*Pakistan: A Hard Country*

That is the new and excellent book by Anatol Lieven, and there is now more reason than ever to read it.  Here are a few things I learned from the book:

1. For most of the years since 1947, Pakistan has had higher economic growth rates than did India.  Pakistan does not have the same pockets of extreme poverty, or for that matter the extreme wealth.  The level of economic equality in Pakistan is relatively high.

2. Charitable donations run almost five percent of gdp, one of the highest percentages in the world and this reflects the emphasis on alms-giving in Islam.

3. A good quotation from a businessmen: “One of the main problems for Pakistan is that our democrats have tried to be dictators and our dictators have tried to be democrats.”

4. Agriculture pays virtually no tax and the government lends lots of money to businesses and doesn’t seriously ask for it back.  As a result Pakistan collects far less revenue than does India, even comparing areas of comparable per capita income.  If Pakistan were a state of India, it still would be considerably richer per capita than India’s poorest regions, such as Bihar.

5. The Pakistani state is nonetheless a lot more stable than most people think.  In part this is because of the conservative structure of kinship and landholder power in the country.

6. The main threats to the future of Pakistan have to do with ecology and water, not politics.

7. The end of the book has a very interesting discussion about how U.S. actions in Pakistan affect different coalitions, feelings of humiliation, relative status relationships, etc.

Definitely recommended, as are Lieven’s books on the Baltics and Ukraine.

Comments

So what do we know about Pakistan's role in protecting bin Laden? It strains credulity that he could have been living in a mansion in or near Islamabad without the connivance of the ISI?

It's obvious, yet it will become a "crazy conspiracy theory" within days. You should probably just forget about it. We were all fooled. Pakistan was really putting our billions to good use fighting terror.

It was a SCAM. The Pakis scammed us for BILLIONS of dollars pretending to help us chase UBL in the mountains, while actually SHELTERING HIM in a prestigious town, near their military academy. Clearly, some actors in the ISI/Government of Pakistan knew where UBL was--the location is too high-profile to be a coincidence.

The scam is that the so called billions have not materialized - most of it is still withheld or has gone directly to buy american military hardware. Of the little that does get through 2/3 is contracted to american companies or NGOs. If one does a cost benefit analysis Pakistan as whole has a rotten deal out of this so-called aid and it just puts off real economic reform inside Pakistan.
If the US can show or prove that government actors/institutions knew where OBL was located then present the evidence (after all the CIA has had the compound under surveillance for about 10 months + about 3000 operatives inside the country) and withdraw the millions (not difficult as most hasn't actually left the USA) and bring the complicit leadership to task in front of the international community. If there is no evidence then the "commentators" should stop whinging about cloak and dagger conspiracy theories involving the ISI.

If for "most" years Pakistan had higher growth rates than India why is it in such a big economic mess now?

Indian economy took off after 1991, Pakistan didn't.

This link should explain it...

http://www.google.com/publicdata?ds=wb-wdi&ctype=l&strail=false&nselm=h&met_y=ny_gdp_mktp_cd&scale_y=lin&ind_y=false&rdim=country&idim=country:PAK:IND&tstart=-315619200000&tunit=Y&tlen=49&hl=en&dl=en

Thanks for the graph. The red line (Pak GDP) seems flat. True that liberalization really gave India a push post 1991; but even in pre-liberalization years since 1970 or so the slope of the Indian GDP line seems far steeper than the corresponding Pak GDP. What do you think?

Where is Tyler getting his GDP growth numbers from? The statement he makes ( " For most of the years since 1947, Pakistan has had higher economic growth rates than did India." ) seems hard to believe based on these datasets.

Slope of the curve is not the right way to look at it; the X-axis is years. GDP growth is measured relative to a base GDP (in percentage). So, just for example, from 1960 to 1990 Pakistan economy grew more than 10 times its GDP in 1960; India economy grew by less than 10 times its GDP in 1960.

Since 1991, India has been fixing its economy, by focusing on growing the pie instead of sharing with all in increasingly small pieces; while Pakistan has been busy digging a hole. That's why Pakistan is in such a mess.

The conventional wisdom is that India's growth trajectory jumped upward in 1991.

But India's economic growth curve jumped up around 1980, not 1991, (then jumped up again around 2004 as part of the larger emerging markets boom).

Also to note during this time, Pakistan's 1980s averages are also high, like ~6.5%. Before falling in the 1990s.

Main reasons that economists I have read are:

1.) Initiation of limited reforms by Prime Minister Rajiv Gandhi. Attitudes toward businesses also shifted in the 1980s However, this does not explain why growth started to accelerate in 1980, rather than 1985.

2.) Borrow-and-spend policies, similar to those of Latin America in the 1970s, accelerated growth, but these eventually led to the 1991 fiscal crisis which sparked the market reforms.

