Political stability is a prerequisite for economic growth in Pakistan

Pakistan, the fifth most populous country in the world, has faced severe political crisis since its inception. With the country swinging between different forms of polity and institutions, this uncertainty created by politics has spilled over in the economic domain as well. The country’s economy has been in the doldrums for the past three decades. Since it is a known fact that economic betterment can only come when there is political stability and consensus among representatives, Pakistan is also not an exception. Thus, it is pertinent to understand how political stability leads towards economic growth and what factors are at play.

In Pakistan, political institutions never got a chance to nurture and maintain stability due to political polarization experienced right after independence. This was followed by short spanned tenures of elected representatives where ensuring tenure continuity remained most important. This uncertainty paved the way for ademoratic forces, which began dominating the political discourse. As a result of this sway, policies and reforms, despite being meaningful at times, never saw daylight. Both the civilian and military governments paid no heed to their predecessor’s decisions, and always took a fresh start. In the 1970s, an ideological shift took place as the then civilian leadership fought tooth and nail to transform an industrial and privatized Pakistani economy into a socialist and nationalized one. Hence, even today, the country faces an acute crisis of policy inconsistency and loss of institutional memory after the turn of every new government. This outlook is contrary to economic sustainability and macroeconomic growth.

In a politically stable environment, the representative form of government is central in legislation and policy making. Representation from all sections of society ensures that policies devised are all inclusive and participatory. In the economic and financial aspects, decisions are taken in favor of the public at large. Parliaments become guardians of the marginalized and deprived factions of society. Thus, political stability yields inclusive policy making and helps devise economic policies which are equitable and growth oriented.

Apart from inclusivity, political stability in the form of participation by different political parties ensure accountability and monitoring of government decisions. When decisions are made under parliamentary sovereignty and oversight, any exclusive measures by the government are put under parliamentary scrutiny and dealt upon with consensus. In terms of economy, financial governance by parliamentary committees, sporadic audits, budgetary approvals by representatives and mandatory agreement before any foreign financial aid keeps the incumbent executive in check and helms the economy towards stability.

A politically stable society is where criticism is constructive, dissent is entertained with tolerance and institutions are designed to serve the interests of the public at large. Policies in such an environment are consistent as they are crafted after meaningful dialogue and debate. Such an environment is very encouraging for investors. Financial procedures to attract investment are designed sans political interests and bureaucratic hurdles. Fundamental economic issues are addressed rather than investing on political point scoring and preparing for the next election. All these ingredients are conducive for investor confidence and long term financial relationships. Therefore, the economic wheel, backed by investor confidence, spins faster if political stability is maintained.

Political stability is supremacy of constitution and parliament. A stable polity is the one where parliament as a political institution has the principal say. Representatives ensure that dialogue and debate is result oriented and any discussion sees daylight after mutual understanding and confidence. Parliament functions at its fullest; welcoming different perspectives and concerns; incorporating meaningful demands from the opposition; and steering policies and reforms to serve the public and improve governance. As a result, economic policies and reforms are also consensus oriented where all stakeholders are kept in loop. Moreover, in case of unexpected outcomes of policies, instead of blaming the incumbent and trading barbs, parliament takes the onus and begins to rectify its initiative. Thus, a framework is established where economic sustainability is inevitable as it is based on inclusivity, consensus, and collective responsibility.

Having addressed the linkage between political stability and economic growth, it is pertinent to understand the relationship between political instability and the subsequent downward trajectory adopted by the economic curve. As discussed, political instability leads to economic initiatives that are exclusive and myopic in scope. Such projects are based on patronage and leverage. Flamboyant display of progress through investment on showcase projects is used to gain voter support in the next election. Furthermore, due to mismanagement of macroeconomic policy, unsustainable means are used by governments for face saving and presenting a false outlook of development and economic growth. In Pakistan, subsequent governments have used foreign policy prescriptions to keep their tenure afloat. Excessive borrowing from the IMF and reliance on foreign aid in lieu of counter terrorism has crippled the system at implementing any meaningful reforms. Hence, instability in politics is directly translated into an economy which becomes unsustainable and counterproductive.

In conclusion, political stability has a direct impact on the socio economic domain. In a stable political environment, economic policies are all inclusive, consensus oriented, and tenure independent. Parliament, adhering to its true purpose and function, ensures accountability as well as representation of every faction of society. As a result, owing to stability, collective consensus, accountability and institutional oversight, the state becomes a business attraction for foreign investors. As a way forward, Pakistani leadership must become tolerant against dissent, ensure accountability and transparency of economic policy, and maintain parliamentary supremacy at all times. It is only through these means that Pakistan can achieve sustainable economic growth and fiscal space for social welfare spending.

 

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