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Social Science and Policy BulletinVOLUME 2 No. 2(Autumn 2010)ISSN 2073-6789

Editorial Board

Parveen AkhtarAnjum AlviSyed Turab HussainMuhammad Farooq NaseerNadia Mukhtar SayedHammad Siddiqi

Editorial Assistant

Usman Liaquat

The opinions and views expressed here belongto the individual authors and do not necessarilyreflect the views of the editors. Some rightsreserved.

The Social Science and Policy Bulletin is publishedquarterly by the School of Humanities, SocialSciences and Law at LUMS. It provides a forumfor debate on the economic and socio-politicalissues pertaining to the formulation andconduct of public policy as well as its impact.The Bulletin aims to disseminate, to a wideraudience, high quality research and policy-oriented work being done by social scientists.The editors of the Bulletin welcome shortessays, either analytical or quantitative, that arerelevant as well as intellectually stimulating.

In this Issue

Editors’ Note 1

Renegotiating Federalism in a TroubledRegion: The Balochistan Package 2Rasul Bakhsh Rais

Industrial Policy: Irrelevant orEssential? 8Syed Turab Hussain

Reforming Pakistan’s Justice SectorReform Discourse 12Osama Siddique

Natural Disasters and PolicyPlanning 19Syed Ali Asjad Naqvi

Research Notes 26

Revealing Facts: Floods in PakistanI. Impact Assesment 34II. Aid and Assistance 35

Editors’ Note

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There is more to economic development than meetsthe eye. The prevalence of highly unequal incomesacross different parts of the world captures a greatdiversity of experience with material progress. It haslong been a central concern for economists to try andexplain the factors responsible for economic growth.Beyond the conventional neo-classical growth modelsthat emphasize technology and capital accumulation,the question remains as to why some countries innovateor accumulate more rapidly than others.

In search of deeper insights, economists have advancedvarious alternative hypotheses to explain economicgrowth; viz., geography, international trade, andinstitutions. The first hypothesis grants primacy to afavorable location, leading perhaps to a natural resourceadvantage and/or suitable climate for the advance ofhuman society. This might have been important in someplaces and at some points in time, but clearly lacksuniversal appeal. On the other hand, trade andintegration into regional markets allowing for freemovement of goods and factors of production acrossborders, has often been portrayed as mutually beneficialfor all involved parties, as resources flow to their mostproductive use and increase the overall income of theregion. Yet benefits from trade may accrue quiteunequally to different trading partners and the relativeimportance of this channel remains an empirical matter.After carefully examining the contributions made byeach of these factors to national income, Rodrik,Subramanian and Trebbi (2004) conclude that the mostimportant factor behind the economic success of acountry is the quality of its institutions.

Institutions may be broadly construed as the set ofnorms and (formal) rules of behavior devised by societyto constrain choices and provide structure to humaninteraction. Defined thus, institutions range from theinformal norms of reciprocity in a trading market to a

set of well-defined property rights along with the formalmechanisms to protect and enforce them. At the macrolevel, they may also include the constitution of a countryas well as specific rules concerning the change ofgovernment and conduct of elections. Institutions tendto be relatively stable but they can change, and at timeschange quickly, as in the case of new formal laws. But,as argued by North (1990), the most substantive andlasting change in institutions often takes place graduallygiven the social embeddedness of accompanyinginformal constraints.

The articles in this issue of the Social Science and PolicyBulletin raise important questions regarding keyinstitutions, or lack thereof, in Pakistan. The first articleby Rasul Bakhsh Rais places the federal structure of thecountry's constitution in the context of provincial rightsand attempts to evaluate the significance of theBalochistan Package and the Eighteenth Amendment.In the second article, Turab Hussain tackles the debateregarding the role of industrial policy in economicdevelopment arguing that there is a need for thegovernment and industry to engage in meaningful'strategic coordination', with the rules of this coordinationframed in a way to prevent both policy capture by thebusiness elite and unchecked ad-hocism of thegovernment. The article by Osama Siddique critiquesthe Pakistani justice sector reform discourse bysuggesting that it take greater cognizance of existingsocial realities. He warns against narrowly framing acomplex discourse, arguing that a meaningful reformmerits shifting the focus of the debate from the courtsto the society and broadening the set of participants.Finally, Ali Asjad Naqvi shows us how simulations fromAgent-Based Models can significantly improve a policy-maker's understanding and management of a naturaldisaster by forecasting outcomes under different policyscenarios.

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Federalism, the constitutional distribution of powerbetween the centre and the provinces, largely remainsan unsettled issue in Pakistan for a number of reasons.Chief among them is a historic tendency on the part offederal governments, military as well as civilian, toassume greater powers than the smaller units in thefederation would be comfortable with. From thebeginning, the political design of the state and thepreferred nation-building strategy placed greater trustand powers with the federal structure than the provinces,ignoring their genuine identity, economic and politicalconcerns. Far from achieving any meaningful integration,this centralization of powers only alienated the provincesand resulted in disputes that involved the use of force.The failure of keeping East Pakistan, now Bangladesh,in the union was primarily a failure in crafting a federalsystem that could balance the requirements of aneffective national government with provincial aspirationsof autonomy and self-empowerment.

Balochistan presents another case of troubled federalismwhere Baloch ethnic sentiments have repeatedly surged,showing deep distrust of the federal government overthe distribution of powers and rights over naturalresources. At the moment, the province is going throughits third insurgency in sixty-two years, putting tremendouspressure on Pakistan's security infrastructure that isstruggling to put down the Taliban insurgency in thewestern tribal borderlands.

Many of the problems that Pakistan is facing today arein general a troubling legacy of military rule, and inparticular a legacy of the Musharraf regime, especiallywith regard to the insurgency in Balochistan that wastriggered by both the character of that regime and itspolitical manipulation. Historically, military regimes havedepended on the centralizing agency of the armedforces, the federal bureaucracy and a selective co-optationof provincial political elites who are amenable toconstitutional deviations. But by suppressing genuinepolitical representation and pushing democratic forcesin the provinces to the sidelines, they generated deepmisgivings against the federal government and thePunjab, the largest province of the federation fromwhere the great bulk of the armed forces were drawn.

This is not to suggest that civilian governments haveaddressed inter-provincial relations or provincialdemands for powers more prudently or empathetically.While Pakistan's experience is patchy in this respect,democratic governments inherently have greater politicalcapacity to negotiate, compromise and accommodateprovincial rights. In the case of Balochistan, the politicaldebris that appears to be so toxic was allowed toaccumulate for a decade, mainly due to the non-democratic and highly centralized military rule ofMusharraf. On the contrary, with less than two years ofterm served, the elected government has taken the firstimportant steps to address the issue, even if not decisivelyor entirely to the satisfaction of Baloch nationalists. Thefirst such step, one that this paper focuses on, is theBalochistan Package and the second, perhaps greaterin significance, is a consensus on the new NationalFinance Commission (NFC) Award and the passage ofthe Eighteenth Amendment.1

Federalism: Striking a Balance

My argument is that the significance of the federal

Social Science and Policy Bulletin, Volume 2, No. 2

Renegotiating Federalism in a Troubled Region:The Balochistan PackageBy Rasul Bakhsh Rais

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question and its pro-active resolution in Balochistan,according to popular aspirations, lies in three inter-related political facts. The first deals with recognizingPakistan's national character as a multi-ethnic society.However, the understanding of this character needs tobe more nuanced than many studies on this subjectreflect.2 The country's ethnic mix is an outcome ofmigration, old and new, and is more intricate, inter-woven and complex than is commonly understood. Ashas become clear through painful experience, the issueof provincial rights is primarily connected to the politicalrights of different ethnic nationalities and one Pakistancan ignore only at the cost of damaging the federation.

The second political fact is that a multi-ethnic state likePakistan requires a democratic and consociational federalframework of governance, because many of the problemsplaguing centre-province relations are about whoexercises what political power. Democracy is a naturaltool for handling ethnic diversity because popularparticipation gives peoples and their representatives asense of ownership in the power structure and a stakein the political system, while federalism, in its true spirit,would give them political, economic and culturalautonomy.

As we know, the theoretical foundations of a federalsystem lie in the concept of dual sovereignty, as it createstwo sets of political authority: an effective and efficientnational government, as well as state or provincialgovernments with separate and well-defined areas ofjurisdiction (Karmis & Norman, 2005; Chemerinsky,2008; Filippov et al., 2004). Empirically, federalism hasproved to be the best arrangement for ethnically diversesocieties. Its recognition of social and political pluralismhelps integrate different communities together in asingle nationhood.

The third political fact is that ethnic identities of regionalsocial groups are rooted deeply in history, culture,language and folklore. The illusory assumption thatthese identities could be wished away or instantly

substituted with another politically-engineered identitywas proven absolutely false in the case of East Pakistan.And if Pakistan continues to ignore the ethnic factor inreshaping the federal political order, it will only addfurther pressures and demands on its fragile politicalsystem.

Unfortunately, successive generations of politicians andpolicymakers in Pakistan have failed to demonstrate trueunderstanding of ethnic pluralism and its place in thepolitical system. Most Pakistani political leaders havebeen uncomfortable in recognizing ethnic identity as alegitimate political concept–it is lost on them that ethnicdifference is and can be a legitimate basis on whichregional groups can claim their share in resources, powerand decision-making at the centre. Even if they didunderstand the political implications of ethnic diversity,they often ignored it by portraying genuine ethnic andregional demands as opposed to the interests of thefederation. Often, this falsification had another sinisterpurpose: to legitimize oneself as a true patriot whilelabeling ethnic leaders and groups as traitors. As a result,Pakistan's national leaders, both civilian and military,never came to terms with the ethnic and regional realitiesof the country, which were presented as more of aproblem than an opportunity to build an inclusive,participatory nationalism. The use of religion to createnational solidarity that would cut across ethnic identitieswas too idealistic to be a pragmatic solution to the realpolitical problems (Binder, 1961).

Ethnicity in Pakistan or other countries is not inherentlyantagonistic to building a nation-state. Those who makethe opposite argument are fixated on the Europeannotion of culture-based nations, which were formedafter many years of immeasurable bloodshed that allowedpowerful groups, often minorities, to impose theircultural hegemony on less fortunate, weaker groups.Most post-colonial states are ethnically diverse, and bynecessity have to undertake a painful process ofadjustment, accommodation and co-existence throughmutual acknowledgement and inclusive politics. Pakistan,

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in comparison to other countries, has an ethnic complexmore conducive to nation-building than others. It hasmany layers of integrative forces that it could have used,and that it can still intelligently use, to weave a richcomposite nationhood. Among these are interspersingethnic groups, linguistic overlaps, common cultural andcivilisational roots, democratic politics and socialmovements.

Ethnic pluralism of the Indus valley region that nowforms the geographical core of Pakistan, was historicallynever separatist in outlook–it was rather an integrativeforce for thousands of years under local kingdoms andgreat empires. There cannot be better evidence for thisthan in the historical pattern of migration of populations,regional commerce and trade (Nichols, 2008). Thishistorical pattern, which has continued over the pastsix decades, has further transformed the ethnic landscapeof Pakistan into a diffuse, patchy and colorful mosaic ofethnic cultures and heritage.

This has happened, however, without any assistancefrom the country's politics, which has always remaineddivisive through its refusal to accept regional autonomyand ethnic rights as one of the guiding principles ofPakistan's secular nationhood. Never in any situation issocial diversity an obstruction to evolution into a cohesivenationhood. It requires a different kind of politics, onewhich must simultaneously be dictated by the logic ofethnic diversity and also the well-established principleof federalism. A kind of national solidarity needs to bebuilt from the ground up, by listening to concerns andvoices from the constituent regions–not by merelyacknowledging them as rightful players, but by givingthem a real voice and stake in national power anddecision-making.

It took Pakistan a quarter century to reach nationalconsensus on the 1973 Constitution that somewhatsettled the federal issue, as regional political partiesaccepted the proposed distribution of powers betweenthe centre and the provinces. But successive regimesin Pakistan have not lived up to that promise, eroding

the trust of the provinces in the federation. Thesuccessive authoritarian administrations that Pakistanhas endured for decades have alienated some ethnicgroups, particularly the Baloch, fuelling anger andfrustration among them. Military rule by definitionundermines provincial autonomy, and in Pakistan's case,in popular regional perceptions, it has become associatedwith the dominance of the majority ethnic group, thePunjabis. It was thus considered to have violated thespirit of federalism and the national consensus.

