Why Nations Fail; A Case Study of Pakistan

‘Why Nations Fail: the origins of power, prosperity, and poverty is a research-based book authored by Daron Acemoglu and James A. Robinson and it discusses at length the huge power differences between rich and poor nations around the globe. By analyzing data and historical roots of different countries, the authors conclude that it is mainly the institutional structure of the nations that determine their progress; “it is the political process that determines what economic institutions people live under, and it is the political institutions that determine how this process works”.

The gist of the book is that the presence of inclusive economic and political institutions in developed countries paves their way towards development. Extractive institutions, on the other hand, can play a role to generate growth but only in the short term. The book presents a case study of different countries but it does not talk about Pakistan; this piece is aimed to look at the political and economic milieu in Pakistan with reference to problems discussed in the book.

One of the propositions that determine the failure of a nation, discuss authors, is that the countries that have been previously colonized “follow[ed] much of the former colonial world by developing hierarchical, authoritarian political regimes” which tend to halt the process of economic success. This case also applies to Pakistan that has encountered an alteration of democratization and military dictatorship at sporadic intervals during the first six decades. This deteriorated the economy of the country drastically.

Furthermore, even the democratically elected regimes in Pakistan, too, have almost had the same individuals over and over again and the democracy here shows no sign of pluralism. This is evident from the transition of PPP and PMLN parties’ rule and then the presence of these very individuals in the new governing party that is PTI.

The German Sociologist Robert Michels called it the Iron Law of Oligarchy. “The internal logic of oligarchies is that they will reproduce themselves not only when the same group is in power, but even when an entirely new group takes control.” Christophe Jaffrelot, a renowned French political scientist, puts it in his The Pakistan Paradox as, “…the disconnect is aggravated by the transformation of political parties into (unofficially) lucrative family enterprises, as is evident in the personal enrichment of the political elite.”

“The low education level of poor countries is caused by economic institutions that fail to create incentives for parents to educate their children and by political institutions that fail to induce the government to build, finance and support schools”, perfectly fits the education system of Pakistan since day one. Because of inefficient economic decisions, the poverty rate in Pakistan was found to be 40% in 2020 by Business Recorder. The high poverty rate has a direct relation with the illiteracy rate as poor people in developing countries cannot afford to send their children to go to educational institutes. Economic Survey presented Pakistan’s literacy rate to be around 60% in 2020.

Escalating privatization of the education and health sector in a poor country like Pakistan is further serving to increase the gap between the rich and the poor. Due to high unemployment and low incomes, the majority of the people cannot even manage the basic livelihood. This, too, is one of the characteristics of the notion ‘underdevelopment created’ and not ‘naturally emerged and persisted over centuries’. As the authors argue, “Under absolutist political institutions, those who can wield this power will be able to set up economic institutions to enrich themselves and augment their power at the expense of society.”

Another example of underdevelopment as being created is the adoption of the dual economy model that gives rise to economic problems in less-developed countries. This kind of economic model divides a country’s economy into a modern sector and a traditional sector. The modern sector supports urban life and ensures the use of advanced technologies in urban areas. The traditional sector, on the other hand, encompasses factors related to rural life including, agriculture and backward institutions and technologies. In Pakistan, around 64% of the population lives in rural areas.

According to the Labour Force Survey of 2017-18 conducted by the Pakistan Bureau of Statistics, 39% of the country’s labor force is engaged in the agriculture sector and it constitutes around 18.5% of the country’s GDP. This creates a huge gap between the rural and the urban sectors of the country where most of the development projects and educational programs are carried out in the urban areas and the rural areas are not given much attention.

To kick-start the way to progress, Pakistan will have to reinvent its institutional structure to make it more inclusive and pluralistic. Rule of law needs to be ensured to make everyone equally accountable before the law. And the empowerment at the grass-root level needs to be ascertained to empower every individual to create a pluralistic distribution of political power.

Moreover, there is a need for the presence of civil society institutions so that basic demands of the general population can be addressed efficiently, and also the nascent governing elites do not augment the policies of extractive institutions. Another important factor to determine the growth of inclusive institutions is the presence of independent and autonomous media that plays an important role in the empowerment of society. But this change will take time and will alter the existing institutions gradually.


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