Capital suggestion: Why do nations fail? | Farrukh Saleem

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Why is South Korea rich (per capita $25,000) and Pakistan poor (per capita $1,100)? In 1960, per capita incomes in South Korea and Pakistan were $900 and $300 respectively. Why has the per capita income in South Korea gone up by 28 times over the past 57 years? Why has the per capita income in Pakistan only gone up by 3.6 times over the same period? Is it culture, weather or geography?

In 2012, Daron Acemoglu, a Turkish-American economist, and James Robinson, a British political scientist, published a 546-page book titled ‘Why Nations Fail: The Origins of Power, Prosperity and Poverty’. Why is South Korea rich and Pakistan poor? The book has the answer. Is it culture, weather or geography? The book has the answer.

Why do nations fail? Is it because of geography, climate, culture or religion? The book concludes that nations rise and fall not because of their geography, not because of their climate, not because of their culture, and not because of their religion.

Why do nations fail? It is not about 5.9 million tonnes of copper ore at Reko Diq. It is not about 41.5 million ounces of gold. It is not about ‘huge’ reserves of iron ore in Chiniot. It is not about 175 billion tonnes of coal at the Thar coalfield. It is not about the ‘game-changing’ $16 billion LNG agreement with Qatar. It is not about the 412 million tonnes of ore at the Saindak Copper-Gold Project.

Why do nations fail? The reasons are man-made not God-given. Daron Acemoglu and James Robinson recommend focusing on three leadership characteristics: greed, selfishness and knowledge of history. Pakistan’s future economic prosperity depends on these three leadership characteristics. Why do nations fail? Are our leaders greedy? Are our leaders selfish? How well do our leaders know history?

Pakistan’s economic prosperity, according to Acemoglu and Robinson, depends on, “How many people have a say in political decision-making.” Pakistan’s economic prosperity, according to Acemoglu and Robinson, depends on whether, “A small group of people control political institutions and are unwilling to change.” Pakistan’s economic prosperity, according to Acemoglu and Robinson, depends on whether our institutions are ‘extractionary’ or ‘inclusive’.

Dynastic politics is about families wherein, “Several members of a family are involved in politics, particularly electoral politics. Members are related by blood or marriage, often several generations or multiple siblings are involved in politics.” Dynastic politics and poverty coexist. Dynastic politics and illiteracy coexist.

The 2017 census in Pakistan has enumerated 30.2 million families. And how many families have a say in political decision-making? Answer: 1,174 families. We have had ten general elections over the past 45 years. Yes, there are dynasties in democracies – Bangladesh, Indonesia, Philippines, India, Sri Lanka and Pakistan. Empirical models have determined the share of dynastic politics in various countries: US six percent; Argentina 10 percent; India 28 percent; Mexico 40 percent and the Philippines 70 percent. According to the Institute of Development and Economic Alternatives, “On average, approximately two-thirds of the elected [Pakistani] legislators belong to approximately 400 families.”

Why do nations fail? The reasons are man-made not God-given: exclusionary politics and extractionary institutions.

The writer is a columnist based in Islamabad.

Email: farrukh15@hotmail.com Twitter: @saleemfarrukh