The questions raised in this article relate to reshapingfederalism in Pakistan with a focus on the BalochistanPackage. The Package is part of larger efforts to transitionfrom the centre-tilted federalism that Pakistan has beenpracticing to a more balanced one that would tackle thegrievances of the smaller provinces. In developing thisline of argument, I will ascertain whether the BalochistanPackage gives a good political signal to disaffected Balochleaders about the willingness of the federation andmainstream political parties to renegotiate the centre-province relationship. I aim to determine if the processof formulating the Package has been inclusive and howthis package differs from an earlier attempt in 2005.3 Ialso try to establish the reason for Baloch rejection ofthe Package thus far, while predicting the likelihood ofsuccess in selling the package as a first step towards engagingBaloch leaders in a dialogue for the resolution of trickyissues concerning provincial autonomy, empowerment andprovincial rights over natural resources.

The Promise of the Package

The Balochistan Package, as the word implies, packs upevery issue, problem and concern that the Balochnationalists have talked about. It promises short-termpolitical and administrative palliative measures inconjunction with long-term constitutional solutions totwo fundamental demands: autonomy and provincialrights over natural resources. I am not sure if the omnibusapproach is the right one to settle the complex problemsof Balochistan, but it is the essence of the Package. Ina way, it is consistent with the political tradition of


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Pakistan that runs on two extremes: one of totalindifference and stalling on political problems and theother of bundling together different issues in a catch-all approach when the situation comes to a boil. Asindicated above, there are many dimensions to theBalochistan problem. Instead of negotiating some priorityissues, implementing the agreed-upon solutions, andthen working on the trust built through demonstratedeffects, the Package attempts to address all issues atonce and in one go. The Package-making ParliamentaryCommittee has neither addressed the distrust of theBaloch leaders and the political capacity of the federalgovernment to implement its recommendations, northe ranking of different issues in terms of priority.

The Balochistan Package is a 'carbon-copy' of theproposals that the Shujaat-Mushahid ParliamentaryCommittee made in 2005.4 That committee had twentyparliamentarians from Balochistan and eighteen fromother provinces. The nineteen-member Sub-Committeeincluded twelve Baloch parliamentarians representingall political parties of the province. The various solutionsproposed in the Balochistan Package are, therefore, notnew for the Baloch leaders. Often these solutions havebeen debated in the media and have formed the basisof political discussions among the leaders of politicalparties. The question, then, is why the ParliamentaryCommittee of the PPP-led government wasted so muchtime when it did not propose anything radically different.It did so to make its policy of 'national reconciliation'credible. This could be achieved by taking ownershipof the Balochistan initiative, thereby taking credit forresolving its lingering problems. However, it could havealso undertaken some necessary path-clearing politicalinitiatives, such as a more focused approach to tracingdown 'missing' (read, in the custody of intelligenceagencies) Baloch activists or instituting a judicial inquiryto probe the murder of Nawab Bugti that triggered awave of violence in the province in 2006.

At best the Balochistan Package can be termed a goodwillgesture, an early indication of the direction of

constitutional reforms by the Federal Government toseek reconciliation with the Baloch leaders. PrimeMinister Gilani aptly termed the package as the“beginning of the rights of Balochistan”.5 Theannouncement of the Package, followed by a consensusbetween the federation and the provinces on the NationalFinance Commission Award after seventeen years, is agood starting point to settle problems between thefederation and Balochistan. The real change has comeabout with the passage of the 18th Amendment into theConstitution greatly restoring the original character ofthe 1973 Constitution in promoting federalism, provincialautonomy and strengthening the parliamentary system.6The Amendment goes much further than anyconstitutional reform in the past in granting greaterpowers to the provinces. The dropping of the concurrentlist of powers from the federal jurisdiction—alongstanding demand of provincial rights' activists—along with the recognition of provincial rights overnatural resources will go a long way toward assuring thepeoples of Balochistan that their rights are protected.But much will depend on how the radical Baloch leadersare brought back into the political process. Non-secessionist Baloch leaders were formally and informallybrought into the negotiation process for finalising thePackage and the 18th Amendment, but there is need ofmuch political suasion to bring their secessionistcounterparts on board.

There is another problem, in general, with theformulation of political packages and reforms in Pakistan.They are usually seen to come from above and are soldto the public as big concessions by the relevantgovernment. The issues relating to Balochistan are aboutrights, and not at all about granting any favours. This isthe position that most Baloch leaders hold and theymay interpret the Package more or less in that light. Itwould have been much better if the federal governmenthad kept the Package open for dialogue and avoided aunilateral approach. The Baloch leaders may still wishto negotiate, and perhaps push for a harder bargain,but that is what democratic politics is all about—resolving

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conflicts through peaceful means. The Baloch leadershave a stake in negotiated solutions in which they haveownership of the process and take credit for winningthe struggle for their political rights. Unfortunately,unilateralism in fashioning the Package has left out theestranged Baloch leaders and it may take further politicalefforts to win back their trust and support. The Packagemust be seen more as a 'road map' than a final or absoluteresolution of the grievances of Balochistan.7 The successwould depend on how effectively the federal governmentimplements it and how soon radical Baloch nationalistsgive up violence and extremism to return to mainstreampolitics. Notwithstanding the flaws in the package, thereis enough in this initiative to provide a ground forengagement between the federal government and theBaloch leaders.

Future Scenarios

The Balochistan Package is the first step towardaddressing the alienation and dissatisfaction of the largestand most mineral-rich province of Pakistan, which overthe past four years has become home to growinginsurgency and unrest. It is the first serious attempt todeal with the grievances that have accumulated overthe decades, especially during the Musharraf militaryregime. There is newfound optimism towards theresolution of the Balochistan issue as all major politicalparties seem to have evolved a consensus on relativelygreater provincial autonomy than the present structureof the constitution can allow. After more than twodecades, political parties have for the first time reachedan agreement on the National Finance CommissionAward (dividing the pool of nationally accumulatedresources between the federation and provinces andamongst the provinces themselves). This sets a goodbackdrop for flexibility and accommodation on the issueof provincial autonomy and the transfer of theConcurrent list to the provinces, which is part of the18th Amendment to the 1973 Constitution. The 18th

Amendment has in fact given constitutional cover tosome of the measures announced in the Package.

The Balochistan Package and the NFC Award coupledwith the new identity and structure of governance forGilgit-Baltistan, reflect a new political thinking onrelations between the provinces and the federalgovernment. This new thinking is greatly accommodativeof regional and provincial demands in two vital areas—greater roles in governance and management ofeconomic resources. Once these concerns are addressed(and this will require concrete steps on the ground),Baloch political groups that seek solutions within thefederal constitutional framework will be strengthened.But those seeking independence may hold their positionuntil real change occurs in the power equation betweenthe centre and the province.8

While talking about renegotiating relations between thefederation and Balochistan, we need to constantly remindourselves about two emerging sources of conflict—natural resources and the changed strategic environmentof the region with respect to new global actors inAfghanistan. The Baloch nationalists find the environmentpropitious for changing their historical relationship withthe Pakistani federation by staking greater claim on bothenergy resources and the Mekran coast, using themultiple crises that Pakistan faces as leverage for betterbargaining. Their success may set the stage for otherregions, notably Gilgit-Baltistan, to demand full provincialstatus, with Azad Kashmir also pushing for greaterautonomy than it currently enjoys. In the latter cases,water resources could figure as a bargaining chip in theirattempt to redefine their relationship with Islamabad.

Conclusion

All provinces in varying degrees have demanded greaterpowers, but the leaders of smaller provinces have beenmore vocal in this respect. For decades, they have beenurging the federal government to devolve jurisdictionover the Concurrent list, which mercifully the 18thAmendment has, in essence, done. It is a departure fromthe past practice of federal government domination, beit military or civilian, whereby the centre remained

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protective of over-extended authority of the federalgovernment, citing reasons of security, nationalintegration and effective governance.

Gradually over the past decade, all political parties havereached a Consensus on the deletion of the concurrentlist from the powers of the federation. The BalochistanPackage reflects the political sentiment among all politicalparties, whether national, religious or regional, on thisissue. It is a sign of political progress, but much woulddepend on two factors: implementation of the packageand rapprochement with those Baloch political leadersthat have lost trust in the federation.9

The author is a Professor of Political Science in theDepartment of Humanities and Social Sciences atLUMS. He can be reached at [email protected].

References and Further Reading

Amin, T. (1998). Ethno-National Movements of Pakistan:Domestic and International Factors. Islamabad: Instituteof Policy Studies.

Baloch, I. (1987). The Problem of Greater Baluchistan:A Study of Baluch Nationalism. Wiesbaden: Franz SteinerVerlag.

Binder, L. (1961). Religion and Politics in Pakistan.Berkeley: University of California Press.

Chemerinsky, E. (2008). Enhancing Government:Federalism for the 21st Century. Stanford: Stanford LawBooks.

Filippov, M., Ordeshook, P. C., & Shvetsova, O.V. (2004).Designing Federalism: A Theory of Self- SustainableFederal Institutions. Cambridge: Cambridge UniversityPress.

Harrison, S. (1981). In Afghanistan's Shadow: BaluchNationalism and Soviet Temptations. New York:

Carnegie Endowment for International Peace.

Karmis, D. and Norman, W. (Eds.) (2005). Theories ofFederalism: A Reader. New York: Palgrave Macmillan.

Nichols, R. (2008). A History of Pashtun Migration,1775-2006. Karachi: Oxford University Press.

Phadnis, U. and Ganguly, R. (2001). Ethnicity and NationBuilding in South Asia. New Delhi: Sage Publications.

Senate of Pakistan, Senate Foreign Relations Committee(2005). Report of the Parliamentary Committee onB a l o c h i s t a n , Re p o r t 7 . R e t r i e v e d f r o mwww.foreingaffariscommittee.org. Accessed on January5, 2010.

Notes

1Raja, A. (2009, November 25). Government offers olive branch forBalochistan. Dawn.2See for instance: Amin, T. (1998); Phadnis, U. and Ganguly, R.(2001); Harrison, S. (1981); and Baloch I. (1987).3Senate of Pakistan, Senate Foreign Relations Committee (2005).Report of the Parliamentary Committee on Balochistan, Report 7.4Siddiqui, T. (2009, December 9). Balochistan package. The News.Mr. Siddiqui worked with the Parliamentary Committee that draftedthe 2005 report on Balochistan.5Raja, A. (2009, November 25). Government offers olive branch forBalochistan. Dawn.6Rehman, I.A. (2010, April 8). Reform compromises. Dawn.7Dawn (2009, December 3). A new beginning.8Rehman, I.A. (2010, December 3).The Balochistan package. Dawn.9The News (2010, January 22). Rabbani warns against failure toimplement package.

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Brief Historical Review

In the course of the economic development of theWest and the Newly Industrialized Countries (NICs) ofAsia, there is no example of a country following acompletely laissez-faire policy with regards to industrialdevelopment. While the nature and extent of theinvolvement of state varied across countries, each havingits particular recipe for industrial development,industrialization did not take place through theunfettered workings of the market in any of these cases.In particular, the success of the Asian Tigers and morerecently of China and India in sustaining high growthrates has been on the back of an activist industrial policy.The extent of state intervention in these economiesranged from input subsidies, tax exemptions, and tariffprotection to direct public sector investments in largescale projects such as steel manufacturing in Korea andJapan.

The post-1945 structuralist conception of developmentconsidered capital accumulation (industrialization) tobe the engine of economic growth and development.For the structuralists, an interventionist industrial policycoupled with trade protectionism was imperative forthe transformation of an economy from primary lowvalue-added production to high value-addedmanufac tur ing , i . e . , impor t subs t i tu t ionindustrialization.1 State intervention was justified bythe prevalence of economies of scale (agglomeration

economies) in manufacturing and coordination failuresinherent in an underdeveloped economy. In the absenceof complementary investments (backward and forwardlinkages) and necessary industrial infrastructure, entrycosts for the pioneering firms into any sector mightbecome extremely high, resulting in a coordinationfailure for private sector investment. Given thesestructural constraints, industrial development (especiallyone that broke away from traditional resource- andfactor-based comparative advantage) was viewed as nextto impossible in a free market environment, givingcredence to the 'infant industry' arguments for protectionand the 'big push' model of large-scale state planningand intervention for industrial development.2

However, state intervention in its various manifestationswas not always successful in achieving efficientindustrialization and sustained economic growth. Theexperience of Latin America stands in sharp contrast tothat of East Asia. Although both regions pursued anactivist industrial and trade policy, the outcomes achievedwere significantly different. In countries like Korea andTaiwan, protection in the form of subsidies and tariffswas afforded to firms that conformed with the state'sobjective of achieving economies of scale in productionthrough explicit export requirements, forced mergersand investment licensing (Chang, 2003). Latin Americaon the other hand did not have such a clear focus interms of achieving economies of scale or creatingincentives for firms to be outward-oriented. In fact, inmost countries the industrial policy was essentiallyinward-looking: more focused on achieving domesticself-sufficiency in manufactures rather than creatingfuture export vents. The outward-oriented industrialpolicy of the East Asian countries provided opportunitiesfor domestic firms to target regional and internationalmarkets, allowing for economies of scale and efficientproduction. This inward orientation of Latin Americancountries, coupled with a shift of resources away fromthe larger agricultural sector, limited and stifled the

Industrial Policy: Irrelevant or Essential?By Syed Turab Hussain

demand for the nascent manufacturing sector therebyretarding its growth, efficiency and competitiveness, acase in point being the Argentine car industry (Bruton,1998).

