S p r i n g 2 011

Social Science and Policy Bulletin In this Issue

VOLUME 2 No. 4
(Spring 2011) Editors’ Note 1
ISSN 2073-6789
The Politics of Public Interest
Editorial Board Litigation in Pakistan in the 1990s 2
Maryam Khan
Anjum Alvi
Syed Turab Hussain
Maryam Khan The Economy and Exchange Rate
Muhammad Farooq Naseer Management 9
Nadia Mukhtar Sayed Syed Zahid Ali
Hammad Siddiqi
Towards State-Building in FATA 14
Editorial Assistants Raza Ahmad

Kiran Javaid Do Parents Spend Equally on their

Usman Liaquat Sons and Daughters? 20
Mariam Tareen Hadia Majid

Revealing Facts: The Arab Awakening 26

The opinions and views expressed here

belong to the individual authors and do not
necessarily reflect the views of the editors.
Some rights reserved.

The Social Science and Policy Bulletin is published

quarterly by the School of Humanities, Social
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forum for debate on the economic and socio-
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and conduct of public policy as well as its
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a wider audience, high quality research and
policy-oriented work being done by social
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short essays, either analytical or quantitative,
that are relevant as well as intellectually
stimulating.
 Spring 2011

Editors’ Note

T he events that have been unfolding in the Middle

East over the last few months are unprecedented. The
Ominously however, the European phenomenon was
short-lived. Once the modest common goals were
leadership in each of these countries faced three strategic achieved, ethnic and sectarian affinities soon dominated
options: compensate without democracy, transition to the nationalistic identity and the state cracked down
democracy, or engage in repression. Looking at recent harder on people where regime change had failed. In
theoretical literature, Acemoglu and Johnson (2006) the Arab case, take for instance tribal Libya united against
claim that where elites can devise least-cost strategies a common tyrant, but fractious and divided without. Or
to co-opt or repress, they will do so. In addition, Tunisia, seemingly poised for a transition to democracy
Engerman and Sokoloff (2003) argue that unequal with its July elections, where few of the 44 registered
resource ownership spawns unrepresentative political parties know what they want, and instead focus on what
institutions. But it may be interesting to note that they don't (Ben Ali).
countries with oil wealth tend to build “hybrid”
institutions, which may reflect the tendency of the state Yet the European revolutions had a different kind of
to alternate between discretion and rule-based success. They made people unwilling to accept tyranny
institutions. The former are created to prevent any as easily as before. So too, one would hope, in the case
curtailing of state power by domestic political forces of the “Arab Spring”. However, that depends on what
and the latter to maintain the appearance of stability to is desired — a clean break with the past or retribution.
attract foreign investment into the oil sector. Institution- Revolutions are not panaceas and revolutionaries not
building motivations thus tend to diverge in different miracle-workers. One realization cannot come soon
sectors of the economy (Luong & Weinthal, 2010). enough, especially ahead of the Arab League summit
scheduled for May: it is impossible to will the ends
In addition to having authoritarian regimes, most Arab without willing the means.
states are rich in natural resources and seemingly
rife with corruption, providing both rent-seeking The articles in this issue of the Social Science and Policy
opportunities for the elite and sustenance for state- Bulletin address several important questions. In the first
patronage networks. Thus, state-funded “white elephant” article, Maryam Khan explores the political roots of
projects are used to appease the masses, suggesting the judicial activism in Pakistan by examining the history of
“progressive substitution of public spending for public interest litigation while comparing it with similar
statecraft” (Luong & Weinthal, 2006). At the moment, developments in India. In the second article, Zahid Ali
even as protestors in Yemen, Syria and Libya remain explains how exchange rate policies are unable to deliver
determined, the Gulf kingdoms watch uneasily and international competitiveness in the long run and the
spend easily with oil-earned largesse to thwart any such policy focus should instead be on improving productivity,
movement for democracy under their watch. quality and reliability. State-building is crucial in garnering
public trust and the latter, as Raza Ahmad shows, is
Some insight into the trans-national spread of Arab increasingly important for bringing peace and
popular unrest is provided by looking at a similar spate development to FATA. And lastly, Hadia Majid analyzes
of events in the recession-hit Europe of 1848, sparked household-level data to highlight that, within households,
by the protests in Sicily that paved the way for the French income from different sources is not pooled and parents
Revolution. Then, as now, people drew analogy from show different spending preferences across male and
the success of their neighbors and united under a female children.
common goal, albeit based on different aspirations.

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Social Science and Policy Bulletin, Volume 2, No. 4

The Politics of Public Interest Litigation in Pakistan in the 1990s

By Maryam Khan

deep nexus between the judge-led Fundamental Rights

movement and the politics of judicial power. To divorce
the study of public interest from power is to deny both
the political provenance of PIL and the power of the
judiciary to mould larger political processes even as it
is influenced by other political institutions. What follows
is a preliminary effort to contextualize PIL—its
merits aside—as a medium of both institutional
accommodation and competition between the judiciary
I n the decade-long period between 1988 and 1999,
the Supreme Court of Pakistan was transformed from
and the political branches of government.

a device for regime legitimation into a self-preserving Distinctive features of public interest litigation
and autonomous (albeit highly politicized) power broker
between a military-backed executive and a highly fragile The PIL movement in Pakistan is characterized by direct
and fragmented parliament. This development originated access to the Constitutional Courts, fairly relaxed rules
in the involvement of the apex judiciary in the political of legal standing and procedure, creative adjudication
struggles of article 58(2)(b) (Siddique, 2006), and and expansive interpretation of rights. There is also
proliferated later through the jurisprudence of the remedial flexibility and free legal aid, along with
Judges' Case of 1996 (which held that the Chief Justice's inquisitorial processes of fact-finding. At the same time
opinion on judicial appointments to the Supreme Court PIL encompasses a vast range of issues and an equally
and High Courts had primacy over the President's diverse range of remedies. Examples include checking
opinion in the event of a deadlock). But these malpractices in educational institutions, affording
jurisprudential tools, contingent as they were at times protection to women in cases of sex offences, securing
on the vicissitudes of high political drama, rested on property rights for female heirs, preventing child labor
and were edified by an enduring substratum of judge- and other means of child exploitation, prohibiting public
made and judge-led Fundamental Rights jurisprudence hangings, directing authorities to check environmental
that enabled a more sustained avenue of judicial pollution and wrongs, and generally checking misuse
empowerment in the post-1990s era. This juridical of authority by government officials (Shah, 1993). The
Fundamental Rights movement of the 1990s came to be Constitutional Courts have achieved this by marshalling
known as “public interest litigation” (or simply PIL) and both the elaborate set of enforceable Fundamental Rights
became an additional tool in the paraphernalia of judicial in the 1973 Constitution and the extensive jurisdictional,
activism available to judges of Constitutional Courts to procedural, investigative and remedial powers available
exercise jurisdiction over the purely political and policy to them in their original jurisdiction (which is devoted
domains of representative bodies of government at to constitutional rights issues, as opposed to the general
opportune moments. appellate and advisory jurisdictions). The provisions
relating to the original jurisdiction of the High Courts
In situating the PIL phenomenon within the larger crisis and the Supreme Court, though similarly worded, have
of governance and democratization in the 1990s, the been interpreted independently to allow for greater
historicized view that I present below demonstrates the flexibility in terms of rights adjudication. The original

