The trilemma of developing states

December 24,2016

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The focus of this year’s 32nd annual meeting of the Pakistan Society of Development Economists (PSDE) was almost exclusively on the recently-launched China-Pakistan Economic Corridor (CPEC) – a $46 billion infrastructure development project that is being funded primarily by China.

The focus on the CPEC was driven by the fact that, despite constant drumbeat and noise created by the Planning Commission of Pakistan regarding it and the project constantly drawing domestic and international concern, little was known about its nature, rationale, composition, geographical, demographic and financial impact. It started creating suspicion, jealousy and open wrangling, not only among provinces and power structures, but also among neighbouring regional countries which saw a stake in its completion or felt its interests were better promoted and protected if the CPEC was disrupted.

To allay such fears, the Planning Commission decided to devote its entire three-day programme to a single mega project, the CPEC. Mobilising its own limited in-house research and analysis capacity, as well as drawing upon that of many outside experts, it tried to put together a reasonable research output. That, if nothing else, flagged enormous gaps in knowledge that needed to be filled to understand the significance and likely impact of an undeniably important regional project.

The project, which is principally based on Chinese interests and initiatives gives Pakistan the role of essentially a sleeping partner or a foot-soldier or a sub-contractor, at best.

To overcome this psychological disadvantage of the project, to provide some intellectual underpinning to it and to lay a claim on substantive ownership of the CPEC, the organisers contrived to devote a session to what was termed ‘sovereign development’. It was held under this year’s Dr A R Kemal Memorial lecture (KML), honouring one of Pakistan’s foremost empirical economists who once headed PIDE. The choice for delivering this ‘sovereign development’ theme fell on Dr Arshad Zaman, an eminent economist in his own right who gave up his World Bank job in the 1980s to join the government of Pakistan as an economic adviser and later as chief economist of the Planning Commission.

Dr Zaman, like many other Pakistani intellectuals and economists, feels uneasy about Pakistan’s continued dependence on foreign aid and loans – which compromises the country’s ability to make its own choices about the pattern, pace and priorities of development. Like many other critics of the CPEC, including some liberals and leftists, he warns Pakistan against “falling into a patron-client relationship with China, replacing (more likely supplanting) the US with China”.

It is in this context that he invoked the concept of sovereignty and passionately argued for “a strategy of sovereign development that combines defense, diplomacy and economic restructuring”. Dr Zaman identified some major global developments confronting Pakistan – resurgence of nationalism in the West and “the emerging alliance between China and Russia and between India and the US”. To counterbalance the anti-Pakistan and anti-Islam narratives of our enemies, Dr Zaman suggested a vigorous effort to pursue a “Muslim national narrative”, with the combined effort of civil and military institutions and the galvanising role of the media.

However, he hardly explained what such a ‘narrative’ implies or how it will be made acceptable to believers of other faiths. He also failed to explain or analyse why such efforts (too numerous to be listed) have dismally failed in the past.

Also significantly conspicuous was the absence of any discussion on the greatest challenge of our times, highlighted recently by Piketty – the growing inequality of incomes at the global, national or regional level. This kind of vision of ‘sovereign development’ is heavily loaded in favour of geopolitical and ideological issues at the expense of economic and development issues.

This grand design of launching a sovereign development strategy for Pakistan is little more than a rehash of the dysfunctional ostrich-like strategy of failing to face domestic and external realities governed by the existing rules of the game in which Pakistan is but a minor player. Before it can lay claim to being ‘sovereign’ in any meaningful way, it will have to acquire economic and political sinews strong enough to be taken seriously.

The concept of ‘sovereignty’ in the age of globalisation – which is by no means over – is undergoing continual transformation. The real problem is its management – not its continued existence. Since the beginning of the 21st century, it has been becoming obvious that the management mechanisms for globalisation that were put in place at the end of the Second World War, especially for the establishment of the Bretton Woods institutions, have become dysfunctional and need major restructuring or replacement. This is in view of the tectonic changes that have been taking place in the world, foremost among them being the continuing rise of China and the continuing fall (in relative terms) of the US and other developed countries which are unable to manage global commons equitably.

Instead of exploring the best options available for countries like Pakistan acting in concert with other developing countries, some would prefer to pursue a path that is likely to isolate Pakistan and other Muslim countries. The two distinguished discussants of Dr Zaman’s paper, renowned television anchor Nasim Zehra and noted defence analyst General (r) Talat Masood, countered his argument that the genesis of extremism could be attributed to 9/11 and Musharraf alone and that extremism did not constitute a threat to the CPEC .

Developing countries are at the cross-roads once again. In the 1960s, most developing countries faced the dilemma of choosing between import-substituting industrialisation (ISI) and export promotion (EP). Five decades later, the choices are much more complex. As the Harvard economist, Dani Rodrik, puts it, they face a trilemma between intense globalisation, sovereignty and democracy – from which they can choose only two.

China, for instance, has chosen the first two and put the third, democracy, on the back-burner. Pakistan, on the other hand, unable to meet the challenges of intense globalisation, seems to be inclined more strongly in favour of sovereignty and democracy.

Email: smnaseemgmail.com


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