22 nd Annual General Meeting of the Pakistan Society of Development Economists: Messages for the Role of Governance and Institutions in Economic Performance Karim Khan Staff Economist Pakistan Institute of Development Economics, Islamabad
Pakistan Society of Development Economists (PSDE) � An Autonomous Body � A Forum for Academics and Policy Makers � Organizes Conferences and Seminars
22 nd Annual General Meeting of PSDE � PC-Lahore-19 th -22 nd December � Theme: Governance and Institution � 14 Thematic Sessions and Panel Discussions+3 Technical Session+3 Plenary Session along with Inaugural and Business Sessions
Why Government and Institutions? � Commerce and manufactures can seldom flourish long in any state which does not enjoy a regular administration of justice, in which the people do not feel themselves secure in the possession of their property, in which the faith of contracts is not supported by law, and in which the authority of the state is not supposed to be regularly employed in enforcing the payment of debts from all those who are able to pay. Commerce and manufactures, in short, can seldom flourish in any state in which there is not a certain degree of confidence in the justice of government. ( Adam Smith: Wealth of Nations )
What is Government and Institutions? � Governance is defined as the traditions and institutions that determine how authority is exercised in a particular country. � Institutions can be defined as “formal and informal rules and their enforcement mechanism that shape the behaviour of individuals and organizations in a society.
What is Good Governance and Quality Institutions? � Effective Rule of Law � Adequate Protection of Property Rights � Absence of Corruption � Well-advised policy making Serving General Interest � Create Incentives Structure
What is Good Governance and Quality Institutions? A wise and frugal government, which shall restrain men from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvements, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government. ( Thomas Jefferson )
Debate on the Determinants of Growth � Solow’s Growth Theory—Labour, Capital and Technological Development � Geography---Climate, Access to an Ocean Port, Distance of Country from the World’s Major Trading Centers Affect Growth � Institutions and Policy Environment affect Growth
PSDE 22 nd AGM on The Role of Governance and Institutions � Lubna’s Paper → History of the Debate – Geography Hypothesis (Climate, Geology, Topography) directly affect economic performance. – Institutions School → The effect of Geography of economic performance is through its effect on institutions.
PSDE 22 nd AGM on The Role of Governance and Institutions Cont. � Adeel Malik and Jonathan R. W. Temple’ paper → An empirical study on the role of institutions and geography. – Uses Index of institutional quality or high quality governance of Kaufmann (1999) and Tropical climate. – Confirms the role of geography and institutions .
PSDE 22 nd AGM on The Role of Governance and Institutions Cont. Corruption and Income Inequality by Eatzaz Ahmad and Aman � Corruption → Growth and Income Distribution � Corruption → Income Inequality → Adverse Effect on Growth → Increase Poverty � Policies → Reduce Corruption → Improve Income Distribution
PSDE 22 nd AGM on The Role of Governance and Institutions Cont. Good Governance and Income inequality by Saima Shafique and Rashida Haq � Social Welfare ↑ with Economic Growth and Lower inequality � Public Sector plays an important role but its efficiency is lower. � Growth is positively related with income distribution � Good governance would improve growth and Growth improves income distribution. � Good Governance---Efficiency of Public Institutions and minimizing corruption
PSDE 22 nd AGM on The Role of Governance and Institutions Cont. Governance and Pro-poor Growth by Rashida Haq and Uzma Zia � Pakistan has lowest score in the governance indictors � Poor Does not Benefit Proportionately from the economic growth � Good Governance → the reduction of Poverty and Income Inequality
PSDE 22 nd AGM on The Role of Governance and Institutions Cont. Which Institution are relevant than others in inequality mitigation by Dawood � Good quality institutions reduce inequality � Political Stability is more important than democracy in the mitigation of inequality. (Dawood) � Social and Legal institution work together with economic institution in the mitigation of inequality.
PSDE 22 nd AGM on The Role of Governance and Institutions Cont. Institutions, Economic Growth and the Role of Social Capital by Amir Mehmmod and Ming Yu � Institutions → Social Capital → Reduction in Transaction Cost and Increased Efficiency → Economic Growth � Institutions → Social Capital → discrimination against outsiders may prohibit flexibility and creativity → Economic Growth
PSDE 22 nd AGM on The Role of Governance and Institutions Cont. Public Policy Training and Civil Service Reforms by Anjum Khurshid � International experience of civil service reforms should be a guide to local service reforms. � Adherence to the principles of merit and increase investment on civil service training as key contributors to policy process and good governance.
PSDE 22 nd AGM on The Role of Governance and Institutions Cont. � Devolution or Decentralization in Pakistan ( Thematic Session → Mohd. Naeem Ul Haq and Riaz Khan ) � Benefits – enhanced public service delivery, higher growth, lower poverty, better macroeconomic management and better governance, participatory development, transparency .
Conclusion Good governance and quality institutions are viewed as establishing an incentive structure that reduces uncertainty and promotes efficiency— hence contributing to stronger economic performance. Therefore, developing sound institutional framework would be very much beneficial for the economy of Pakistan.
THANK YOU for your Patience
Recommend
More recommend