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jurisdiction of the High Courts is contained in article Fundamental Rights matters of public importance on its
199(1)(c) of the 1973 Constitution and states own initiative, the Supreme Court initiated the case on
the basis of a telegram addressed to the Court, drawing
…a High Court may, if it is satisfied that no other its attention to the plight of bonded laborers in the brick
adequate remedy is provided by law, on the kiln industry. While enlarging the ambit of its jurisdiction,
application of any aggrieved person, make an order the Court commented on the novelty of suo moto action
giving such directions to any person or authority, and explained the guidelines according to which matters
including any Government exercising any power or of general public importance could be taken up for
performing any function in, or in relation to, any adjudication on the basis of an informal letter, report
territory within the jurisdiction of that Court as may or news:
be appropriate for the enforcement of any of the
Fundamental Rights… (emphasis added). It is of the utmost importance in such cases that
when formulating a scheme of action, the Court
Fundamental rights adjudication in the High Courts, must have due regard to the particular circumstances
therefore, necessitates locus standi in the form of “any of the case, to surrounding realities including the
aggrieved person” who has “no other adequate remedy.” potential for successful implementation, and the
On the other hand, the original jurisdiction of the likelihood and degree of response from the agencies
Supreme Court is found in article 184(3) and provides on whom the implementation will depend. In most
cases of public interest litigation, there will be neither
Without prejudice to the provisions of Article 199, precedent nor settled practice to add weight and
the Supreme Court shall, if it considers that a question force to the vitality of the Court's action. The
of public importance with reference to the examples of similar cases in other countries can
enforcement of any of the Fundamental Rights…is afford little support. The successful implementation
involved, have the power to make an order of the of the orders of the Court will depend upon the
nature mentioned in the said Article (emphasis particular social forces in the backdrop of local
added). history, the prevailing economic pressures, the
duration of the stages involved in the implementation,
Accordingly, the Supreme Court is not constrained by the momentum of success from stage to stage, and
questions of legal standing or right to petition, though acceptance of the Court's action at all times by those
its jurisdiction is circumscribed by its own interpretation involved in or affected by it.1
of “public importance”—presumably the only pre-
condition for activating the Supreme Court's original The Supreme Court's original jurisdiction, combined
jurisdiction. Hence, while the High Courts' jurisdiction with suo moto powers, has obvious implications for the
is dependent on an aggrieved party (which has in fact expansion of judicial power, as virtually no matter of
been defined very broadly), the Supreme Court's constitutional importance is foreclosed from the Court's
jurisdiction is almost unfettered in terms of justiciability scrutiny. Under the right conditions, the Court can act
(Khan & Siddique, 2007). fairly autonomously in assuming judicial control over
issues of public importance (the interpretation of which
The path-breaking case of the brick kiln workers in 1990 is also in the hands of the Court). But the question
also marked the beginning of the Supreme Court's remains, how did PIL, along with its various procedural
“epistolary” and suo moto jurisdiction. Interpreting its and substantive tools, take root in Pakistan?
original jurisdiction as enabling it to take cognizance of

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The Indian influence jurisdictional and remedial reach to a plethora of

governance functions.
Early stock-taking scholarship on PIL suggests that it
was adapted in many ways from across the border in Almost all the jurisprudential and procedural innovations
India (Menski et al., 2000). In the mid-1970's, India was of SAL in India found resonance in the PIL movement
witness to unprecedented judicial populism that in Pakistan through creative judicial interpretations of
ostensibly sought social and economic justice for the articles 184(3) and 199(1) of the 1973 Constitution. The
poor. The Indian Supreme Court's procedural and manner in which judges likened their ideas and at times
jurisprudential innovations revolved around the violation explicitly referred to Indian judicial pronouncements
of constitutional rights, leading to a formidable rights gave PIL a much “borrowed” flavor. Consider, for instance,
discourse in favor of direct judicial access to “little Indians Chief Justice Muhammad Haleem's direct reliance on a
in large numbers.”2 These innovations included the string of Indian precedents in the pioneering PIL case
relaxation of the standing rule and other procedural in Pakistan (Benazir Bhutto, 1988).3 Or the adaptation
niceties; expansion of the substantive meaning of right of “little Indians in large numbers” in the Indian judgment
to life to encompass broader matters of social and of S. P. Gupta (1982) to “little Pakistanis in large numbers”
economic empowerment and human dignity; in the seminal Pakistani case of Darshan Masih (1990).
establishment of a novel, epistolary jurisdiction that Consider also the widely recognized claim that the
enabled the Court to take cognizance of rights violations emphasis of early PIL cases on the issue of bonded labor
on the basis of letters and newspaper reports; and was inspired heavily by the influential Indian judgment
reinterpretation of the otherwise unenforceable of Bandhua Mukti Morcha (1984).4 Or, further still, that
Directive Principles of Policy to support and enhance the strikingly similar fashion in which the novel “suo
the procedural and substantive innovations of this new moto” doctrine was articulated and applied on both
breed of litigation. The kinds of issues that this judicial sides of the border revealed the Pakistani judiciary's
populism targeted included “freedom from indigency, close adherence to Indian jurisprudence (Menski et al.,
ignorance and discrimination as well as the right to a 2000).
healthy environment, to social security and to protection
from massive financial, commercial and corporate Selective borrowings
oppression” (Bhagwati, 1987). Leading Indian legal
scholars explain that this judge-induced “social action Having said that, PIL cannot simply be considered an
litigation” (or SAL) was an attempt by the Supreme Court off-shoot of judicial populism in India, given the very
to marshal “a new kind of social legitimation” in response selective nature of constitutional osmosis between the
to the “post-Emergency euphoria at the return of liberal two countries (Khan, 2010; Siddique, 2010). The Pakistani
democracy” (Baxi, 1987) (referring to Indira Gandhi's Supreme Court has consistently rejected some Indian
emergency rule in 1975-6), and “to increase its political doctrinal innovations, like the basic structure doctrine
power vis-à-vis other organs of government” (Sathe, while adopting and remolding others like PIL. The basic
2001). From a vantage point of almost three decades structure doctrine — a purely judge-made jurisprudential
after the emergence of SAL, Robinson asserts that this tool that allows the Indian Supreme Court to strike
“new interventionism was born at a time when Parliament down a constitutional amendment on the pretext that
and the country's other representative institutions were it modifies the fundamental, underlying structure of the
increasingly politically fractured and viewed as abdicating constitution — is perhaps one of the highest forms of
their governance responsibilities” (2009). This judicial activism in terms of the extent of judicial
governance vacuum enabled the Indian Supreme encroachment on legislative and executive powers. Since
Court to step into the political space and expand its the 1970's, challenges to constitutional amendments