Notwithstanding some notable exceptions, such as theaircraft, steel and shoe industry of Brazil, the industrialtransformation of Latin America was generally not assuccessful as in East Asia. According to Rodrik (2004),“the difference between East Asia and Latin America isnot that industrial transformation has been state-drivenin one and market- driven in the other. It is that industrialpolicy has not been as concerted and coherent in LatinAmerica as it has been in East Asia, with the consequencethat the transformation has been less deeply rooted inthe former than it is in the latter.”

The 1980s brought a major shift in development thinking.The debt crisis and the ensuing macroeconomic instabilitywhich ravaged Latin America for more than a decadewas blamed on the 'villainous' policies of stateintervention and trade protection in the region (Taylor,1996). The rampant rent-seeking, corruption andinefficiency of governments in developing countriesengendered further skepticism regarding theeffectiveness of the state in fostering industrial andeconomic development. The fact that East Asia remainedunscathed from the vagaries of the debt crisis gavesupport to the neo-liberal view which was centered onthe concept of market supremacy and trade liberalization.Export-led growth was highlighted as the major factorbehind the successful transformation of East Asia, whileits activist industrial policy and initial years of tradeprotection were essentially overlooked. The alternativeput forward was articulated by what came to be knownas the 'Washington Consensus'. Under the neo-liberaldevelopment paradigm, the role of the state in industrialdevelopment was limited to correcting market failuresand the provision of public goods. Although marketfailure or externalities provided an economic rationalefor state intervention, mainstream economists and policymakers became more circumspect of government

intervention, stressing the greater propensity andprevalence of government failures as opposed to marketfailures in developing countries.

Towards an Industrial Policy

As is evident from the above historical overview ofindustrial policy, demarcating the domain of stateintervention in an economy has been the source ofcontinued controversy and debate. However, there isan emerging agreement between heterodox andmainstream economists on the broader role of industrialpolicy and the importance of structural transformation.The differences which remain are on how much or towhat extent a country may deviate from its comparativeadvantage. The notion of comparative advantage in neo-classical trade theory is essentially static—it does notallow for the possibility of industrial transformation,given the current prices and factor endowments in aneconomy. As stated earlier, the central objective ofindustrial policy is to diversify the industrial base andmove into higher value-added activity. While themainstream economists stress on a 'step by step', orgradual transition towards higher value-added productionin conformity with available technology and factorresources, the heterodox camp stresses the importanceof defying comparative advantage by taking 'leaps' incertain areas which are considered strategic (Lin &Chang, 2009).

Given that the fundamental principle of an industrialpolicy is to facilitate the process of structuraltransformation, a possible bridge between the twoperspectives on industrial policy would be to focus policyintervention to facilitate 'new activity' in the industrialsector while helping existing firms upgrade their productsand production methods. In other words, the policiesshould consolidate and strengthen existing comparativeadvantage and at the same time attempt to harnesspotential dynamic comparative advantage to stimulatea diversified and internationally competitivemanufacturing and export base.

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The 'new activity' entrepreneurs are those who eitherintroduce a new product in the domestic market ordevelop a more efficient production technology for anexisting product. In fact, the formation of an industrialcluster is greatly dependent on the incentive structurespresent for the first entrant (pioneer firm) in a newindustry. Although the ability of the state to 'pick winners'is limited on account of imperfect information regardingfuture returns on new investment opportunities, thestate can increase the probability of a new entrantbecoming a 'winner' through strategic policy intervention(Hausmann & Rodrik, 2003). Such strategic interventioncan lead to the formation of economically viable andvibrant industrial clusters. Policies which facilitate theemergence of new clusters, especially in economicallydepressed areas, would result in a more equitable andinclusive growth—a broader objective of the typicalindustrial policy.

The state can facilitate the entrepreneur by addressingboth coordination and market failures. Coordinationfailures might arise due to spatial impediments such asthe absence of necessary infrastructure (such as roadnetwork, electricity etc.), or the non-existence of criticalcomplementary investments in the area. These lattercosts would often tend to decline with an increase inthe number of firms in the cluster, indicatingagglomeration economies.3 Similarly, a market failurethat could hinder a new investment may exist in thecredit market, either because firms lack collateral orbanks lack information on firms (due to the absence ofa credit history). With both coordination and marketfailure, the state can intervene by providing necessaryinfrastructure and devising mechanisms such as a venturecapital fund which would enhance the prospects of anew entrant or innovator to qualify for financing.Furthermore, industrial policy can be employed togradually alter existing factor resources and thuscomparative advantages. For example, investments ineducation and vocational training could increase theendowment of skilled labor. This would not only help

existing firms move up the value chain, but alsoencourage new investments that are skilled labor-intensive.

The key lesson derived from East Asia is that industrialpolicy is not a one-off phenomenon but a process wherefirms and the government learn about majorimpediments and opportunities to engage in “strategiccoordination”. Therefore the broader approach towardsformulating industrial policy should be through thecontinued interaction between the private sector andthe government. This engagement should be effectivelyinstitutionalized so that it can form the basis of a dynamic,flexible and evolving process of industrial policymaking.The crucial point about this public-private engagementis a balanced position which is somewhere betweenbureaucratic ad hoc-ism and complete embeddednessof the private sector in industrial policy and planning.While the former extreme would increase the likelihoodof inappropriate policy formulation, the latter wouldspawn a state patronized inefficient industrial sector[see, Rodrik (2004)].

An important constraint in industrial policy makingwhich is relevant today is the more restrictive 'policyspace' available to countries. Leaving aside the debateon the effectiveness of trade policy, developing countriesunder the WTO trading system cannot readily use tradepolicy as an instrument for industrial development, aswas done by most industrialized countries in the past.For example, export subsidies, local contentrequirements and quantitative restrictions on importsare all illegal under the rules of the WTO. Moreover, theWTO agreements on trade-related aspects of intellectualproperty rights (TRIPS) ensure that there is no reverseengineering and copying of goods, which has renderedtechnology transfer through learning and imitationdifficult. A positive feature of the WTO is its institutionalmechanism that allows developing countries to negotiatefor increased 'policy space'. The failure of recent roundsof negotiations which attempted to extend multilateral

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discipline to national competition and investment policiesis evidence of developing countries effectively protectingtheir policy space (Rodrik, 2004).

Finally, given the tight fiscal constraints facing mostdeveloping countries, the extent and possibility of stateintervention through either public sector investmentsor subsidy provision is severely limited. In many instances,these limitations are part of the conditionalities imposedby multilateral agencies. Prudent macroeconomic policyand increased domestic public revenue generation wouldfacilitate a more proactive role of government in industrialpolicy. In the absence of fiscal space, designing a feasibleindustrial policy is of paramount importance andunderscores the need for strategizing and prioritizinggovernment intervention.

The author is Assistant Professor and Acting Head ofthe Department of Economics at LUMS. He can bereached at [email protected].


Baran, P. A. (1957). The political economy of growth.New York: Monthly Review Press.

Bruton, H. J. (1998). A reconsideration of importsubstitution. Journal of Economic Literature, XXXVI,903-936.

Chang, H. J. (2003). East Asian development experience.In H.J. Chang (Ed.), Rethinking Development Economics(pp. 107-124). London: Anthem Press.

Hausmann, R. & Rodrik, D. (2003). Economicdevelopment as self-discovery. Journal of DevelopmentEconomics, 72(2), 603-633.

Lewis, W. A. (2003). The theory of economic growth.London: Taylor and Francis.

Lin, J. & Chang, H. J. (2009). Should industrial policy inDeveloping Countries conform to comparative advantage

or defy it? A debate between Justin Lin and Ha-JoonChang. Development Policy Review, 27(5), 483-502.

Nurkse, R. (1953). Problems of capital formation inunderdeveloped countries. New York: Oxford UniversityPress.

Prebisch, R. (1950). The economic development of LatinAmerica and its principal problems. New York: UnitedNations.

Rodrik, D. (2004). Industrial policy in the Twenty FirstCentury. UNIDO.

Rosenstein-Rodan, P. (1943). Problems of industrializationof Eastern and South- Eastern Europe. EconomicJournal, 53(210/11), 202-211.

Singer, H. (1950). The distribution of gains betweeninvesting and borrowing countries. American EconomicReview, Papers and Proceedings, 40(2), 473-485.

Taylor, A. M. (1996). On the costs of inward-lookingdevelopment: Historical perspectives on price distortions,growth and divergence in Latin America from the 1930to the 1980s. NBER Working Paper 5432.

Notes

1Singer (1950) and Prebisch (1950) documented a seculardecline in terms of trade of poor countries. This finding served asone of the critical arguments for structural change.2 Within the economics profession, many such as Nurkse (1953),Lewis (1955), Baran (1957), and Rosentein-Rodan (1943) wereadvocates of a development strategy led by the state. In fact, withthe exception of a few like Albert Hirschman, who vieweddevelopment as a more spontaneous and chaotic process, theconsensus has been towards state-led development strategy.3An investment by a firm creates positive externalities (unintendedbenefits) for other firms. Therefore, while there are diminishingreturns to investment at the level of the firm, there may existincreasing returns at the level of the industry (cluster). As individualfirms do not take into account the positive externality of theirinvestment decisions, they tend to under-invest, thus creating arationale for government intervention.

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There are increasingly growing gaps between thejustice sector reform discourse in Pakistan and peoples'actual expectations from and differential experiencewith the justice system as determined by various levelsof social, economic and political disempowerment andalienation. In this context, based on my review andanalysis of a wide array of relevant theoretical andempirical literature, documentation of government anddonor-led justice sector reforms, Pakistani law reformcommission reports, and several local and internationalstudies on the problems confronting the Pakistani justicesector, I essentially posit two contentions. My firstcontention is that the narrow perspectives and agendasof what I call the 'legal reform community' monopolizethe justice sector reform discourse in Pakistan and as aresult, this discourse is socially de-contextualized(Siddique, forthcoming). This 'legal reform community'includes judges, lawyers, government policymakers andlaw officials, as well as local and international consultantsemployed in justice sector reform policy-making andadvisory work in Pakistan. In many instances, themembers of this 'legal reform community' are theconsultants/advisors that design, formulate, influenceand implement reform interventions whilesimultaneously being the object/target of reforms (withthe reform agenda overwhelmingly concentrating onreforming the judiciary and the court system). I contendthat due to their particular ethos, perspective and design,the reform prescriptions coming from the 'legal reform

community' adopt a macro, abstract and narrowlydoctrinal and legalistic perspective to law reform. Further,these prescriptions largely ignore the various social,economic and political contextual constraints that mayinhibit access to legal remedies for different sections ofcontemporary Pakistani society. Additionally, this reformprocess and resulting reform prescriptions are highlyexclusionary of vital stakeholders who are not membersof this 'legal reform community.' In other words, the'legal reform community' is motivated by a reformphilosophy, and driven by a reform agenda that createsan artificial divide between the legal system and society.Thus, it approaches reform in more or less an artificiallycreated vacuum (Ehrlich, 1936). Invariably, this reformagenda focuses on the speed and delivery capacity ofthe extant legal and judicial system and pursues thisgoal through strident advocacy for greater numbers,better infrastructure, higher remuneration, and greaterstaff support for the judiciary. There is little or noattention to the legal system's actual complex andmultifarious interplay with and impact on diverse sectionsof society. This is reform without any sense of context.