3.) Another explanation, I do not remember the source (but I believe it to be in print) holds that India's improved economic performance in the 1980s has its roots in the period of Emergency Administration (1975-77) and subsequent economic mismanagement under the Janata Party in 1977-1980. Apparently, during the emergency rule period a 20-point economic programme was implemented which included liberalizing investment procedures. The lessons of the success of this period may have been emulated by the next democratic Congress government, elected in 1980.

As per Rahul's link to Google Public Data. This is not adjusted for inflation. I'm using a variation of the continuously compounded growth formula to solve for the rate.

We have the growth mathematics for India to be:
[ln(1,377,000,000,000)/(36,605,000,000)]/62 = r
r = 0.0585077041
Lets just round to 5.9%

While for Pakistan to be:
[ln(1,377,000,000,000)/(36,605,000,000)]/62 = r
r = 0.0609253776
Lets just round to 6.1%

So I suppose Tyler is right, but it's not a big deal.

India's new rise seems to be making up for its "Hindu rate of growth" before 1980.

I am trying to make sense out of "The main threats to the future of Pakistan have to do with ecology and water, not politics" and failing.

Politics can evolve, but if the resources necessarily to sustain Pakistan aren't there, how can Pakistan exist under any regime?

Most of Pakistan is desert and it is reliant on its major river. And it is not rich enough to vault over into mass desalination/other expensive water sources.

This is probably a reflection of what might happen if you create a country solely on the basis of religion.

What! You can blame religion for a lot of things if you are so inclined but blaming it for climate change and a lack of water resources would be a bit far fetched...and daft.

The only way you could say that Pakistan doesn't have extremes of wealth and poverty is if you (as Cowen appears to) compare states to states. There obviously is enormous disparity of wealth between individuals, which is alluded to in point 5 about the suffocating feudalism of Pakistani society. The comparison to India doesn't make much sense. If the richest person in society made a lot of money from say a cell phone network, that's a lot less problematic than if the richest person in society is a landholder.

True. Further, as far as I know, Pakistan is almost totally bereft of a middle class that generally serves as the engine for economic and social development in most countries.

Pakistan has a substantial middle class. What holds it back isn't the lack of ambitious strivers but a dysfunctional, highly tribal political culture where cousin marriage is the norm. This means the country runs on the "I Against My Brother, I and My Brother Against My Cousin, I and My Brother and My Cousin Against The World" model. The rule of law and impartial enforcement of contracts is a joke. Meritocracy does not figure at all. It's all about who your connections are and this impacts across the whole realm of public activity.

TPTB don't put any effort into long-term development because they know it's quite likely they'll be out of office in six months to a year so they better collect as many bribes as possible before then.

"Pakistan has had higher economic growth rates than did India. Pakistan does not have the same pockets of extreme poverty, or for that matter the extreme wealth."

FWIW, I know people who've visited both India and Pakistan who have made the same observation i.e. wealth disparity in India is a lot more glaring. I don't know why, maybe the caste inter-marriage restrictions have made IQ bandings much more stratified amongst different sub-populations.

"Pakistan does not have the same pockets of extreme poverty, or for that matter the extreme wealth."

A part of this is a initial value effect. I suspect India started out in 1947 with a part of the population that was much poorer and with more income variation. To trace why this geo-economic quirk exists differentially in India over Pakistan, you'd have to go much further back in colonial history.

Pakistan at independence had none of the industrial centers of the British Indian Empire. It was basically a mixture agriculture (including feudal holdings but also modern farmers such as northern punjab) and cantonment areas (the frontline of the Empire) where most of the soldiers of the Br. Indian Army were recruited from. India on the other hand had all the industrial pockets such as Bombay, Ahmadabad, Nagpur, Bhopal etc. and the administrative centers of the empire, Delhi, Calcutta etc. and most of the educational establishments. Pakistan was not that fortunate and most of the industry etc has been build post 1947. @ rahul you are right that colonial history is important to understand South Asia development but the data shows that Pakistan had to buld more or less from scratch. I think Anatol Lievens analysis of Pakistan is very robust and also presents a fresh angle on both the problems and the potentials.

What's the sanity behind comparing pakistan, a country with bihar a state? If sri lanka were compared with new orleans it might be richer too.

Actually, the more pertinent question would be if India were a province of Pakistan, where would it be today?

(Had it not been for the Brits and the Indian National Congress, there was a serious risk of that happening.)

New Orleans, Louisiana $17,258
Sri Lanka $5220 (adjusted to U.S. purchasing power equivalent)

I know you were just making a point, but why is this not a valid comparison? If New Orleans were indeed lower, I think that would say something quite significant. It would shatter our preconceptions of the two places, which is exactly what this post about Pakistan is trying to do.

