Pakistan's institutions are crumbling

The importance of institutions for economic development and growth has long been recognised — for example, in the writings of Adam Smith and, more recently, exemplified by Douglass North's 1993 Nobel Prize.

- SAEED AHMED

Governance quality and perceptions of the political, economic, and policy climate are critical in shaping overall conditions for investment and growth. Given the mobility of international capital, strong institutions play a major role in attracting and retaining investment inflows.

Pakistan's declining growth and investment trends are largely attributable to the continuous decline of its institutions. This is reflected in poor governance assessments in the World Bank's 'Worldwide Governance Indicators'.

When benchmarked against regional counterparts, Pakistan's performance is subpar. For instance, in 'government effectiveness', India's percentile rank was 67.9, while Pakistan lagged at 30.6 in 2023. In 'political stability and absence of violence/terrorism', Pakistan's rank was a mere 6.6. Similarly, in 'regulatory quality', Pakistan's score of 19.8 was well below India's 47.2.

Governance in Pakistan's public institutions has reached a critical point. The political leadership remains oblivious to the fact that their actions, motivated by political ambitions and vested interests, are eroding key state institutions — parliament, judiciary, and executive. Consequently, Pakistan is trapped in a low-growth, low-investment cycle, facing insurmountable development challenges. To illustrate, the economy grew by just 0.98 per cent in the first quarter, well below the projected 3 per cent for this year.

The current self-styled democratic government, often called a 'hybrid regime', continues to undermine civilian institutions. Parliament, a key state organ, is in a precarious position.