A major part of the problem is the purely technocraticand at times self-servingly insular approach of the 'legalreform community' that has historically dominated andcontinues to dominate the justice sector discourse inPakistan, as indeed it has in India (Baxi, 1982). Anadditional problem, I contend, is the growing popularityof legal rhetoric in the international law and developmentdiscourse that is bringing about a new reductionism(Kennedy, 2008). As a result, complex developmentissues are increasingly formulated, evaluated, anddebated through the framework of legal concepts andremedies. This can cause, I suggest, obliviousness tomeaningful appreciation of the risk of narrowly legalizingwhat is a much more complex discourse. Consequently,this can also distract attention from the need for a deeperpolitical and economic engagement with the underlyingissues plaguing the justice sector and indeed society

Reforming Pakistan’s Justice Sector Reform DiscourseBy Osama Siddique

itself. With this in view, the upshot of my argument isthat in the Pakistani context, the existing justice sectordiscourse reveals that law reform, and law making, largelytakes place without sufficient cognizance of socialrealities, social diversity and social disparity. This is dueto several political, structural and institutional reasons,aspects of which I have discussed elsewhere (Siddique,2006; Siddique, 2007).

My second contention is that the justice sector reformdiscourse in Pakistan is further flawed because it isahistorical in its envisioning and analysis of its problems.In other words, it does not engage with the reality ofthe continuing imprint of colonial law-making on thecurrent Pakistani laws and legal system (Siddique,forthcoming). A rich array of multi-disciplinary literatureon colonial rule in undivided India reveals that coloniallegal systems and law-making likely caused wide-scalesocial, political and cultural displacement (Cohn, 1959;Rudolph & Rudolph, 1965; Galanter, 1968; Skuy, 1998).Motivated as it was by different and at times conflictingpolitical philosophies (Stokes, 1982; Kolff, 1992), andby a set of policy priorities formulated by the particularexigencies and imperatives of colonial rule (which alsovaried in different parts of colonial India and duringdifferent periods of colonialism) ( Washbrook, 1993),this is hardly surprising. In light of the fact that many ofthese colonial legal codes and legal and administrativegovernance frameworks are still largely intact in Pakistan,there is an acute need to revisit their design and contentin light of contemporary realities, institutional challengesand popular aspirations.

A better-contextualized, more socially-cognizant andintellectually-nuanced approach to legal reform mayhave a more positive social impact in terms of upholdingconstitutional rights and legal protections of dis-advantaged groups in Pakistani society. Furthermore, agrowing invasive trend on part of the Pakistani judiciaryto encroach the realm of the purely political is highlyproblematic. Additionally, the exclusionary tendency ofthe Pakistani law and justice discourse to crowd outattention to and engagement with other neglected and

rightful avenues for political and economic reform oughtto be resisted. This 'cultural hegemony' of the law maywell be doctrinal as well as institutional, as indeed it mayalso manifest in terms of its special language, procedures,categorizations and general modus operandi (Merry,1990; Moore, 1978). To borrow a concept from Foucault(1975) and apply it in the current context, legal'normalization' ought to be under special scrutiny,especially when it seems increasingly violative of diversity,pluralism and popular modes of access to justice, andwhen it completely erases or transforms what thecommon person finds more intelligible, accessible andfulfilling (Bhattacharya, 2001). Failure to resist suchhegemony, when it excludes the layperson, thedisempowered and the disadvantaged, I suggest, maycause further lack of success for the justice sectordiscourse in addressing issues and contestations thatnecessarily require major political and economic debate.The very political nature of these issues and contestations,in any event, make these an inappropriate terrain ofoperation for purely technocratic and legalistic reformapproaches. Continuing neglect of necessary avenuesof political and economic engagement necessary for aholistic understanding and meaningful redress of rights'violation and legal disempowerment and violation ofrights is ultimately self-defeating, and amounts to littlemore than the pursuit of a legal red herring.

It is thus important to shift the focus of justice sectorreform from purely technocratic/legalistic to legal-sociological (Llewellyn, 2008; Hale, 1923; Hale, 1935;Hale, 1943). In other words, it is vital to transfer thegaze from the courtroom to the disputants themselves(Siddique, forthcoming). This is essential, in order toclearly assess the real nature of disputes in Pakistan,particularly in rural areas where the bulk of its populationlives. Rural Pakistanis have far lesser contact with theappellate judiciary (the focus of attention for the bulkof the justice sector reform discourse), as compared totheir regular contact with the lower rungs of the state—the tehsil and district courts of first instance and appeal,the tehsil and district administration, and the local police

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station. Furthermore, it is necessary to determine exactlyhow these disputes emerge in society, get resolved oralternatively, are perpetuated. Whether and how someof these disputes become legal contestations are onlysecondary questions. These secondary questions canbe meaningfully investigated only if there is simultaneousappreciation of the socio-politico-economic backgroundand imperatives for potential legal contestations. It isthus important to determine whether there are regularwinners and losers in typical and widely prevalent ruraldisputes. It remains to be seen whether consistentlyending up on the losing side is a function of certainexisting disempowerments and socio-economicconditions. It is also important to determine whetherthe cultural hegemony, the cost, the delay, and thecontinuing incomprehensibility and/or lack of fit of theformal legal system persuades many rural disputants totake recourse to informal dispute resolution mechanismsand modes of popular justice. Finally, it is necessary toascertain whether some of these alternative informalmodes of dispute resolution ought to be furtherbolstered, both to enhance access to justice, and toreduce the ever-increasing workload on the formalcourts.

This necessitates even deeper exploration of whetherthe history, structure, sociology, ideology and capacityof the existing legal system and its operators inhibitsand constrains it in addressing disempowerment andresulting injustices. At the same time, it is logical to askif these phenomena actually cause the existing legalsystem and its operators to cement and perpetuate suchdisempowerment and injustice. This then raises therelated question of whether the aforementioned de-contextualized nature and ahistoricity of the justicesector discourse further perpetuates this institutionalinability, and even complicity. The upshot of all this isthat a myopic focus on the legal system in isolation ofits context, and the constant analytical formulation ofdisputes in society as essentially legal contestations, willcontinue to prevent more meaningful, deeper,

multidisciplinary evaluation of the socio-politico-economic dimensions of the justice sector.Such myopia seems to be leading us nowhere in termsof our larger understanding of the real reasons for anincreasingly divided and contentious Pakistani society. It is not even adding much to our comprehension ofthe narrower question of why the formal justice systemis getting more and more burdened with new legalcases, becoming slower in its output, being increasinglyperceived as controversial in its dispensation andconsequently losing the trust and confidence of thepeople. At present, we have no empirical evidence ordeep legal-sociological-anthropological work to answereven this relatively narrow question. We cannot yetaccurately describe the nature of the bulk of disputesin Pakistani society and resulting court cases. Are theya function of archaic and flawed laws, absence of socialregulation, procedural weaknesses, institutionalshortcomings, poor capacity and weak training of justicesector personnel, contractual asymmetry, personalwealth, growing rent-seeking, demographic pressureson resources, or any and all of these factors and more?To which features is the phenomenon attributable toand in which parts of Pakistan - we simply do not know.There is no current on-going research of note, no reliabledisaggregated available data, and no rigorous analyticalor explanatory theory on offer. We have conjectures,speculations, anecdotes and biases at best. As a result,the existing priorities of justice sector reform arerestricted to relatively superficial steps like training courtclerks, computerizing cause lists in courts, introducingbetter court record management systems etc. Whilethese steps can have some useful impact, especially interms of accumulation of useful data for future analysisand enhanced case flow efficiency, on their own theymay not ultimately amount to much without acommitment to deeper assessment of the substantiveand structural issues confronting the justice sector.Other than that, there is the perennial demand by thecountry's judicial leadership for more judges, morecourts, more facilities and higher salaries.

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The Fallacies and Shortcomings of the CurrentDiscourse

It merits at this stage to further flesh out the twoaforementioned critiques of the justice sector discourse,by briefly elaborating on their most prominentcharacteristics, dimensions and directions, with a specialfocus on the last decade of reform (or at least thepromise of it).1 Briefly stated, these characteristic featuresof the reform process are as follows:

(a) The Pakistani justice sector discourse mistakenlycontinues to equate the vast and complex concept ofthe justice sector with the narrower operation of judgesand courtrooms. While adopting this narrow perspective,the 'legal reform community' continues to myopicallyfocus on efficiency enhancement of court-based disputeresolution mechanisms, while ignoring the actual qualityof justice coming out of the courts. It is all about speedand efficiency and relatively little about substantivejustice and equity.

(b) Further, the reform interventions germinating fromthis discourse have largely ignored the underlyingreasons for societal disempowerments and disputes andthe resulting contestations in courts. They haveessentially reduced the analytic of court contestationsto bare number crunching in terms of aggregatesregarding case institution, disposal and pendency, ratherthan a scrutiny of the complex interplays of thesecontestations with important societal phenomena. Suchscrutiny is necessary if disputes are to be meaningfullyaddressed. This is true even for successful pursuit ofthe narrower goal of arresting the trends of constantlyescalating, oftentimes frivolous and/or coercive, andinvariably delayed litigation in the country. This vitalcontext and the underlying reasons for Pakistani courtbattles, however, are constantly overlooked.

(c) Even in terms of reform solutions, the reforminterventions, in particular the ones introduced overthe past decade, have adopted a very court-centricapproach. This limited approach has two dimensions.

The first dimension is that in reform dialogues andengagements, an overwhelming primacy is accorded tothe courts, judges and legal practitioners over and aboveother equally important players in the justice sector.The latter include, inter alia, citizen and consumergroups, NGOs, human rights groups, academics, policyexperts, media, labor and trade unions, political partiesand legislative bodies. Unsurprisingly, this has resultedin a very narrow outlook on the justice sector and itsproblems. The second dimension is that reformprescriptions are essentially determined and controlledby limited, technocratic and at times parochialperspectives of the aforementioned ascendantpractitioners of the law. This constant neglect of thenon-court and non-legal profession dimensions of thejustice sector has in turn contributed to the half-heartedness of any ancillary attempts at generatingdemand, awareness, and stakeholder ownership forthese reform interventions in society. This is anothercontributory reason for the lack of success andsustainability of these reforms.

(d) The neglect of and non-engagement with politicalparties and actors, political processes and the legislaturein the Pakistani justice sector reform discourse hasfurther added to the malaise. It has meant that manyareas of constant disputes and legal contestations thatactually require wide consultations and consensus-building, fresh policy thinking and legal upgradationand amendment of the applicable law (or even theintroduction of new and socially informed laws andregulations in areas that face the vacuum of such lawsand regulations), remain unaddressed. Being politicallyunrepresentative and unaccountable, these technocratsand legal experts, however, could not care less aboutthis political and social apathy vis-à-vis their reformprescriptions.

(e) By giving overwhelming primacy to courts as theterrain for reform and judges and lawyers as theinstruments of reform, these justice sector reforminterventions have also neglected alternative modes ofdispute resolution, mediation and case diversions. This

has translated into lost opportunities for making justicemore accessible to citizens. This has also ruled out thepossibility of reducing case backlog and acceleratinglitigation in courts by relocating many kinds of disputesto alternative arenas. Even where effective socialregulation made more sense, a legal penalization andcourt-based adjudicative solution is preferred. Forinstance, more effective drafting and stringentimplementation of urban zoning and constructionregulations would preclude many contestations thatfind their way to the courts for resource consumingadjudication and remedy claims. This results in not justconflating the issues but also rules out more effectiveout-of-court resolution of certain types of disputes.Lastly, all this has major economic ramifications as itmerits additional scrutiny as to how regulatory intensitycan offer benefits of reducing expensive and/or self-serving and rent-seeking litigation.

The above should hopefully clarify that my critique ofthe justice sector discourse does not simply provide thebasis for and lead up to an argument for merely addinggreater analytical rigor and contextual awareness to thedeliberations within the existing justice sector discourse,thereby lending greater efficacy to its reformprescriptions. The problem is much deeper than this.While pointing out the de-contextualized and ahistoricalnature of this discourse, I am also arguing that thisdiscourse is not only too hegemonic and exclusionary,but at times even self-serving and self-perpetuating.There is, thus, a fundamental problem with the currentmembership of the 'legal reform community.' In otherwords, I contend that even if the current discussantsand members of the 'legal reform community' were toread more history and engage more actively with society,not much is likely to change. There is unlikely to bemuch more than a limited positive impact given theconflated and ever-growing disputes in society.Meaningful engagement with the fundamental andunderlying social, political and economic factors thatperpetuate dispute and discord in society is simplybeyond the analytical reach and institutional leverageof the discussants and decision-makers in the current

discourse i.e., the judges, the lawyers, international andlocal law reform consultants and government lawdepartments. The mode, by both choice and necessity,as well as the terrain of reform for these players areafter all merely the courts. However, many of the causesfor the problems faced by the actual disputants andeventual litigants in society lie beyond the adjudicativeand corrective capacity of the courts.

