norm in Balochistan since at least 2006, 'targeted' killings on the rise in Karachi — and now, the targeting of journalists perceived to be 'anti-state'.

While the slow-motion implosion of state institutions has been work in progress for the past four decades at least, its expanding reach to all institutions — civilian as well as non-civilian — is, while inevitable, a relatively more recent phenomenon. From here, unless we show some evidence of a colossal recognition of the direction we are hurtling towards, it is a non-linear progression — i.e. things start slipping out of control in a disorderly and progressively larger quantum fashion.

So this week, it was a toss-up between writing on our very own Greek tragedy (fiscal disorder), or what I consider to be a larger picture of institutional decay. As an aside, both the fore-mentioned situations, Greece of today and Argentina of the 1970s, have a strand in common with Pakistan as well — the suffocating stranglehold of a rapacious elite. Given the gravity of developments, I decided to write, once again, on the growing infirmity of our institutional framework and how it has an inevitable bearing not just on Pakistan's economic performance but its overall situation.

As has been repeated on several occasions in this column, Pakistan's global standing in terms of the strength of its institutional framework is abysmal. According to the latest Worldwide Governance Indicators compiled by the World Bank, as of 2009 Pakistan slipped to the 13th percentile in terms of the 'Control of Corruption' indicator (i.e. it ranked better than 13 per cent of the countries in the world on this indicator), while it maintained its 19th percentile in 'Government Effectiveness and Rule of Law' indicator. For the control of corruption indicator, Pakistan's peer group included Afghanistan, Zimbabwe, Burundi, Haiti, Togo and Nigeria. By comparison, Sri Lanka was at the 45th percentile and India at 47.

For rule of law, countries in Pakistan's vicinity include Togo (one notch higher) and Papua New Guinea (two notches lower). Once again, Pakistan is the lowest-ranked South Asian country barring Nepal. By comparison, Sri Lanka comes in at 53 while India is at a respectable 56. While Pakistan's standing in at least one indicator in this data set (related to corruption) has deteriorated sharply over the past two years, falling from 26 in 2007 to 13 in 2009, it has steadily languished in the bottom 20 in the rule of law indicator since 2004. On the other hand, India and Brazil, two high-growth economies becoming ever more influential on the world stage, have consistently ranked around 55-60 and 45-50 respectively since the inception of the indices in 1996.

The bottom line? That institutions matter, not just for generating high and sustained economic growth, but for wider social well-being. In Pakistan's case, the mindset that has guided the country since virtually the beginning — of undermining institutions, of propping up establishment-friendly individuals, select groups and organisations that are considered too important to be under the ambit of law — has to change. Without a stronger institutional base, Pakistan cannot function, let alone prosper.

The starting point for the long journey towards building strong, credible institutions has to be the recognition of their need — and the willingness by all to be subject to rules and laws as exercised by those institutions. Why do some countries have stronger institutions than others, and can institutions be built and strengthened even if there exists a recognition for their need, are vexing questions that institutional economists are still grappling with. Some have come to regard institutions as 'endowments' that certain countries are lucky to have. Others believe that given time, the right conditions — and good leadership — the process of building strong institutions can be replicated.

The element of good leadership is one that breeds the greatest despair in our case. Consider: currently amongst the most vocal politicians (after Imran Khan) on the need for good governance and strong institutions is Mian Nawaz Sharif. Resident of a multiple-acre estate, owner of at least one Mayfair flat, the good Sharif pays approximately $59 in annual tax and claims that he does not own a car. He is widely credited with instituting police 'encounters' in the 1990s as a way of by-passing the courts in Punjab, and stormed the Supreme Court to pre-empt an adverse judgement.

He is in good company, of course. Under the careful watch of the president, the prime minister and the cabinet, Pakistan is now better in control of corruption, according to the World Bank, than only 26 other countries out of 213 in the world. Sixty-one per cent of parliamentarians declared nil taxable income, and therefore have been receiving — rather than contributing to — taxpayer money.

Where does one turn? A collective recognition by all stakeholders is needed. Otherwise ... we have missed the plane, the train, the ship the boat. Must we miss Noah's ark as well?

The writer heads an economic consultancy based in Islamabad.