Daily Times

The debate of extractive elite was rejuvenated by Acemoglu and Robinson’s famous book Why Nations Fail: The Origins of Power, Prosperity and Poverty that came out in 2012. The book generated lots of interest and is still being quoted to explain the rise and fall of nations. I was quite critical of the book when I reviewed it for an academic work in 2013. However, Naomi Hossain’s now much publicized book on Bangladesh The Aid Lab: Understanding Bangladesh’s Unexpected Success published in 2017 made me rethink my position on Acemoglu and Robinson’s work.

First Naomi’s work on Bangladesh and then we would go back to the discussion on extractive elite. Naomi’s work shows that Bangladesh has successfully transformed itself from being labeled as “the basket-case” to a country that has made great strides to improve its human development, reduce poverty and improve food security. Naomi’s argument is even validated by the latest Human Development Index released whereby Bangladesh is at 136th position out of 189 countries; India at 130th, Nepal at 149th, Sri Lanka at 76th and Pakistan lagging behind all the rest in the region at the 150th position.

The Aid Lab as illustrated by the author’s talk dwells on the role of elite in Bangladesh in engendering pro-poor growth inclusive of women’s role and participation. All relevant stakeholders in Bangladesh including the policy-making elite, NGOs, the people and donors reached what is called in the literature the “political settlement” or a “social contract” to protect the poor against the “crises of subsistence” to ensure their survival based on lessons learnt from the famine of 1974. The cyclone in 1970, and the civil war in 1971, were other calamities that had hit the people in that part of South Asia and formed part of collective memory that worked to transform the nation through a steep learning curve. Bangladesh fares better than Pakistan on human development indicators and has joined the ranks of middle-income countries. Despite being the world’s aid lab, it is the “domestic political settlement” or “social contract” that played the role of a stimulus in brining about the positive change in Bangladesh, despite their “chronically weak governance”.

Pakistan despite being economically more developed than the East Pakistan of 1971, enjoying better production of raw materials needed for economic development, being better positioned in terms of ecological conditions has been outperformed by Bangladesh in human development and better exports-led economy

Recently in the press in Pakistan, Bangladesh’s success and Pakistan’s relatively weak position in the Human Development Index in the region has been discussed. There was also discussion on Acemoglu and Robinson’s work and their notion of extractive elite. However, there is a need to link the role of extractive/inclusive elite and its differential impact on Pakistan and Bangladesh.

Acemoglu and Robinson contrast between inclusive and extractive political and economic institutions. Inclusive politico-economic institutions are much needed to get nations out of poverty and put them on the long-term growth trajectory. Though, Acemoglu and Robinson focus on well-defined and enforced property rights, the rule of law, sanctity of contract and prevalence of a level-playing field. The authors contrast these inclusive institutions with extractive institutions whereby power is concentrated in the hands of a tiny elite with not much checks and balances and fewer constraints. Drawing on a large body of historical data and case studies, Acemoglu and Robinson call for the inclusive political and economic institutions, whereby the tiny elite does not enjoy un-fettered power.

If we interpret Naomi’s work on Bangladesh, it seems the elite made the social policy decisions in Bangladesh just as they do in Pakistan. Bangladesh does not enjoy the kind of stability of property rights that Acemoglu and Robinson associate with inclusive institutions. However, what has been different in the case of Bangladesh is that their elite (I am assuming both political and military elite) arrived at a “political settlement” or “social contact” to engender a pro-people and pro-poor growth and social development policy and implemented it, particularly after the return of democracy in Bangladesh since the early 1990s.

One may infer from this that by contrast, Pakistan’s political and military elite did not arrive at a “political settlement” or “social contract” to put people’s development first before any other notions of national importance. Pakistan despite being economically more developed than the East Pakistan of 1971, enjoying better production of raw materials needed for economic development, being better positioned in terms of ecological conditions has been outperformed by Bangladesh in human development and better exports-led economy.

It is important to state that one should not paint Bangladesh as a miracle of development. It still suffers from the issues of weak governance, political infighting and poor human rights record. However, Pakistan’s political and military elite might just be more extractive than their counterparts in Bangladesh and less inclined towards pro-poor growth and human development social policy. This might just explain the difference between the two countries explained above.

The writer has social science/development sector background and lives in Islamabad

Published in Daily Times, October 27^th 2018.