G.

C University Lahore
Department of Political Science
B.A/ B.Sc (Hons)
Year IV Semester VII
Course Name: Political Economy of Pakistan
Course Code: PS: 4105
Course length: One Semester (16 weeks)
Credit Hrs 03
Course Leader Muhammad Naseer Ahamd Taib
Course Description:

Political economy (P.E) is one of the subjects that deals with economic process, institutions
and their roles in shaping and re-shaping of the societies. This course also throws light upon
the relationship between class structuring and Economics. It also highlights how the
economic changes translate the socio-political settings of a society. Pakistan’s Political
Economy needs some theoretical basis to understand its socio-political and economic
settings. Political Economy is considered as one of the best technique to understand state as
institutions, its structures, functions and their relationships. It empowers students to have
critical accounts about state and its institutions in different economies.

Pre-Requisite: Dynamics of Pakistan Politics (PS-359)

Co-requisites: Elitist Politics and Political development in Pakistan (PS-4106)

Course Goals & Objectives:

Goal 01: Define and explain Political Economy.

Obj 01: Define Political Economy. Explain its scope.
Obj 02: Explain the Economy of developing countries
Obj 03: Discuss the state structure and Political Economy
Obj 04: Explain the nature of Pakistan’s Political Economy.
Goal 02: Describe and explain Different theories to understand Political Economy
in Pakistan.
Obj 01: Explain Mercantilism, Capitalism, Colonialism and Socialism.
Obj 02: Sketch a brief view about economy and its role in the political
orientation of state and society.
Obj 03: Differentiate between colonialism and capitalism and their political
orders.
Obj 05: State the reasons of the survival of Capitalist Economic order in the
World.
Obj 06: Discuss the Political Economy of growth, redistribution and poverty.

Goal 03: Discuss, Explain and analyze the issues in Pakistan Political Economy.
Obj 01: Discuss the Politics of Economic reforms in Pakistan.
Obj 02: Explain Political Economy of Pakistan: class, state and transition.
Obj 03: Discuss the impact of agricultural modernization.
Obj 04: Critically analyze the role of modernization, urbanization and
Industrialization.
Obj 05 Analyze the Political Economy of industrialization in Pakistan.

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 Obj 06: Analyze the political economy of foreign aid and trade.
Obj 07: Critically analyze the role of MNCs, NGO and non state actors
Obj 08: Analyze Political economy of defense in Pakistan.
Obj 09 Analyze Political Economy of Lawlessness in Pakistan

Time Management Matrix

Goal No. 1 20% 4 week
Goal No. 2 30% 4 week
Goal No. 3 50% 8 weeks

Assessment Criteria:
∑ Semester Work (Assignment + Quiz/class test + Class Participation): 15% + 20%
∑ Assignment 5%
∑ Final Term: 60 %(Objective + Subjective): 10 %.+ 50%

Evaluation is based on how well the students will perform in class, and other activities.
Performance of the students will be monitored through out the semester. The examination
will test the student’s understanding of the various concepts discussed during the course. The
written examination requires students to complete a theoretical paper covering all aspects of
the course.

The students will be working on assignments individually as well as in team (group)

Quizzes will be uniformed and can be taken randomly in any class.

GGA Mapping

GGA’s 1 2 3 4 5 6 7 8
Goals
1 √ √ √ √ √ √ √ √
2 √ √ √ √ √ √ √ √
3 √ √ √ √ √ √ √ √

Recommended Books

1. Issues of Pakistan Economy S. Akbar Zaidi

2. Political Economy of Decentralization by S. Akbar Zaidi
3. Political Economy of Pakistan by Pandive Naik
4. Capitalism and modern social theory by Anthony Giddens
5. Profit over people by Noam Chomsky
6. Fredric Jameson by Adam Roberts
7. Colonialism/Post colonialism by A. Lumba
8. The Political Economy of Lawlessness by Azhar Hassan Nadeem
9. Military INC. military Economy by Ayesha Siddiqa
10. Slected Essay on the Political Economy of Pakistan by Dr. Qais Aslam

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What is an approach? What are the different approaches to study of Political Science?
Introduction:
∑ Science is a method to conduct a research [Hypothesis, observation, data collection, date
analysis, theory and law]
∑ There are different ways to reach to the subject.
∑ Now interdisciplinary studies have been given extra care.

Meaning of an Approach:
Dictionary says’ an approach is the act of drawing near an object from a given point or
direction.
In Political Science;
It means the criterion or perspective adopted by a political scientist while studying any
political phenomena.
Broadly Speaking approaches are classified into [1. Traditional 2. Modern]
Traditional: [they are not traditional because scientific method is applied in all the below
subjects.
1. Historical [historical evolution of various political institutions and historical documents in a
descriptive method].
2. Geographical: it mainly deals with geographical factors (Soil, climate and natural resource)
and their impacts on human behaviour or state behaviour.
3. Philosophical: discourse analysis of ideas and philosophies of great individuals.
4. Legal Approach: legal framework to make a textual analysis of state and its various
institutions.
5. Economic: it is a common observation that economic conditions of state have great and
deep influence on individuals.
6. Psychological: human nature, structure of brain, nerves system.
7. Sociological: social factors and cultural outlook
8. Institutional: this approach mainly concerned with the state and its various institutions.

Modern:
1. Behavioural: it mainly deals with how the [system, group of institutions or individual]
behave.
2. Integrative: in this approach it is believed that the subjects of Political sciences are very
complex and dynamics. So, it is very hard to apply a single approach. So, they implied
different tools and techniques to make a micro analysis.
3. Power: This covers that every activities in political science is a sign of ‘Power’. So, they
political scientists use ‘power framework’.
4. System: in this approach ‘system framework’ is applied understand different components of
a state or society. In system approach it is studies that there are different components, their
structures and functions and they co-operations.