Wouldn't any geographical area be fair game to compare? I mean there are easily available rankings of such things as GDP per capita, population, etc. with nearly every country regardless of anything.

1. Pakistan, India, China and US Gini are 30, 37, 47, 41 resp. India is a diverse country and offers multiple ways of discriminating against people based on their religion, caste, language, region and ideology. There has to be some economic fallout from that. Pakistani society also discriminates based on religion, sect, region, etc but sadly enough they deal with it rather efficiently. India with a functioning electoral system does not follow that path.

2. Charitable donations for Pakistan, India, China and US are at 5%, 0.6%, 0.1% and 2.2% of GDP. Currently, in the Islamic Republic of Iran, religious charitable trusts, or Bonyads make up a substantial part of the country's economy, controlling an estimated 20% of Iran's GDP. In China, my understanding is that the govt does not encourage charitable donations, since it wants to be seen as the sole benefactor. In Pakistan, Jamaat-U-Dawa, the charitable wing of Lashkar-E-Toiba (LeT), is one of the largest charitable organization (and currently also the front end for LeT, which is banned and was involved in the most recent terrorist attacks in Mumbai) So, it has probably something to do with religion and legitimacy.

3. It's not just agriculture that skips taxes; Pakistan Prime Minister also does not pay any taxes.

http://pak1stanfirst.com/201105013404/pakistan/governance/prime-ministers-federal-cabinet-doesnt-pay-taxes.html

4. "The Pakistani state is nonetheless a lot more stable than most people think. In part this is because of the conservative structure of kinship and landholder power in the country."
... I think this is Euro-speak for feudalism. But, here's some very recent news about political stability in Pakistan ...

http://tribune.com.pk/story/160450/mqm-observes-day-of-mourning-for-slain-leader/

5. "The main threats to the future of Pakistan have to do with ecology and water, not politics."

I've heard similar arguments about the Arab-Israel conflict; though I will admit that in case of Pakistan it might be somewhat relevant. Pakistan often complains about the water rights and control of flow in its rivers that originate in India. The Kashmir issue, though under the garb of Islamic fraternity, is also related to it.

The women are beautiful too.

Did Tyler read the entire book after 11:30 last night?

4. That sounds like a lot of state governments in the Midwest.

1. It is not clear if TC, when talking about economic growth, has accounted for the massive aid Pakistan has been from Saudi and US and also China. In contrast, till 1990, India's main ally was Soviet Union, not nearly as capable as the US. Everyone thought of Pakistan as a weak, harmless, small state, and showered favors on it while India was in the stranglehold of Nehruvian bureaucracy. Once Soviet Union collapsed, things gradually started looking up for India.

2. As TD pointed out above with the JuD/LeT a lot of the charity/alms giving actually reflects the terrorist culture in Pakistan. Terrorists do massive charity work as they are really motivated guys, while the Pakistani government is even more corrupt than the Indian government.

3. Comparing entire India (too diverse) to Pakistan is stupid, not expected of a serious economist. One could possibly compare (Indian) Punjab to Pakistan : I don't hav the current data but at least as of 2004 Punjab's gini was 0.29, lower than the current value for Pakistan.

Worse, TC hasn't accounted for the change in gini caused by liberalization.

4. What exact parameters did the guy use to compare the intensity of political problems with ecological ones? Or does it just look too contrarian to be false?

5. Readers, please look at TC's language : "conservative structure of kinship and landholder power" - if he ever wrote a similar thing for India he would have written medieval feudal mindset or something like that. "Look at the plus side of Islam countries, downside of India" is a recurring motif in TC's work.

Another subtle clue to TC's pro-Pak bias are his semantic blunders: India has states, Pakistan has provinces. Bihar is a state, not a province. Ever hear a commentator refer to the Mississippi province or the Minnesota province?

If India has states, why would it be wrong to refer to a hypothetical in which Pakistan is a "state" of India? Tyler never used the word "province". Unless he edited his post before I read it.

Canada has both states and provinces. I don't know what the difference is.

okay then name one Canadian state

Hmm, you're right. Canada has provinces and territories.

Razib Khan analyzed India but it's component parts here.

thank you for looking up the Punjab data, exactly as I suspected. You would think that economists would look for relevant points of comparison, but sometimes you would be wrong.

The book is about Pakistan not India and an excellent book. There are comparisons to other countries including India - but not exclusively. The book is not a comparison to India - why is everyone getting so worked up about it. From the comments it seems to challenge and provoke some of the prevailing notions (obsessions) about Pakistan, hence jingoism I suppose.

Charitable donations run almost five percent of gdp, one of the highest percentages in the world and this reflects the emphasis on alms-giving in Islam.

