Issues

What Role Can the U.S. Play in Pakistan’s Development?


By Maria Andersen, George Mason University

Last week I attended an event at one of my favorite development centers, the Center for Global Development (CGDev). The event was two panel discussions and a reception to launch CGDev’s recent report titled “Beyond Bullets and Bombs: Fixing the U.S. Approach to Development in Pakistan”.

The Overarching Issues

Why is the U.S. Extending Aid to Pakistan? As with most bilateral aid, the relationship between the Western donor (the U.S.) and the recipient developing country (Pakistan) is asymmetrical and has become nothing short of a bureaucratic mess. The U.S. has a vested interest in Pakistan for security reasons. Threats of terrorism are still high on America’s radar. Pail Cruickshank recently found that just over half of the 21 most serious terror plots planned against the West had direct roots in Pakistan. Furthermore, it is no secret that Pakistan remains somewhat of a hotbed for extremist ideas. With the majority of the Pakistani population being under the age of 25 (young, uneducated, often unemployed, upset with the current system), a recipe for disaster is not out of the question. Some of the problems in the current USAID approach that were highlighted in the report were:

• Hefty requirements and overbearing oversight by the U.S. are essentially hindering innovation within the institutions. Lack of accountability and decision-making is discouraging USAID and Pakistani government staff members from being creative and exploring alternative approaches to development questions.

• U.S. aid to Pakistan has tripled ($500 million to $1.5 billion) under the Obama administration) but no direct results have been seen yet.

A few necessary ingredients for a Pakistani success story:

1. Maintain a stable state that serves to protect and deliver justice to all citizens equally.

2. The development programs need to clarify their missions. Experts need to practice humility and patience in their approaches.

3. They need to become more forward looking and focus on long run opportunities for growth rather than fall subject to short run political pressures. They need to be well aware of the unintended consequences that short run aid projects may have on Pakistan’s development. Shuha Nawaz pointed out that the West is “talking long term but acting in the short run”. Such a mindset has adverse consequences for the principal receiving the aid.

4. Focus should be placed on private sector investment, rather than Western spending of aid money in public institutions. Wise, carefully considered slow investments will signal to Pakistan that the U.S. is a worthy business partner. Hasty, fragile aid projects that end up  failing will give the exact opposite message. As Nawaz rightfully said, “Development is the area where you have to think long term with patience.”

5. Rewarding of successful projects. Domestic and foreign investment should be emphasized for projects and businesses that are already working. Successful initiatives should be rewarded with outside investment; not crowded out by a swarm of new, miniscule aid schemes.

What I Took Away from the Event

It’s far too easy to lump Pakistan into the “big bad wolves” of the Middle East category. But that is not at all fair! This is an incredibly unfortunate misconception. I find that the majority of  the problem in foreign policy, aid and international relations between the West and the developing world lies in attitude. In the case of Pakistan, so much can be gained if the West looks at the Middle Eastern glass as half full rather than half empty. Pakistan should not be viewed as a ticking bomb threat ; rather, it should be looked at for what it is – a mecca of golden business opportunities!

The report writes:

“Pakistan is not Yemen or Somalia; from a development perspective, it is not Afghanistan either. Pakistan has a large middle class, an active and engaged civil society, a free press, and a fledging civilian government that is making some progress strengthening democratic institutions.”

I have been intrigued by Middle Eastern development, military aid and the West’s war against terror for quite some time now; hence, why I decided to attend the event. My knowledge of these issues is limited so I learned quite a lot!

First off, I had no idea that Pakistan has such a flourishing textile and apparel industry. Pakistan is also quite resource rich. In other words, Pakistan’s producing industries have a lot to offer to the West. I think it’s fantastic that the visiting panelists and CGDev are encouraging a reduction in trade restrictions and increases in foreign and domestic investment. In the report, CGDev asks that:

“Congress and the administration should work together to develop and pass legislation for duty-free, quota-free access to U.S. markets for all Pakistani exports from all of Pakistan for at least the next five years.”

Yes! This is very important. Pakistani appears to hold a comparative advantage in textile that the West could potentially benefit from. However, if trade barriers are high (tariffs, quotas, etc.) the incentive for outsiders to trade with Pakistan is severely crippled. True, Pakistan borders Afghanistan and is home to extremist groups, but let’s not forget that Pakistan also shares borders with two rising economic stars: China and India. Cross-border trading can make nations better off and help Pakistan develop. In addition, a false picture is painted of the Pakistani marketplace, and this creates a grim image that discourages foreigners to invest. I’m a firm believer that trade, investment and saving are crucial to peace, growth and prosperity.

One of the panelists particularly impressed me: Masood Ahmed, a department Director at the International Monetary Fund. Ahmed emphasized investment, private sector development and entrepreneurship. He stressed that the problem in Pakistan is one of the political economy. He shared the belief that good economical approaches in Pakistan will take political economics into consideration and focus less on picking apart at trivial economic technicalities.

*Source: http://www.cgdev.org/content/publications/detail/1425136

Originally published at On the Flipside (http://mariarandersen.wordpress.com)

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