Development 2.0--by Nadeem Ul Haque

The aid establishment has grown on the basis of 2 assumptions 1. That there is a capital shortage in poor countries and 2.  That these countries lack the ability to make policy either because of knowledge or information shortfalls. The world has changed and these 2 assumptions are now untenable. Capital markets are flush with cash and they are eager to push it on to poor countries. The internet and globalization has made knowledge easily accessible to all. Most countries now have all manner of expertise. They are all exporting experts to the west. Despite these developments aid continues to grow. Financial flows are small. Now aid establishment is retailing policy advice, capacity building and technical assistance. While reports and consultants are surrounding poor country policymakers making them feel good, talent from those countries is being released to do outstanding work in the west. Yet their governments would rather have aid than bring back talent. And aid seems to ...

With Shahid Kardar Happy days have returned. The privatisation process has been resumed in earnest. So goes Islamabad’s self-congratulatory declaration on the Rs38 billion raised from the sale of its 20 per cent stake in UBL. The authors of this article, who probably have been the strongest proponents of the free market in recent decades and have generally pushed for a more market-based open economy, should then be equally happy. We, however, feel that privatisation, done wrongly, can have perverse results. To this end, we refer to this deal to illustrate the several questions that should be widely debated so as to inform the government’s privatisation policy. As mentioned above, we have long advocated the adoption of a more deregulated, open, market-based economy. Privatisation is but one step in that direction. Most public policy analysts would agree with the following principles of privatisation: a) The divestment should improve the efficiency and profitability of the operat...

I for one feel that these columns lamenting terrorism and asking for state to wake up and fight are overdone and repetitious. Allow me to raise some questions that all of us need to face.  1.  Are we only getting views of elite columnists? Do the ordinary people agree? 2. Is the state that has been used by elite for predation, capable of the task?  3. Are these columnists concerned only with the unreformed state doing battle or would they agree that without wholesale reform to rebuild state and social contract this war cannot be won? 4. Where were these thinkers when the rent seeking, predatory state preyed upon the poor and the disadvantaged? Eg. Land acquisition of poor farmers to build housing colonies and industrial estates. When their schools/universities stripped.  5. Was the state not used mainly for elite rent seeking for decades? Did that not leave the poor searching for solutions through informal markets which we love to call "undocumented"? Did...

Is the budget a law? Then why is it violated so easily? When the budget is passed by parliament it is a law that lays out the expenditure limits and where expenditure is to be made. It also passes a revenue and financing plan. Over the years we have seen how easy it is to violate the this law.  Expenditures are always turn out to be larger than envisaged in the law. Most of the sectoral expenditures made turn out turn out to be contrary to the law. In particular, realized development expenditures are often less than in the law. Revenues are always less than in the law but what is worse, some of the decrease happens because the FM and the ECC hand out tax exemptions as politics or other considerations demand. Article 77 says Parliament has the power to tax and the tax law enunciates taxes that should prevail by law.  Yet MOF is able to violate the constitution and the law with ease. Unfortunately, Parliament is too unconcerned or unaware of its responsibility. The E...

For a while a debate has raged in development economics between the 'bottom-up” school (main protagonist: Bill Easterly) and the approach to the “top-down” school (Jeffrey Sachs and the aid agencies). It seems what is happening in Pakistan is providing an ideal experiment to test which of the competing visions is doing better. As we all know Pakistan is the front-line state in the 'Clash of Civilizations'. Within Pakistan, too the war is about Islam and What it means for Pakistan. Both sides hang on to shreds of evidence to prove their case. Truth is there are 2 competing visions of Pakistan and the contest is heading towards the finish line and it seems that the Islamic side is winning. Those on the liberal side perhaps in recognition of their weakness are getting increasingly shrill--in oped pieces and talk shows-- “begging for the army to save them”.  All they want is some force whoever it might be to go out and fight for them and their lifestyle. History shows...

Ever wonder why you can't find a flat in most cities of Pakistan? With a young population and a large housing shortage, counted to be in millions, why are there no flats? Cities are spreading into large sprawls building 2 storey houses, diligently following the planner's instruction to build 1+1 and no more. And these must be single family homes. Hence 1+1+1. 2 floors and 1 family. The Planner knows best! When you ask them they say they are planning an open suburb which to them is the pinnacle of human achievement. Of course no suburb is complete without wide avenues, underpasses and bypasses to allow 'cruising' lie in Route 66, James Dean and all. That is the image the Planner has in mind. They also maintain that we are rural people and like to hug the ground and will not live in flats. Needless to say our weather too is flat unfriendly. Of course our culture is “Kothi” in a suburb. They overlook that people in our old walled cities have for c...

There is a lot of agreement that education is the way forward. Oh yes educate them the more you can the better. Give them skills. Give them education. Love it. Here I am sitting at dinner with donors and the rich industrialists --an interesting combination. So well meaning. So comfortable with each other. So much agreement. They have all the answers. If only they were given a free rein all would be good. So the donor says we need more taxes and the rich people all say oh yes, but the fault is the middle class undocumented sector. Yes if only those dirty people who work hard could be forced to pay. Yes the ones with all the advantages and the SROs are already heavily taxed. Yes the SROs are a problem but we will have to phase them out slowly. They all nod. The conversation moves to trade with India. Yes we must but then you know there is protection on their side. So what should we do? Imagine if there free trade and no borders much like European Union. What if we could reverse ...