A Governance Perspective on Development Issues

Economic growth and poverty reduction are difficult to achieve in the best of times. With decaying institutions and poor governance, these goals become an impossible dream. That is why the theme of this year’s annual meeting is “Governance, Institutional Reform, and Economic Growth”. I hope that the papers being presented and the discussions on or around this theme during these four days will indicate the way forward from the current morass. I shall not bore you with the details of the economy’s deplorable condition—most of you are familiar with them. Its deterioration is best judged by the International Country Risk Guide (ICRG) ratings for Pakistan, which are computed by weighting three elements—corruption, rule of law, and bureaucratic quality. These ratings for Pakistan in 1998 are three times what they were in 1982. This means that on a relative scale, things in Pakistan are three times as bad in 1998 as the 1982 levels. Still, I must dwell on the essential elements of this year’s theme for a way forward. I strongly believe that our salvation now lies in good governance and appropriate institutional reform which is sustained over a suitably long period of time.

Impact of Changing Profile of Rural Land Market in Pakistan on Resource Allocation and Equity

Agricultural impact

Recent Evidence on Farm Size and Land Productivity: Implications for Public Policy

Agricultural productivity is low in most of the developing countries including Pakistan. Moreover, slow and meandering agricultural growth is unable to keep pace with the fast and persistently growing population pressure in these countries. That in turn, has, continued to result in malnutrition and recurrent famines [Cornia (1985)]. Worse than this are the results of an ILO (1977) study, which has shown that food consumption inequalities have actually increased overtime not only in the food deficit countries but also in countries experiencing rapid agricultural growth. This points to the ever-hanging shadows of food deficiency and resulting malnutrition over the countries characterised by slow or negative growth in per capita food production and perverted income distribution [Cornia (1985)]. The only choice with these countries is to enhance food production and provide better access to food consumption for the poor masses. In order to achieve this objective policy-makers consider various options including increased use of modern inputs—mechanical and biological technologies, and removal or reform of the prevalent socio-economic power structure in agriculture that is considered to be an impediment to growth. It may not be desirable to apply these options separately in order to achieve the objective of reducing rural poverty [Cornia (1985)]. Growth in agriculture—that is sustainable and appropriate, is possible when all factors of production are accessible to all strata of the farming community. This is particularly so in the case of access to land. In this regard, land redistribution accompanied by increased input supply is the preferred policy option.

A Critical Evaluation of the Budgetary Process for Public Expenditure in Pakistan

Over the past decade budgetary policies have emphasised a firm restraint on the growth of total expenditure and a restructuring of the profile of both current and development expenditure to deal with a high fiscal deficit in Pakistan. Regarding current expenditure, there has been an increasing emphasis on meeting fully the recurrent cost requirements of completed public investments and on the minimisation of the costly subsidY programmes. Development expenditure has been increasingly directed towards the priority sectors pertaining to physical and social infrastructure and to early completion of the on-going development projects. Effective public expenditure management places heavy demands on existing government institutions and has a much wider scope than the formulation and implementation of conventional expenditure budgets. The formulation of an appropriate macroeconomic framework, selection of projects on a sound basis, prqper designing of public sector investment programmes and appropriate linkages between planning and budgetary processes is as, if not more, important than the narrow focus on expenditure budgeting [Hussain (1979»). Notwithstanding the importance of these broader aspects of budgetary issues, this paper does not deal with such public expenditure management issues. Instead it concentrates on a description and an analysis of the formulation process of government expenditure budgeting. The conventional practice in Pakistan in the formulation of expenditure budgets is based on the ''bottom-up" demands of various government agencies. Feats regarding the adverse consequences of deficit financing with respect to macro instability have persuaded the government to impose constraints on total expenditure. Donor agencies, especially the International Monetary Fund, have been instrumental in the imposition of 'top-down' constraints on the 'bottom-up' demands

Credit for Rural Poor in Pakistan

Farmers, large and small, and the non-farm population in rural areas all suffer from the liquidity constraint. Credit is needed to acquire command over the use of working capital, fixed capital, and consumption goods. The Green Revolution technologies have increased the credit requirement for modern inputs and farm investment. A new expanded role of rural credit institutions has emerged in the wake of the technology revol~tion in rural areas. Two distinct approaches have been used to provide the financial services to the rural poor. The most widely favoured approach in the past was the use of subsidised interest rates with a portion of credit reserved for the poor. The low interest policy was based on the premise that it would induce farmers, large and small, to use modern' inputs on a larger scale. One of the adverse side-effect of this policy was the introduction of an element of financial unsustainability in the loan portfolios of the credit institutions. The recent view about the delivery of rural credit consists of using market interest rates and using a mixture of 'bottom-up initiatives' at the local level, using non-government groups and 'top-down initiatives' by the formal credit institutions in terms of the simplification of the procedures and decentralisation of the credit operation for credit supply to the rural poor. In this paper, an attempt is made to evaluate the efficacy of these two approaches in the case of Pakistan for delivering credit to the rural poor

Recent Evidence on Farm Size and Land Productivity: Implications for Public Policy

Agricultural productivity is low in most of the developing countries including Pakistan. Moreover, slow and meandering agricultural growth is unable to keep pace with the fast and persistently growing population pressure in these countries. That in turn, has, continued to result in malnutrition and recurrent famines [Cornia (1985)]. Worse than this are the results of an ILO (1977) study, which has shown that food consumption inequalities have actually increased overtime not only in the food deficit countries but also in countries experiencing rapid agricultural growth. This points to the ever-hanging shadows of food deficiency and resulting malnutrition over the countries characterised by slow or negative growth in per capita food production and perverted income distribution [Cornia (1985)]. The only choice with these countries is to enhance food production and provide better access to food consumption for the poor masses

Regulatory Issues in Pakistan Telecommunication

Growth in telecom infrastructure and provision of modern telecom services to consumers at a cost based tariff helps growth of national economy. Modern telecoms serve as the engine of growth of national economy. Following the global trends of liberalisation and deregulation in telecoms monopolies which have thus far been providing inefficient communication at a greedily high tariffs are falling apart. Mergers in telecoms are not for increasing the size of the monopoly but to provide more efficient and cost effective services to the consumers. In Pakistan the erstwhile T&T department played a needful role at its time. Conversion of the department into a corporation and then into a company were steps necessary for following the global trends. Need now is to continue this trend further, eliminate the monopolistic approach by allowing more players in the field thus permitting the market forces to decide the provision of better quality of modern services at competitive price. In this paper, an attempt is made to specify the fundamental objectives of public policy which should govern the supply of telecommunications facilities in Pakistan. The economic perspective for the sector implies that the past approach towards the telecommunication policy in Pakistan was flawed and had required a drastic strategic change.