Can Political Instability and Economic Growth Not Move Together in Pakistan? | CSS Essays | PMS Essays | Essays by Sir Syed Kazim Ali | CSS Essays | PMS Essays | Essays by Sir Syed Kazim Ali
Mehwish Shahzad has attempted this essay on the given pattern, which Sir Syed Kazim Ali teaches his students, who have consistently been qualifying their CSS and PMS essays. The essay is uploaded to help other competitive aspirants learn and practice how to write a comprehensive outline; how to write bullets in an outline; how to write the introductory paragraph; how to connect sentences and paragraphs; how to write a topic sentence; how to put evidence within the paragraphs.
Outline
1- Introduction
2- Understanding the relationship between political instability and economic growth
3- Current situation of political instability in Pakistan and its impact on the economy
4- How are political instability and economic growth can never move together?
- ✓ Inconsistent Economic policies, every new government abandoning the previous government’s economic projects due to their narrow mindedness
GDP rate of 6.8% in the era of Ayub’s regime due to consistency in the policies
- ✓ Increasing unemployment owing to a decline in developmental and economic projects, a significant setback to the human capital due to political turmoil
Political instability, the third most significant obstacle in the way of development, Word bank report
- ✓ Skyrocketing inflation due to the mismanagement and short-term policies of the government, declining rupee value
Double-digit inflation increased to 24.9%, PBS report
- ✓ The gradual decay of economic institutions in the hand of politicians impeding economic progress
Tarbela Hydropower project investigation in the NAB for corruption of Rs. 753 Mn by WAPDA
- ✓ Interrupting GDP growth, business, and trade activities due to riots and strikes by the frustrating people, a result of the political fiasco
Unrest events leading to a 1% reduction in GDP, Survey report
5- How to ensure political stability for economic progress?
Political level
- ✓ Proper charter of economy, a national document for the country’s salvation by the consensus of all the political parties
- ✓ Long-term vision by the top leadership to foster political and economic stability and to avoid frequent ousters
- ✓ Encouraging public participation to hold politicians accountable for immature and self-interest policies
Economic level
- ✓ Broadening of the tax base with the help of political commitment, leading to political and economic prosperity
- ✓ Shifting from a geostrategic to the geo-economic hub, a welcome initiative for the country’s political and economic progress
- ✓ Implementing CPEC projects effectively to engender economic growth
6- Critical Analysis
7- Conclusion
The economy is a country’s backbone, helping it march towards unsurpassable social and political development. However, political instability serves as a bottleneck to a state’s socioeconomic and political lifelines. Unfortunately, Pakistan also stands among those states where political upheaval has led the economy towards shambles. The current political scenario is the nadir of the country’s economic history. Since it is a fact that both cannot go hand in hand; the existence of one is the death of the other. It is saddening that frequent ouster of government leads to inconsistent economic policies affecting the smooth functioning of the economy since its inception. Moreover, increasing unemployment, skyrocketing inflation, and declining FDI result from political chaos since investors never invest in an uncertain political environment. Riots and strikes further interrupt business activities affecting the GDP of the country. Political turmoil has paved its way in the roots of the economy, damaging the economic institutions of Pakistan. It shows that political stability and economic prosperity have a symbiotic relationship. Both can work only in the shadow of each other, benefitting from each other at every turn. Therefore, pragmatic measures at the political and economic levels can help the country cope with political instability. At the political level, introducing an ethical charter of the economy as a national document, coupled with long-term vision by the top leaders and public participation, is imperative. At the economic level, widening the tax base, shifting to a geo-economic pivot, and implementing CPEC can engender economic growth. In the contemporary world, Pakistan can only progress if the country pulls itself out of these political clinches. Thus, the essay comprehensively analyses how political instability and economic growth can never move together. Also, it highlights the way forward to ensure political stability for economic progress.
Political instability is the propensity of a government to collapse either because of poor economic performance or rampant competition between various political parties. On the other hand, economic growth implies improvements in a country’s national income, leading to good economic conditions for the people. However, a country with a strong and stable political structure can experience steady economic growth. Indeed, a robust, safe environment where a political authority knows its duties and responsibilities eliminates the uncertainty of the economic future. In the same way, the economy in support of such a strong political environment will ensure steady growth. However, unstable structures in politics, of course, is the most critical factor affecting the economic stability of a state since political stability is the precondition to economic stability. Ray Jovanovich aptly said, “Without political stability, there can be no economic prosperity; that’s the bottom line.”
