The modern economists have resolved that better institutional quality and political stability are the key determinants to evaluate macroeconomic performance of economies concerned.
Better quality state institutions assure economic growth by offering a level playing field to all agents with a fair opportunity to exploit the available resources; ensuring contract enforcement and property rights through swift judicial system; realising sustainable social and public sector policy implementation through apolitical state functionaries and promoting private sector with complete check on crime and violence through dedicated law enforcing state agencies (Acemoglu and Robinson 2008; Easterly, Ritzen and Woolcock 2006).
The high quality state institutions reduce uncertainty and encourage economic transactions that further stimulate economic growth as like in case of high-income countries. The high-income countries have been realising high economic growth rates as a result of high level total factor productivity due to improved efficiency of basic input factors i.e. labour and capital in the given economic models that was only possible in presence of high quality state institutions.
Non-existence of high quality state institutions engenders extractive economic activity that further substantiates socio-economic disparity beside ethnic, regional and geographical conflicts eventually distorting economic growth and resulting in economic instability overall (Acemoglu and Robinson 2008; Collier 2007; Gradstein and Justman 2000).
However, the political stability is the prerequisite for establishment of high quality state institutions. The apex level state institution quality can be attained through an improved level of governance.
The independent and other researchers associated with the World Bank and other international organisations have defined the governance as a set of traditions, laws and regulations that empower the institutions concerned to exercise authority for the sake of public service delivery in the country concerned. The World Bank publishes Worldwide Governance Indicators (WGI), which are estimated by considering six dimensions including Voice & Accountability; Political Stability & Absence of Violence/Terrorism; Government Effectiveness; Regulatory Quality; Rule of Law and Control of Corruption by the leading researchers Daniel Kaufmann and Aart Kraay since 1999 are based on more than thirty type of data sources. The aforesaid indicators indicate the rank of the country concerned among the countries in the world in percentile rank values varying from (0) to (100) demonstrating lowest to highest rank. The aforesaid six dimensions of governance have been defined by the WGI by considering multiple traits belonging to the country concerned. The voice and accountability explains the ability of the citizens to select the government beside freedom of expression and association and free media. Political stability and absence of violence/terrorism account for political instability and politically-motivated violence and terrorism. The government effectiveness measures the quality of public and civil service with a degree of independence from political interference. It also considers quality policy formulation along with its realiation beside government’s level of obligation for such policies.
The regulatory quality determines the capacity of the government regarding devising and applying policies to stimulate private sector development. The rule of law explicates the level of socio-economic agents’ confidence in the society; contract enforcement; property rights along with quality of police and courts by considering the prospects of crime and violence. The control of corruption explains the degree of malpractices in the public sector for personal advantages.
These six Worldwide Governed Indicators (WGIs) have been examined for the period 2011-20 in respect of OECD high-income countries, lower-middle countries, specifically in case of Pakistan. It has been transpired that the percentile rank values of these six indicators are stable in highest 4th quartile in case of high-income OECD countries. The percentile rank for five indicators is on higher side varying from 85 to 88-pecrentile except for political instability and politically-motivated violence and terrorism that is around 74-pcerentile. In case of lower-middle income countries, all these six indicators fall in the upper limit of 2nd quartile with a value near median fluctuating from 32 to 42-pcerentile.
Whereas, in case of Pakistan all these indicators fall almost in lowest 1st quartile and on the bottom of 2nd quartile which do not extrapolate a better picture even as compared to the lower-middle income countries. The average percentile rank during 2011-20 with regard to voice and accountability is 26-pcerntile; government effectiveness is 27-pcertile; regulatory quality is 27-percentile; rule of law is 24-percentile and control of corruption is 20-percentile. Therefore, the political instability has been measured as 1.655-percentile on average during 2011-20 that is a matter of grave concern. Particularly, during the years 2011-13 and 2015-16 the percentile rank for political stability indicator is estimated as zero with highest value of 5.19-percentile for the year 2020.
The above said indicators suggest that political stability led the high-income countries to establish high quality state institutions through improved levels of accountability; public sector effectiveness and regulatory quality along with substantial check on violence and corruption. The presence of high quality state institutions facilitated further to actualise long-term socio-economic policies on sustainable basis. This not only permitted them to attain high economic growth rates but also to realise the dream of quality social fabric having a great sense of social responsibility and civic mindedness in contrast to the lower-income countries, particularly Pakistan. It may be concluded that in Pakistan the political instability did not allow to establish all inclusive high quality state institutions and the socio-economic development process always witnessed turbulent phases. The political and regional conflict always distorted the accountability process. The highest propensity of democratic governments’ collapse never allowed the state institutions to function optimally.
Therefore, the political fabric of Pakistan is required to draw a consensus that may allow the continuity of democratic governments concerned with a healthy criticism of public polices by the opposition and unprejudiced process of accountability by the government. So that the democratic and political stability may allow improvement in the quality of state institutions through sustainable policy reforms and accountability and the seventy-five years old dream of socio-economic development of Pakistan may come true.
The writer is serving as Director (PD&R), Motorway Police, and holds master degree in International Trade and Economic Cooperation from Graduate School of Pan-pacific & International Studies, South Korea.