An example may further explain this. Even in thecomparatively limited objective paradigm of theacceleration of legal case disposal (a pet area of reformin the last decade or so but with much older antecedentsin the law reform history of the country), availablestatistical evidence shows that the gap between newlyinstituted legal cases and existing case disposal is anever widening one (Murtaza and Siddique, 2010). Thisnecessitates a deeper understanding of what is causinggreater societal dispute and resulting litigation. Thisagain requires a better appreciation of whether an archaiclaw, outdated procedure, increasing claims on shrinkingresources, greater exploitation on the basis of politicalor economic power or any of a whole host of otherdemographic, sociological, political and/or economicvariables are contributing to excessive litigation. Thisalso mandates a consideration of whether the solutionlies in controlling and rationalizing any of thesecontributory variables or in exploring alternative modesand processes for dispute resolution and indeed evencuring the causes for excessive disputes. A recent surveyreveals several important linkages between popularperception of crime, actual experience with crime andaccess/lack thereof to the police, and household andindividual characteristics like geographical location (bothon the rural/urban spectrum as well as in terms of thesocio-economic development of the region), householdwealth, education, gender, religion, age, caste and socialaccess/networks (Anjum and Siddique, 2010). Yet thereform focus has been exclusively on tweaking supply-side variables—higher number of judges, better courts,enhanced salaries, more computers and fax machinesetc., without any attempts at appreciating thecomplexities on the demand side and the multiple

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challenges faced by the end-users of the formal justicesystem.

Therefore, instead of just focusing on legal cases, andon evaluating the legal adjudicative process for disputesand its limitations, current legal research in Pakistanought to be driven by a larger and deeper agenda. Ithas to ask whether the nature and extent of disputes inPakistani society actually points to larger issues of acrumbling Pakistani social contract and eroding stateapparatus. The underlying objective of future legalresearch and policy work ought not be to merelypropose, as is the wont in the current justice sectorreform discourse, how the existing legal and judicialsystem can be tweaked and refined for better servicedelivery and right protection. The raison d'être andimpetus of such work ought to be to evaluate the extantofficial justice sector reform discourse from a legal-sociological lens, in order to determine its actual roleand direction in contemporary Pakistani society—a rolethat I argue is one that limits and debilitates the possibilityof a wider and richer discourse and for far-reaching andmeaningful reforms. Its purpose ought to be to gaugeand discuss the inherent institutional shortcomings ofthe judiciary that will always constrain it from providingmeaningful justice solutions—solutions that couldpossibly only be provided, it is argued, through directpolitical and economic reform. This, briefly, is thejustification for the argument for broadening, enrichingand diverting the current focus of the justice sectorreform discourse from the court and the case to thesociety and the dispute. This is very unlikely unlessthere emerges a new, wider and deeper reform discoursethat is defined, structured and driven by thoughtfulrepresentatives from the various vital and currentlyignored stakeholders in the Pakistani justice sector. Thelegal academy ought to be one of these.

Osama Siddique is an Associate Professor of Lawand Policy at LUMS and a doctoral candidate at theHarvard Law School. He can be reached [email protected].


Bhattacharya, N. (2001). Remaking Custom: TheDiscourse and Practice of Colonial Codification. In R.Champaklaksmi & S. Gopal (Eds.), Tradition, Dissentand Ideology: Essays in Honour of Romila Thapar, (pp.20-51). Delhi: Oxford University Press.

Cohn, B.S. (1959). Some Notes on Law and Change inNorth India. Economic Development and CulturalChange, 8(1).

Ehrlich, E. (1936). Fundamental Principles of Sociologyof Law. Cambridge, MA: Harvard University Press.

Foucault, M. (1975). Discipline and Punish: The Birthof the Prison. New York, NY: Vintage Books.

Galanter, M. (1968). The Displacement of TraditionalLaw in Modern India. Journal of Social Issues.

Hale, R. (1923). Coercion and Distribution in aSupposedly Non-Coercive State. 38 Political ScienceQuarterly, 470.

Hale, R. (1935). Force and the State. Columbia LawReview, 286.

Hale, R. (1943). Bargaining, Duress, and EconomicLiberty. Columbia Law Review, 603.

Kennedy, D. W. (2008). The 'Rule of Law', PoliticalChoices, and Development Common Sense. In D.MTrubek. & A. Santos (Eds.), The New Law and EconomicDevelopment (pp. 95-173). New York, NY: CambridgeUniversity Press

Kolff, D.H.A. (1992). The Indian and British LawMachines: Some Remarks on Law and Society in BritishIndia. In W.J. Mommsen and J. A. De Moor (Eds.),European Expansion and Law: The Encounter ofEuropean and Indigenous Law in 19th-and 20th -century Africa and Asia (pp. 201-237). Oxford: Berg.

Llewellyn, K. N. (2008). Jurisprudence : Realism inTheory and Practice. New Jersey: Transaction Publishers.

Merry, S.E. (1990). Getting Justice and Getting Even:Legal Consciousness among Working-Class Americans.Chicago: The University of Chicago Press.

Moore, S.F. (1978). Law as Process: An AnthropologicalApproach. Boston: Routledge & Kegal Paul.

Murtaza, S. A. & Siddique O. (2010). The RetrospectiveReport: Mapping and Assessment of Justice SectorInterventions, Donors and Government 1998-2000. TheAsia Foundation.

Rudolph, L.I. & Rudolph S. H. (1965). Barristers andBrahmans in India: Legal Cultures and Social Change.Comparative Studies in Society and History, 8(1).

Siddique, O. (2006). The Jurisprudence of Dissolutions:Presidential Power to Dissolve Assemblies under thePakistani Constitution and its Discontents. ArizonaJournal of International & Comparative Law 23, 615-715.

Siddique, O. (2007). Martial Laws and Lawyers: The Crisisof Legal Education in Pakistan and Key Areas of Reform.Regent Journal of International Law 5(1), 95-122.

Siddique, O. & Anjum S. (2010). The Punjab CrimePerception Survey Report 2010. Asian DevelopmentBank/Government of Punjab.

Siddique, O. (forthcoming). The Hegemony of Heritage:The 'Narratives of Colonial Displacement' and theAbsence of the Past in Pakistani Reform Narratives ofthe Present. Mimeo.

Siddique, O. (forthcoming). Approaches to Legal andJudicial Reform in Pakistan: Post Colonial Inertia andthe Paucity of Imagination in Times of Turmoil andChange. Mimeo.

Siddique, O. (forthcoming). Reform on Paper–A PostMortem of Justice Sector Reform in Pakistan from 1998-2010. Mimeo.

Siddique, O.(forthcoming). Reform Nirvanas & RealityChecks–Justice Sector Reform in Pakistan in the 21stCentury and the Monopoly of the “Experts.”

Skuy, D. (1998). Macaulay and the Indian Penal Code of1862: The Myth of the Inherent Superiority andModernity of the English Legal System compared toIndia's Legal System in the Nineteenth Century. ModernAsian Studies, 32(3), 513-557.

Stokes, E. (1982). The English Utilitarians and India.New Delhi: Oxford University Press

Washbrook, D. (1993). Economic Depression and theMaking of 'Traditional' Society in Colonial India 1820-1855. Transactions of the Royal Historical Society, 6thSer, 3.

Upendra, B. (1982). The Crisis of the Indian Legal System.Delhi: Vikas Publishing House.

Notes

1In my current research, I am further elaborating upon andproviding supportive evidence for this, especially scrutinizing majorgovernment and donor-driven justice sector reform from 1998 to2010.

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In the wake of recent floods in Pakistan, disastermanagement and government responsiveness are onceagain at the forefront of public debate. At the time ofwriting this article, 1600 people have perished due toflooding and over 20 million (one in eight people) havebeen displaced. The physical damage is of anunprecedented scale, with reconstruction andrehabilitation likely to be a challenge both in terms ofpolicy planning and execution.

One of the immediate tasks in response to a crisis is theinitial damage assessment for policy planning. From theexperience of developing countries that have faced large-scale natural disasters (for example, the recent Pakistanfloods and the 2010 Haiti Earthquake), such datacollection remains an ad-hoc process for two mainreasons: the scale of the disaster and the lack of aninstitutional infrastructure which can effectivelyenumerate relevant information. A shortfall that can beimmediately identified is the lack of readily availablebaseline information at the village level that includes aspatial database on village locations with respect to riversand road networks. This is potentially one of the mainreasons for delays in initial damage assessment in theabsence of mechanisms to monitor rate of populationdisplacement and delivery of relief goods in theimmediate aftermath of the floods. Given the scale ofthe disaster, overcoming such information gaps is achallenge to any institution no matter how prepared,hence highlighting the need for alternate methods of

disaster analysis.

In light of this, simulations based on behavioral modelsof human and natural phenomena can significantlyimprove the understanding and forecasts of crisisscenarios. Simulations done using agent-based models(ABMs) can help analyze patterns of displacement, reliefitem flows, and spread of diseases etc. Agent-basedmodeling is an effective policy research tool for complexsocial systems which can simulate real phenomenaarising through the interaction between individual agentswhose behavior may be non-linear, heterogeneousand/or path-dependent, besides showing temporalcorrelations due to learning and adaptation. Such modelscan also incorporate information on the infrastructureof affected regions, for example, location of schools,hospitals, camps, markets, road and river networks,elevation and topographical data, all of which play asignificant role in how a natural disaster scenario unfolds.By predicting flows of populations beforehand, reliefactivities can be implemented quickly and effectively tohigh population clusters. Such a model can also beextended by developing and testing proposed policyoptions such as various configurations of resettlementand rehabilitation schemes.

This article will introduce the use of agent-based modelsas a tool for the analysis of natural disasters. A simplemodel of a regional economy will be presented and theresults of a shock will be shown. Extensions to thismodel and potential applications will be discussed forthe current flood situation.

Agent-based Modeling and Disaster Analysis

ABMs are a form of bottom-up computational socialscience where a social phenomenon is abstracted basedon how the reality is perceived (Gilbert, 2008; Axtell &Esptein, 1996; Bonabeau, 2002). They constitute twomain components: agents or social actors (individuals

Natural Disasters and Policy Planning1

By Syed Ali Asjad Naqvi

or collective entities, for example, firms or households),assumed to be autonomous and heterogeneous whoare endowed with behavioral rules that allow them tointeract with each other and the environment; and theenvironment which represents the virtual space onwhich the agents interact. This space can range fromhaving little or no significance to being critical to thebehavior of agents. For example, geography, land quality,and road type are some of the environment variableswhich might be important for disaster analysis.The value of using ABMs in social sciences lies in theirability to explain social phenomenon from individualcomponents. Their application can vary from theoreticalexercises in modeling phenomena (Axtell, 2000), tomodeling and validation of other models (Moss, 2008),to simply understanding actual phenomena in accuratespatial representation of the environment wherepredictions can be made. In our case, the focus is onthe first and the last aspect, where the aim is to examinepatterns of certain outcomes in the event of a naturaldisaster which can then be extrapolated for policyanalysis.

ABMs are a convenient tool for conducting experimentswith different parameter settings, where interactionscan be tested in simulation runs and considered forfurther analysis or empirical validation. This ability toconduct experiments is a significant advantage ofusing ABMs in analyzing disaster scenarios. Withexperimentation difficult (and also immoral in case ofnatural disasters) to conduct in real life situations, suchsimulations can help make accurate forecasts regardingloss of life, starvation and spread of disease, allowingprecautionary measures to be taken. Furthermore, ithas become possible to fit actual population-levelbaseline data on an accurate geographic setup whichallows us to replicate, test and extrapolate crisisscenarios.2 Moreover ABMs are currently the only toolthat allows us to explore and understand emergentphenomena where the output is more than the sum ofits parts, which can result in better insights in under-standing natural disasters (Gilbert, 2008; Bonabeau,

2002).

ABMs also excel at modeling flows, especially in scenarioswhere the direction of causality is hard to determine.In this case different components of the economy directlyor indirectly affect each other such that the processends up in feedback loops, which either settle down toa stable path or spiral out of control (similar to stochasticcobweb models). Such feedback loops are critical forunderstanding natural disasters so as to detect criticalthresholds beyond which a system can become unstable.For example, due to excessive shortage of food suppliesthe system might collapse in the long-run unless externalintervention stabilizes it. Such recursive loops or feedbackmechanisms are easy to incorporate and study in ABMsand give a more realistic understanding of situationswhich are out of equilibrium and exhibit non-linearpatterns. Intuitively, there is a high probability that suchpatterns will occur during natural disasters, allowing forthe identification of tipping points beyond which thewhole system may collapse. Furthermore ABMs havetwo key advantages over economic modeling: first, itallows us to monitor how a system transitions from oneequilibrium to another, especially if the processes arenon-linear and second, it allows us to explore changesin distributions both spatially and temporally when noa priori restrictions are imposed on the variables.Moreover, in developing countries like Pakistan, wheredata collection is a slow and long-term process, savingsin terms of time and money make ABMs even moreattractive. The nature and scale of natural disasters, incertain cases, might make the exercise of conductingrapid comprehensive surveys even more intractable,hence pointing to the superiority of ABMs in providinguseful policy benchmarks.