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presented to the Pakistani judiciary have attempted to from its Indian counterpart in many significant ways,
transplant this doctrine, as articulated in India, onto one of which was that the “development cycle” of PIL
the country's constitutional jurisprudence. The was highly accelerated in Pakistan (Menski et al., 2000).
Constitutional Courts of Pakistan, however, have never
quite found grounds for convergence with India on this Additionally, PIL was visibly adopted by political interests
issue, thus insulating constitutional amendments from at the highest levels, with prominent politicians claiming
substantive judicial review (Khan, 2010). The merits of violation of their political rights under the garb of
this stance aside, it is highly strategic. Unlike India, the Fundamental Rights. At one level, it is important not to
basic structure doctrine in Pakistan has in most instances over-emphasize the use of PIL as a political tool in
been invoked in the context of challenges to de facto Pakistan vis-à-vis India. Even in India, scholars observing
constitutional amendments by military governments, judicial developments as early as the mid-1980s
such as the Eighth Amendment and particularly article recognized that the movement was “at best an
58(2)(b). By making the Constitutional Courts arbiters 'establishment revolution'” (Baxi, 1987). Even so, it
of the political struggle between a popularly elected would not be unfair to claim that Pakistan's PIL
Prime Minister and an often military-backed President, jurisprudence has a more conspicuous flavor of political
such amendments have served to empower the Courts elite struggle in the larger battle for democratization.
in periods of democratic transition, at the expense of Of course, the timing of PIL in Pakistan suggests some
representative institutions. The Courts have thus resisted parallels with India in terms of the triggers for the
the extension of judicial review powers that would only development of social and economic rights-based
hurt their own institutional interests in the long-term. constitutionalization. Like the development of SAL in
India, the PIL jurisprudence of the 1990's reflected a
Whither PIL: indigenous developments and the complex mix of post-emergency judicial catharsis and
crisis of governance an acute crisis of governance in Pakistan's political
institutions. Deep political fractures existed not only
Quite apart from the selective nature of constitutional between the military junta and political elite, but also
borrowings from India, a number of developments in amongst the different elements of the new civilian
Pakistan have lent PIL a distinctly indigenous quality. To government. The constant threat and the actual
begin with, PIL was envisaged as an ideological rights- implementation of article 58(2)(b) complicated matters
based device to “achieve democracy, tolerance, equality further and created deeper fissures in governance
and social justice according to Islam” (emphasis added).5 mechanisms, providing the Constitutional Courts
The important contribution of Islamic arguments to the sufficient space to articulate an alternative narrative on
advent of PIL through innovative interpretations of article governance and socio-economic justice. These parallels
2-A (which, in 1985, made the Objectives Resolution a notwithstanding, Pakistan's variant of judicial populism
substantive part of the 1973 Constitution) has been is distinctive because of its political overtones, as the
thoroughly documented (Lau, 2006). Moreover, there following examples illustrate.
was clearly a decade-long hiatus between India and
Pakistan in the emergence of PIL. Barring some early The 1988 Supreme Court judgment that signaled the
but isolated examples of the Pakistani Supreme Court's beginning of PIL as a judicial movement concerned
attentive eye on developments in India, the growth of Benazir Bhutto's constitutional challenge to certain
PIL as a methodical feature in Pakistani constitutional provisions in electoral laws on the basis that they were
jurisprudence coincided with Zia's departure and the ex facie discriminatory and thus violated her freedom
reinstallation of civilian government in the late 1980's. of association under article 17. While striking down parts
The nature and pace of PIL in Pakistan thus differed of the legislation as unconstitutional, the Court

