Written by: Akmal Hussain
Posted on: August 09, 2019 | 
| 中文
Quaid i Azam, Muhammad Ali Jinnah
Let us begin by redefining underdevelopment as a condition where the actualization of the human potential of society is systematically constrained. In these terms, Pakistan remains underdeveloped because opportunities for fulfilling a person’s potential are restricted to the few and denied to the many.
One of the abiding features of Pakistan’s economy is mass poverty and inequality. This phenomenon has persisted because it is rooted in the very structure of Pakistan’s growth process.[1] Even today, seven decades after independence, while a small elite lives in luxury the majority of the people are deprived of the minimum conditions of dignified human existence.[2] For example, our estimates show that the top 0.1% of the population has an average monthly income of over Rs. 1 million while the bottom 60% of the people have an average monthly income of Rs. 6000.[3] Apart from inter-personal inequality, inter-regional inequality also remains acute. For example, in district Killa Abdullah of Balochistan the incidence of poverty in terms of the multidimensional poverty index, is 96.9% compared to 4.3% in the Lahore district of Punjab.[4]
In contrast to the prevailing inequality, Quaid-e-Azam Muhammad Ali Jinnah propounded a vision wherein equality was a foundational principle of Pakistan. He declared in ringing tones that echo in the tragic silences of Pakistan’s economic architecture:
“The great ideals of human progress, of social justice, of equality and of fraternity constitute the basic causes of the birth of Pakistan…”
The principle of economic equality is also embodied in articles (38)a and (38)e of the Constitution of Pakistan.
For almost half a century mainstream economists held the view that inequality enables growth.[5] This was based on the assumption that only the rich are able to save and hence invest. Pakistan’s policy makers since the inception of its planning process adopted this view uncritically. So, during the decade of the 1960s on the basis of the doctrine of “functional inequality”[6] economic policy was deliberately designed to shift incomes from the poor to the rich in order to achieve high rates of GDP growth. While growth did accelerate during the Ayub period, the assumption that the rich would save a high proportion of their income, failed to materialize. Consequently, an economic structure emerged that was characterized by endemic inequality and aid dependence.
New research has shown that contrary to the conventional wisdom, inequality in fact has an adverse effect on long term growth,[7] while equality is good for growth.[8] So now we can turn the orthodox view on its head, and suggest that sustained high economic growth can be achieved through equality. This can be done on the basis of providing opportunities to the middle classes and the poor for high quality education, skill development, credit, and access over productive assets. Accordingly, a broad base of savings, investment, competition, innovation[9] and productivity increase can be achieved which would generate a new trajectory of high growth based on national capabilities rather than foreign dependence.
We have presented elsewhere a detailed strategy of economic growth through equity.[10] Here we will simply flag the main elements of such a strategy:
We have argued on the basis of research that a new process of growth through equality can be achieved in Pakistan and in so doing we can fulfill Jinnah’s economic vision. We have also presented the main elements of a strategy of growth powered by the enterprise and talent of all of the people rather than a few.
64% Pakistanis deprived of safe drinking water, says WB report. (2019). Retrieved 8 August 2019, from https://www.pakistantoday.com.pk/2019/03/22/64-pakistanis-deprived-of-safe-drinking-water- says- wb-report/
Aghion, P., Howitt, P., Brant-Collett, M. & García-Peñalosa, C. (1998). Endogenous Growth Theory. Cambridge, Mass: MIT Press.
Ahmed, T., & Ali, S. (2019). CHAPTER 3 CHARACTERISTICS OF HOUSEHOLDS AND RESPONDENTS. Retrieved from https://dhsprogram.com/pubs/pdf/FR29/03Chapter3.pdf
Atkinson, A. B. (2015). Inequality: What Can be Done?. Cambridge, Mass: Harvard University Press.
Berg, A., Ostry, J.D. & Zettelmeyer, J. (2012). What Makes Growth Sustained?. Journal of Development Economics, 98 (2), 149-166.
Education. (2019). Retrieved 8 August 2019, from https://www.unicef.org/pakistan/education
Galor, O. & Zeira, J. (1993). Income Distribution and Macroeconomics, The Review of Economic Studies, 60 (1), 35-52.
Hussain, A. (1994). Poverty Alleviation in Pakistan. Lahore: Vanguard Books
Hussain, A., & Dubey, M. (2014). Democracy, sustainable development, and peace. Oxford University Press.
Hussain, A. et al., (2017). Inclusive and Sustainable Development: Analytical Basis and Policy Framework. UNDP Pakistan.
