Mythbusters: Are Generals better stewards of the economy?

May 31st, 2012 | By | Category: Express Tribune

RupeesDr SM Taha’s opinion column for Thursday’s Express Tribune, ‘Fake democracy’, repeats the myth that the nation has done better under military dictatorship than democratic governance. This myth is widely projected by apologists for dictators and martial law, but is based not in facts but economic smoke and mirrors.

Dr Taha writes that “the unpleasant fact is that the economic growth rate achieved during democratic regimes has compared poorly with the rates achieved during military regimes”. However, former Senior Economist at the World Bank and Finance Minister of Pakistan Shahid Javed Burki explains that this is a myth in his book Changing Perceptions, Altered Reality: Pakistan’s Economy Under Musharraf, 1999-2006.

During the eleven years of the period of Ayub Khan, the GDP increased at a rate of 6.7 per cent a year. In the Ziaul Haq period, which lasted also for eleven years, the GDP grew at 6.4 per cent a year. This should not imply that the Pakistani economy does well when men in uniform are in control. What it does show is that during periods of military rule Pakistan was able to draw significant amounts of foreign capital which augmented its low rate of domestic savings, and produced reasonable amounts of investment. But during military rule the economy also became extremely dependent on external capital flows. This created enormous vulnerability.

The economy under Ayub Khan in particular benefited from the infrastructure left behind by the British. Despite being a young nation, Pakistan started off with world class roads and canal systems. Much like the old joke, “What is the fastest way to get rich? Be born to rich parents…”, Ayub Khan has been given credit for an economy that was largely a product of historical chance instead of specific policies.

Describing economic growth during the dictatorship of Gen Musharraf, Dr Burki explains that,

“According to one point of view in this debate, the brisk performance in 2004-5 was the consequence of the happy confluence of a number of events. Those who held that view – and I belong to that group – thought there was a low probability of that happening again.”

Even during the alleged economic growth that took place under Gen Musharraf’s rule, not everyone gained. The poor, in particular, actually suffered more, says Dr Burki.

How did the poor fare under President Pervez Musharraf? Slow recovery from the economic slump in the 1990s which was the result of the economic stabilization policies adopted by Islamabad under the pressure of the International Monetary Fund had one serious negative consequence. It exacerbated the situation of poverty; although firm estimates are not available, the number of people living in absolute poverty continued to increase at the rate of 10 million a year from 1999 to 2002.

The Musharraf government was warned of increasing poverty rates by reports from both Karachi-based Social Policy and Development Centre and UNDP, but “both reports were ignored by Islamabad”.

The poor fared better under Gen Zia, but despite some improvements due to his introduction of zakat, “the two more important reasons were the growth rates based on agriculture and the large amounts of remittances sent by Pakistani workers in the Middle East”. According to the internationally renowned economist Dr Burki, “more than anything else, remittances played a significant role in reducing the level of poverty”.

The idea that generals have been better stewards of the economy than civilians is, in short, a myth. It is a myth based on decontextualised data that ignores inconvenient facts. Dr SM Taha is entitled to believe that democracy as a system is flawed, but he should present his case without relying on myths.

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