Conclusion:
1. Truth does not exist in social science
2. It all about perspectives.
3. If we trace out facts in arguments, we will trap in one perspective and become a pray of
that.

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Lecture 1:
Introduction:
∑ Means of Labour………Instruments of Production (past by hand Now machine)-------
--Production-----------profit------------share.
∑ Human needs; Food, clean drinking water, clothing, shelter. (More Security)
∑ First part mainly deals with the conceptual understandings of the subject of
Political Economy.
∑ After the end of Cold War, every subject has been passing through the process of
change.
∑ Cold War discourses
∑ Post- Cold War discourses.
∑ Political Economy is a rapidly expanding field of inquiry in Political Science.
∑ Economic assumption to understand political and social behaviour.
∑ In social sciences truth does not exist. It’s all about perceptions.
∑ It is derived from Greek Word “ Politeia Oikonomia”
o Politeia means society organization/state
o Oikonomia
ß Oikos (House hold affairs)
ß Nomos(Law)
∑ This is the age of interdisciplinary studies. This paradigm shift took place in the
recent past. It has been concluded that in social sciences there are different
perspectives and it is not good to have the study of one perspective because that
leads toward the intellectual death.
∑ Political economy is a unified field of (Political science, Economic and History).
∑ It is systematic inquiry of wealth and its influence on decision making.
∑ The study and use of how economic theory and methods influences political ideology
[set of ideas regarding the political settings of the society or state].
∑ In a broader perspective, it is the study of
o Individual [ Basic unit of any system]

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 o Society [ individuals relations]
o State[ political economy of interstate relation]
o Market [market fix the position of state at various level. Some at core
position while other would be placed at peripheral or Sami peripheral.
o The relationship between them
∑ It also helps to understand how and in what ways economic system alter the whole
discourse of the society.
o Capitalists talks about free market and free market is an essence of
democratic settings in a society.
o Socialist’s talks about the controlled economy that ensure centralized
political and social order in state.
v Part B talks about the political economy of Pakistan.

v Hegemonic position of Political Science and Economics have Marginalized new

alternatives. Most of literature you have gone through produced by political
scientist, historian or economist or sociologist. They have explained Pakistan in their
respective context. To expand the horizon of the student, political economy as a
perspective needs to be explained.
v Pakistan is one of the classical case studies to understand political economy as an
approach.
o It had experienced colonial system
o It is traditional society with modern state institutions.
o A state experiencing Neo colonialism in international economic order.

Part C: Definitions:
1. Gilpin [The Political Economy of international Relations]

“It is reciprocal and dynamic interaction of the pursuit of wealth and power”
2. Charles Lindblom [Political Economy and welfare]
“It is the Study of exchange and authority”
3. Peter Blau:[ Exchange and Power in social life]
“It deals with exchange and coercion”
4. Charles Kindle Berger[ The world under depression: 1929-1939]

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 “It is the study of power and money”

Part D: Explanation:
These definitions mainly focus upon;
A: Political environment and its impact on Economic behaviour [individuals, society,
institutions and state]
B: The impacts of market fluctuations on the politics or political behaviours of [individual,
society, institutions and state]
C: Economic policies and their impacts on politics
D: Political decision making and its impact on market behaviour.
Part E: Scope:
This subject has two perspectives to overview the subject matters/contents:
Micro and Macro levels:
This subject mainly deals with all activities [individuals, institutions and state]. So, its scope
is as vast as political Science.
This subject also gives detail description about economic theories and their implication on
state and society.
Focus would be mainly on;
1. State as an institution; [Domestically deals with economy and its relations with
politics; its failure and contributions] and international economic system she is a
great actor.
2. Power: relationship between power and economy.
3. Behaviour of individuals: Financial constraints or position and its role on individual
behaviour.
4. Institutions: Their economy and position in state affairs.

Par E: Conclusion:
It is new approach to understand political and economic behaviours.

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This topic is divided into 5 parts
1. Barter system:
a. It creates cooperation and coordination among different segment of the society. It
strengthens the system of community based society.
b. People of a community were divided on the basis of profession but they all have
respect and share form the community resources and products.
c. They all contribute in different capacities to enhance the income of the community.

2. Feudal System in Europe/Community system in India/ it means there were different systems
across the world. The concept of internationalism was not very famous.This subject got
significant importance after the rise of England as world power and with the process of
colonialism.

3. Classical Adam smith and Ricardo[idea of absolute advantage and comparative advantages]
and their implication in inter-state relation.
a. Absolute advantage refers to the ability of a party (an individual, or firm, or country)
to produce more of a good or service than competitors, using the same amount of
resources.
b. The important thing in Absolute advantage is that others do not have the capacity
to produce the good. In this context she got absolute advantage.
c. Adam Smith first described the principle of absolute advantage in the context of
international trade, using labour as the only input.
The subject raised by Adam Smith in 1776 in his book An Inquiry into the Nature and
Causes of the Wealth of Nation.
d. Comparative advantage refers to the ability of a party to produce a particular good
or service at a lower and over another. This idea was presented by David Ricardo in
1817 his book On the Principles of Political Economy and Taxation.
e. Both have the capability to produce but restrained her not to produce the good in
which she has more cost.
f. Competitive Advantage Theory: Schum-peter school of thought presented this
theory. Company has long experience (Skills and resources) no one compete her
swish watches. They have long experience. So they also have skill, market and
resurces. In this context it has competitive advantage.

4. Mercantilism:
∑ It was a powerful concept of 16-18 century. It was imposed by most of the European states.
∑ This system was evolved in Europe after the decline of Feudal system.
∑ Its main objective was to export more than imports.
∑ This system helped the European countries to develop their economic position.
∑ Adam smith was an economist who presented this idea. He defined this term as
“Mercantilism is a system of Economic Nationalism for the purpose of building a
wealthy and powerful state”.
∑ This Economic policy based on
o National Policy of accumulation of Bullion (Gold and Silver or precious metal)
o Establishing Colony

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 o Merchant Marine
o Developing Industry
o Favourable balance of trade
∑ Impacts of Mercantilism:
o Control Economy
o Centrally control Political system
nd
∑ 2 phase was Colonial Mercantilism
∑ This was the phase when Europe was experiencing Europe-Building.
∑ No open competition
∑ Navigation Act of 1650,’ British limit trade-to trade relation
∑ The Staple Act of 1663,’ Colony can export to European states but through British port.
∑ Import Raw Material and Export Finish Goods.
∑ Military become powerful because of commercial Supremacy.

