Following the ministrations of the military regime over
the last three years, officialdom including those in exalted positions, would
have us believe that Pakistan's economy has achieved "take off". It
may be time therefore to subject the usage of this term to serious scrutiny. Unless
the state of the economy is accurately described, policies for its improvement
cannot be identified. In this article, we will examine the meaning of the term
"take off" in economic discourse and then see whether it is a correct
description of the current state of Pakistan's society and economy.
"take off stage" became part of the lexicon in economics when W.W. Rostow
published his controversial book, The Stages of Economic Growth. (Rostow was an
economic historian, who worked as special advisor for foreign policy to presidents
Kennedy and Johnson respectively). On the basis of the historical experience of
Europe, he proposed that in the context of economic development, it is possible
to classify all societies within one of five stages: (i) The traditional society.
(ii) The preconditions for take off. (iii) The take off stage. (iv) The drive
to maturity. (v) The age of high mass consumption.
usefulness of Rostow's theory lay in the fact that it combined prevailing social
attitudes, the relative importance of the landed elite in the political structure
and technological and economic features of a society as the basis of determining
the stage of economic development. The theory was criticized on grounds that:
(a) It was a spurious 'theory of history' because while ignoring the actual history
of societies in Asia, Africa and Latin America, it used certain present features
to place them into a structured framework of the European historical experience.
(b) By placing all existing societies into stages, the theory ignored the interaction
between the advanced industrial countries (stage 5) and the under developed countries
(stages 1 and 2). An analysis of such an interaction, critics argued, could provide
insights into why certain countries were developed and others under developed
within a globalized economy.
In the context of the
current economic debate on the 'stage' of Pakistan's economy it may be useful
to indicate some of the defining features of Rostow's traditional, the pre take
off and the take off stages respectively.
stage was characterized by pre scientific social attitudes, the predominance of
the landed elite over political power with "family and clan connections (playing)
a large role in social organization." At this stage there is a low ceiling
on productivity growth because modern science and technology were "either
not available or not regularly and systematically applied." Are not these
features of a traditional society, characteristic of large parts of Pakistan's
society, polity and economy today?
In the pre conditions
for take off stage according to Rostow, "the idea spreads not merely that
economic progress is possible, but that economic progress is a necessary condition
for some other purpose (example national dignity)." At this stage the process
of self-sustained economic growth has not yet begun, but the defining features
are political. "Politically, the building of an effective centralized national
state, on the basis of coalitions
in opposition to the traditional landed
was a decisive aspect of the preconditions period; and
it was, almost, universally, a necessary condition for take off." Are these
not features which could be a major part of President Musharraf's political agenda
which could at least move us to the pre take off stage? Instead the government's
spin masters have conveniently assumed that we are already at the take off stage,
thereby obviating the need for the hard political and economic choices necessary
for reaching even a pre take off stage.
For Rostow the
take off occurs when there is "not only the build up of social overhead capital
and a surge of technological development in industry and agriculture, but also
the emergence to political power of a group prepared to regard the modernization
of the economy as serious, high order political business." At this stage
"both the basic structure of the economy and the social and political structure
of the society are transformed in such a way that a steady rate of growth can
be, thereafter regularly sustained." Such self-sustained growth is based
on: (i) a dynamic entrepreneurial elite, (ii) a high rate of domestic savings,
(iii) a large professional middle class, (iv) a diversified industrial structure
and the institutions for translating scientific research into rapid technological
change. Can it be said that these transformations of the political, social and
economic structures have been achieved in Pakistan? Surely not, if we consider
the facts. Let us take each of these necessary conditions for take off and see
if Pakistan has fulfilled them:
(i) The entrepreneurial elite by and
large is not characterized by innovative, risk taking captains of industry but
by a tradition bound elite that has historically relied on government subsidies
and protection measures within a patron client relationship. For example during
the early 1960s it has been estimated that the average rate of effective protection
was as high as 271%. By the 1990s even though the rates of effective protection
had been considerably reduced, the increase in the share of manufacturing attributable
to protection amounted to 5% of GNP (Gross National Product).
industrial elite far from raising domestic savings and achieving self reliance
for the country has engaged in conspicuous consumption. For example during the
1960s, 15% of the resources annually generated in the rural sector were transferred
to the urban industrialists and 63% to 85% of these transferred resources went
into increased urban consumption. Far from raising the domestic rate to the target
level of 25% (which would have reduced dependence on foreign loans) the actual
saving rate never rose above 12% right upto the end of the decade of the 1990s.
(iii) Poor coverage of education and even poorer
quality of education has meant that the middle class is both narrow and professionally
ill equipped to sustain rapid economic growth.
(iv) Failure to diversify
is a pronounced feature of Pakistan's industrial structure: For example, the percentage
of total investment in the manufacturing sector going into traditional textile
and related goods was 41% in 1964-65 and in fact rose slightly to 44% in 1990-91.
Finally both the structures of society and of 'democratic' governance
are dominated by the landed elite and the systems of power, pelf and privilege
typical of its culture. The nascent social stratum, which seeks to build a progressive
society and a dynamic economy based on the discourse of reason, the pre eminence
of merit, equality of opportunity, economic welfare of all citizens and honest
governance, lives precariously on the margins of the social and political structure.
Given these facts it is no service to the country to mislead the nation
into thinking that the necessary social, political and economic features of the
take off stage have already been reached. The regime of President Musharraf has
taken many hard decisions and has a number of achievements to its credit. However
it risks threatening the credibility of its real achievements by claiming what
it has not achieved. Pakistan is not yet at the take off stage. The regime may
have begun the journey, but it still has a long way to go to reach even the pre
take off stage, let alone take off.