A Hypothetical Model and Experiment

During the recent floods in Pakistan, a large fraction ofthe rural population has been directly affected. Suchlarge-scale displacement of the population has strongeconomic repercussions for the country. For example,

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recent floods are estimated to have caused over 20percent loss in crops, a major source of food for boththe affected regions and the rest of the country.Furthermore, population displacements have led to anincreased demand for food in host areas. This has ledto a considerable drain on resources, causing sizeablefeedback effects on the whole economy. Moreover, thecountry could potentially face a second-round crisis interms of food price hikes and loss of life due to water-borne diseases in the upcoming months.

To illustrate this point further, a simple model is createdfrom the aforementioned facts to present a hypothetical“shock” scenario. Although the model is purely atheoretical exercise in setting up an artificial economy,certain predictions like high rural-urban migration, witha concomitant rise in food prices and stagnantconsumption levels show plausible results.

on a share-cropping basis or by business-owners as wagelabor. This demand for labor within the region leads tothe formation of a labor market where workers respondto real-income differentials and migrate to clear themarket. Similarly, the demand for the two goods acrossthe region also creates a circular flow of goods and money.

Figure 1(b) shows the environment of the artificialeconomy in NetLogo (Wilensky, 1999), an ABM modelingsoftware, where yellow patches represent villages, greypatches cities, and white lines a basic road network. Abenchmark configuration is used to determine patternsof economic variables such as income, demand andsupply of goods, prices, consumption and long-rundistribution of population across urban and rural areas.This also establishes the level of food stock both at theindividual and market levels giving the initial level offood vulnerability in the system.

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Figure 1: An Artificial Economy(a) (b)

Source: Naqvi (2010)

money

tradeable goodlocal demand

Local economywith road networks

wageslaborerscultivators

wheatmoney

money

trad

eabl

e go

od

surp

lus

expo

rt

RuralMarket

VillagesUrbanMarket

CitiesCapitalists

ForeignMarket

In this model, a simple regional economy of the typeshown in Figure 1(a) is assumed. It comprises two sub-regions, namely villages and cities, and is populated bythree agent categories: cultivators, laborers, and smallbusiness-owners. Cultivators are land-owners who growwheat, consumed across the region. Business-ownersrepresent a small mercantile class producing a tradablegood that is demanded both within and outside theregion. Hence excess production is exported, allowingbusiness-owners to earn profits. Laborers represent amobile working class that is hired by either cultivators

A simple experiment is conducted where the overallwheat productivity is reduced by half and then allowedto partially recover after a certain time. This approximatesthe impact of a flood shock that can result in partialcrop loss with minimal deaths, where land becomesusable after some time. Hence the population remainsrelatively stable, with the outcome of this shock beingplayed out purely in terms of changing populationdistribution and stock levels across the artificial economy.In order to identify the previously mentioned criticalthresholds in the system, no external intervention is

22


allowed. In order words, no in-built relief provision existsin the experiment nor do we assume any additionalbehavioral rules for disaster response. This makes theresponse of this closed system purely internal or “natural”,where economic behavioral rules determine the outcomeof the shock. We expect agents to prefer higher incomeand consumption to a lower one; hence any shock to astable system will automatically lead to a shift inpopulation distributions causing new trends across othereconomic variables as well. The result of a 50 percentwheat loss is given below.

Figure 2 shows the impact of the shock on populationlevels. The vertical line represents day 0 when the artificialeconomy receives the shock. All trends before this cut-off point are derived from the benchmark configurations.Figure 2(a) shows the change in absolute population

in response to productivity improvements.

To understand this shift in population distribution andits impact on other variables, we examine the urbanwheat market. Cities tend to maintain a certain stock ofwheat over and above current demand. This allowsmarkets to maintain a certain turnover (30 to 40 daysfor wheat) which stays relatively stable, barring anymarket fluctuations. Calibrating the sensitivity of marketsto fluctuations is an important aspect of natural disasters,where despite sufficient supply within a closed system,delays in response (due to high transportation costs orlack of infrastructure) make markets more vulnerable toshocks. In the current model, markets maintain anexogenously determined level of turnover, which onaverage equals 40 days. Figure 3 shows the impact of theshock on the urban wheat market. Figure 3(a) shows the

Figure 2: Population Flows and Migration Pattern

1000

800

600

400

Total Population

To

tal

Ag

en

ts

Cities Villages

-250 0 250 550 750 1100 1250 1500Days

level across villages and cities while Figure 2(b) showsthe migration patterns. Since the shock reduces wheatproduction by half, Figure 2(a) shows a sudden drop inpost-shock rural population due to rural-urban migration,which eventually slows down as the economy stabilizes.Over time as productivity recovers, a small reverse-migration also takes place. Figure 2(b) shows themigration pattern, where the initial phase of the disasterresults in high displacement and then slight reversal assome village laborers move back to their original locations

net supply of wheat pre- and post-shock. After the shocks,markets are able to hold out until the loss in supply causesthe system to fall into disarray, where any subsequentsupply to the market quickly dwindles. This results inexcess demand of wheat (indicated by the graph fallingbelow zero), causing shortages in the market. To counterthis, the market clearing price of wheat goes up to stabilizethe flows. As shown in Figure 3(b), the mean trend ofwheat price shows an increase, while the actual scatterplot of prices shows a high incidence of spiking due tointermittent price hikes in a volatile market.

-250 0 250 500 750 1000 1250 1500

30

20

10

0

Migration - Laborers

Ag

en

ts

Source : Naqvi(2010)

Villages to Cities Cities to Villages

Days

(b)(a)

Figure 3: Population Flows and Migration Pattern

The above graphs illustrate the fluctuations in the urbanwheat (food) market caused by feedback effects acrosstwo variables: loss in production on the supply-side andan influx of rural population on the demand-side. Figure4 shows the impact of this shock on the real-income inthe economy. A 30 % real-income difference is maintainedacross rural-urban income levels to capture the usualincentive for rural- urban migration. Since the shockcauses a temporary reduction in output, village laborersget a smaller fraction of wheat through share-cropping,

of which most is consumed, while a smaller amount issold in the markets. This forces a sudden drop in ruralincome levels, resulting in a high level of migration ofvillage workers to cities in search of employment. Asthis version of the model assumes no capacity constraintsin the tradable goods' production in the cities, allmigrating labor is absorbed by business-owners, forcingwages in the cities to go down. Income levels continuedropping till they revert to the baseline rural-urbanincome difference.

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Wheat Market Cities-Net Suply1100

500

0

-500

-1100

-250 0 250 550 750 1100 1250 1500

Supp

ly -

Dem

and

(uni

ts)

Days

Mean 95% CI

Wheat Market Cities - Price

Rs.

25

2

15

1

-5

-250 0 250 550 750 1100 1250 1500Days

Mean 95% CI


Figure 4: Changes in Real Income


Real Income - Laborers

Re

al In

co

me

(R

s.)

-250Days

0 250 500 750 1000 1250 1500

30

20

10

0

(b) Price(a) Output

Scatter

Cities Villages

Potential Extensions

Our artificial model depicted a scenario in which onetype of shock was simulated using a benchmarkconfiguration of an artificial economy. Of course, manyother configurations and experiments can be done usingthis model. The purpose of presenting this model wasto simply illustrate how the response of an economy toan external shock can be broken down into variouscomponents and how the impact of different variableson each other can be isolated. These patterns can beuseful to preemptively determine trends in key variablesin a natural disaster scenario, using baseline informationto calibrate the model.

Moreover, to replicate an actual disaster scenario, thelevel of complexity in the model has to be increased forplausible results. This includes adding certain socio-economic conditions which can directly impact outcomesof natural disasters and are critical for future policyplanning as well. For example, employment trends,migration patterns, price rules and income levels canvary significantly from region to region. In this regard,ABMs are usually the only platform available for handlingseveral calibration configurations in the same model,making them dynamic enough to be easily extended toan actual scenario. Moreover, the increase in complexitycan be varied according to the type of natural disasterbeing tested.

In the example above, the focus was on the impact ofproductivity shocks on food stocks and populationdistributions to highlight the food vulnerability in thesystem. While this experiment required relatively detailedbehavioral rules and specific market structures to bedefined, this baseline framework can now easily beextended in a modular way, such that different versionscan deal with different aspects of natural disasters. Thesecould include ABMs with specific focus on populationdisplacement, food supplies, family networks,geographical impact, and epidemiological analysis. Usingthis approach, information can be used from existing

empirical data (for example, income levels and prices),while considerable complexity can be layered in as perthe scenario under consideration. High-endcomputational power that is now available can enableresearchers to predict patterns of disasters using onlybaseline information. Obviously, the system can thenbe updated once more recent micro-level disaster databecomes available. For example, if a camp houses only500 people while 1000 were predicted through thesimulation, this information could be used to furtherrefine the model and reduce the deviation from actualtrends. This recurring prediction/calibration approachcan help with better relief coordination, especially inthe early phases of the disaster, to allow effective policyplanning in the long-run.

Syed Ali Asjad Naqvi is currently a candidate forPhD in Economics at the New School for Social Research,New York. This article stems from his dissertationresearch and is currently a work-in-progress. Pleasesend comments, feedback and suggestions [email protected]


Axtell, R. (2000). Why agents? On the varied motivationsfor agent computing in the social sciences. WorkingPaper No. 17, Center on Social and Economic Dynamics,Brookings Institute.

Bonabeau, E. (2002). Agent-Based Modeling: Methodsand Techniques for Simulating Human Systems.Proceedings of the National Academy of Science, 99(3).

Epstein, J. M. (2006). Remarks on the Foundations ofAgent-Based Generative Social Science. In L Tesfatsionand K.L. Judd (Eds.), Handbook of ComputationalEconomics, Volume 2: Agent-Based Modeling.Amsterdam: North-Holland.

Esptein, J. (2009). Modeling to contain pandemics.Nature, 460, 687.

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Epstein, J. & Axtell, R. (1996). Growing Artificial Societies:Social Sciences from the Bottom Up. Cambridge, MA:MIT press.

Gilbert, N. (2008). Agent-Based Models (QuantitativeApplications in the Social Sciences). California: SagePublications.

Moss, S. (2008). Alternative Approaches to the EmpiricalValidation of Agent-Based Models. Journal of ArtificialSocieties and Social Simulation, 11(15).

Naqvi , S. A. A. (2010). Simulating Shock in RegionalEconomies: An Agent-Based Approach (Unpublisheddoctoral dissertation). New School for Social Research,New York, NY.

Wilensky, U. (1999). NetLogo. Centre for ConnectedL ear n ing and Computer-Based Mode l ing .Northwestern University, Evanson, IL. Retrieved fromhttp://ccl.northwestern.edu/netlogo.

Notes

1I would like to acknowledge Prof. Duncan Foley (New School forSocial Research), Prof. Sanjay Reddy (New School for SocialResearch), Prof. Robert Axtell (George Mason University) and Prof.Lopamundra Banerjee (New School for Social Research) for givingdirection to this project.2For example Epstein (2009) uses 300 million agents to simulatethe spread of the H1N1 virus in the United States and extendsit to the world, with its population of over 6 billion.

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Research Notes

Several faculty members at the School of Humanities,Social Sciences and Law (SHSSL) at LUMS are activelyinvolved in research in the fields of Economics, PoliticalScience, Sociology/Anthropology and Law. The researchnotes collected below thematically organize their latestwork and highlight its policy relevance.

Macroeconomics, Trade and Economic Growth

Syed Zahid Ali has been working on exchange rate,taxes, and interest rate policies. Using non-stochasticmodels in continuous time, he checks the propositionthat if the system is stable then currency devaluationcannot both contract employment and worsen thebalance of payments of the country. Other models byZahid Ali examine how the supply-side effects of theexchange rate and taxes interact to complicate the effectsof currency devaluation, first using stochastic models incontinuous time and later in discrete time. He has alsoworked (with Sajid Anwar) on testing the productivitybias hypothesis, using data from the latest version ofPenn World tables for the three South Asian economiesof India, Pakistan and Sri Lanka. Currently, his workinvolves models that incorporate forward-lookingvariables, backed by micro foundations in an attempt toanalyze issues such as the correct exchange rate andinterest rate policies for less developed countries.