Colonialism:
∑ It is not a simple term. We employ this term is very simple context as arule by other.
∑ It is very complex traumatic phase
∑ It establishes new political order.
∑ Colonia is derived from Roman language which means settlement
∑ Initially it was used for Roman settlements

Definition:
According to Oxford English Dictionary (OED)
“A settlement in a new country-----a body of people who settle in new locality,
forming a community subject or connected with their parent states.”
AniaLooma in her book colonialism/ post colonialism defines colonialism as,
“It a very complex and traumatic relationship between new comers and
natives”
She defines it at other place as
“Colonialism can be defined as the conquest and control of other people and
land”
Discussion:
1. Forming a community shows subject-master relationship.
2. It is not a good and constructive relationship rather Traumatic relationship
3. Controlling mechanism

How cannibalism would be institutionalized

∑ Disliking toward the native set up
∑ Establishment of colonial political order.
∑ Education system supported them to control

Types of colonialism:
∑ Political
∑ Social
∑ Economic
∑ Cultural

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Impacts:
∑ Political
∑ Social
∑ Economic
∑ Cultural
∑ Educational

Mercantilism and colonial mercantilism:

Capitalism:
Neo-Colonialism:
5: Capitalism
Simply define as ,’ a System where private actors are allowed to own and control the means
of production in accord with own interest and where the invisible hand of price mechanism
coordinates supply and demand in a market in a way that is automatically in the best interest
of society.
Political Economy of capitalism means how and what ways government interfere in market
affairs and set it according to its own interest. It means classical form of capitalism does not
exist cross the world.
Declared Rules of capitalism:
1. Free market
2. Individual freedom
3. Economic mobility
4. Democracy

Un-written rules of capitalism:

1. Capitalism can easily create mafia system.
2. It creates Haves and Haves not
3. Depression
4. Breaking traditional social bonds and create new one like clubs etc.

Now the question is why this system is still surviving. It has the adoptive and adaptive
capabilities.
In Pakistan context: Lost Capitalism: Essays by Dr Zafar Altaf
The focus of the dialogue is the capitalist groups in Pakistan are
1. Landed aristocracy; means controlling the raw material.
2. They are also industrialists/ manufactures
3. They are the markets/ they determine the trends of the market
4. They are the political decision makers
5. They are in bureaucracy
6. They are the importers and exporters.

Another problem with the capitalist class in Pakistan is that they consideration are Greed not
profit like the modern capitalist countries.
6: Socialism
∑ It is a philosophy where means of production belong to the society rather any institution or
person.

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 ∑ Under this philosophy division of resources and labour is very important. Means humans are
also treated like material things.
∑ Application of technology which they have employed to control labour and undermine
labour work.
∑ This basic debate about the deteriorating condition of working class.

The basis of Theories of Marxism:

The material conception of history:
The theory of Class War:
The theory of surplus value:
The Law of concentration of Capital:
The Theory of social Revolution:
This system has some inherent problem with in it.
Conclusion:

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Theories of Political economy:
1. Political Economy in classical tradition.
∑ The classical economists of 18th and 19th centuries were the firstly used the term of
Political Economy
∑ The period by classical political economy cannot be stated exactly.
∑ (Adam Smith, Wealth of Nations in 1776……Johan S. Mill Principles of Political
Economy1848…..Karl Marx as the last classical political Economist 1818-1883)
∑ The discussion on Classical Political Economist can be divided into two parts
∑ The argument for market self-regulation[ it deals with nature of the market and its
relations with the state]
∑ Theory of values and distribution [ Production and use of economic surplus]
2. Neo-classical
∑ The Chicago school is a neoclassical school of thought associated with the work of
the faculty at the University of Chicago.
Their focuses are on;
∑ The Chicago School of Economics is arguably the most successful and influential
since World War II. [ Chicago school of Political economy by warren J. Samuels]
∑ Their focus is on [1: role of institutions on the shaping and re-shaping public choice
and their outcome 2: they are the first who see market competition as endemic
3: they believe that market cannot automatically under produced public goods; they
are some institutional involvement in it. 4: they are against the strong point in which
it has been accepted that government involvement should be required to correct
externalities.
∑ Political activities are motivated by same forces which regulate economic behaviour.
∑

∑The Virginia school of political economy is a term applied to a school of economic

thought originating in universities of Virginia and mainly focusing on public choice
theory, constitutional economics, and law and economic.
3. Modern

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Political Economy of Pakistan as a state: its issues
ÿ State in the context of Political Science:
o Over glorified as a concept in the last century.
o State was created by Man because they were not happy in a state of nature.
o It was established for the welfare of mankind [security and economic development]
o In this situation, why the concept of developed and developing states have been
introduced. It is a big question.
o It means state is not a perfect institution because it was made by a man, not by any
divine power.
o Now state as an institution is under great criticism.
o Politics of state
o Pakistan as a state and its economy.
o Economy of Pakistan makes it a subject of shame rather prides.
o Economic situation of state determine its position among states of the world[ some
are developed, developing and under-developed]
ÿ What are the issues of Pakistan economy that make it developing?
a. Colonial Economy rather capitalist;
b. Extractive institution; leads toward social conflict; Dis-harmony; no collective
choice; individualist approach.
c. Poor Social capital; focus on government job; no private jobs; no development; all
the capital extract for social development will be used on the payment of salaries of
government employees.
d. Poor Market Structures; it is fact only those state developed in the world who
developed their economies.
i. Market does not function independently
ii. State apparatus would be used to create the monopoly of some groups or
institutions.
iii. No saving and no investment
iv. There is wide gap between import and export
v. Poor technology
vi. Gap between saving and investment
1. Cultural issues
2. No incentive from bank. Low rate of return
e. Micro Projects
f. Privatization and its impact
g. Consumer Economy rather producer
h. Sluggish decentralization; in active decentralization.
ÿ Conclusion:
a. Economy of Pakistan made it a fail state.
i. It has colonial economy
ii. It has colonial state institution
iii. Poor relationships between state, society and economy.

