Hard vs Soft Infrastructure? Blue Print of Paradigm Shift
It all started in the mid-1950s to early 1960s, these years represented a pivotal moment in Pakistan’s transport development, often referred to as a ‘critical juncture.’ This period occurred when international development organizations, along with their consultants, introduced Five-Year Plans to advance the country’s transport systems as part of broader economic development efforts to stimulate growth. Pakistan, benefiting from substantial foreign financial and technical assistance from bilateral and multilateral agencies during this period, made key decisions regarding its transport future. Although various options such as railways, non-motorized transport, and road development were available, the country ultimately prioritized road infrastructure and private vehicle use over other alternatives such as rail and non-motorized modes of transport. (Imran and Low, 2005). The financial assistance from the World Bank increased in favor of road development as can be seen in the figure below
Fig 1: IBRD and IDA commitments to the Transport Sector (1950-93)
Source: World Bank, 1994.
These plans were made in 60’s, one wonders what has sustained the policy for the next seven decades within a complex institutional system where 9 federal ministries and 22 departments are responsible for decision making in transport sector? The answer lies perhaps in story lines that emerged from the real understanding of the problem by different institutions as per their interpretation and biases.
The story lines of 70’s was “economic growth/development needs transport infrastructure” or “investment in transport infrastructure brings economic growth” stating economy and transport development as complements. Though the emphasis should have been on efficiency, the “road development as a vision for prosperity” took the lead. This was supported by “poverty reduction through road development” in 80’s and “motorization will bring more economic wellbeing” in 90’s. The environmental concerns, gave birth to construction of more road infrastructure to alleviate congestion. However, the empirical evidence between road infrastructure, investment and growth nexus depends primarily on local circumstances and could be positive, negative or neutral as has been observed in Pakistan’s case.
This path dependency in transport sector reflects the broader trends in development policy of Pakistan. The over reliance of Pakistan development programs on foreign financial and technical assistance was long been recognized, unfortunately no solutions were ever proposed. The international development institutions, foreign experts and intellectually dependent bureaucracy continued to shape the policy making pushing Pakistan to prioritize “hard infrastructure” over soft infrastructure such as capacity building of decision making institutions.
Doing Development Better – Shifting the Paradigm
Box 1: Sectoral shares in PSDP.
A major breakthrough came from the PIDE’s conference on doing development better in 2020. The conference provided a much needed review of the growth system in Pakistan indicating that growth and productivity has been declining since the last four decades. Around 80.35 % of the PSDP projects are used to finance infrastructure projects (box 1). Thus there is an urgent need to accelerate growth in a sustainable manner by reevaluating the Haq/HAG approach to shift the paradigm of growth policy (Haque, 2020)[1]. The centrality of cost–benefit analysis, asset management for maximum returns, and the consideration of PSDP funds as loans for the project were some of the proposals that were considered a must to accelerate productivity and growth.
The way forward should be based on reform and deregulation to accelerate productivity, private investment and entrepreneurship (Haque, 2020).
PIDE Growth Strategies – Reforms and Sustained Growth
Under the leadership of Dr Nadeem Ul Haque, PIDE subsequently introduced several growth strategies which could serve as an alternative to the HAG/Haq model. The PIDE reform agenda for accelerated and sustained growth, launched in 2021, emphasized on the need for immediate reforms in civil services, judiciary, and regulatory bodies. The agenda stressed that Pakistan must develop markets in agriculture, energy, real estate, and cities while also advancing reforms in openness, internet access and tax simplification. PIDE’s one-year growth strategy, launched in 2022, presented a comprehensive growth plan centred on software development. It identified the internet for all as the fundamental pillar of growth alongside other initiatives such as regulatory audit, unlocking dead capital and encouraging youth involvement in sports. Transforming Economy and Society, launched in 2023, highlighted the reforms needed in different sectors of society. A focus on strong digital infrastructure to promote innovation and technology-based solutions both in services and manufacturing was emphasized to reduce reliance on traditional sectors like agriculture and textiles.
[1] Haque, ul N (2020), Doing Development Better: Analyzing the PSDP. PIDE Policy viewpoint, 11:2020.