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broadened the class of persons who could approach infringement of the right of a citizen to have free, fair
the Supreme Court directly for rights violation. It also and equal access to an independent and impartial
set a precedent for a kind of abstract judicial review of Court/Tribunal.”9 It is principally this politicized variety
legislation on the touchstone of constitutional rights by of PIL that has allowed the Supreme Court to create
establishing that direct and formidable inroads into the purely political
territory of the legislature and executive.
[w]hen the impugned legislation by reference to its
provisions is ex facie violative of Fundamental Rights The purveyors of PIL: the Supreme Court and its
of an individual or political parties or associations Chief Justice
or unions, proceedings lie for the enforcement of
those rights irrespective of the fact whether any In addition to the governance vacuum and the judge-
prejudicial order has been passed by the Executive led creation of novel jurisprudential tools, the
under the law as the Constitution treats the institutional structure of the Supreme Court also
Fundamental Rights as superior to ordinary contributed to the growth of PIL and the general
legislation.6 expansion of judicial power. Robinson's observations
about the causal nexus between the institutional structure
Another high profile and visibly politicized PIL judgment of the judiciary and judicial activism in India are equally
is the third article 58(2)(b) dissolution case in which relevant to Pakistan (2007). The hierarchical structure
the Court reinstated Sharif's government on the basis of judicial decision-making in Pakistan as well as the
that the Fundamental Right of freedom of association discretionary authority available to the Chief Justice has
included the right to form government after an electoral been central to the growth of judicial power. Under the
victory and to carry into effect the government's 1973 Constitution, the Pakistani Supreme Court is at
mandate. 7 The Judges' Case constitutes another liberty to “make rules regulating the practice and
illustration of this phenomenon, in which the Court procedure of the Court” (article 191). The Supreme
allowed a Fundamental Rights-based challenge to Court Rules of 1980 grant the Chief Justice vast
allegedly unconstitutional judicial appointments on the discretionary powers, which include constitution of
grounds that “not only a practicing Advocate but even judicial benches in the Court (subject only to a general
a member of the public is entitled to see that the three minimum requirement of three judges per bench);
limbs of the State namely, the legislature, the Executive nomination of judges for the Shariat Appellate Bench;
and the Judiciary act not in violation of any provision of constitution of and transfer of judges to branch registries;
the Constitution, which affect the public at large” and general docket management and assignment of cause
that “Fundamental Rights, which are enshrined in our lists; initiation of disciplinary action against Supreme
Constitution and which also have the backing of our Court advocates for professional misconduct; approval
religion Islam, will become meaningless if there is no of the Supreme Court Registrar's duties and terms and
independent Judiciary available in the country.”8 Yet conditions of service of other judicial staff; and
another example of a politicized PIL case concerns the sanctioning of expenditure and re-appropriation of funds
validity of Justice Sajjad Ali Shah's appointment as Chief within the budgetary allocation (without the prior
Justice, in which the Court held that the right of access approval or concurrence of the Ministry of Finance). In
to an impartial and independent tribunal was an addition, Supreme Court judges as a collegium have
extension of the “right to life” under article 9, and suo moto powers in relation to contempt of court
declared that “any deviation from the method prescribed proceedings as well as an extensive canvas of “inherent
under the Constitution for appointment to the high powers” including the power to “make such orders as
office of Chief Justice of Pakistan, would give rise to the may be necessary for the ends of justice or to prevent

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abuse of the process of the Court” (Order XXXIII, Rule In comparison, the first three dissolution cases under
6 of the Supreme Court Rules). article 58(2)(b) (in chronological order) had judicial
benches numbering 11, 12 and 10, judges respectively.
As early as 1978-1979, the Court had held that it was the
duty and obligation of the Chief Justice to personally Conclusion
preside over all important cases; that it was the
undisputed privilege and duty of the Chief Justice to From 1998 to 2004, there was a notable decline in the
constitute benches for the hearing and disposal of cases use of PIL (Khan & Siddique, 2007). This period
coming before the apex court; and that no one had the coincided largely with the first half of Musharraf's rule,
right to demand a bench of one's own choice in view when the new military government was preoccupied
of the Chief Justice's exclusive authority. These judgments with garnering legitimacy and consolidating political
came at a time when Zia's handpicked Chief Justice, power. It was not until 2005 that PIL was resurrected
Anwarul Haq, was at the helm of affairs of the Supreme and deployed in an unprecedented manner to check
Court. The concentration of power and authority in the executive power—a subject I reserve for future discussion.
office of the Chief Justice made sense from the point of
view of a working relationship between the executive Maryam Khan is an Assistant Professor of Law and
and the Constitutional Courts. In most circumstances, Policy at the Lahore University of Management Sciences.
it was enough for the executive to exercise influence She may be reached at [email protected].
over the Chief Justice, who would then in turn exercise
his broad powers to constrain the potential for
References and further reading
disagreement within the Supreme Court on important
constitutional matters, whether in appeal or under the
Baxi, U. (1987). Taking suffering seriously: Social action
Court's original jurisdiction. The structural disincentives
litigation in the Supreme Court of India. In N.
to dissent within this hierarchical system can be gauged
by the evidently homogenous judgments emanating in Tiruchelvam and R. Coomaraswamy (Eds.), The role of
high-profile constitutional cases with one or two dissents the judiciary in plural societies. London: International
at the most. Chief Justices in the first half of the 1990s Centre for Ethnic Studies.
— Muhammad Afzal Zullah and Nasim Hasan Shah—
used their powers generously to promote PIL. Starting Bhagwati, P. N. (1987). Social action litigation: The Indian
in the mid-1990s, PIL seemed to have transformed into experience. In N. Tiruchelvam and R. Coomaraswamy
a visibly political tool under Chief Justice Sajjad Ali Shah (Eds.), The role of the judiciary in plural societies.
with the rising polarization of Supreme Court judges London: International Centre for Ethnic Studies.
through article 58(2)(b) jurisprudence. The powers of
the Chief Justice to constitute benches and set up branch Khan, M. (2010). Selective borrowings. Seminar: We the
registries assumed much greater strategic significance People, a Symposium on the Constitution of India after
at this time. For instance, in order to evade dissent in 60 Years, 1950-2010, 615. Retrieved from http://www.india-
an increasingly divided bench, Chief Justice Sajjad Ali seminar.com/2010/615/615_maryam_khan.htm.
Shah constituted smaller and more selective judicial
benches for cases of paramount political importance Khan, M., & Siddique, O. (2007). The 2005 South Asian
like the Judges' Case in 1996 (five), the Presidential earthquake: natural calamity or failure of state? Exploring
Reference against Prime Minister Nawaz Sharif in 1996 state liability and remedies for victims of defective
(five), the Eighth Amendment Case in 1997 (six), and construction in Pakistan. Australian Journal of Asian
the last dissolution case against Benazir in 1997 (six). Law, 9(2), 187.

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Social Science and Policy Bulletin, Volume 2, No. 4

Lau, M. (2006). The role of Islam in the legal system of

Pakistan. The Netherlands: Koninklijke Brill.

Menski, W., Alam, R., & Raza, M. (2000). Public interest

litigation in Pakistan. London: Platinum Publishing.