Antonio Marasco has conducted a study (co-authoredwith Ehsan Choudhri and Farhan Hameed) which usesa dynamic general equilibrium model to explore themacroeconomic and welfare effects of a large increasein FDI, such as that experienced recently by a numberof emerging economies. A second project focuses onthe effects of FDI on host country's welfare in terms ofgains from trade when firms are characterized byheterogeneity in their productivities. He showed thatfirms tend to order themselves in terms of increasingproductivity, such that least productive firms engage in

domestic markets, medium productive firms export andmost productive firms engage in FDI. Antonio has alsoempirically tested the link between FDI and growth. Inone article, he has done so in the presence of economicintegration, while in another he studies the role playedby technology. Additionally, he has also been interestedin researching the relationship between income inequalityand growth via technological progress.

Anjum Nasim's research interests includemacroeconomic policy, international trade and publicfinance. His recent research, co-authored with SajalLahiri at Southern Illinois University, specifically examinesthe potential for the reform of sales tax and tariffs inPakistan. The research looks at whether tariff revenueshould be substituted by consumption tax revenue andalso at whether tariffs on intermediate and final goodsshould be altered. Analyzing welfare effects, the researchconcludes that replacing tariffs on intermediate goodswith increased consumption tax would be welfarereducing. Also, optimal tax and tariff calculations indicatethat effective rates of protection in Pakistan can belowered by decreasing tariffs on final goods and raisingthem on intermediate goods. Another recent paper byAnjum Nasim and Sajal Lahiri develops a trade-theoreticmodel to calculate the optimal level of rebate providedby the Government of Pakistan; it concludes that as theGovernment becomes less revenue constrained, nationalwelfare would be boosted by increasing the rebates givento the exporting sector.

Turab Hussain's research interests range from migrationtheory and policy to poverty and rural development totrade and development. His research on migrationemploys the extended family framework instead of thestandard Harris-Todaro model, whereby the family, ratherthan the individual, is treated as the relevant decisionmaking unit for migration. The policy implications ofhis research indicate that developmental policy may leadto counter-productive results-urban employmentsubsidies may increase the pull factors of migration,

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Autumn 2010

hence leading to greater unemployment in the long run.Similarly, rural subsidies or lump-sum transfers to ruralhouseholds may, counter-intuitively, make migrationmore attractive by reducing its costs. In another paper,Turab explores how the rate of migration may not bepositively related to the degree of networks present atthe destination. Using an extended family framework,it is shown that a greater number of previous migrantsmay crowd out opportunities for new ones, hencereducing migration incentives.

Ijaz Nabi's latest research focuses on economic growth,income distribution and poverty reduction. Between1990 and 2007, South Asia, led by India, saw rapideconomic growth and impressive poverty reduction. Hison-going research assesses the quality of that growth inview of the fact that it is driven in all countries, withvarying degree, by remittances and rapid increase inconsumption. The impact on the economic structure ofSouth Asia is being examined in order to assess whetherthere is a shift of labor towards high-productivity, high-wage employment that would sustain growth andimproved living standards over a longer period of time.The principal findings indicate that growth in South Asiais driven by the services sector, which in most countriescomprises largely non-tradeables and has relatively lowlabor productivity. Ijaz Nabi's research further pointsout that the ongoing global financial crisis and sharpreductions in the price of oil have impacted theeconomies (the US and the oil rich Middle-East) whereremittances to South Asia originate; this could have farreaching consequences for South Asia and constitutesa major vulnerability that needs to be better understoodand managed. Ijaz is currently advising the government-he is a member of the Prime Minister's Economic AdvisoryCouncil as well as the Planning Commission's Panel ofEconomists.

Game Theory and Behavioral Finance

Hammad Siddiqi's research is in the area of behavioral

economics and finance. He has shown that a behavioralbias called the “lure of choice” aggregates to the marketlevel, hence directly affecting prices and allocations. Thisbias can potentially explain a few puzzles in financialmarkets including the closed-end mutual fund paradox.His recent research involves the derivation of a newoptions pricing formula based on the assumption thatinvestors are coarse thinkers. Coarse thinking is the ideathat people tend to put situations into categories andthen use the same model of inference while evaluatingco-categorized situations. The new formula termed thebehavioral Black-Scholes formula provides an explanationfor the implied volatility skew puzzle in equity indexoptions. His past research revealed that coarse thinkingcan explain the collusive outcome in a Bertrandcompetition with increasing marginal costs. Furthermore,he has shown that the two main aspects of coarsethinking, transference and framing, are present in anexperimental options market. On the policy side,Hammad's work involves the issue of Hawala, wherebyhe explores how interactions between formal bankingand informal Hawala greatly diminish the ability of theState Bank to effectively run a monetary policy. Also, hehas looked at how badla financing creates microstructurerents, concentrating de facto power in the hands of afew powerful brokers and hence stalling the process ofreforms in the stock exchanges of Pakistan. Accordingto his suggestion, all institutions in the stock exchangesof Pakistan (governing as well as financing) must bechanged simultaneously through the establishment ofa new stock exchange called the National Stock Exchangeof Pakistan.

Ali Cheema's research work can be broadly classifiedinto two themes: (a) descriptive work on poverty, socialand income mobility and village and district-leveldevelopment outcomes; and (b) governance, institutionsand political economy. His paper, “Geography of Poverty:Evidence from the Punjab”, co-authored with ManasaPatnam and Lyyla Khalid is the first paper to provide

28


robust statistical estimates of poverty and developmentindicators across Punjab's thirty-five districts. Anotherpaper makes use of a unique panel data-set ondevelopment outcomes at the district level and measuresthe degree of convergence in development outcomesacross villages between 1961 and 1998 and furtherattempts to explain the considerable divergence found.He has used this work to inform the design of povertyalleviation and social protection strategies that he hasworked on as part of the Planning Commission's Panelof Economists and as part of the Chief Minister Punjab'sEconomic Advisory Council. His work on institutionsand political economy analyzes the manner in whichstate institutions and local village-institutions impactdevelopment outcomes. Another paper (with ShandanaMohmand and Asjad Naqvi) analyzes the extent to whichdecentralization at the union-level results in elite captureof public service delivery. Finally, his paper (with BilalSiddiqi) on path dependence and public good provisionestimates the extent to which development outcomesat the village level are affected by initial socio-economicinequality within the social structure of villages.

Miguel Loureiro is one of the founding members ofResearch and Information Systems for Earthquakes inPakistan (RISEPAK). Presently, Miguel is a doctoralcandidate at the University of Sussex, looking at theimpact of the 2005 earthquake on social institutions andvalue systems in Pakistan-administered Kashmir. In hislatest papers, he assesses the resilience of informal socialprotection mechanisms in Pakistan, and problematisesthe concept of “community” in rural Pakistan. He hasalso started revisiting notions of social stratificationwithin South Asian Muslims.

Muhammad Farooq Naseer has worked on variousaspects of economic development ranging from theeconomics of education and health to public goodprovision and political selection. One component of hiswork attempts to evaluate the impact of policy onoutcomes of interest. For instance, he examined the

impact on learning outcomes of a recent schoolingreform, which established that child-friendly teachingmethods tend to improve student learning in languagesas well as mathematics. In addition, he has worked inthe area of judicial reform by providing statistical analysisof a representative case load from selected courts toenumerate the causes of delay in the justice system. Asan important off-shoot of this work, he has partneredwith colleagues in the Computer Science departmenton a project to study the benefits of automated analysisof judicial performance data from the daily caseloadinformation at the courts. In his other research,conducted in collaboration with Ali Cheema, Farooq hasexplored the causes and institutional constraintsunderlying the continuing deprivation of historicallylandless households. Based on a random sample ofhouseholds from Sargodha district, they establish thathouseholds belonging to different strata of the ruralsociety have not only had a very different profile ofeducational attainment over the last three generations,but that initial differences have widened over time. Theabove analysis is part of a report, “Poverty, Mobility andInstitutions in Rural Sargodha: Evidence for SocialProtection Reform”, to be published by the Governmentof Punjab's Planning and Development Department.

Taimur Rehman's research interests relate to politicaleconomy and Marxism. His ongoing research looks atthe class structure and mode of production in Pakistan.

Efficiency, Agriculture and the Rural Economy

Abid Burki and Mushtaq Khan have togetherconducted research on milk supply chain networks andthe efficiency of smallholder dairy producers in Pakistan.Their paper examines the effect of depression on thetechnical efficiency of dairy farms by using data from800 smallholder commercial dairy producers of ruralPunjab. It studies the impact of the rural milk supplychain on smallholder efficiency by employing stochasticproduction frontier and technical inefficiency effects

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model. The paper also calculates the annual loss toPakistan's dairy sector due to the depression.

Abid Burki has also carried out research regardingPakistan's banking sector. His recent paper, coauthoredwith Shabbir Ahmad of the International IslamicUniversity, examines the impact of bank governancechanges on bank performance by taking unbalancedpanel data of Pakistan from 1991 to 2005. The findingsof this paper suggest that, in general, financial reformsimproved banking sector performance. The winnersfrom governance change were either the privatizedbanks or the private banks selected for merger &acquisition whose post-governance change efficiencylevels have enabled them to exploit new profit-makingopportunities. Furthermore, in a study commissionedby South Asia Network of Economic Research Institutes(SANEI), Abid Burki has explored the links betweenpolarization and poverty. Based on empirical evidencefrom Pakistan, studies the impact of public infrastructureprovision on the incidence of poverty in a district. Hisrecent research also investigates the relationship betweenadult wage and child labour, and the impact of schooland teaching quality on child labour.

Mushtaq Khan has conducted research which examinesthe effect of changes in prices of food grains on theincidence of rural poverty. Another study inspects theimpact of household-level health shocks on poverty. Inaddition to his usual research and teaching activities,Mushtaq Khan is also a member of the Institutions forDevelopment working group on the PlanningCommission’s Panel of Economists.

Political Science

Mohammad Waseem is part of a team for a jointresearch project on religion and development, sponsoredby DFID. As the country coordinator of this project, fourresearch reports have been produced under him, twoof which he authored himself: “Religion, Governance

and Politics in Pakistan”, and “Dilemmas of Pride andPain: Sectarian Conflict and Conflict Transformation inPakistan”. He is also working on his new book PoliticalConflict in Pakistan, which seeks to explore the genesisand pattern of development of conflict in the state andsociety of Pakistan and its multiple forms, includingethnic, religious, federalist and linguistic conflicts. In arecent paper on affirmative action policies and socialjustice in Pakistan, he concludes that these policies arepotentially non-disruptive of the power structure andnon-revolutionary in their content as well as direction,and affirmative action is here to stay as a progressiveinput in a social and political framework that remainswedded to status quo in all other fields of public policy.His latest research includes a comparative analysis ofthe role of the ombudsman in Asian countries.

Ejaz Akram's area of research offers an interdisciplinaryoverlap in the fields of Politics, Religion and Philosophy.Most of his current research looks at the interface ofreligion and politics in three arenas: interfaith andcivilizational dialogue to include Islam-West, Muslim-Christian, and Hindu-Muslim relations; transnationalism(regionalism) and globalization; environmentalism, thestudy of human ecology and philosophies of nature.The first cluster involves research which origins lie inhistories of different civilizations and their theologicalsystems that has led to certain type of philosophical andpolitical thinking. This cluster further leads to two areasof focus: the politics of Abrahamic religions worldwide,and South Asia, the home of two great religious, traditionsnamely Islam and Hinduism. Ideals of all these civilizationslend plenty of opportunity to shape the realities thatcan lead to mutual acceptance, co-existence or at leasttolerance. The second arena of Ejaz Akram's researchdeals with politics of the Muslim world by judging thecharacter of regionalist aspirations and its attendantinstitutions and how globalization provides opportunityto achieve closer cooperation but also discourages anddisrupts such cooperation. Most importantly, the lastarena of Ejaz Akram's research looks at developmental

30


modernism and its relationship with secularism that hasa causal nexus with global environmental insecurity. Allthree clusters of research are employed to pull togetherthe normative and the empirical in a move towards a“green” theory of political peace, mutual co-existence,and sustainability.