At present, political instability has become a matter of grave sickness for Pakistan. Since the recent ouster of the prime minister through the vote of no confidence has led a country towards instability and chaos. It has pushed the country to the brink of an implosion. Political instability manifests itself in Pakistan, including blame games, institutional decay, rising inflation, economic woes, and a tussle between the judiciary and executive. It casts dire consequences on the people’s political and economic development and social life. As a result, Markets expected Pakistan to be another Sri Lanka in the making. Since Pakistan has faced an acute foreign currency shortage after political instability, things may lead to a similar crisis in Sri Lanka. It is high time Pakistan swallowed the bitter pill of hard political reforms before it is too late.
Here, it is important to discuss that political instability and economic growth can never move together. Nevertheless, its effects are too severe to be ignored. Some of them will be brought under discussion in this section. To begin with, political instability leads to the switching of economic policies. When it came to power, every new government introduced its own economic model, which created volatility and inconsistency in the smooth functioning of the economic policies. As a result, investors feel reluctant to invest in such a volatile economy, which ultimately affects a country’s economic progress. It is evident that economic growth in military regimes was better than that of democratic regimes due to their long tenure. The GDP rate was 6.8% during Ayub’s regime since dictators had long terms leading to consistency in the economic policies. Hence, political unrest can never let the economy function smoothly.
Moreover, political instability reduces a country’s foreign direct investment (FDI). Since investors does not feel comfortable to invest in a country with political uncertainty. According to the State Bank of Pakistan (SBP), due to the recent ouster of the national government, investors withdrew their investment of $30 Million in the account of FDI. Moreover, it has multiplier effects, such as low investment in a country leading to low development, increased unemployment, increased poverty, and reduced foreign exchange reserves. Hence, it is proven that political chaos in a country is a severe blow to an already fragile economy.
Both of the above arguments lead to another significant discussion, which befalls Pakistan’s economy in the shape of unemployment. In a developing country like Pakistan, no new projects can be installed in a deteriorating political condition. Similarly, it does not create new jobs in a country since it halts the expansion of existing projects. According to World Bank, political uncertainty is the third most significant obstacle to Pakistan’s economy. It can impact not only the productivity and expenditure of a country but also the national income of a country. Thus, it depicts clearly that political instability and economic growth cannot go hand in hand.
With this puzzle, the issue of rising inflation during political chaos hits below the belt of Pakistan’s economy. When there is a high probability of being replaced, it becomes difficult to manage inflation. As a result, it depreciates the value of the domestic currency and, eventually, impacts the import and exports of a country. According to the Pakistan Bureau of Statistics (PBS), the annual inflation rate increased to 24.9% in July 2022, soon after the regime change. It was even expected to grow, which has dire consequences for the economy. Hence, frequent cabinet changes and political turmoil are directly correlated to a country’s economic woes.
Along with the mismanagement of inflation, the economic institutions of a country are also decaying in the hands of corrupt politicians. The economic institutions, including WAPDA, finance, commerce, textile, and industry, are all decaying due to incompetence, corruption, and ineptness. Recently, the WAPDA chairman appeared before the National Accountability Bureau’s (NAB) office where he was interrogated about corruption worth Rs753 million in the Tarbela Fourth Hydropower project. They invest only half on the ongoing projects, and the remaining half is pocketed for their use. Hence, this poor management, corruption, and inability caused stagnation of the economic process to a devastating end.
Last but most certainly not least, the riots and strikes due to political fiasco led to the closure of business and trade activities, interrupting the GDP growth. According to a survey title ‘The Economics of Social Unrest’, “on average, unrest events caused a 1% decline in the GDP.” For Pakistan, the long political unrest could cause a major dent in GDP growth. Political instability is common, followed by riots and strikes by the people. As a result, it halted business and trade activities. And it generated a negative signal to the investors, who consequently stopped investing in such a risky environment and shifted their business to other countries, affecting the economic progress.
Pakistan’s current federal and provincial governments need to go beyond firefighting and push forward essential reforms at the political and economic levels that are key to ensuring the country’s political and economic stability and long-term growth prospects. First, there must be a charter of the economy for economic stability. All stakeholders should be a part making of the alliance. In this regard, government and the opposition should collaborate to steer the country out of unprecedented political and economic uncertainties. The basic goals should be set in the charter of the economy. Those goals shall remain unchanged in the case of the new government. Recently, trade unions and business leaders had a meeting with the government and political parties to insist the government for the making of the charter. Hence, it depicts that they already realized this step’s importance.