Robinson, N. (2009). Expanding judiciaries: India and

the rise of the good governance court. Washington
University Global Studies Law Review, 8(1), 1.

Sathe, S. P. (2001). Judicial activism: The Indian

experience. Washington University Journal of Law &
Policy, 6, 29.

Shah, N. H. (1993). Public interest litigation as a means

of social justice. Pakistan Law Digest, 31.

Siddique, O. (2006). The jurisprudence of dissolutions:

Presidential power to dissolve assemblies under the
Pakistani Constitution and its discontents. Arizona
Journal of International and Comparative Law, 23(3),
615.

Siddique, O. (2010). Across the border. Seminar: We the

People, a Symposium on the Constitution of India after
60 Years, 1950-2010, 615. Retrieved from
http://www.india-seminar.com/2010/615/615_
osama_siddique.htm.

Notes
1Darshan Masih alias Rehmatay v. the State, PLD 1990, SC 513.
2S. P. Gupta v. Union of India, A.I.R. 1982, S.C. 149.
3Benazir Bhutto v. Federation of Pakistan, PLD 1988, SC 416
(hereafter Benazir Bhutto (1988)).
4Bandhua Mukti Morcha v. Union of India A.I.R. 1984, S.C. 802.
5Chief Justice Muhammad Haleem in Benazir Bhutto (1988).
6Benazir Bhutto (1988).
7Mian Muhammad Nawaz Sharif v. Federation of Pakistan, PLD 1993,

SC 473.
8Al-Jehad Trust v. Federation of Pakistan, PLD 1996, SC 324.
9Malik Asad Ali v. Federation of Pakistan, PLD 1998, SC 161.

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 Spring 2011

The Economy and Exchange Rate Management

By Syed Zahid Ali*

of external debt and current account deficits. On average,

the external debt to GDP ratio in LDCs is approximately
26 percent whereas the current account deficit to GDP
ratio is between four and five percent. In the early 1990s,
many Latin American and East European countries
followed trade and capital liberalization policies reflective
of the policy stance of the IMF, World Bank, and the
U.S. Treasury as popularized by the Washington
Consensus. This policy stance purported to help LDCs
I n the present era of increased economic integration,
exchange rate movements play a critical role in
economies grow, focusing on tackling external debt and
current account deficits. The Washington Consensus
determining the behavior of both nominal and real suggested a ‘corner solution’: developing countries must
variables such as inflation, output, employment, the either fix their exchange rate to an international anchor
balance of payments, and most importantly, economic currency or let it float freely. The main focus of the
stability. Studies such as Summers (2000), Frankel (1999), Consensus was on the return of these economies to
and Calvo & Reinhart (2002) have argued that the choice market fundamentals with minimal government
of appropriate exchange rate regime (especially in the intervention where needed.3 It produced mixed results.
case of economies with few restrictions on the capital China and India, two countries that followed the
account) is an important determinant of economic Washington Consensus, have experienced rapid
stability.1 Notwithstanding the importance of vagaries economic growth. However, this growth can also partly
in international capital markets, Fischer (2001) points be attributed to their heavy investment in education,
out the link between fixed or soft pegged exchange rate particularly in the fields of science and engineering.4
regimes and various financial crises: the 1994 Mexican
meltdown, the East Asian financial crisis of 1997 and the In the aftermath of the Asian financial crises of 1997-98,
Argentine and Turkish crises of 2000. In contrast, owing a number of countries endeavored to abandon their
to their reliance on a flexible exchange rate policy in soft-peg exchange rate regimes and opted for ‘corner
1998, countries such as South Africa, Mexico, and Turkey solutions’ as Williamson (2000) analyzes, under pressure
managed to avoid a similar predicament. It can therefore from the IMF. However, even countries that retained
be argued that the choice of exchange rate regime has the official tag of ‘free-floating regimes’ soon reverted
implications for the effectiveness of monetary and fiscal to their pre-crisis practice of maintaining soft-pegs to
policies. For instance, in the case of an open capital the US dollar.5 In reality, exchange rate regimes can take
account, an increase in the money supply leads to a a number of forms: conventional fixed, soft-peg or
depreciation of the local currency, which increases crawling peg; the managed or independent float; and
aggregate demand through an increase in net exports. the horizontal or crawling band, etc.6
Similarly, tight monetary policy strengthens the local
currency and results in a decrease in aggregate demand, In the past, less developed countries followed IMF advice
which while curbing inflation, can exacerbate the current stipulating weak currency exchange rates and balancing
account deficit and increase unemployment.2 of the budget through taxation to avoid external
imbalances and currency crises. However, for many
At present, a number of less developed countries (LDCs) LDCs, a weak currency policy has neither eliminated
and emerging economies are grappling with problems nor even reduced the trade deficit. For instance, starting

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Social Science and Policy Bulletin, Volume 2, No. 4