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Political Economy of Growth:
Capitalism and underdevelopment. By Ander Gander Frank
Political Economy of Growth: it the idea of Paul A. Baran (his book is political economy of
growth)
How many of us familiar with the idea of developmental Studies.
How can we understand development and underdevelopment?
What is the idea of underdevelopment with in development?
Why other than European countries are not developed. Russia, China, Arabs,
Why big powers wanted to order and re-order world to establish their hegemony in
both good and service sector. They have also controlled the economy of the world.
For us development means westernization while under development means
Asianisation.[mislead them about our culture]
In simple words Growth is referred to a positive change, often over a period of time.
Whereas, Economic growth, is referred to the increase in the market value of the goods and
services produced by an economy over time.
It means when we are talking about economic growth it refers both goods and service.
Paul A.Baran was of the opinion that ‘Actual economic surplus ‘is a cause of growth.
Economic surplus for him was the ‘difference between current output and current
consumption. In the Past this difference was in goods production and consumption and Now
it is existing in the form of services.
It leads towards saving and saving toward economic hegemony of a state.
Saving was because of the technology and economic system.
All this set up press the developing states towards periphery.
The Fundamental question is
Why there is a big difference in economies across the world.
Economic system
Political system
Historical Experience
Market value of goods and services
Control of international market
Cultural experience
All the above variable help us to understand, why some states save enough, invest enough
and developed enough. While on the other hand some states still struggling for their survival.
Why the countries of the world have vast difference.
Pakistan is among those counties who have different experiences. On one side it has
experienced one of the chronic phase known as colonization. While on the other hand it
structural-Functional orientations do not have roots in the soil rather align.
Following are some of the factors that make it under-developed.
1. Institutional development:
a. Nature of an institution matters a lot to determine its goals.
b. In Pakistan institutions are Extractive in Nature. (Colonial Institutions)
c. If the state institutions are not evolved from the soil then they will leads towards
social conflict.
d. Social conflict is one of the main causes of Instability.
e. Instability brings economic backwardness.
f. Dependency
2. Physical Capital:
a. Saving [ Pakistan among those countries who have poor saving]

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 b. Natural resources. [ Pakistan have ample natural resources but due to poor
governance they are wasting]
c. This leads toward economic inequality that inequality is cause of social conflict leads
to Political instability.
3. Human Capital: [ in modern age values of Services]
a. Growth means market value of the goods and services.
b. Services are related to the Human Capital.
c. It is duty of the government to expand ‘professional Bar’ to its maxim extend.
d. Implication in Pakistan.
4. Technology:
a. Paul A. Baran believed that Actual surplus was because of Technology. Produced
more to capture the international market. Industrialization.
b. Now it is exist in the form of service sectors.
c. This technology helps them to save enough.
d. While the situation in Pakistan is very worse than ever before.
5. Market:
a. Market determines the trends of development. (Goods or service )
b. Culture and market trends. Their relationship.
c. Concept of international market and its influences upon the local markets.
Relationship between local and international market.
6. The Culture of underdevelopment. [ Nadeem Qasir, Pakistan Studies: An investigation into
the Political Economy.]
a. Dichotomy between state and society. State modern and society modern.
b. Pre-mature decay.
c. Social disparity
d. Religion and society
e. Corruption.
f. Cynicism /distrust. Among individuals and authority, between centre and federating
units.
7. Over developed state not the individuals. [ Hamza Alvi, The State in Postcolonial Socities:
Pakistan and Bangladesh.
8. The Pakistani military’s interests and their consequences. Unbalancing among state
institutions. Ayesha Siddiqa, Military Inc.: Inside Pakistan's Military Economy.
9. Global powers and their influences. Z.A Bhutto, Myth of independence.
10. Urban way of living.
11. Disarticulated development.
12. Social choice:
a. There is a dichotomy between i.e. Political and social, economic and cultural,
religious and political etc.
b. In such fragmentation a society does not developed its discourse of development.
c. There is no concept of Collective Choice rather social conflicts.
13. Conclusion.

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Political Economy of decentralization in Pakistan:

Introduction:
∑ Local government is a form of public administration which in a majority of contexts,
exists as the lowest tier of administration within a given state.
∑ Why this concept got significance importance in Pakistan during military regime in
general and civil in particular.
∑ After the end of the cold war, capitalist and democratic states of Europe have
announced their policies that they will not support any state that is not democratic.
[Participation and mass mobilization] would be main features.
∑ Let us talk about the broader objectives of local self-government system in any state
then it would be implemented on Pakistan.
o Dissolution of Power from centre to local institution. (Political and economic)
o Political orientation of masses.
o Participation of people

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 o Mobilization
o Construction of the active and progressive civil society.

∑ In Pakistan;

Issues of decentralization in Pakistan:

1. It was engineered for Political legitimacy.
2. It drives its roots from the colonial pattern of Local self- Government rather
democratic concept of decentralization. [Localized patronage structures]. Mean a
classical model of Politics of patronage.
3. A system of Distortion and conflicts.
4. Rule of Bureaucracy.
5. Rural urban conflict.
6. Baradri politics.
7. Decentralization or devolution renegotiates state-subject relationship.

∑ It was engineered and re-engineered since 1947 to attain political legitimacy.

