Best Books on Pakistan’s Economy

1. New Perspectives on Pakistan’s Political Economy: State, Class and Social Change, edited by Matthew McCartney and S. Akbar Zaidi
For the most part, the media discourse on Pakistan’s economy has focused on the International Monetary Fund (IMF), revenue shortages, food inflation, the country’s increasing debt, how few Pakistanis pay direct taxes, rising utility rates, the growing burden on the poor and corruption/incompetence in government agencies. Those who have a say in the matter — the government, business leaders, international financial institutions (IFIs), global ratings agencies, academics and business journalists and analysts — often put forward a poorly textured picture of the economy. With limited success in implementing structural reforms since the late 1980s, the public dialogue is frustratingly familiar. For example, the government assures us that things are progressing well, the IFIs have supportive things to say, businessmen complain and nothing really changes. Worse still, because this dialogue is tiring, conspiracy theories are created — the more outlandish the theory, the greater the traction.
This book seeks to create a better understanding of Pakistan’s political economy. It is the first stab at creating a more comprehensive framework for Pakistan’s political economy. Although there is no explicit study of the size of Pakistan’s informal economy in the book, the editors/contributors explain how local governments are influenced by bazaar traders, either by their spending power or their ability to shut down local markets. This group is against any form of documentation as this would undermine their modus operandi.
The book argues that the growth of the informal economy, the fragmentation of bureaucracy, the acceptance of patronage within the government machinery and the devolution of power have weakened the federal government. This creates a disconnect between what Islamabad would like to achieve, e.g. tackling loss-making SOEs, increasing documentation to raise direct tax revenues, stopping the hemorrhaging in the power sector, addressing the gross undervaluation of real estate, etc, and the specific interests of those people/organisations that need to change their behaviour to fix the economy.
2. Pakistan: The Economy of an Elitist State by Ishrat Husain
First published in 1999, the second edition is a much-needed update on the first, taking into account the economic and sociopolitical realities.
The book lays threadbare fundamental issues of growth and structural change, agriculture and industry, macroeconomic foundations and problems of infrastructure and trade. It does that in a manner that both the hardcore economist and a general reader acquainted only with a limited understanding of economy, gets a clear picture of Pakistan’s economy and the corrective course it must take. As the book cover explains, it has three main components. It traces the history of Pakistan’s economic development during the last 70 years and outlines an agenda of economic and social reforms for the country. More importantly perhaps in our context, the author analyses Pakistan’s economic development in the political context, a connection mostly ignored by some economists or discussed only briefly.
Looking at the political economy, the author emphasises the fact that accumulation of wealth amid widespread poverty are not sustainable socially and economically. To him, economic factors alone are not sufficient to explain “the Pakistan paradox,” that is, high growth rate “with low and uneven development, followed by sluggish growth and weak social indicators.”
The book seeks to dispel the general perception that international financial institutions, such as the World Bank and the IMF are to primarily blame for hijacking our economy and prescribing their own corrective measures. To get rid of the elitist economic system, it proposes “a new model of democratic governance” where the state, the markets and the civil society “play different but synergetic and mutually linked roles” as the way forward.
The book has a substantial number of nicely placed and sourced graphs, tables and charts to bring home the point. It is a valuable addition to the already available debate and analysis on economic reforms.
3. Pakistan’s Agenda for Economic Reforms by Dr Vaqar Ahmed
The utility of ‘Pakistan’s Agenda for Economic Reforms’ by Dr Vaqar Ahmed has been described as providing a ‘non-technical understanding of weak economic growth and performance of the public sector in Pakistan relative to that of peer countries’.
According to the author, a key point the book advocates is that the dividends from infrastructure and related developments under the China-Pakistan Economic Corridor (CPEC) will remain unrealised if Pakistan does not move towards expediting macro-level reforms that help competitiveness of private enterprise. Some pending structural reforms in the areas of economic governance are the key to growth and sustainability of micro, small and medium enterprises in Pakistan. He goes on to say that once our private enterprises grow, it will be immensely important to enable them in becoming exporting entities. Pakistan’s export growth has been one of the lowest across South Asia. This, however, also depends on improved trade relations with neighbours including Afghanistan, India and Iran.
The book says a lot more than that. Indeed, it is a comprehensive anthology of the ailments that Pakistan’s economy has routinely suffered from through decades and the ways out of the quagmire. More specifically, it is in the area of coming up with solutions that the author has so meritoriously used both the strength of his research and his vast understanding of the economic complexities which have traditionally hampered Pakistan’s growth, helping us heave a sigh of relief that, after all, there could be a way out.
