INDIA PAKISTAN: Economics of a Hand Shake

By Dawood Mamoon

Will Newly elected Prime Minister of Pakistan honorable Shebaz Sharif shake hands with Indian Prime Minister Narendra Modi? Well this book tells a story of a similar hand shake that happened between a military ruler of Pakistan and a democratic Prime Minister of India. Would democracy fare differently this time? We have to understand the story of economic development to understand the possibility of peace. Therefore, to know the answer, the book starts of by understanding complex equation of economic development for a nation state. For example, freedoms, rights, and equality are common dreams among different human societies irrespective of their economic, social, political and cultural circumstances. This book presents a brief discussion on the reasons for the divergence of circumstances different civilisations find themselves into by linking this dichotomy with arguments available in contemporary development economics. The book examines how politically empowered institutions in comparison to politically repressed fare with different measures of inequality. Countries that are practising democracies are less prone to unequal income distribution. Though under good economic management, autocracies may redistribute incomes from the richest to the poorest, more generally an autocratic set up violates the median voter hypothesis. The book further discusses the dynamics of peace initiatives made by Pakistan in 2006 and their importance in changing the regional dynamics in favour of increased economic cooperation in the light of the study undertaken by Murshed and Mamoon (2007) which has analysed the multiple determinants of conflict between India and Pakistan. The book highlights the importance of peace in the region especially for Pakistan where the development potential of the country have been stifled greatly due to a long history of political and economic volatility while linking Pakistan's progress with that of its neighbours through conflict mitigation process.

• Language: English
• Publisher: Dawood Mamoon
• Release date: Mar 11, 2024
• ISBN: 9798224906024

Dawood Mamoon

Dawood Mamoon has been Director Office of Research, Innovation and Commercialisation (ORIC) at leading Engineering University of Pakistan namely Ghulam Ishaq Khan Institute (GIK) from 2020 to 2022. He was affiliate of Harvard Business School from 2013 to 2017. He has a PhD in Economics for Sustainable Development from Erasmus University, the Netherlands.

Book preview

INDIA PAKISTAN: Economics of a Hand Shake

Dawood Mamoon

Published by Dawood Mamoon, 2024.

While every precaution has been taken in the preparation of this book, the publisher assumes no responsibility for errors or omissions, or for damages resulting from the use of the information contained herein.

INDIA PAKISTAN: ECONOMICS OF A HAND SHAKE

First edition. March 11, 2024.

Copyright © 2024 Dawood Mamoon.

ISBN: 979-8224906024

Written by Dawood Mamoon.

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Table of Contents

Title Page

Copyright Page

Also By Dawood Mamoon

INDIA AND PAKISTAN | Economics of a Hand Shake

Further Reading: Why Imran Khan Should be a Free Man

Also By Dawood Mamoon

About the Author

About the Publisher

INDIA AND PAKISTAN

Economics of a Hand Shake

by

Dawood Mamoon

Will Newly elected Prime Minister of Pakistan honorable Shebaz Sharif shake hands with Indian Prime Minister Narendra Modi? Well this book  tells a story of a similar hand shake that happened between a military ruler of Pakistan and a democratic Prime Minister of India. Would democracy fare differently this time? We have to understand the story of economic development to understand the possibility of peace. Therefore, to know the answer, the book starts of by understanding complex equation of economic development for a nation state. For example, freedoms, rights, and equality are common dreams among different human societies irrespective of their economic, social, political and cultural circumstances. This book presents a brief discussion on the reasons for the divergence of circumstances different civilisations find themselves into by linking this dichotomy with arguments available in contemporary development economics. The book examines how politically empowered institutions in comparison to politically repressed fare with different measures of inequality. Countries that are practising democracies are less prone to unequal income distribution. Though under good economic management, autocracies may redistribute incomes from the richest to the poorest, more generally an autocratic set up violates the median voter hypothesis.  The book further discusses the dynamics of peace initiatives made by Pakistan in 2006 and their importance in changing the regional dynamics in favour of increased economic cooperation in the light of the study undertaken by Murshed and Mamoon (2007) which has analysed the multiple determinants of conflict between India and Pakistan. The book highlights the importance of peace in the region especially for Pakistan where the development potential of the country have been stifled greatly due to a long history of political and economic volatility while linking Pakistan’s progress with that of its neighbours through conflict mitigation process.

