Factors Affecting Good Governance in Pakistan

This research is being submitted on June 14, 2010, for Mr. Bergeen’s Microeconomics course at Rasmen College by John Divler.

Ruebeck, Christopher S.; Averett, Susan L.; Bodenhorn, Howard N.; B.E. Journal of Economic Analysis and Policy: Contributions to Economic Analysis and Policy, 2009, v. 9, iss. 1, Database

Within the last 60 years, Third World development has been a global priority, at the top of virtually every Western agenda. And with the rise of the global population and poverty levels continuing to rise along with it, it is very easy to see why human development is becoming such a topic of focus and discussion among members of the academia. But one question that everyone wants the answer too is, how does Third World development fit into Globalization? Despite apparent compatibility, when closely examined it is clear to see that Globalization actually contradicts Third World development due to the conflict of agendas. Both Globalization and Development hold views concerning market reform, social structure and regulation, which are

The contemporary society poses quite a number of challenges to the social, environmental, economic and political front. Without the help of a governance system that is stable and bears direct impact on the individual citizens in practically the entire nation, it is very likely that the nation will suffer under the weight of these challenges named above.

Economic factors: Due to income disparity in Pakistan and the adverse economic conditions, people are tending to save rather than to spend. Moreover, the increase in unemployment rate and inflation rate also supports these assumptions. However, on the other hand, the increase in the wealth of already wealthy people has increased the use of Dine in restaurants which is one of the stimuli for McDonald’s to open a branch in Pakistan. Furthermore, cost of labor has decreased over the years making labor cheap in Pakistan as compared to other countries has also influenced foreign investments. Examples of Economic factors are Growth rate, inflation rate, unemployment rate, interest rates, exchange rates, labor costs, labor supply etc.

Cotton, textile, grains, fruits and vegetables are the major exports and source of foreign exchange earnings. The international trade regulation and competition have caused Pakistani producers to introduce technologies in processing and manufacturing better quality, cost-effective and value-added products, in accordance with the international standards. In addition to this, globalization has opened doors for millions of job opportunities for Pakistanis all over the world. Personal remittances account for 7% of GDP for Pakistan (World Bank, 2015) and not only help in increasing the living standards but also, through private domestic investments, help in economic growth. Furthermore, the free and preferential trade agreements with regional and international economies has allowed the inflow of technology and surplus capital into Pakistan, allowing the development of infrastructure, telecommunication and energy

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Overview: This section explains the research philosophy, the literature survey for this research, data collection technique, data analysis approach and the overall process of the research. It started by gather the general insights that were relevant to the research; derived the information into a research topic; brief explanation about how the research was conducted, how the data was collected through experiment, how the data was analysed and concluded.

And as peoples trust in the State to fulfil its tasks dwindles, so does the States power to provide those services (ibid.). But from a development perspective things are a bit different. Most problems in delivering services to citizens are financial in nature (Greve, 2012), but where a lack of funds might stop State-led development, it is not detrimental to the State as an agent of it. For what is perceived ‘’good development practice’’ there is always international funding (for example McGrath, 2015, Worldbank.org, 2015, Undp.org, 2015). This paper does not go into the debate of is ‘’good development practice ‘’ good or not- it takes internationally sponsored and promoted development practice as implicitly good. And for the sake of argumentation on- is the State a good or bad agent of development- it does not matter what kind of development it promotes. So this good development is taken as the one we want our states to be agents to. And the State relying on foreign sources of funding development practice when it lacks state funds for development might be positive. To clarify, a state that runs a budget deficit does not have the monetary power to start development policy. This allows for the internationally funded and tried-out development practice to become the only development practice a state can enforce (finance), because it can fund it from external sources such as donations,

The prevailing view of modernisation was that for poor countries to achieve capital formation, productivity and consumption, comparable to those in developed countries, it was necessary to duplicate the cultural institutions of the latter. Ethnocentric ‘growth’ and development theories and the establishment of a number of global development institutions such as the World Bank and International Monetary Fund propelled one another as part of the Cold War.

Overall, it is closely associated with governance related issues in Afghanistan. During the Taliban regime, Afghanistan also faced lack of prosperous, stable and strong political governance since the people in power (the Taliban) were dictators and brutal criminals committed massacre in large-scale throughout the country. They had killed journalists, suspended International organizations, killed and massacred foreigners by calling them ‘outsiders’. If we refer to history, before 2001 both Afghanistan and Rwanda were closely in same position in terms of governance since they both were lacking a legitimate government authorized and known by United Nations or International community. Therefore, Rwanda’s case is associated and is somehow the same as Afghanistan. This paper therefore argues that, political governance is playing a vital role in stability and harmony of community to have a peaceful and prosperous society as well as in getting and using international assistances and aids. However, it depends on government how, when, and where to use these aids. Rwanda is a good example, throughout the history Rwanda have been receiving enormous amount of aids and assistance from international community in particular the United Nations but due to the political governance and structure of governance those aid were not used properly and made the situation even worst. Moreover, lack of good political governance and illegitimate government of Rwanda led to several

Failure in development is a lack of sustained periods of economic growth and stability, and an increased dependence on foreign aid. For example, forty five per cent of people in Sub-Saharan Africa still continue to live in poverty (About Sub-Saharan Africa). Secondly, the inability to meet eight of the Millennium Development Goals constitutes a failure in promoting development within the last fifteen years (The Millennium Development Goals 2014). Furthermore, World Bank prescriptions have not promoted sustained growth independent of foreign involvement by “[raising] Southern output” (Mosley 1949). The World Bank’s “measured ability to trigger sustained growth in developing countries has been poor […] particularly […] in the poorest countries” (1951). This disparity in flow of investments to developing

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The system of governance in different countries of the world may be different in form and content as there are various types of political system , but the basic objective of all the government to provide batter and more efficient administration to all section of the population so that there hopes and aspiration are met.

Limited research work exists on this area, like Booth et al (2001) studied 10 developing countries including Pakistan. However, this study was confined only to top 100 index companies. Second study by Shah and Hijazi (2004) was an improvement on the first one as it included all non-financial firms listed on KSE for the period 1997-2001. However, the second study too was basic in nature in terms of its use of pooled regression model avoiding the fixed effects and random effects models. The purpose of this study is to extend the work of Shah and Hijazi (2004) by extending the sample period i.e 2001-2006 and including more firms in sample as convenient random selection of samples, using relevant models of panel data and using more explanatory variables.