Rasul Bakhsh Rais's current research focuses on therelationship between the tribe and the state in Pakistan'sWestern borderland. According to his research, there isa dialectical relationship between the tribe and the state.Both represent authority structures, institutions,leadership and rules to govern local populations. Whilethe modern notion of national sovereignty and territorialcontrol would require assimilation of the tribe into thelarger national community, the tribe and its chieftainwould strive to maintain their autonomy, traditions, andpolitical arrangements. The ethos and structural needsof the two to survive, and for the state to expand, comeinto clash. The research therefore raises the issue ofhow to go about assimilation or integration of tribalregions without provoking conflict. One of the centralquestions of Rasul Bakhsh's research is whether thePakistani state pursued a well-designed, elaborate andconsistent policy of effecting social change throughmodernization process in the western borderlands, orhas it relied on the colonial framework of “separation”and indirect control? The focus is how the threeinternational systems-British colonial, Cold War, andAmerican hegemonic have defined and redefined thedynamics and interactive process between the tribesand Pakistani state.

Magid Shihade's research interests are modernity andviolence along with knowledge production as a form ofresistance. His early research focused on communalviolence among Arabs in Israel, and how state origins,history, and policies have shaped the identities of itsArab citizens. The research is linked to a larger questionof state-society relations and group conflicts in thecontext of modernity. Shihade's research draws on

knowledge production, especially the work of IbnKhaldoun, which aims at challenging so many binariesthat have impacted our universities, societies and culturesboth in the West and the rest. The work on Ibn Khaldounis also an attempt to democratize knowledge and itsproduction by challenging the monopoly on knowledgeof any culture or geographic region. Shihade's currentresearch is concerned with violence within and betweenstates as well as global conflicts. It is an attempt to studythe ways in which states, modernity, and the modernglobal system have shaped these processes. It is also anattempt to address injustices, inequality, and the formsof domination and exclusion that are at work all overthe world and to understand their effects. In part, thisproject aims at studying the structures of power andhegemonic forces that lead to undemocratic societiesand states.

Sociology and Anthropology

Sadaf Ahmad's previous research has focused ongender- based violence and has involved an investigationof people's belief in rape myths, its sources and socialconsequences, an exploration of sexual harassment inPakistan, and an assessment of the feasibility of projectsinstituted by development organizations to work on theissue of gender-based violence. Gender and religion hasbeen another area of Sadaf Ahmad's research. Her lastresearch project “Transforming Faith: The Story of Al-Huda and Islamic Revivalism Among Urban PakistaniWomen” was an attempt to understand how itstechniques of expansion and pedagogies of persuasionhave allowed Al-Huda, an Islamic school for womenestablished in Islamabad in the early 1990s, to turn intoa social movement. This work illustrates the manner inwhich Al-Huda aims to create subjects with a unitaryconsciousness by propagating a particular kind ofhegemonic religious discourse among them andhighlights the multiple reasons urban Pakistani womenhave for engaging with and internalizing such a discourse.Sadaf Ahmad's current work involves exploring multiple

frameworks of gender justice in Pakistan. She is alsoplanning on conducting research on religious minoritiesin Pakistan, more specifically the Buddhist community,in the future.

Ali Nobil's areas of research comprise migration,transnationalism, human smuggling, gender and working-class subjectivities, oral history and psychoanalysis, socialtheory, theory and practice of journalism, and mediaand cinema. His monograph “Gender, sexuality andillegal migration: a comparative study of humansmuggling from Pakistan to Europe” focuses on thedriving factors of human smuggling and its costs andconsequences. Furthermore, he has looked at the historyof Urdu, Punjabi and Pashto cinemas in Pakistan and theway in which these cinema cultures reflect or counterdominant narratives of social conservatism. His researchalso examines the state's role in neglecting andoppressing artistic and cultural discourse.

Ali Khan's research has revolved around child andforced labour in South Asia. His book with OxfordUniversity Press (Representing Children) examines therepresentations of working children in the media andin the development discourse and how this hasinfluenced the structure of various international projectsto eradicate child labour. The book also adopts anethnographic approach to the question of why childrenwork and thereby reveals the importance of micro-levelfactors in the decision making process of families andchildren. Ali Khan has also undertaken considerableresearch on the issue of forced labour in sectors ofPakistan's economy including brick-making, carpetweaving and mining. The thrust of his work lies in tryingto reveal the complexity and multi-faceted nature ofbonded labour relations. His other ongoing project isas series editor for a six book project for Oxford UniversityPress on anthropology and sociology in Pakistan coveringthe areas of migration, religion, education, bondedlabour, gender and urban issues. The book on Migrationwas released last year. The edited volumes on Gender

and Education have been released this year and the oneon Religion in summer 2010. Ali Khan's latest project(with Ali Nobil Ahmad) involves research on cinema andsociety in Pakistan. The research, for which interviewsand fieldwork are underway, is a social history of thefilm industry itself.

Livia Holden's research examines the process of socialordering through structured communication, andespecially the legal discourse within extra-systemicnetworks. Her research focuses on state, non-state, andmixed sources of law and their implications with humanrights and governance. She carries out extensive andlongitudinal fieldwork in South Asia, in Southern Italyand in California with a specific stress on collaborativeapproaches. At present she is extending her fieldworkto Pakistan regarding forum shopping strategies andlegal discourse related with property rights, diasporaand socio-legal expertise, and lawyering practices.Moreover, Livia has investigated matrimonial remediesamong Hindus in South Asia and in the context of SouthAsian migration in the USA and the UK. Her publicationincluded family law, criminal law, lawyers praxis,traditional jurisdiction and custom and focused on thereception of Anglo-Saxon law by the Indian legal system,on the dynamics between state and non-state lawregarding dispute settlement in rural Central India, andon the effects of social engineering policies and politicalagendas on the practices of Hindu matrimonial remedies.She has also co-authored a variety of collaborative projectsstriving for accountability vis-à-vis informants. Livia iscurrently investigating socio-legal expertise intransnational case law within the context of South Asiandiaspora, and the fee regimes within lawyering practices.She is also envisioning collaborative research on propertyrights among Muslim communities in India and Pakistan.

Anjum Alvi's main area of anthropological research isSouth Asia, with particular emphasis on the MuslimPunjab. Her publications deal with kinship, exploring itfrom different angles, like the structure and ritual of

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32


marriage, the concept of the gift, and rites of passage.This work leads her to the discussion of the concept ofthe person and self in Muslim Punjab as well as to thecomparison of Punjabi patterns of kinship with those ofother areas of South Asia. Her ongoing research ismultidisciplinary, taking regard of theology as well asphilosophy. A central concern is the argument for a placeof ethics in anthropology. Discussing the theoreticalperspective of ethics in anthropology, she deals withthe concept of freedom and morality, particularly withreference to the work of Pope John Paul II and otherphilosophical perspectives of the 20th century. Thismultidisciplinary approach also informs her research onthe concept of brother-sister relationship in the MuslimPunjab within the context of South Asia. Her other workdiscusses the concept of Muslim veiling in the Punjabas a value in relation to the global debates on this topic.An article on the concept of the veil is currently underconsideration. Finally, she works on transformations ofthe meanings of exchange relations within South Asia,and she explores the ethical nature of the gift as well asphilosophical implications associated with it.

Law and Policy

Asad Farooq is carrying out research that is premisedon the contextual approaches to law and law-doing.Much of this work has been tied to ongoing engagementswith social movements. During his thesis work, he wasengaged with peasant communities struggling for landrights in Malawi, whilst researching on the implicationsof dominant discourses of governance for the socialmajorities, and examining languages and forms ofresistance to these. It represents a study in both legalimperialism and the decolonizing of law. Similarly hehas worked on developing a jurisprudence of people'slaw whilst engaging with communities of resistance onland and water rights struggles in Pakistan. The latterhas also involved (dis-)engagements with inspectionprocesses both at the World Bank and the AsianDevelopment Bank. More recently his work is developing

into the examination of ''the indigenous'' as a ''new''political subjectivity.

Ali Qazilbash's research interests have ranged frominternational law and human rights to the Pakistaniconstitution, particularly the Eighteenth Amendment.His ongoing research investigates the history of bondedlabor in Pakistan. His recent paper on “Law and Religionin the History of Pakistan”, presented at the LUMSconference, sought to explore the reasons for Pakistan'sratification of the international covenant on civil andpolitical rights. He was also invited by Research Societyof International Law (RSIL) to speak on the use of forcein international law.

Sikander Shah's area of research relates to publicinternational law and is focused on state sovereigntyand territoriality, use of force, self-determination, globalterrorism, human rights, WTO laws and corporategovernance. His most recent work is forthcoming in theAmerican Journal of International Law and the VermontLaw Review. He is currently working on publicinternational law issues most relevant to Pakistan as aResearch Scholar at the University of Michigan LawSchool. In particular, his work focuses on the legality ofthe US drone attacks on Pakistan under the internationallaw of armed conflict and on determining the impact ofthe international law of sovereignty and statehood onclassical Islam as well as on Islamic revivalist movements.

Osama Siddique has been closely involved in researchas well as policy work. He is currently completing hisdoctorate at Harvard Law School. His most recentresearch includes two forthcoming law journal articlesentitled “Approaches to Legal and Judicial Reform inPakistan: Post Colonial Inertia and Paucity of Imaginationin Times of Turmoil and Change,” and “The Hegemonyof Heritage: The Narratives of Colonial Displacementand the Absence of the Past in Pakistani Reform Narrativesof the Present.” These extensive articles conduct ahistorical and sociological critique of the justice sector

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Autumn 2010

reform discourse in Pakistan and its continuingchallenges. As a policy advisor, Osama has most recentlyconducted the first ever ''Crime Perception Survey ofthe Punjab'' for the Government of Punjab and the AsianDevelopment Bank (ADB). He has also led a jointUN/ADB team that advised the Government of Pakistanon the shape and structure of future laws in FATA, PATAand Khyber-Pakhtunkhwa in the wake of the on-goingconflict. He has also recently co-written for the AsiaFoundation a Mapping and Assessment Report on variousgovernment and international donor driven law reformprojects in Pakistan from 1998 to date. He is at presentengaged in a countrywide District Courts' Efficiency andCapacity Assessment exercise for USAID. His other recentresearch includes a book on the presidential power todissolve assemblies under the Pakistani Constitutionand its discontents. He has also published law journalarticles exploring the use of Blasphemy Laws in Pakistan,discussing state liability and remedies for victims ofdefective construction in Pakistan, as well as analyzingthe crisis of legal education in Pakistan. In addition, hehas written various book chapters on the plight of juvenileprisoners along with some on legal issues surroundingcorporate governance and small and medium enterprises(SMEs). Osama is involved in justice sector policyconsultancy work since 2004 as the Law and JusticeReform Specialist for ADB. He has primarily worked onlegal education reform. Additional law and policy reformprojects that he has been involved with include workon, inter alia, delay reduction in courts, legal bar reforminitiatives, drafting of new laws and legal amendmentsin the areas of consumer protection laws, ombudsmanlaws, civil and criminal procedure codes, and institutionalcapacity-building projects for the provision of free legalaid and judicial training institutes.

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Revealing Facts: Floods in Pakistan

Million

15

10

5

0

Flood Drought Earthquake Storm

1950 1960 1970 1980 1990 2000 2010

2007

2005

1992

199619991978

19761973

Source: Office for the Coordination of Humanitarian Affairs (2010). Pakistan Floods: Historical Natural Disaster Events.Available at < http://www.reliefweb.int/rw/rwb.nsf/db900SID/ JOPA-887FUU?OpenDocument>

I. Impact Assessment

While natural disasters are exogenous shocks to an economy and cannot be predicted or controlled, it is the responsecapability of a country that determines their eventual impact. And though impacts may vary depending on themeasure used, the most telling impact statistic is in terms of the affected population. With more than 20.2 millionpeople affected in an area exceeding 160,000 km2 and facing crop destruction of more than 2.5 million hectares,it is safe to say that this is a disaster of unprecedented scale.

Figure 1: Population Affected by Natural Disaster Events in Pakistan

201020

Table 1: A Comparison of Pledges Received for the Pakistan Floods and Haiti Earthquake

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Guidelines for Authors

All submissions will be handled electronically and shouldbe sent to [email protected]. Submitted articles, notexceeding 3500 words in length, should preferably be inthe form of plain text or as a word editor document. TheEditorial board will review all submissions to determinetheir suitability for publication. Articles should not besimultaneously submitted for publication to another journalor newspaper. If a different version of the article haspreviously been published, please provide a copy of thatversion along with the submitted article. All correspondence,including notification of the editorial decision and requestsfor revision will take place by email. In case the author(s)do not respond in a timely manner, the Editors reservethe right to make final revisions before publication.

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