Political economy of provinces

[Neo]

Political economy of provinces

DR ZAFAR ALTAF

ARTICLE (July 03 2010): How are the natural resources of a province to be so integrated with the human advantages that the province works its wonders to the advantage of its population? That is one aspect of China that comes to mind so frequently that in a nation of 1.3 billion they have managed the resource use so well and so effectively.

They have not necessarily borrowed from here, there and everywhere. The resource use was and is self-generated and when they went in to something they went with the disciplined passion that is astonishingly high. The Chinese with all the interested comments and propaganda of the West have not budged an inch and have continued to develop along the route that they have decided.

Is there virtue in commercialisation and that too that is market-driven economic development and how have the crises of localised capitalism dealt with by the decision-makers? Local governments have been encouraged to do their bit and the initial budget being scanty they have been asked to work with whatever they have and to generate further resources locally. This has put tremendous pressure on the local governance system. This fiscal decentralisation in other words is followed by fiscal decline.

The extra resources that they have to develop are very much dependent on these local governing systems. The resultant pressure has led to a contradictory aspect in which the localised system has had to seek measures that would enable them to cover their expenditure and to develop. The decisions as to where and what to invest in was locally dependent. The fiscal burden has led to an independence of effort that is a central command and control structure speaks volumes of the ability of the Chinese to modify their work. At the central level, the recent development of signing trade pact with Taiwan in which 800 items would be traded freely is another indication of resilience and independence.

Taiwan was never acceptable to the Chinese mainland and yet here they are doing trade with them. Is that going to take them a different route to acquiring Taiwan? Well you never know for the system has given up its one China policy. The US way of continuous conflict to gain from it has been out aside as a result of this. The winds of change were visible when China accepted the US concept and went in to WTO with the two Chinas situation having been accepted. The concept that there are no eternal enemies and no eternal friends was Western concept of foreign policy.

China has converted it in to a political economy issue and will dare to work it. The US stands to lose as this will ultimately mean the end of conflict and the end of arms sale to Taiwan. The Chinese have seized the opportunity and not too soon.

The manner of this development was not necessarily going their own way, but the adaptation of certain principles enunciated by the federation and the policy principles of Deng's policy announcements in 1992. The shift is normally brought about by the lateral entrant of governors of the provinces. The urbanisation factor has been seriously addressed and these urban areas are not islands of prosperity but have distributed their income benefits to the rural areas. The urban economy has, therefore, built the rural economy and is not meant for the people of the urban towns only. The integration can take many forms, but the interesting factor is that the demand is computed by the peri-rural areas as to the requirements of the towns.

Some interesting new concepts came in to being as a result of the urbanisation and the peculation of land. It was quickly realised that the urban boom led to the preferential policy on 'inner open city'. Speculate what the China's governance system said, but that is going to be done on the policy lines issued by them. The result was that the boom was utilised for the furtherance of the economy and was not eaten up as equity.

Compare this with the selfish and parochial policies that were followed by Pakistan during the Musharraf regime. Capital gains tax was done away with resources were mismanaged and were eaten up or rather gobbled up. Selfish and self-centered individuals were in power and they gathered with both hands [probably feet also] instead of understanding the concepts that were needed to make these resources available for positive economic resource use. Capital gains tax and wealth tax were abolished and threats were held out to those that could have been used for the localised development.

This has happened all over Pakistan. What was the idea of these people buying land at Gwadar? Those that did not want to sell were forcibly made to sell and the chiefs of the area did as they very much pleased. The comparison is not odious and does not take into consideration the cultural differences. What is more important to understand is that the Chinese have this ability and this flexibility to change their norms and to make them more effectively workable. Here one is at odds with the systems that allows for the graft and the greed to work against the state. The graft is a criminal act against the state and not against the government.

The economist and I have a few of them in the family had predicted that the urban and housing boom in the US and elsewhere in the developed world would lead to a crisis and how right they were. The Western system of economics was not the measure of men in the East where greed is often held up for ridicule. So that was how they held speculators to work for the economy and the common man. The economic zones that were developed were not done so in isolation for they did not wait for the investor from abroad but rather encouraged local level entrepreneurs.

The creation of wealth and its loss was done under the Western capitalist system. So socialism a la communism was laced with capitalism, but the political system was not changed for it had stood the test of time. Unlike other Central Asian republics, the political system was not changed and neither were their any praise for the political system from the West which always pointed to the human rights debacle in China. They continued as they were bringing in leadership that developed and that kept on working for the betterment of the people. The politbureau has picked the right kind of leadership and will probably continue to do so.

The way forward seems to be in terms of relocation of 'Third front' enterprises. They were given the philosophical name of coming down from the mountains and the valleys. These enterprises not only relocated themselves physically, but also re-determined their product line. The other main feature of this success story [s] was that the entrepreneurs felt that they had to work for the state in order to ward off the danger of external investment. We on the other hand want to give all kinds of incentives to externals and deprive our own of those very benefits. Consider their new options and wonder at the Chinese mind. In this particular case these enterprises, to ward off externals, had established linkages with over 150 window enterprises in order to facilitate export and to bring in what is capitalist terminology would be to create an area of economic tension that pulls in the right direction.

This much for today but the manner of doing things is very much their own and the belief that fiscal shortages can be overcome by the right sort of policies. What are those right sorts of policies is very much dependent on the people of Pakistan. The problem with us is that every one else is a cheat and liar except oneself. That all and sundry are corrupt except the speaker. Don't believe me. Go to any institution and see how the collective work is going on. The honest and the dishonest are all there with the dishonest doing what they can. That is how the Chinese do not perform.

Business Recorder [Pakistan's First Financial Daily]