∑ Another important issue regarding debates on decentralization is that Political science
has dominant position to describe decentralization.
∑ In authoritarian and centralized states what would be the position of local institutions.
∑ It has been observed that mostly local self-government was introduced during un-
democratic, un-representative, unelected and military governments.
∑ Why a military government does aggressively supported devolution plans.
…………………...
∑ First time civilian government pursuing local self-government. What would be its
implication and complications?
∑ This subject will help to explore the nature of Pakistani state and class formation.
Normalcy, new normalcy.
∑ How the socio-political and economic order was reorder on the name of
centralization.
∑ Decentralization gave political legitimacy and time/space to the dictators to stele
down their administrative issues.
∑ Devolution system was introduced to attracted democratic world that Pakistan is
enhancing community participation and civil society. [It is a condition by the western

16
 donor states that they will support a state only when there will be community
participation and active and mobilize civil society.]

Historical Development:
∑ In pre-colonial era the concept of local system was there. It was not structurally
stratified and functionally specialized rather they had lose institutional boundaries.
Community system. Collection.
∑ Under colonial Raj statured local system was introduced to collect the revenue. Their
focus was on control and collection.

17
18
 ∑ Pakistan inherited same political order and mentality of the leaders.
∑ Pakistan has inherited steel framed Bureaucratic state structures.

Local self- Government system in Pakistan:

In a Boarder context, three times in the political history of Pakistan, local self- government
system was introduced.
All of them were different in both structural and functional context.
The irony of the local self-government is that they were introduced by non-democratic, un-
elected and authoritarian rulers.
The discussion on local self-government in Pakistan means a dialogue on the military
regimes in Pakistan. It is expanded more than 30 years.

Ayub Khan 1958-1969:

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 October 1958 he took the charge of the state and banned the political activities.
Suspend the constitution and everything went under his control.
In October 1959, he issued an ordinance known as local self-government ordinance. After it,
within two month election need to be conducted.
This local self- government system has two phases. [Rural phase and urban phase]
1. In the first phase of BDS Basic democratic were elected.
2. Second phase started with the introduction of Municipal Administration
ordinance of 1960.

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 Some believe this system was a system that integrated Rural-Urban leadership
while others have different perceptions and they thought it widen the gulf
between rural and urban leadership rather marginalized the mobilized urban
elite.
In a structural-Functional Context, this system has Four Administrative tiers;
∑ At Grass roots level Administrations:

At union council levels 37,959 villages were divided into rural union council while at lower
level in urban areas there were town committees. [Any area having more than 14,000
inhabitants was classified as an urban area while less than that would be declared as rural].
∑ Tehsil council in rural areas while Municipal committee/cantonment Board in rural
areas. A.C was the chairman at Tehsil level
∑ District level council. D.C was the Chairman at District level
∑ Division level Council. Commissioner at division level.

Discussion:
∑ It strengthen military-bureaucratic oligarchy
∑ Create space for new leadership under the flag of military
∑ Public leadership was marginalized through EBDO (Elective body dis-qualification
order)
∑ Over developed military as state institution and at 2nd position was Bureaucracy while
demoes and their leadership were out of state power structure.
∑ Emergence of a new political class; rural politicians.
∑ Emergence of a new economic class.
∑ Green Revolution elite framer strategy.

Zia Ul Haq:
∑ Zia ul Haq took over the charge of the state in 1977
∑ He promised to have election within 90 days
∑ National and Provincial assemblies were dissolved.
∑ New military government was established
∑ LGO (Local Government Ordinance 1979)

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∑ In 1980 LGO got some amendments to implement.
∑ Clear division between Ruler and Urban
o urban structures
ß Metropolitan city 2
ß Municipal corporation 12
ß Municipal committee 146
ß Town Committee 336

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 ∑ Rural structures
ß Union council
ß Tahsil Council
ß District Council

Discussion:
ß Divide the Rural and urban elite
ß Zia has given more consideration to the urban elite as compare to the rural elite.

District Government:
Sr. No Name of Province Total District
1 Baluchistan 32
2 KPK 26
3 Punjab 36
4 Sindh 24
5 State Capital 1
6 Azad Kashmir 10
7 Gilgit 9
Total 138

23
24
25
Election under Musharraf plan of District Government:

In India Resources of Local Bodies are collected as under.

26
27
28
Political Economy of defence:
Introduction:
State is body of institutions having coordination and cooperation to achieve objectives of
states i.e security and economic development. It is only possible if all the institutions are
working in their defined boundaries and jurisdiction.
On the other hand if any institution over developed that imbalances the institutional
arrangements and leads toward dis-functioning.
Unfortunately in Pakistan, since its inception, efforts were made to make Political institution
weak and non-political institutions like military and bureaucracy powerful.
Military in Pakistan has pivotal importance. It is one of the most powerful institutions that
decide the future of the state of Pakistan. Some time it works as a powerful agent to influence
the decision making while on the other hand it rules the state.
World perception:
There are different models with respect to the military and role in Politics.
∑ Democratic Model: in this model all the governmental institutions works under the direction
of the political elites. (USA, UK, Israel etc)
∑ Mixed system. In this system military has been given political role by the constitution but it
limits or jurisdiction has been defined. (Turkey)
∑ Authoritarian democratic: in this model military has been given assign function by the
constitution but when it feels that civilian institutions are not working under their
instruction it brings military coup data. Pakistan and Bangladesh are the classical examples.

Different theoretical understanding regarding political economy of defence:

1. Hamza Alvi: over developed state institution
2. Aysha Siddiquia: misbalancing among state institutions.
3. Hassan Askari Rizvi: Military Bureaucratic oligarchy
4. Military intervention in Pakistan in International political economy context.
Dr Tahir Kamran mentioned about the authoritarian Survey of American foreign policy in his
book democracy and governance in Pakistan as,’’ In many of the countries to which they
extend foreign aid, the army is the best organization in the country and frequently one to
the most forward looking.”