in the 1950s, Pakistan devalued its currency by almost unemployment.8

1600 percent, yet the country still faces acute internal
and external imbalances. In fact, the debate concerning In the late 1990s/early 2000s, a crucial challenge to the
the desirability of devaluation has spanned over 60 years. exchange rate management debate arose, questioning
A number of theoretical and empirical studies have the validity of the uncovered interest rate parity (UIP)
shown that the efficacy of devaluation depends critically condition.9 Marey (2004) concluded that exchange rate
on not only the stability of the system, but also the expectations might take the form of adaptive, regressive
competing demand- and supply-side effects of exchange and extrapolative (both bandwagon and distributed lag)
rate polices. Most studies have concluded that while expectations. The form of expectations is important
currency devaluation may or may not be fruitful in the when central banks regularly intervene in the foreign
short run, it is certainly neutral in the long run.7 exchange market. In order to avoid exchange rate
volatility, emerging economies tend to follow a soft-peg
Exchange rate management and current practices exchange rate regime (Calvo & Reinhart, 2002). This
involves occasional exchange rate manipulation to
The idea of currency devaluation much practiced in the achieve certain targets. Whether exchange rate
past, is once again gaining attention in both policymaking manipulations deliver results largely depends on the
and academic circles. For example, there has been debate demand- and supply-side effects of the exchange rate.
in Ireland to quit the Euro and adopt the Irish pound For example, in case of exchange rate depreciation, the
in order to acquire the power of devaluation (O’Rourke, country gains competitiveness thereby increasing net
2009). Some central banks have used monetary exports. However, it may simultaneously cause an
instruments to defend a pre-determined or target increase in real interest rates affecting investment and
exchange rate. In order to benefit from a weaker consumption negatively. Hence, the net effect of
currency, central banks have engaged in the manipulation depreciation on aggregate demand for home country
of exchange rates. In July 2009, for example, Chinese goods is ambiguous. On the other hand, supply-side
foreign reserves exceeded USD two trillion, with her effects of exchange rate depreciation are measured
central bank actively buying US dollars to prevent further through changes in production costs. Many less
appreciation of the Chinese yuan. At present, monetary developed countries rely heavily on imported inputs
authorities in the US are being accused of taking such as oil and machinery. In such a scenario, exchange
deliberate steps to depreciate the US dollar through so- rate depreciation would augment the cost of production,
called quantitative easing. The objective is to overcome especially if the country has limited substitutes for
the adverse effects of the global financial crisis. However, imported factors of production. Another channel through
considering the international status of the US dollar and which supply-side effects operate is the adjustment of
the fact that exchange rates are multilaterally determined, prices by domestic firms in the event of changes in both
economists are skeptical of the success of this policy. exchange rate and price of foreign goods. Assuming that
Whether induced currency depreciations help depends the firm is either a multinational or a domestic exporting
on a number of factors. For instance, trading partners firm, this makes sense. Since exchange rate variations
tend to align exchange rate policies, taking steps to have positive and negative impacts, the net effect
protect their export market shares. In recent years, invariably depends on their magnitudes and the form
Japan, Britain, Brazil, India, South Africa, Thailand, and of exchange rate expectations.
South Korea have threatened to devalue their currencies.
Switzerland is one of the nations affected by recent Is there a “correct” exchange rate policy for LDCs?
devaluations. The Swiss National Bank (SNB) actively
bought Euros between March 2009 and June 2010 to Considering both the demand- and supply-side effects
arrest further appreciation of the Swiss franc and of exchange rates, we may draw two broad conclusions.
safeguard the interests of its exporters and reduce First, a country may benefit from having an undervalued

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 Spring 2011

currency if its net exports are exchange rate elastic (i.e. nominal exchange rate, which may again trigger a balance
the Marshall-Lerner conditions are satisfied) and the of payments crisis. In 1994, Mexico faced such a situation
exchange rate has either no or weak supply-side effects. and the currency swiftly and significantly lost value.10 In
Second, a country may profit from an overvalued such a case, the role of monetary policy is to forestall
currency if the exchange rate has strong supply-side undue speculation and mitigate ambiguity.
effects, irrespective of whether the Marshall-Lerner
conditions are satisfied (Ali & Anwar, 2010). In reality, Calvo & Reinhart (2002) strongly support either fixed
globalization ensures the supply-side effects of exchange exchange rates or a dollarization policy. However,
rate changes in all economies. Accordingly, whilst Krugman & Obstfeld (2002) argue that balance of
supporting a policy of overvalued exchange rates, it payments crises may also occur under a fixed exchange
would be wise to consider related issues. For example, rate regime. Their argument revolves around the fact
the success of an overvaluation policy adopted by a that the means available to a central bank to defend a
country is unambiguously contingent on the response fixed exchange rate are rather limited. They have shown
of its trading partners. Moreover, in addition to the that shocks in exchange rate expectations lead to
additional resource expenditure required to keep the devaluation of the currency, thereby triggering capital
exchange rate above its true market value, an overvalued flight. Similarly, while analyzing the history of exchange
exchange rate can have other undesirable consequences. rate regimes in Latin American countries, Frenkel &
Fischer (2001), for example, argues that in the event of Martin (2010) note that real exchange rates have played
domestic and foreign shocks, the central bank has to an important role in the macroeconomic performance
increase the interest rate to defend the overvalued rate, of these countries. Most have relied on fixed or semi-
potentially harming both aggregate demand and the fixed exchange rate regimes to maintain price stability.
banking system. It can also be argued that pursuing a This policy, however, led to excessive real exchange rate
policy of overvalued exchange rates can lead to a appreciation, which contributed to balance of payments
speculative attack on the currency that may force the and financial crises.
monetary authorities to devalue the affected currency,
possibly resulting in a currency crisis. Keeping exchange Conclusion and policy recommendations
rates below market values may not be a promising
proposition either. As mentioned previously, induced Exchange rate manipulations that are aimed at achieving
depreciation would work if and only if the supply-side overvaluation, undervaluation or maintaining some
effects of the exchange rate are not present and the desirable level with adjustments over time are examples
Marshall-Lerner conditions hold. Both of these conditions of soft-peg regimes. This sort of a regime is strongly
are unlikely to be satisfied in developing countries. criticized by Fischer (2001). He argues that countries
Moreover, as indicated earlier, trading partners are likely with open capital accounts practicing a soft-peg are
to respond by devaluation and hence the net effect may more prone to financial crises. Furthermore, he maintains
only be an increase in prices and mounting speculation. that, “soft peg systems have not proved viable over any
If a country is actively participating in the devaluation lengthy period, especially for countries integrated or
race and exchange rate expectations are consistent with integrating into the international capital markets”.
the bandwagon type (commonly observed in countries Likewise, Obstfeld & Rogoff (1995) also contend that
that have been affected by currency crises), then currency soft peg exchange rate regimes may not last long for
speculators are likely to buy out the country’s foreign any type of economy.11 Frankel (1999) concludes that,
exchange reserves, thereby forcing currency devaluation “no single currency regime is a panacea, rather, my
and the onset of a balance of payment crisis. Moreover, overall theme is that no single currency regime is best
it is possible that nominal devaluation results in real for all countries and that, even for a given country, it
exchange rate depreciation. In this case, there is a may be that no single currency regime is best for all
possibility that the real exchange rate may fall below the time”. It is suggested that while following a flexible

