The Management of the Pakistan Economy: 1947-2024
January 26, 2025
Dr Rashid Amjad, the author, is professor of economics at the Lahore School of Economics. He also spent 26 years with the International Labour Organisation (ILO) as Director Employment Policy. He has rich and diversified knowledge on the subject. So, when he says poverty declined during the first two decades of (2000-2019) and more things like that, we have to rely on his deep knowledge.
However, Dr Amjad makes it clear in the very beginning that he has written this book on the management of Pakistan’s economy 40 years after he last delved into the subject. His previously co-authored book with the late Dr Viqar Ahmed, published in 1984, was also on the same topic, but it only covered the period from 1947 to 1982.
Writing books on the economy is rare in Pakistan, despite the fact that there are diversified subjects available to explore and numerous problems to which solutions need to be found. Economists usually prefer to write articles on different subjects and some of them publish books based on written and published articles. These kinds of books do not explore deeply the real problems of the economy; neither do the writers of these books find real remedies to improve economies such as ours.
However, Dr Amjad took the pain to write a book on subjects covering the main issues the country has been facing since its birth. This book, which is only the first part of a presumably longer thesis, covers economic growth, human development and structural change.
The subjects are too vast to cover exhaustively over 77 years in 115 pages. But the book is good for learners who would like to have a basic idea about our economic problems and the consequences of the failure of our economic policies in different eras.
Dr Amjad writes that there is a growing feeling that income distribution has increased considerably over the last 77 years. However, there is no reliable data to establish this claim. The household income and expenditure surveys, upon which earlier studies have been based, show relatively low inequality in income distribution. This may surprise many Pakistanis who are facing the disastrous impacts of the concentration of wealth in the country — a root cause of inequality that is accepted the world over.
We have been watching China, the fastest growing economy in the world, succeed in reducing poverty but at the same time the country has also been producing the highest number of billionaires, leaving the United States behind. These billionaires are a clear indication of unequal distribution of wealth.
In the case of India, it is chasing China but the level of poverty there is higher than China. However, India is also producing billionaires in big numbers. Clearly, inequality there has been increasing more than China.
The World Inequality Report (2022) shows Pakistan in the moderate group of countries, where the bottom 50 percent earns 12-13 times less than the top 10 percent. In India, that figure is 20 times more.
“Pakistan witnessed an impressive decline in poverty [from] 2000 to 2018,” writes the Dr Amjad. “However, this was not matched by a corresponding decline in malnutrition, which remained nearly constant at 30 to 35 percent.” He has presented lots of data and produced graphs to justify his perceptions about economic management and economic policies. Inconsistent economic policies have resulted in economic problems, particularly for the masses.
But, as Dr Amjad says, the nationalisation of the private sector in the 1970s in Pakistan changed dynamics and halted economic growth. The Pakistan Peoples Party government came into power in Dec 1971 and nationalised banks, insurance companies and selected industries. Then it set up public sector capital and intermediate goods, steel, engineering, chemicals and fertilisers industries. It further moved to nationalise small and medium industries.
These policies greatly expanded the public sector shares in manufacturing. However, even at their peak, the shares did not exceed 10-12 percent of the entire manufacturing output. As the private sector’s confidence was badly shaken, its level of investments reduced drastically. Thus, by 1977, 70 percent of all investments came from the public sector corporations — a dramatic reversal of roles relative to the 1950s and 1960s.
The author rightly points out the consequences of sudden changes in political and economic policies. A recent article in Dawn by Dr Saeed Ahmed, a Phd in Economics from Cambridge, states that political change in 2022 resulted in political and economic uncertainties and the country had to face $36 billion losses as the Gross Domestic Product (GDP) fell from $375 billion in FY22 to $339 billion in 2023.
Dr Amjad has found reasons for Pakistan’s slow growth, particularly with reference to the rapid growth period of 1980s and 1990s, when the Asian economic tigers were growing at a pace of seven to eight percent. Pakistan failed due to three main reasons, he writes.
The first was external developments — the Soviet invasion in Afghanistan in 1979, the US invasion in 2002 and civil wars after each evacuation. The civil wars spilled over into Pakistan with serious economic consequences. Secondly, poor economic management meant economic reforms required for economic improvements were not implemented. The third factor, he posits, was the criminal negligence of not investing in people, which has kept Pakistan far from the other emerging Asian economies.
The book does not reveal anything new, though it still has something for readers, particularly for those who like to have a quick look over the economic pattern of the last 77 years. The author has also provided a number of tables and charts to make it easy for the reader to understand this book and the economy.
The Management of the Pakistan Economy: 1947-2024
Part 1: Economic Growth, Human Development and Structural Change
By Rashid Amjad
Lahore School of Economics
ISBN: 978-969-7502-17-2
122pp.
Published in Dawn, Books & Authors, January 26th, 2025
Labels: Books, Faculty, Lahore School, Management of Pakistan Economy, Pakistan, Publications
posted by S A J Shirazi @ 1/26/2025 10:46:00 AM,
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