Over 44% children in Pakistan suffering from chronic malnutrition. (2019). Retrieved 8 August 2019, from https://www.pakistantoday.com.pk/2019/03/08/over-44-children-in-pakistan-suffering-from- chronic- malnutrition/
Stiglitz, J. (2012). The Price of Inequality. New York: W. W. Norton & Co.
WHO (2019). Retrieved 8 August 2019, from https://www.who.int/chp/chronic_disease_report/media/PAKISTAN.pdf
[1] By structure we mean the design features which determine the pace and pattern of economic growth.
[2] 64% of the population do not have access over safe drinking water ("64% Pakistanis deprived of safe drinking water, says WB report", 2019), chronic diseases are projected to account for 42% of all deaths in Pakistan (WHO, 2019), The human potential of the next generation is constrained by the fact that over 44% of the children below age 5 are suffering from malnutrition ("Over 44% children in Pakistan suffering from chronic malnutrition", 2019) and 22.8 million children age 5-16 are out of school ("Education", 2019). In Pakistan 20% of the households have on average two persons sleeping in one room; while at the other extreme in 20% of the households 7 or more persons sleep in one room (Ahmed & Ali, 2019).
[3] i) According to the World Bank data, 25.62% of Pakistan's National Income goes to top 10 percent of its population. The figure above is estimated on the basis of the assumption that the same distribution holds within the richest 10 percent of the population as in the case of the population as a whole.
ii) Hussain, A. et al., (2017). Inclusive and Sustainable Development: Analytical Basis and Policy Framework. UNDP Pakistan, page 07.
[4] Multidimensional Poverty in Pakistan, Ministry of Planning, Development and Reforms, Government of Pakistan, Oxford Poverty and Human Development Initiative and UNDP.
[5] Simon Kuznets, Economic Growth and Income Inequality, The American Economic Review, Volume 45, Number 1, March 1955, pages 1-28.
[6] Mahbub-ul-Haq, The Strategy of Economic Planning: A Case Study of Pakistan, Oxford University Press, Karachi, 1963.
Note: To his credit, Dr. Mahbub-ul-Haq had the intellectual integrity to blow the whistle when near the end of the decade interpersonal economic inequality had become extremely high, and revealed the famous figure of 22 families controlling 66 percent of industrial assets. Dr. Haq combined intellectual integrity with dynamic scholarship when he later changed his view. In his Seven Sins of Economic Planners, he emphasized that what is important is not only the level of investment, but the extent to which it helps develop human resources. Mahbub-ul-Haq then went on to be one of the architects, along with Professor Amartya Sen, of the Human Development Index. Dr. Haq pioneered the UNDP Human Development Reports which had a major impact on changing worldwide, the focus of policy towards human beings rather than GDP growth alone.
[7] Oded Galor and Joseph Zeira, Income Distribution and Macroeconomics, The Review of Economic Studies, Volume 60, Number 1, January 1993, pages 35-52.
[8] i) Andrew Berg, Jonathan D. Ostry and Jeromin Zettelmeyer, What Makes Growth Sustained?, Journal of Development Economics, Volume 98, Number 2, 2012, pages 149-166.
ii) Joseph Stiglitz, The Price of Inequality, Allen Lane, 2012
iii) Anthony B. Atkinson, Inequality: What Can be Done?, Harvard University Press, Cambridge Massachusetts, 2015, page 83.
[9] Philippe Aghion, Peter Howitt, Maxine Brant-Collett and Cecilia García-Peñalosa, Endogenous Growth Theory, MIT Press, 1998.
[10] i) R.K. Pachauri, The Impact of Global Warming and Imperative of Mitigation, Chapter in Akmal Hussain and Muchkund Dubey (eds.), Democracy, Sustainable Development and Peace: New Perspectives on South Asia, Oxford University Press, New Delhi, 2014
ii) This is based on an earlier work of the author: Akmal Hussain, An Institutional Framework for Inclusive Growth, Paper Contributed to the Panel of Economists for Medium Term Plan, Government of Pakistan, 2009. This paper was later published in the ï€nal report of the Panel of Economists, Planning Commission of Pakistan, in chapters 7, 8, 9, 10, 11, 12 and 13.
iii) Hussain, A. et al., (2017). Inclusive and Sustainable Development: Analytical Basis and Policy Framework. UNDP Pakistan.
[11] Hussain, A., & Dubey, M. (2014). Democracy, sustainable development, and peace. Oxford University Press.
[12] Hussain, A. et al., (2017). Inclusive and Sustainable Development: Analytical Basis and Policy Framework. UNDP Pakistan.
[13] i) Hussain, A. et al., (2017). Inclusive and Sustainable Development: Analytical Basis and Policy Framework. UNDP Pakistan.
ii) Akmal Hussian, Poverty Alleviation in Pakistan, Vanguard Books, Lahore, 1994
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