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Social Science and Policy Bulletin, Volume 2, No. 4

exchange rate policy is desirable in that it allows for in- for all countries or at all times. NBER Working Papers
built stabilization, the government may find other policies No. 7338. Cambridge, MA: National Bureau of Economic
useful in addressing issues of trade deficits and Research.
unemployment.12 For instance, a country should use
efficiency, quality and reliability, rather than exchange Frenkel, R., & Martin, R. (2010). A concise history of
rates, to compete globally. Similarly, finding and creating exchange rate regimes in Latin America (CEPR
new markets could be a key to success for these Discussion Papers 3346). Washington, DC: Center for
countries. LDCs may also benefit from foreign Economic and Policy Research.
collaboration, as evidenced by the successful experience
of China, India, Malaysia, and more recently, Bangladesh. Fischer, S. (2001). Exchange rate regimes: Is the bipolar
Many reputed international brands now have production view correct? Journal of Economic Perspective, 15 (2),
units in such countries, creating jobs and generating 3-24.
sizeable foreign exchange for them. These international
collaborations may go a long way in shaping these Galí, J., & Monacelli, T. (2002). Monetary policy and
economies through technology transfer and human exchange rate volatility in a mall pen economy (CEPR
capital development. Lastly, considering the upward Discussion Papers 3346). Washington, DC: Center for
trend in food prices, it is imperative for LDCs to revive Economic and Policy Research.
agriculture in line with modern-day science and
technology. These countries have tremendous potential Ivrandi, M., & Guloglu, B. (2010). Monetary shocks,
for earning valuable foreign exchange by exporting exchange rates and trade balances: Evidence from
agriculture produce to the rest of the world. inflation targeting countries. Economic Modeling, 27,
1144 – 1155.
Syed Zahid Ali is Associate Professor of Economics at
the Lahore University of Management Sciences and Krugman, P., & Obstfeld, M. (2002). International
can be reached at [email protected] economics: Theory and policy (3rd ed.) New Delhi:
Addison Wesley.
References and Further Reading
Ali, Z., & Anwar, S. (2010). Supply-side effects of exchange Lizondo, J. S., & Montiel, P. J. (1989). Contractionary
rate, exchange rate expectations and induced currency devaluation in developing countries: An analytical
depreciation. (Unpublished manuscript). Lahore overview. IMF Staff Papers, 36, 303-23.
University of Management Sciences, Pakistan.
Marey, P.S. (2004). Uncovered interest parity tests and
Allen, M. (2010). Switzerland hit by currency devaluation exchange rate expectations. Paper presented at
race. Retrieved from http://www.swissinfo.ch/eng/ Computing in Economics and Finance. University of
business/Switzerland_hit_by_currency_devaluation_ Amsterdam, Amsterdam.
race.html?cid=28504670
Nenovsky, N. (2006). Exchange rate inflation: The
Einchengreen, B., & Hausmann, R. (1999). Exchange contribution of Albert Aftalion (1874 – 1956). Editions
rates and financial fragility (NBER Working Papers 7418). of Bulgarian National Bank.
Cambridge, MA: National Bureau of Economic Research.
Obstfeld, M., & Rogoff, K. (1995). The mirage of fixed
Calvo, G., & Reinhart, C. (2002). Fear of floating. exchange rates. Journal of Economic Perspectives, 9
Quarterly Journal of Economics, 117, 379-408. (4), 73-96.

Frankel, J.A. (1999). No single currency regime is right O’Rourke, K. (2009). Currency devaluation may look an

12
 Spring 2011

easy option but it’s a trick on workers. Irish Independent be fixed relative to another currency for long periods of time, with
periodic devaluations and revaluations. A conventional fixed peg
is a regime where a currency is pegged at a fixed rate to a major
Stiglitz, J. (2003). Challenging the Washington Consensus. currency or a basket of currencies but is allowed to fluctuate within
The Brown Journal of World Affairs. 9 (2), 33-40. a narrow margin of 1 around a central rate. A horizontal band,
although very much similar to the conventional fixed peg, is softer
Summers, L.H. (2000). International financial crises: in that it allows the exchange rate to narrowly fluctuate around a
Causes, prevention, and cures. American Economic formal central rate. In a crawling peg regime, currency is adjusted
Review, 90 (2), 1-16. periodically in small amounts at a fixed rate. Similarly we can define
a crawling band regime where the exchange rate band itself is
allowed to change. For more details, see Tiwari (2003).
Tiwari, R. (2003). Post-crises exchange rate regimes in 7See Lizondo & Montiel (1989) for a comprehensive survey of the
South Asia: An empirical survey of de-facto policies devaluation debate.
8See Allen (2010).
(Seminar paper). University of Hamburg: Hamburg,
9The UIP condition states that the difference in interest rates
Germany.
between two countries is equal to the expected change in exchange
rates between the countries’ currencies. If this parity does not
Williamson, J. (2000). Exchange rate regimes for emerging hold, a riskless profit may be earned.
markets: Reviving the intermediate option. Washington, 10See Krugman and Obstfeld (2002) chapter 17, Appendix II for

DC: Institute for International Economics. more details.

11For an interesting discussion favoring a hard peg, see for example,

Notes Eichengreen & Hausmann (1999) and Calvo & Reinhart (2002).
12Gali & Monacelli (2002),and Engel (2002), among others, have

*This article is based on a recent unpublished study that I co- shown that if sellers set prices in their own currency (a phenomenon
authored with Sajid Anwar, entitled Supply-Side Effects of Exchange known as producer currency pricing or PCP), central banks should
Rates, Exchange Rate Expectations and Induced Currency allow the exchange rate to float freely and authorities should target
Depreciation. domestic prices to minimize the overall volatility in the economy.
1The importance of the role of exchange rate policy in determining
the inflation rate and other variables is not new. French economist
Albert Aftalion (1874–1956), using basic statistical techniques,
found that, in France, causality ran from the exchange rate to prices
and from prices to money. In the case of Germany, he found that
causality ran from the exchange rate to money and then from
money to prices (see Nenosvsky, 2006).
2Ivrendi & Guloglu (2010) consider the impact of a contractionary
monetary policy shock in five inflation-targeting countries. They
argue that the contractionary shock results in a decrease in both
price level and output, an appreciation of the exchange rate and
an improvement in the trade balance. Similarly, Fischer (2001)
highlights the “impossible trinity” i.e., we cannot simultaneously
have free capital movement, a fixed exchange rate, and an effective
monetary policy.
3Fixed exchange rate policies were popular before World War I,
from the mid-1920s to 1931 and from 1945 to 1973 (see Krugman
& Obstfeld, 2002). Today, economies mostly use floating exchange
rates.
4For an interesting analysis of the Washington consensus, see Stiglitz
(2003).
5See Calvo & Reinhart (2002).
6Under a fixed peg regime, a country adheres to a fixed nominal
exchange rate relative to some other currency for the indefinite
future. With a soft peg, there is no corresponding long-term
commitment to a particular value for the exchange rate, but it can

