Dercon-ian Homegrown Solutions

Pakistan's problem is not that its elites are 'bad' people who have little concern for anything outside their narrow and selfish interests; it is that they currently do not have the incentive to do otherwise

Dercon-ian Homegrown Solutions

Prime Minister Shehbaz Sharif recently announced the creation of a committee on 'homegrown economic development' for Pakistan. While the newfound emphasis on localisation is certainly a welcome step, commentators are perplexed as to why an initiative on finding indigenous economic solutions is being headed by a non-native: Stefan Dercon – a Belgian-British economist and a former policy advisor to the FCDO (Foreign, Commonwealth and Development Office) at UK's Ministry of Foreign Affairs and the British crown's foremost international development agency. This is an explicitly political entity whose stated objective (as listed on its website) is: 'We pursue our national interests and those of British citizens.' By making such an appointment, it appears that instead of pursuing the 'homegrown' solutions as advertised, Pakistan seems to be, yet again, forfeiting its sovereignty to a global power in exchange for hefty paychecks to a handful of opportunists in the 'policy domain' at the expense of raising our debt to another country. Naturally, this debt will have to be repaid by further squeezing the overburdened working masses. Is this progress?

It is worth probing whether any sort of transparency was adopted in populating this committee – thus far, all indications point to how the names were drawn rather arbitrarily behind some very thick and securely shut doors. For instance, it is hard to point the finger at who exactly was responsible for nominating the personnel on this panel? (It's a wholly different matter as to whose brainchild it was in the first place with a sense of urgency and desperation). On what basis were these members selected while others who were equally (or perhaps more) deserving candidates in terms of qualifications and work experience were omitted? Most importantly, what work have they done in Pakistan that is current, nuanced, and actually attuned to local issues and concerns? 

Of equal concern: what are the terms of their contracts – particularly how much are they being paid by the government of Pakistan, especially if we are drawing further loans to pay them in our current fiscally constrained environment with a new International Monetary Programme (IMF) due to kick off? If past experiences are anything to go by, these distinguished gentlemen could easily stand to make a windfall in the daily range of £3,000-£5,000.

With all democratic norms having been pushed to the backburner, a massive gulf currently exists between those in high-level 'committees' and the people they are allegedly generating policies for

A rudimentary search for Stefan Dercon shows that he has earned plaudits for his theories on 'elite bargains' – implicit agreements between those in and around the corridors of power about policy orientations and growth/development paradigms – which, in the case of Pakistan, he claims are structured in a manner that promotes personal wealth accumulation over genuine collective prosperity. The lack of transparency in the 'homegrown' committee that he himself is heading, however, ironically seems to be in line with that spirit. If we talk about homegrown experts, the Pakistan Institute of Development Economics (PIDE) and its affiliated members have spent the past three to five years producing detailed, cutting-edge research on rethinking major aspects of Pakistan's economy including energy, banking, industry, agriculture, domestic commerce, fiscal policy, regulatory excess, urban development, trade facilitation, real estate, civil service, stock exchange, civic participation, and political contestation – all with a central and exclusive focus on unearthing pathologies specific to Pakistan. Despite these achievements, and the fact that it is the only national-level economic think tank currently operating in Pakistan, no engagements were made with it at any stage of the 'nominations' process, which begs the question of who this initiative is ultimately serving.

Another important consideration in this entire situation is the problematic idea of 'experts' leading reform initiatives in a top-down fashion with the backing of the powerful. Pakistan's problem is not that its elites are 'bad' people who have little concern for anything outside their narrow and selfish interests; it is that they currently do not have the incentive to do otherwise. This is the result of structural constraints linked to the preservation of extractive colonial-era state configurations.

The alternative to this 'technocratic' control is the bottom-up model of development that Nobel Laureate Amartya Sen argued for: to promote five kinds of freedom, namely economic, political, social, transparency related, and protective security. These have to do with fundamental reforms to key institutions and organs of government with the objective of enhancing autonomy for ordinary citizens, consequently allowing them to actually participate in markets and shape the decision-making processes that affect their lives. The exact opposite of this is currently the case in Pakistan. With all democratic norms having been pushed to the backburner, a massive gulf currently exists between those in high-level 'committees' and the people they are allegedly generating policies for.
 
Considering this, what information are 'homegrown' solutions being generated on? Econ-101 textbooks or the geopolitical interests of big multilaterals? Perhaps a combination of the two.

Alarm bells should be ringing!

Editor's Note: Professor Dercon is no longer employed by the Foreign Commonwealth and Development Office, having left the organization in 2022.

The author is a Research Fellow at the Pakistan Institute of Development Economics