Serving as the dean of a premium business school in Pakistan, Dr. Ishrat Hussain interacted with students graduating from the most elite private schools in Pakistan as well as CEOs and owners of elite corporations, multi-national companies and large-scale businesses. Therefore, with his vast experience that involves heading the central bank and a premier business school, he is endowed with enough knowledge and insights to write a comprehensive book on the elitist state. The last chapter in the book provides a detailed analysis of the last two decades (2000-2019), which the author spent at institutions, both government and higher educational, in Pakistan.
The book begins with a chapter on the growth and structural change in the economy of Pakistan. This chapter outlays the transition from an agricultural economy at the birth of Pakistan, which accounted for more than 50% of GDP, to an economy dominated by the services sector in the mid-1990s. The chapter discusses various eras that shaped the economic history of Pakistan. A chapter on the production base follows which details the development of the agricultural and industrial sectors in Pakistan. It emphasizes on the lack of reforms as well as the lack of innovation and competition in the critical sectors. For instance, the industrial policy in Pakistan has favoured the elite as it has not only been highly protective of selected industries but generated large private benefits. The macroeconomic foundations lay out the challenges in setting the fiscal, monetary and exchange rate policies throughout the history of Pakistan, leading to volatility. The book emphasizes on fiscal indiscipline across various eras leading to high fiscal deficits and consequently challenges in economic management.
The author includes chapters that discuss the importance of human capital such as health, education and poverty alleviation as well as chapters focusing on physical capital in Pakistan. This provides the reader with valuable insights into the level of inequality in the country as well as the impact of poor availability of resources on labour productivity and economic growth. The chapter on physical capital highlights the constraints due to the low quality of infrastructure with the help of detailed analyses on various aspects of the infrastructure that include roads, telecommunications, irrigation and energy.
The author ensures a holistic approach in discussing the impact as not only challenges are put forward with a detailed historical analysis on each issue discussed but policy reform recommendations are also incorporated. The author follows up with a chapter on the external account of a country that includes a discussion on foreign trade, external debt and resource flows. The author mentions the structure of trade, consisting of a narrow base, the extremely slow approach towards trade liberalization and the chronic balance of payment crisis as weaknesses in the trade policies. In essence, the author ensures that not only a detailed historical context be provided to the reader but discussions on cross-country comparisons and future prospects are also provided to readers accompanied with rounded insights into critical issues.
The author continues with a chapter detailing Pakistan’s economic performance. This primarily discusses the economic conditions of Pakistan over time and includes comparisons against best-practice countries in East Asia as well as the development of Pakistan in the context of South Asia. It brings out paradoxes in economic performance as poor trends for certain indicators have weakened the economy. The author emphasizes on the role of the elite groups as they have maximized their rent seeking activities. In one chapter, the author lays out the economic and social agenda for the 21st century. This chapter forms the backbone of the book as it involves several recommendations for key institutions in Pakistan. The author concludes the book with a chapter titled ‘The Elitist State’. This is mainly an addition to the first edition. This chapter emphasizes on the mechanism for rent-seeking and wealth accumulation adopted by the elite groups and the distortions created as a result.
The book is highly recommended as it is an excellent resource for any individual interested in obtaining well-rounded insights into the economic conditions of Pakistan and the evolution of the economy since the birth of Pakistan and that too from a source regarded as the most experienced and most authentic voice on economic issues in Pakistan. However, it would have been more interesting if the information and statistics in each chapter were updated to more recent years instead of putting them all in one concluding chapter. This disconnect with issues faced in recent years is one disadvantage that must be addressed by the author in subsequent editions.
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