Bad governance

LAHORE: Bad governance can have significant negative impacts on the economy. This includes erosion of investors’ confidence, and ineffective public institutions. Even judicial delays are manifestations of bad governance. It impacts the marginalised and vulnerable populations the most.

Bad governance leads to uncertainty and unpredictability in the business environment. Investors are hesitant to invest in countries or regions with weak governance as it increases the risks associated with their investments.

This lack of investor confidence can result in reduced foreign direct investment (FDI) and hinder economic growth. We are seeing this impact in Pakistan, which attracts nominal FDI in the region.

Corruption and embezzlement of public funds is fostered by bad governance. When government officials engage in corrupt practices, it diverts resources away from productive sectors of the economy.

Corruption undermines fair competition, discourages private sector investment, and distorts resource allocation, leading to economic inefficiencies. All these factors are in vogue in our country.

Weak governance also results in poorly functioning public institutions. This can manifest in inadequate infrastructure, substandard public services, and ineffective policy implementation. Inadequate public institutions hamper economic development by impeding private sector activities, stifling innovation, and limiting productivity. We have the weakest regulatory institutions in the region that usually are the hallmark of banana republics.

Transparency and accountability sit on the back bench in poorly governed countries. These are crucial elements of good governance. When these aspects are compromised, public funds can be mismanaged, and decisions can be made based on personal interests rather than the welfare of the society. Lack of transparency and accountability erode trust in government, hampering economic growth and development.

Judicial delays can indeed be considered a manifestation of bad governance. Delays in the judicial system can undermine the rule of law, erode public trust in the justice system, and hinder access to justice. Judicial delays can discourage investment, hamper contract enforcement, and impede economic activities by creating uncertainty and a lack of legal recourse.

They can also disproportionately affect vulnerable populations, who may lack the means to navigate lengthy legal processes. Timely and efficient judicial systems are essential for maintaining the stability necessary for economic growth and development.

When the economy is impacted by bad governance, its effects are felt across the society, but certain segments are often disproportionately affected, particularly the marginalised and vulnerable populations.

Bad governance can exacerbate existing socio-economic inequalities, such as the ones between the rich and the poor, genders, ethnic minorities, and indigenous communities, who are more likely to bear the brunt of inadequate public services, corruption, and unequal resource distribution.

Among businesses, the small and medium enterprises often face greater challenges in environments with bad governance. Limited access to credit, lack of institutional support, and regulatory barriers can hinder their growth and competitiveness.

SMEs, being important drivers of job creation and economic diversification, are crucial for inclusive and sustainable development. SME sector in Pakistan is in doldrums because of bad governance.

Bad governance practices, such as excessive debt accumulation, mismanagement of natural resources, and failure to address environmental issues, can have long-term repercussions for future generations. They may inherit a degraded environment, limited resources, and the burden of unsustainable policies, impacting their quality of life and economic opportunities.