Factors strengthening military Economy:

1. Its colonial role and position.
2. Well-structured institution with defined functions.
3. Concept of Mojahid. Honest instituion
4. In this context ‘Milbus’ that means military capital plays a vital role.
a. Defence Budget. 70-100%
b. Housing Society. DHA and EME
c. FWO construction company
d. Fauji Foundation
e. Weapon selling
f. Defence service to UNO
g. Educational services. Defence University
h. Health services
i. Askari Bank
j. Askari insurance

29
 k. Army welfare trust.e

The institutions that never faces economy crisis and makes arrangement to earn maximum to
strengthen itself never face any problem. Extra money that comes from different sources
would be utilized to control the power structures.
Military men can bribe any individual.
Hide any individual
Force any individual.
Initial phase (1947-1958):
1. Political chaos: After the demise of Quaid, there were political chaos because
a. There were confrontations among various political groups for state power.
b. Between civil-military and political elite
c. Between non-political (civil military bureaucracy) and political elites
2. Divided and Rule:
Yes it is right that divide and rule was the principle that was adopted by colonial
master to rule the sub-continent but after the demise of Quaid, new leadership was
not potential enough to handle all political and non-political forces. In this situation
political un-rest was created in all the provinces of Pakistan.
3. Weaken civil institutions:
a. Army hegemonies state affairs through its personal control of state and politics and
did not left space for political institutions to grow.
b. Ayesha Siddiqa concluded from the writings of Ayesha Jalal, Saeed Shafqat, Hussain
Haqquni and Hassan Abbas that military deliberately acquired its multiple roles and
weakened the state and its political system for its own interest.
4. Bureaucracy- Military oligarchy.

a. Ideally speaking bureaucracy tends to be obligatory institution to the civilian elites

but in Pakistan, since its inception it prefers to be aligned with Military.
b. In 1954 Gulam Muhammad requested Ayub to take up the government at the place
of Muhammad Ali Bogra.
c. Muhammad Ali Bogra (Bureaucrat) as defence minister April 1953 to October 1954.
Then prime minster 1954 to 1955.
d. Ayub khan as defence minister form October 1954 to August 1955 is a clear sign of
collaboration between civil and military bureaucracy.
e. Saeed Shafqat points it out when he talks about Ayub-Mirza ties. Sinkander Mirza
gave 2 time extensions to Ayub khan 1954-1958. When Mirza thought that the then
P.M did not extended Ayub for third time, He imposed Martiala.
5. Political aggregation:
a. Defence minster

30
 b. Foreign Affairs
6. Defame Political elite:
a. In-competent
b. In sincere
c. Corrupt
d. Driven by Greed.

Ayub Khan 1958-1969:

Ayub’s Profile:
Profile:
o Mr Ayub was born in 1906.
o He got commission in army in 1928.
o He was first C-In-C (Commander In Chief) in country’s arm in 1951.
o In 1954 Muhammad Ali Bogra appointed him as his Defence Minister.
o Imposed Military Rule in 1958 and became the 2nd president of the country.
o Ayub continued his predecessors' policy of an alliance with the United States during
the Cold War, joining CENTO, and allowing the U.S. and Britain access to facilities
inside Pakistan, most notably the airbase outside of Peshawar, from which U-2
intelligence flights over the Soviet Union were launched.
o After defeating Fatima Jinnah in the controversial presidential elections of 1965,
Ayub's standing began to slide amid allegations of widespread vote rigging
o Died in 1975

3 principles:
Dr Tahir Kamran in his book Democracy and governance in Pakistan classified this era as an
era of praetorianism:
Praetorianism means excessive or abusive political influence of the Armed Forces in a
country.
o Accountability
o (EBDO) Elective Bodies Disqualification
o About 7000 individuals were relegated to ignominy/humiliation through
EBDO in 1959 But Hussein Shaheed Suharwardy, Qazi Isa and Sahibzada

31
 Hassan Mehmud opted to face the trial. Hence they were arrested and faced
prosecution.
o Control of Media/ Military State narrative
o Ayub Khan made a best use of media to malign the politicians.
o In 16th April 1959 A martial law ordinance empowered government to take
over newspapers which published or contained matters likey to endanger
the
ß The defence, external affairs or security.
o Public safety ordinance was executed with letter and spirit to control new
items.
o 1963 press and publication ordinance was promulgated to patriotism. No
subject was allowed to be published that was beyond the context of this
subject.
o Bengali Under-representation in National politics.
ß Once under Ayub regime step was taken to have national
consensuses on the issue of Tashkent Declaration. 700 personal
attended the conference. Only 21 were form East Pakistan.
ß Most of the members of Ayub cabinet were from West Pakistan.
Bengal was military colony of West Pakistan.
o Grass Root democracy in the form of Basic Democracy)

Methodologies:
o Appointment of Retired Military officers on important positions.
o Civil Bureaucracy given extra consideration in local affairs.
o Cleansing of Politician at national level.
o COII (Council of Islamic ideology). Dr Fazal was its directory. Controversy on his Book title
Islam. No conservative Mulla was its member. Technocrats form judiciary and bureaucracy.
o American support. 1959 Mutual defence agreement.
o Industrial boom.
o Green Revolution and capitalization of agriculture.

Out Come:
o Military as the only institution of Power. Military was the state of Pakistan.
o Infusion of military officers in different departments of Pakistan. They not only hegemonies
the governmental rather other institutions of Pakistan.

Zia Ul Haq: 1977-1988:

32
Profile:
He was born in 1924.
He joined Commission in Indian army in 1943.
In 1976 he was appointed as chief of army staff by Z.A Bhutto.
He died in 1988 in Air crash.

