Inclusive Institutions and Progress go Hand in Hand

Rabi Chandoor

Institutions around the World:

In a famous book, “Why Nations Fail,” Daron Acemoglu and James A. Robinson have focused on the causes of the failure of different nations around the world. They have asserted that institutions around the world, be they political or economic are mostly of two types i.e. extractive and inclusive.

Countries with extractive institutions are governed by aristocrats, autocrats, dictators or monarchs. Political and economic progress in such countries has always seen a downward trend due to the arbitrary use of power by a handful of elites. Political institutions do not have the voice of the public as they do not allow them to freely participate in the political process. Therefore, people at large are not able to have desired laws and policies which in turn change their economic outlook. Sometimes, they are even confiscated of a free and equitable environment that is necessary to utilize their raw talent. Such people who have been devoid of freedom and opportunity cannot aspire to take a great leap forward.

On the contrary, countries with inclusive institutions have a truly democratic environment. The perks of these institutions can be gauged from the fact that the people do not have to make a compromise on their freedom as there is a larger check on the arbitrary powers of the executive. In return, people enjoy an environment with a great level of opportunities and have a greater say in the laws and policymaking. With freedom and a sense of security, people can utilize their abilities to improve their economic conditions. For example, in the west, it was the beauty of inclusive political and economic institutions that Thomas Edison and James Scott made inventions that spearheaded the industrial revolution. Had there not been a peaceful environment and the security of intellectual property rights, they would never have been able to make their inventions useful for the people.

So, it is the institutions that decide the fate of a country. Extractive institutions limit freedom and discourage talent. Whereas, inclusive institutions limit the arbitrary power and encourage a peaceful and progressive environment.

Institutions in Pakistan:

In Pakistan, one can say that the people have always been deprived of inclusive institutions. Because it has been ruled by a narrow elite that have organized society for their own benefit at the expense of the vast mass of people. The country has been ruled by sporadic dictatorships or the so-called elected leaders, who were either obedient to their individual interests or to the interests of their political party. They never allowed the institutions to prosper, to avoid accountability and transparency. On the contrary, governments have the history of using the institutions for targeted political victimization to satisfy their pride and the vote bank.

Another example of discouraging inclusivity is that people seldom resort to innovation. The government rarely encourages people to innovate. Those who do, are hardly ever appreciated. The problem of not having sufficient brains to innovate is deep-rooted and lies also in the rotten education system of Pakistan. Among many reasons: first is the absence of uniform and an inclusive education system; and second is the irrelevant syllabus, which meets only the requirements of the earlier phase of the industrial revolution. The previous phase of industrialization required professional degrees. But now is the technical age, which demands skill development. Therefore, in the absence of inclusive institutions, both the political and economic progress has stalled. Pakistan has rarely anything to export. It can neither export the legitimacy of domestic political institutions nor the value-added products, hence, it always remains engulfed in a short-term political and economic crisis.

So, what is the way forward? People of Pakistan should stop and think for a while that what sort of institutions they want? A status quo, which seems to be extractive or a modern liberal democracy, which is inclusive and has promised many nations with political and economic prosperity. They should develop a consensus on it. Otherwise even another century would not be enough to steer the country towards progress and enlightenment.

Rabi Chandoor
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