Economy, Welfare and Reforms in
Pakistan: Essays in Honour of Dr Ishrat Husain
Edited by Vaqar Ahmed and Maaz Javed
Oxford University Press, Karachi
ISBN: 978-0190708818
308pp.

Seeing Economy, Welfare and Reforms in Pakistan: Essays in Honour of Dr Ishrat Husain, edited by Vaqar Ahmed and Maaz Javed, is wonderful, for Dr Husain has had a distinguished career in public service and public policy and, through his own writings, has contributed greatly towards improving our understanding of Pakistan and the issues we face.

In fact, it would not be wrong to say that Dr Husain has had many careers and has been able to distinguish himself in all of them. He was a very well-regarded civil servant, worked for the World Bank, guided policy direction in various countries, was governor of the State Bank of Pakistan (SBP), turned the Institute of Business Administration (IBA) into a full university of good standing and has long worked with the government on such important issues as institutional and civil service reforms.

In his foreword to the book, Dr Tariq Banuri, chairperson of Pakistan’s Higher Education Commission (HEC), terms Dr Husain a “clinical economist”. Like doctors, clinical economists need to “recognise complexities”, provide “nuanced, context sensitive advice”, back up this advice with “robust feedback systems” and have “sustained commitment to professional ethics.”

This is what most economists aspire to, and this is what ties Dr Husain’s various career trajectories into a single actuality. His commitment extends to poverty eradication, institutional strengthening and mobilisation and robust feedback of policies deemed important.

A book of essays inspired by Dr Ishrat Husain’s contributions provides good overviews of Pakistan’s economic situation

The 17 essays, inspired by Dr Husain’s contributions, are organised into five sections: macroeconomic management, subnational economy, financial markets, socio-economic challenges and regional integration.

Admittedly, there are some important omissions. Some essays on Dr Husain’s work in governance, change management, higher education management and civil service reforms would have been good, but covering all areas of his work would have made the book much longer.

The section on macroeconomic management has many interesting papers and Dr Vaqar Ahmed’s own is a good summary of the fiscal imperatives that the state faced over the Covid-19 period — and continues to face — and some of the policy responses it came up with to deal with the issues of rising expenditures and for managing macroeconomic balance.

Dr Zafar Hayat provides quite a critique of the SBP’s management of monetary policy. The main contention is that the key, larger goal for monetary policy is to ensure price stability, the predictability of which helps a country achieve higher and sustainable growth.

The SBP — and Dr Hayat has written extensively on the issue — has been trying to target growth directly and far too often. This has undermined the price stability objective and so, in the end, monetary policy has neither been able to achieve price stability, nor sustained it reasonably enough to high growth levels in the country. I am not a monetary or macro economist, so cannot comment on the strength of Dr Hayat’s argument, but it would have been interesting had the editors included reaction to this paper from the SBP’s research department.

Professor of economics Dr Bushra Yasmin’s paper on the foreign investment climate is a good introduction to, and summary of, issues that foreign direct investment (FDI) faces in Pakistan. Our institutional structure for FDI support is weak and largely ineffective. China is our major FDI partner but, overall, we do not have FDI coming in from many countries, and of sizable amounts, unless it is specifically contracted for protected areas and under specific conditions, such as the China-Pakistan Economic Corridor (CPEC) and/or electricity generation plants.

The section on subnational economies summarises the socio-economic development and main issues of provincial economies. There is generally a lot more literature on Punjab and Sindh, much less on Balochistan and hardly any on Gilgit-Baltistan. Dr Abdul Salam Lodhi highlights the development “gap” existing between Balochistan and other provinces; to give just one, but poignant, example: net enrolment rates for girls in middle and secondary schools in Balochistan are only 13 percent and four percent, respectively.

Dr Saranjam Baig’s chapter on Gilgit-Baltistan is very informative, although without many statistics — understandable, because hardly any time series data has been collected on the region. It is wonderful that the editors included the essay because it shows all that needs to be done in the area regarding data collection, setting up of institutional framework and, most importantly, for development of Gilgit-Baltistan.

Regarding Islamic banking and finance, Ahmed Ali Siddiqui provides a detailed introduction and brings readers up to date on issues that still need resolution, in order to allow for even more rapid expansion of Islamic finance in the country.

On the subject of female participation in the labour force, Pakistan’s rate stands at 22 percent, next to Afghanistan’s — which is lowest in the region. Many women over the last 30-odd years have had the opportunity to get education and, if barriers to entry in the labour market are properly addressed, Pakistan can experience quite the economic change.

It would also, potentially, have significant impact on other important variables such as child marriage, fertility, education and health of children, women’s empowerment and infant and maternal health. Dr Hadia Majid’s paper looks at the major hurdles in women’s empowerment and financial inclusion, such as access to identification papers and lack of mobility.

The last three chapters look at regional integration and trade. Liaqat Ali Shah highlights the role and importance of CPEC, while Ghulam Samad and Ghulam Ali discuss Pakistan’s limited trade — and also limited potential for trade — with Central Asian nations. Issues in our immediate neighbourhood remain important, of course, but unresolved.

It is relevant to point out that bringing together several authors, each with their own distinct style, in one book, is a difficult task. Should there be strict style and format guidelines for uniformity, commonality and flow, or should each author’s distinct voice be encouraged to emanate?

Ahmed and Javed have chosen to edit with a light touch. The contributors are a mix of academics, policymakers, government officials and private sector professionals, which means style — as well as quality — varies across chapters. Some papers are descriptive, others are analytic. Most chapters provide just overviews of their respective subject and, at times, this leads to listings without any in-depth information.

A concluding chapter — although probably hard to write — would have been useful to give readers an overall perspective, as the papers on Pakistan’s macroeconomic situation tell a rather grim story of rising debts and deficits, price instability and faltering growth, whereas other chapters tell of reform and some successes. So where exactly does Pakistan stand and what do the book’s editors make of the big picture?

The book will be worthwhile for policymakers as it not only gives good overviews of Pakistan’s economic situation, but also recommendations and suggestions for governments and policymakers to think about. Students will also find it useful.

Now, back to the one in whose honour it has been written. Throughout his career, Dr Husain has not only grappled with large ideas from a theoretical perspective, but got his hands dirty as well. The topics covered in the essays show the range of areas with which he has engaged.

The connecting thread, as Dr Banuri notes in the foreword, is the approach of a clinical economist — a perspective that many economists, social scientists and policymakers could learn from.

The reviewer is dean at Lums and senior research fellow.

He tweets @BariFaisal

Published in Dawn, Books & Authors, August 7th, 2022