Containment and consolidation of power policy:

∑ Disqualified of politician by military court in the name of accountability. 180 members of the
last parliament were disqualified. Political underdevelopment.
∑ 8th Amendment to counter P.M.
∑ 1985 revival of democracy for economic assistance.
∑ Non-party election.
∑ Appointment of retired officers.
∑ Military council.
∑ National Security Council.
∑ Fuji Foundation.
∑ Use religion for his interests.

Pervaiz Musharaf 1999-2010

Profile
He was born in 1943 in Delhi India.
He joint commission in Pakistan army in 1961.
Mr. Nawaz Sharif the then P.M appoint him as chief of army staff in 1998.
Objectives:
Economic revival
Poverty alleviation
Political re-structuring
Devolution of power at grass root level
To achieve these objectives he has given 7 point agenda.
1. Re-building National confidence and morale.
2. Strengthen the federation/ Removal inter-provincial disharmony.
3. Revive the Economy
4. Ensure Law and Order situation in the country
5. De-politicize state institutions.
6. Devolution of Power.

33
 7. Ensure Accountability.

Steps to strengthen his position:

NAM (National Accountability Buru) 1999
District Government system.2001
Referendum 2002
General Election 2002 and PML(Q)
17th Amendment 2003 (B.A) Education.

34
Political Economy of Corruption in Pakistan:
Introduction:
∑ Corruption is a universal curse around the world and exists in all the countries as a common
phenomenon.
∑ Its degree and nature varies from state to state.
∑ Corruption is a two-way process, involving members of both the public and private sector, or
a “giver” and a “taker” who are engaged in illegal, illegitimate and unethical action.
∑ The concept of economic rent (or monopoly profit) occupies a central place in the literature
on the subject of corruption.

Definition:
The World Bank and other multilateral institutions refer to it as:
“Corruption means the abuse of public office for private gains. It involves the seeking or
extracting of promise or receipt of a gift or any other advantage by a public servant in
consideration of the performance or omission of an act, in violation of the duties required of
the office”.
Asian Development Bank (ADB) is the “misuse of public office for private profit or political
gain.”
Formula presentation of Corruption:
Corruption = (Monopoly) + (Discretion) – Accountability or in abbreviated form as:
C=R+D–A
The equation states that the more opportunities for economic rent,
(R) exist in a country, the larger will be the corruption. Similarly, the greater the
discretionary
powers (D) granted to administrators, the greater, will be, the corruption. However, the
more
administrators are held accountable (A) for their actions, the less will be the corruption,
and hence a
minus sign in front of A.

35
Article by Dr. Imran Ali
Political Economy of industrial development in Pakistan:
Introduction:
∑ The fundamental question in this regard is “Why have private industrial activities fail to take
off a significant scale in Pakistan”.
∑ It is unprepared to meet the local as well as global challenges.
∑ Private industrial development in Pakistan has a mixed track record.
1. Variant industrial policies.
2. One of the reasons behind industrial backwardness is that policies were
designed to give advantages to the elite and special group.
3. Secondly the role of foreign aid in disorienting industrial structures.
4. Depend upon state patronage (state creates monopoly of some group)
5. This sector is prone to structural deficiencies.
6. Over concentration on textile. Yes it is right to have specialization but it must
be top in every state policy. In Pakistan textile was given special consideration
but shortly it suffered because of the above factors.
7. Defective public infrastructure and unfavourable investment climate.

∑ This dialogue manly covers

1. A historical overview of industrial development in pre-colonial and

colonial era.

2. 1947-1958 Political unrest and establishment of stable government.

3. 1960’s Short term industrial policies and its impact on Pakistani society
and state.

4. 1970’s Nationalization policy and its impact on state structuring of

Pakistan

5. 1980’s liberalization

6. 1990”s struggle for power and restoration of stable political order

7. 2000’s Terrorism, political instability

∑ Historical underpinning of industrial development in Pakistan:

∑ Pre-colonial:
1. 16th, 17th and 18th centuries have deep impact in the world politics. In India 18th
century brought a social revolution that has impacted it every spheres of life. There
was a great violence and instability.
2. Peasant and lower Zamindars gather against the authority.
3. With the displacement of old elite, a new era of patron-client relationship begin to
strengthen the feudal system.

36
 4. There was connection between raw material (agrarian product), industry (small
scale) and market (local). Industry was quite enough to meet the demands of the
local market.
5. They fail to capitalize their industry to expand their scope and equipped with
modern technology and innovation. Even they were making innovation in their
respective field.

Colonial formation:
∑ Colonialism is a system through which the whole Indian society was re-order to strengthen
the roots on the British in the sub-continent.
∑ Patronage based model of governance was introduced by them. There was not merit in their
system.
∑ They consolidate power with the help of the civil military elite.
∑ This system divided the whole society between Patron and Client.
∑ New industry was developed at small scale and forced the labours special those who were
busy in their home or cottage industry to work in the field
∑ It leads to dependent economy.
∑ Discouraged industrial and urban development. Focused on rural development. They also
strength rural elite rather urban mobilized elites.

Post-colonial:
Z.A Bhutto rightly said in his book ‘myth of independence’ independence of Pakistan is just a
myth not a reality.
∑ The unfavourable inheritance:
Partition of India proves to be watershed for industrial and economic development in
Pakistan.
It also leads toward industrial shock in the form of [out migration of merchant, insignificant
industrial and manufacturing development]
∑ Migration of commercial group:

80% industry belong to non-Muslim

80% foreign trade controlled by them
In Bengal situation is more dismal [few Muslim were engaged in trade or industry]
∑ A weak industrial base:

After independence only 1% was contributed by industrial development.

There was total absence of modern industry.
41.1% small scale [flour, rice, food grain, cotton ginning]
1. [Long standing structures remained unchanged]Under colonial Raj
subcontinent got orientation that disorder the whole set up and push state and
society into new network of state and its institutions which helped the colonial
masters rather natives.
2. From historical evidences one can easily trace out that the initial conditions
which were the hindrance in industrial development such as low level of
urbanization and out-migration of bourgeois at the time of independence.
3. At the time of independence different documented ways were used by the
elites to secure their interests.