1. The Price for Prosperity in Pakistan, Only If

The introductory section presents a hypothetical scenario where Pakistan and India are able to resolve bilateral disputes including Kashmir and within a peaceful South Asia, Pakistan under next five years emerge as an economic power where there is no poverty.

Recently in 2019, the World Bank held a conference that presented 100 years’ vision for Pakistan at 2047, when the country becomes one of the leading economies of South Asia and larger Asia. (World Bank, 2019) Why wait for 2047, and why not make it all happen within the next 5 years under the stewardship of Shebaz Sharif to bring Pakistan the glory that skipped Pakistan for last 70 years or so? There is one simple step of glory Pakistan needs to take and the country shall be transformed to the good of its dwellers. However, before I mention what the step is, following assumptions need to hold true within the next five years. Assume that Prime Minister Shebaz Sharif with due agreement with the people of Pakistan solves all bilateral issues with India including the Kashmir dispute within next couple of years. Of course the resolution to bilateral issues with India would also include due agreement of Indian government and its people. Once India the traditional rival, becomes a cooperative neighbor, Pakistan would start witnessing bilateral cooperation in trade and India’s support to Pakistani concerns in the region and the world. Let us talk about economics of cooperation. In a peaceful South Asia, Pakistan is able to increase its national competitiveness and exploit regional and global markets for its exports that include billions of people strong markets of India and China. As Pakistan nears the resolution of Kashmir dispute in the next couple of years, exports of Pakistan to India reach 20 billion dollars’ mark. Assume that CPEC and the encompassing Special Economic Zones are functional with strong industrial clusters between Pakistan, China and India, Pakistan enters into small scale and large scale manufacturing that boosts its exports to the rest of the world on account of 30 billion dollars.

A peaceful Pakistan, where already a multiethnic and multicultural dialogue would be started by Pakistani government within the population presents and opens its rich heritage to the outside world that attracts tourism that would reach to another 20 billion dollars in next 3 years. Pakistani education and health institutions improve their services to the level that is practiced by private universities like Lahore University of Management Sciences or hospitals like Shaukat Khannum Memorial Hospital and thus people within the South Asian Region and its immediate peripheries would come to Pakistan for education and treatment purposes bringing additional 10 billion dollars.The oil and gas exploration in Pakistan becomes more successful and in next couple of years Pakistan’s spending on energy imports comes down significantly and the PTI government saves another 10 billion dollars in imports. Notwithstanding the encompassing property boom and foreign investments in different sector but nevertheless including all such, these assumptions would bring additional 100 billion dollars to Pakistani economy on annual basis, and thus it has a favorable effect on the exchange rate. By the time government of Shebaz Sharif enters its fifth year of good governance, assume that Pakistani Rupee appreciates against dollar to an extent that 1 Rupee is equal to 10 US Dollars. This assumed exchange rate is the moment of glory for Pakistani nation. First and foremost, this exchange rate means that there is zero poverty in Pakistan. The minimum wage in Pakistan is around Rupees 15,000. In dollar terms that would now amount to 30,000 dollars per month. An unprecedented era of prosperity would enter Pakistan. The only question is whether the world, South Asia and most importantly Pakistan and India ready to pay the price for such prosperity that has a genesis in peace and resolution of Kashmir dispute. Yes peace may have immense benefits for Pakistan. Last time India and Pakistan seriously talked peace with each other were the good old days of President Pervez Musharraf when on the sidelines of SAARC Summit in 2003, President Musharaf walked towards then Indian Prime Minister Vajpayee and extended his hand for peace. That hand shake was later transformed into some serious peace talks between both countries. But the challenges on both sides seemed insurmountable, true to this day. The most salient challenges are the very history both countries share and of course the kind of Economics they follow. Yes even democracy is economics. It is yet to be decided whether democracy is good economics because for Pakistan, economic growth only happens when there was always a military rule in the country. But Economic Growth and Economic Prosperity are not the same. Thereby this book discuss the economics that dominated during the Military rule of President Musharraf in the context of a comprehensive definitions for sustainable economic development.  In other words, readers can make a good guess whether Pakistan and India would really benefit from peace or it is just a rhetoric. The book helps readers to understand and thereby know the dividends of peace for Pakistan, at the