This reflects noble alms-giving? Sorry to shatter the cuddly illusions; but maybe, just maybe, it reflects an efficient machinery to fund terrorism? The US Dept. of state lists 47 "Foreign Terrorist Organizations" I wonder donations to which ones would qualify as charity in Pakistan?

http://www.state.gov/s/ct/rls/other/des/123085.htm

I am not saying that all the charities are bad; all I am saying is that the issues are not black-and-white. Just because a corpus got classified as charity does not reveal much. Oftentimes a lot of the alms are tied to religious causes. Yes, they feed poor kids, but if it is accompanied by radicalization in a charity-run madrassa how do we count that in a cost-benefit analysis? An objective question would be what percentage of the Pak charitable donations went to truly secular charities?

So... religious charities == bad, secular charities == good? I'll keep that in mind--about you.

I believe he means the designation of "religious charity" in pakistan might include some unsavory organizations.

or you could stick to the black and white interpretation if you can't handle anything more complex.

Ridiculous post. The country is "stable" because of its feudal system? I wish it were thus - as does the feudal landlord Salman Tasser who became Governor of Punjab, spoke out against blasphemy laws and was assasinated. Remember people were celebrating on the streets when this happened.

Does Tyler consider why the recent Pakistan had to stand down fro hosting the cricket world cup? Because a squad of terrorists - not one of whom was captured! - attacked the visiting Sri Lankan team. Its not a coincidence that peripatetic TC hasnt visited Pakistan - its too unsafe. Hundreds of people (mostly Muslims) have died this year alone in suicide bombings.

But of course the main threats to its future is water!

Salman Taseer was not a landlord. His father was an academic and he himself was the equivalent of a CPA who later did very well for himself when he started up businesses.

I don't think Tyler's being ridiculous at all. When you go to Pakistan, it's quite apparent that terrorism is maybe item no. 15 on people's list of concerns. Crime and ethnic violence is very high - about as bad as Columbia during the reign of Escobar -and far more people die in homicides than they do in suicide bombings. The economy is always terrible and inflation typically runs in the mid-teens. Looking at how much the prices of basic food staples have risen, it's a wonder there hasn't been a revolution. You are far more likely to die in a road accident than because of terrorism due to appalling standards of driving. You know you're in Pakistan when you see a twelve year-old hauling his family to the local market in the family car.

There is little risk of a terrorist takeover. The bigger threat is the country running out of resources. The population has exploded and because of the lack of political stability, the country's infrastructure is very woeful.

Terrorism is given the spot-light effect. The probability you will go thirsty is much higher than the probability of being killed by a suicide bomber.

One thing that surely speaks volumes about Pakistan's level of development and modernity is the absolutely abysmal socioeconomic performance of Pakistani immigrants in Britain, They are the bottom of the barrel, a permanent lumpen-proletariat, with astronomical crime and poverty rates, and with each generation worse off that its predecessor.

More complicated than that. In the U.S., Pakistani immigrants (like Indians -- and it is sometimes hard to tell them apart) do pretty well. If you were to use your same method of analysis, looking at Pakistani immigrants in the U.S. would lead you to conclude that Pakistan is a very rich county.

The history of Pakistani immigrants in the UK is that a large percentage of them came from a particular region (Mirpur?) beginning in the 1950s. They were undereducated, no resources, etc. Very different from the Pakistani immigrants who come to the U.S.

About 70% of British Pakistanis are from a tiny district in Azad Kashmir called Mirpur alone. The cultural, economic, social leap they made to move to mosque-and-mill towns in the North of England was huge. All because of dislocation caused by the Mangla Dam. So it's a very unrepresentative sample.

How about comparing Pakistanis who live in the West Midlands and Yorkshire and the Humber [those from Mirpur] with those living in the London-area? There are differences in everything from GCSE pass rates to median income and % in managerial occupations.

Pakistani-Americans have a different pattern of immigration and are more reflective of London.

Yes, Pakistani immigrants who went to mill towns in the north of England in the 60s mostly came from one town called Mirpur in Azad Kashmir. They were largely unskilled and had poor literacy levels. A lot of their offspring have adopted the mores of African-American ghetto-dwellers. Judging Pakistan's level of development based on them would be like judging America's based on East St. Louis. Pakistani immigrants who came from middle-class families in Pakistan have largely settled in the south-east and London and have done quite well for themselves. Since their focus tends to be on work and family, they don't have a very high profile.

A good point of comparison, I could be wrong is Hmong immigrants to cities like Fresno vs Pakistani immigrants to Bradford.

It depends on the context. Bradford and the Mirpuris is old hat. Pakistani (working class) second generation in Scandinavia and Holland have done well - many are getting educated and on the whole prospering. Specially the young women are doing well. I suspect a class ridden society such as Britain, combined with the resources of the migrants and the economic woes of the 1970's does not leave much room for social mobility.

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