37
From 1947-1958:
This period has mixed experiences. On one side there is boom of economic development
while on the other side there was an economic death.
Initially, due to outmigration of the manufacturing and industrial class, market goes down.
During (25 June 1950 – 27 July 1953) Korean War, there was constant increase of raw
material export in Pakistan. There was increase of price in international market. Traders
melded lot of money.
1949-1950 the growth rate was 34%
1954-1955 the growth rate was also 34%
While in 1959-1960 it was just 12%
During this era PIDC [Pakistan industrial development corporation] was established to
regularize the trade. [Pakistan Industrial Development Corporation (PIDC) was originally
established as a Central Corporation under the PIDC Act, 1950(XLV of 1950)]
This helps the government to control the foreign exchange and issue licence. This gave
powers to bureaucrats to regulate economy.
They created monopoly of the few organizations such as Adamjee, Saigal, Amin and crescent
etc.
Absence of open competition among the organizations.
The focus of such policy was individualistic rather collective. So, it discouraged collective
action and favoured individual and created the monopoly of few.
From 1958-1969:
Ayub Khan liberalized the economy that gave space to the new investors but it was
dominated by the big industrial companies.
A strategy was developed by the government to control the monopoly houses. Banks and
insurance companies were given ample importance to control monopoly houses.
1: situation of the Banks:
To achieve this objective PICIC [Pakistan industrial credit and investment corporation] was
established. Under this 17 banks were incorporated but out of them 7 were controlled by the
monopoly houses. These 7% were controlling 60% of total deposit while 50% loan. [Means
they were leaving space for others to grow.
2: situation in the insurance companies:
While in 1969 there were 47 insurance companies were established but out of them14 were
controlled by the monopoly houses. They also poses 50% share of the total assets.
3: representation in the financial institutions
These seven monopoly houses do not only controlling the economic activities rather
representing in important governmental financial institutions. [in different boards of PICIC
and foreign aid and loan disbursing companies]. In 1970 there were 37 monopoly houses but
13 were controlling the 70% of the total amount.
4: Green Revolution and its impact:
It capitalized the agricultural sector and marginalized the small farmers. It also encouraged
the 20 families.
Land reforms and its reality?
From 1969-1975:
1970 election not only broke up Pakistan as a signal nation rather set back large scale
industrial development in Pakistan.
Z.A Bhutto and nationalization:
Bhutto made an alliance of Upper peasant of Punjab got power under the Green Revolution,
Landed magnates of Sindh and socialist intelligentsia.
1. Nationalization of the big industry. Discourage private and foreign investment.
2. Imposition of state own enterprises on agricultural trade. (cotton, rice and wheat)

38
 3. Nationalized intermediate level of agro based industry and controlled by state.
4. These police brought conversion from feudal to industrial capitalist class.

From 1975-1989
∑ During this period there was Afghan War. Pakistan was supported by western powers.
∑ During this period incentives have been given to the industrial class.
∑ Textile got importance. New investment policies ware design to strengthen textile lobby.
∑ 2/3 exports of Pakistan was textile based.
∑ There was lack of diversification in textile.
∑ Bad loaning portfolios become a cause of Bankruptcy of Banks and financial institutions.
∑ Some of the corrupt and default enterprises owner entered in politics such as (1: Sharif of
Ittefaq group, 2: Chaudhary of Gujarat and 3: sons of generals). They were given space by
the military elite to get political legitimacy.
∑ Non state actors got importance.

From 1990-1999
∑ Liberalized the economy to attract foreign investment
∑ PDP (privatization and de-regularization Programme) was adopted to create balance
between Public and private sectors.
∑ During this period private sector got share (1988: 48% while in 1999 was 57%)
∑ Private investment was increased up till 8 to 10 % of the GDP ( increase 4 time)
∑ 60% of export was textile based
∑ 7% increase per year in cotton production
∑ 3% increase in cloth production
∑ Pakistan captured 2% of world market in textile.
∑ Sugar industry got state patronage during this period. (1988: there were 45 sugar mills and
in 1999 there were 75 sugar mills)
∑ During this period sugar got ample importance than rice, wheat and even cotton. Pakistan
became 4th largest sugar producing country in the world and 5th in yield.
∑ Nawaz shrif made sugar production as centre of economic activities. (Banks and DFIs
development financial institutions) were busy to support sugar industry.
∑ 5 cement factories were privatized to mian Mansha who got MCB. Second beneficiary group
was Schon Group (Pak-china fertilizer, National Fiber Third Sikandar Jatio got Metropolitan
steel, Zeal Park cement and shikarpur rice
∑ Corruption and political unrest had slowed the process of economic development.[ Nawaz
got was dismissed on lack of transparency on privatization while Bebi govt. on high
corruption charges.]
∑ Outstanding loan was (1988: 80 billion while in 1999 that was 300 billion)

From 1999-2010

1. Pakistan was ranked third in world banking profitability.

2. The IT industry was valued at around $2 billion and employed around 90,000
professionals.

39
3. The CNG sector attracted over $70 billion in investment in the past five years and created
45,000 jobs.
4. The telecommunications sector attracted around $10 billion in investments and created
over 1.3 million jobs.
5. Industrial parks were set up throughout the country for the first time.
6. Mega projects such as the Saindak, Rekodiq, marble production, coal production, mining
and quarrying were pursued.
7. Foreign reserves increased from $700 million to $17 billion.
8. The Karachi stock market went from 700 points to 15,000 points.
9. The industrial sector registered 26 per cent growth.
10. Textile exports in 2007 were worth $11.2 billion

But the bed point was agro industry was discouraged. Electricity crises and inflation
brought the country down in industrial sense. During Musharraf time IT got significant
importance while other industrial sectors were kept behind.

There was over development of public sector as compare to the industrial sector.

2008 to 2015:

40