Pakistan’s economy has been in a shambles for a very long time, thus effectively thwarting efforts to attain any substantive level of relevance in regional and international domains. The author has come forth with a credible prognosis for curing a bulk of grave belittlements and put the country on course to attaining economic potency. A shift in the critical fundamentals, as very ably and professionally enunciated in the book, will constitute the ground on which could be raised a sustainable edifice of economic stability, progress and development.
The book ‘serves as an interesting introduction to policymakers, journalists and civil society organisations interested in carrying out research and advocacy work as part of their social accountability efforts and attempts to improve economic governance in the country’.
4. Governing the Ungovernable by Dr Ishrat Husain
The government system Pakistan inherited from British colonial rule is not only outdated but has also deteriorated over time. Pakistan failed to transform from a conventional colonial bureaucracy to a creative one. The book, “Governing the Ungovernable,” by Dr Ishrat Husain points out flaws that led to the government’s fall. Husain proposes a comprehensive reforms agenda for institutions; ranging from the civil bureaucracy to the private sector.
The better the governance, the higher the economic growth rate, Husain says. The economic growth during military regimes was not due to foreign assistance but due to better governance, he adds. Poor performance of the education and health sectors isn’t due to lower allocation of budget, but because of poor governance. The combined budget of the health and education sectors as a ratio of the gross domestic product (GDP) is now higher than the military-to-GDP ratio. It’s a myth that Pakistan is a garrison state and needs to spare budget from the military.
Husain argues that Pakistan’s bureaucracy for the first 30 to 40 years was better than that of today. But it changed over time – becoming more complex – and its people expect more from the government. It’s not fair to compare a 21st-century Pakistan with that of the 1960s.
There’s a disconnect between the society and the state, Husain says, adding that: “We have developed a unique tendency to disbelieve and discount any good news about our country or people and to exaggerate the negatives beyond all proportions.”
Facts have become difficult to distinguish from fiction, Husain says. Even the educated opt for comforts of ignorance and scepticism. The youth lacks confidence in their abilities, resulting in indifference, inaction and unwillingness to participate in contributing to our country. Instead, they’re searching for a redeemer who will solve Pakistan’s problems.
Pakistan needs strong local governments, Husain says, to help citizens and businesses communicate their grievances to the government and hold the government accountable. District governments should get funds depending on need. Equity is more important than equality, because developed districts receive compensation from private sector investments.
Husain discusses the performance of various institutions, but does not provide any framework for governance reforms. Nevertheless, this book is useful for policymakers and young graduates.
5. Creating Shared Futures, Pakistan-China: A Journey of Trust and Friendship by Dr Talat Shabbir
The book traces the journey of trust, strategic convergence and friendship undertaken by both China and Pakistan for seven decades. It gives a detailed historical background of Pakistan-China relations and an in-depth description of geopolitical advances between the two nations. The author unfolds the story of formative years of China-Pakistan relations explaining the Cold War dynamics and their impact on the two nations, the governing factors which brought them together. He points out a major turn in Pakistan-China relations when Pakistan facilitated China’s rapprochement with the US. He also outlines how the border dispute between India and China was responsible for setting a base for strong friendship between the two countries. The arms embargo and the overwhelming nature of Pakistan-US relations increased Pakistan’s trust and dependence on China. After the Pakistan-India war in 1971, China made efforts to take its relationship with Pakistan to next level by building strategic and economic infrastructure in Pakistan, which according to the author was the indication of a long-lasting camaraderie and partnership between both countries.
China adopted a balanced regional approach in South Asia by developing its ties with India but, at the same time, it indicated that it would work on expanding its relationship with Pakistan and other South Asian states. This predicted the future direction of Chinese policy towards the region. China continued to provide crucial defence and strategic support to Pakistan and has remained Pakistan’s most trustworthy arms supplier. In chapter 4 “Navigating Troubled Neighbourhood,” Dr Talat comprehensively sheds light on the global setting after 9/11 and its effects on Pakistan-China relations and the world order. He also puts it into the context of Pakistan-China relations. The author tries to bring in the central point or crux of how the changes in the security landscape triggered by 9/11 strengthened Pakistan’s ties with China, creating prospects for a steady strategic and economic cooperation. Getting involved into a mega-venture like China-Pakistan Economic Corridor is the most significant demonstration of the strength of this relationship.
The book offers insights rarely written so comprehensively about the history of this relationship between the two countries, how this journey of trust and trade began, in what ways the two countries traversed through the changing regional and global dynamics navigating through complex conflicts, troublesome neighbours and natural disasters through the able leadership of the two countries.