Why Pakistan Needs Inclusive Institutions

The progress and prosperity of a nation hinges on strong and inclusive political and economic institutions. Other factors, namely geography or culture, may contribute in one way or another but without strengthening key institutions, development remains but a pipe-dream. By creating a level playing field, inclusive institutions bring the best people to the forefront of political and economic spheres, thereby benefitting both people and society. Inclusivity makes both people and society rich.

Pakistan’s political institutions are not inclusive. Rather they are highly personalised and restrict political leadership to be the choice of the few. The way political parties are run and elections are contested pave the way for the affluent segment of the society to enter the political arena. The high costs involved in general and even local elections leaves little space for the average person to fit in. Political institutions are thus extractive by their very nature and the narrow political elite which harvests the political dividends warrants the continuation of the things as they are because it favours and perpetuates their interests.

True leadership emerges by holding intra-party elections in tandem with the democratic spirit and the strengthening of local governments. The ruling parties, except Pakistan Tehreek-e-Insaf (PTI), have been reluctant to hold local elections and devolve power, hence restricting the way local leadership can emerge and take control of their own affairs. Even after the local elections, all provinces with the sole exception of Khyber Pukhtunkhwa have denied transfer of powers to the locally elected representatives. This is indicative of the fact as to how our political institutions are far from becoming inclusive which is sine quo non for development and democracy to take deep root.

Leadership emerging from extractive political institutions creates economic institutions for safeguarding the elite’s economic interests. Again, these economic institutions are not inclusive. The political elite extract benefits from economic institutions at the cost of the rest of the population, thus creating extractive economic institutions.

Daron Acemoglu and James A. Robinson in their book entitled “Why Nations Fail” have maintained that extractive economic and political institutions are inter-dependent. Extractive economic institutions are extractive because such institutions are designed to extract income and wealth from one subset of society to benefit a different subset. Resultantly, one segment of society makes fortunes at the expense of the others. Ever increasing disparity between different segments of society and regions and the yawning gap between the rich and the poor indicate that much needs to be done to make our economic institutions inclusive.

Extractive economic institutions create poverty and illiteracy. A majority of the population finds it hard to make ends meet, not to speak of access to education and health facilities. According to Pakistan’s first ever official report on multidimensional poverty, four out of ten Pakistanis are poor. The report reveals that nearly 39 percent of Pakistanis live in poverty, with highest rate of poverty in FATA and Balochistan. The report further reveals that the poverty level has actually increased in several districts in Balochistan and Sindh during the past decade.

Likewise, Pakistan has one of the lowest literacy rates in the world. According to UNESCO, 55% of the population is illiterate and Pakistan stands 160th in the world. Without equipping the youth with modern education and making it accessible to everyone, development will always remain an elusive dream.

The solution to the problems regarding development lies in making institutions inclusive. Inclusive economic institutions can only be formed by inclusive political institutions. Through inclusive political institutions, power is broadly distributed in a society thereby making it difficult for its arbitrary use. Such an arrangement also makes is difficult for those with vested interests to undermine the very foundations of the inclusive institutions. Economic institutions thus created will help in achieving more fair distribution of resources benefitting all the segments of the society.

[Cover Image: Flickr/DVIDSHUB]