Governing the Ungovernable
Insider on why Pakistani institutional reform keeps failing at implementation.
Summary
Husain served as Governor of the State Bank of Pakistan and in senior positions at the World Bank, and wrote this analysis of Pakistan's institutional decline and what would be required to reverse it.
His central argument is that Pakistan's economic underperformance results from the deterioration of state institutions rather than from policy choices. He documents the comparison directly: Pakistan grew faster than India and than most of Asia through the 1960s, when its civil service, judiciary and regulatory institutions functioned, and fell behind as those institutions were degraded.
The mechanisms he identifies are specific. The civil service was politicised from the 1970s, with recruitment, promotion and posting decisions moved from merit-based processes to political control, which destroyed the incentive to perform and drove capable people out. Successive governments, both civilian and military, expanded discretionary power at the expense of rule-based administration. The judiciary became slow and unreliable, which removed contract enforcement. Public enterprises became employment vehicles. Tax administration collapsed, leaving one of the lowest revenue ratios in the world and a state unable to fund anything.
His prescriptions concentrate on restoring merit-based recruitment and security of tenure in the civil service, on separating policy from operations, on devolving delivery to local government, and on rebuilding a small number of institutions rather than attempting comprehensive reform.
Husain writes as a senior insider who attempted several of these reforms and largely failed, which gives the account authority about why they fail. The book is specific to Pakistan and is long. Its general argument, that institutional quality rather than policy determines outcomes and that institutions can be degraded within a generation, applies well beyond it.
Key takeaways 7
- Pakistan grew faster than India and most of Asia in the 1960s, when its state institutions functioned.
- Economic underperformance since results from institutional degradation rather than from policy choices.
- Politicising civil service recruitment, promotion and posting destroyed the incentive to perform and drove capable people out.
- Expanding discretionary power at the expense of rule-based administration served whoever held office and damaged the state permanently.
- A slow and unreliable judiciary removes contract enforcement, which affects every economic transaction.
- Tax administration collapse left one of the lowest revenue ratios in the world and a state unable to fund basic functions.
- Rebuilding a small number of institutions is more achievable than comprehensive reform, which repeatedly fails.
Who should read it
Analysts and operators in Pakistan and comparable states who want a senior insider's account of institutional decline and why reform attempts fail.
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