Second, political parties should sit together and carve out a long-term vision to foster political and economic development. The leadership formulates and executes the strategy through which a leader’s vision translates into a reality. For instance, Deng Xiaoping changed China through his visionary leadership. He changed all the policies of the previous communist leader Mao Zedong; he introduced many reforms and engagements with the international community. Within a decade, he uplifted China out of the socioeconomic crisis. As a result, the per capita income of the Chinese was 25-fold, and 700 million people lifted themselves out of poverty. Hence, fine-tuning the policies is necessary for political and economic growth.
Third, public participation should be encouraged since it can pull the country out of the political darkness. The active role of the public in politics would hold politicians accountable. As a result, they never skip from the pro-state attitude; and they never make immature and self-interest policies. As Abraham Lincoln aptly says, “we the people are the rightful masters of congress and the courts.” Therefore, public participation is significant for a country’s lasting political and economic system.
At the economic level, the government needs to broaden the tax base bringing every sector and every individual above the threshold level under the tax net. It will help the government to reduce the budget deficit by up to 3% of the GDP in the next three years. This step would relieve the government from the budget deficit issue, and they can fully focus on the other issues of the economy. Recently, amid the global crisis, Jordon pushed the tax ratio to six per cent, Egypt by three per cent and the Philippines by two per cent. Pakistan can also do the same with the help of strong political commitment and stringent reforms.
Next, the strategic shift from geo-strategic to geo-economic is a welcome and sound initiative by the government to realize Pakistan’s real potential. However, the government should need to formulate a proper strategy to implement it. Since the Belt and Road Initiative (BRI) will connect Asia with Africa and Europe, Pakistan has a crucial role to play in it due to its strategic location. As Chinese president Xi Jinping aptly says, “the BRI may be China’s idea, but its opportunities are going to benefit the entire world.” Therefore, this project should be of prime importance to Pakistan’s government. Currently, it is the only way in the hand of Pakistan to realize its investment potential and achieve economic growth.
Last but certainly not least, China Pakistan Economic Corridor (CPEC) is the harbinger of robust economic growth, and it is only possible through its proper implementation. Therefore, the government is required to fully focus on it and make sure that political upheaval would have no impact on it. So far, it is estimated that USD 64 billion worth of foreign investment will arrive through China’s megaproject. Therefore, it is high time for Pakistan to avail of this opportunity for investment to achieve economic progress. For this, Pakistan should build the trust of the industrialists and investors of this project and showcase itself as a safe haven for these investors.
In a critical diagnosis, various elements in the country have remained responsible for the worsened political scenario of the country. First and foremost is the role of military leadership in interfering in the country’s political affairs. Initially, it was directly involved in politics through martial law, and recently, it stayed backstage but still manoeuvred with the system. The successive military coups have not led a genuinely representative political culture to develop in Pakistan, thus, impacting the political stability. Moreover, the power play between the opposition party and the government has primarily affected the country’s political system. the main objective to gain power has blinded them to the country’s national interest. Therefore, their strategies to weaken each other have negatively impacted the political stability in Pakistan, hindering economic growth.
In conclusion, it is no exaggeration to say that political instability and economic growth can never move together. However, Pakistan can move towards economic development by overcoming the challenge of political instability in valid letters and spirit. For that matter, the government needs to make a plan to overcome the issue of political unrest in a country, not only at the political and economic levels. A proper charter of the economy by the consensus of all the political parties is the need of an hour. Also, special attention needs to be given to public participation in political matters, and long-term vision by the political leadership can surely bring political and economic stability. However, some more needs to be done; Pakistan has great prowess to transform itself from a crisis-ridden state to a flourished economy if the CPEC and the new narrative of geo-economics are implemented in true essence since it has trickle-down effects. Similarly, other measures like widening the tax base and other political and economic measures are vital efforts to engender political and economic progress. Indeed, by taking suggested measures, political stability can be achieved, which eventually helps the country reach the economic progress milestone.
CSS Solved Past Papers’ Essays
Articles Might Interest You!
The following are some of the most important articles for CSS and PMS aspirants. Click on any to start reading.