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Social Science and Policy Bulletin, Volume 2, No. 4

Towards State-Building in FATA

By Raza Ahmad

the north-western frontier of the Indian Empire. Under

these arrangements, the Frontier Crime Regulations
(FCR) of 1901 was introduced which governs FATA to
date. FCR was ostensibly built upon local tribal customs
and was enforced by tribal leaders and their
constabularies. Under the Pakistani Constitution, FATA
is included among the “territories” of Pakistan (Article
1). Though it has representation in the National Assembly
and the Senate, FATA remains under the direct executive
T he federally administered tribal areas (FATA) of
Pakistan have seen intense conflict since the US invasion
authority of the President (Articles 51, 59 and 247) and
the President is empowered to issue regulations for the
of Afghanistan in 2001. FATA comprises of seven Tribal “peace and good government” of the tribal areas. Laws
Agencies and six Frontier Regions.1 According to the framed by the National Assembly do not apply to FATA,
2008-09 estimates, the total population of FATA is about unless by executive order.
4 million. With poor governance, dire socio-economic
indicators and a unique legal status, the region has Today, FATA continues to be governed primarily through
become a hotbed of militant activity, spearheaded by the FCR of 1901. It is administered by the Governor of
the Taliban and al-Qaeda networks. The academia, Khyber-Pakhtunkhwa (KP), an agent to the President of
policy-makers and media often overlook the unenviable Pakistan, under the supervision of the Ministry of States
situation of this populace which lives in abject poverty and Frontier Regions (SAFRON) in Islamabad.3 The
and without basic rights. Most of the population depends Political Agent (PA) is next in the command chain and
on subsistence agriculture with a per capita income of his job has historically entailed maintaining peace in the
USD 250 per year, which is half the national per capita assigned tribal agency via bargaining, cash gifts to maliks
income, with almost 60 percent of the population living (state-recognised tribal leaders) and military force.
below the national poverty line. Until 2002, decisions related to development planning
were taken by the FATA section of the North Western
Inadequate governance arrangements in FATA have been Frontier Province (now renamed as Khyber-Pakhtunkhwa
responsible for the gap between the Pakistani state and henceforth KP) Planning and Development Department
the people. A weak or virtually absent social contract (P&DD) and implemented by government line
between the state and citizenry can explain, to some departments. A FATA Secretariat was set up in 2002 to
extent, why insurgencies have occurred and continue be headed by the Secretary FATA. In 2006, the Civil
to be a threat to peace and security in the region. It is Secretariat FATA was established to take over decision-
beyond the scope of this article to address the issue of making functions, with an Additional Chief Secretary,
terrorism and therefore, it will focus on the inherent four secretaries, and several directors. Line departments
weaknesses of governance in FATA and show that state- of the Civil Secretariat FATA now carry out project
building is the key to creating peace in the region.2 implementation. The KP Governor's Secretariat acts
as a liason between the federal and provincial
Patterns and structure of governance in FATA governments and the Civil Secretariat FATA.

During the 19th century, the British came up with unique Government administration in each tribal agency falls
political arrangements for this region, which constituted under the purview of the PA, as supported by assistant

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 Spring 2011

political agents, tehsildars (administrative head of a exclusivity towards the poor and marginalized, and lack
tehsil) and naib tehsildars (deputy tehsildar), along of accountability, to some extent they have been
with members of various local police (khassadars) and successful in making up for the absence of modern
security forces (levies or scouts). The PA oversees the state-led judicial instruments based in the social contract
working of line departments and service providers and between the citizen and the state. But in recent years,
is responsible for handling inter-tribal disputes over the Taliban have killed more than 600 traditional leaders,
boundaries and natural resources, as well as regulation leaving a severe vacuum of governance in the region.4
of trade with other agencies or settled areas. The system has been severely weakened by conflict and
can hardly fulfill its functions at present.
FATA is divided into two administrative categories:
'protected' areas under the direct control of government, Civic governance mechanisms operative through civil
and 'non-protected' areas administered indirectly through society groups, political parties, media, and community
local tribes. In protected areas, PAs vested with judicial groups have been very weak in FATA. Their capacity
powers decide criminal and civil cases. After completing to develop and pursue political demands, to hold
the necessary inquiries and investigations, a jirga is accountable public and traditional governance
constituted with the consent of disputing parties. The institutions or to contribute towards development and
jirga hears what the parties have to say, examines service delivery is limited.
evidence, conducts further inquiries where needed, and
issues a verdict (which may be split or unanimous). People's perception of governance
Though the jirga mechanism enjoys widespread cultural
acceptance, it is not immune from distortions. There Based on these unrepresentative governance
are a number of requirements for a jirga to be held, arrangements, the people of FATA are extremely
including hospitality, which is increasingly beyond the dissatisfied with their civic status. Recent surveys by the
reach of many. As a result, poor and more vulnerable “Community Appraisal and Motivation Program”
segments of society often cannot afford to convene a (CAMP, 2010) provide invaluable insights.
jirga. There are also grievances that jirga decisions
mostly favor the richer or more influential parties and Concern for deteriorating “law and order” continues.
thus reinforce the influence of elites. In both 2010 and 2009, approximately one-third of FATA
respondents identified the lack of law and order as the
The tribe, together as a lashkar (contingent), has biggest problem facing Pakistan. In the 2009 poll,
historically enforced decisions. While most disputes are “security” remained a pressing concern for 62.9 percent
settled internally, more serious matters may require the respondents. Similarly, “education and schools” (56
convening of a larger jirga made up of maliks, elders, percent) followed by “health services/hospitals” (50.7
the PA, members of the National Assembly and Senate, percent) were considered the most important services
and occasionally even representatives from neighboring that the Government of Pakistan should be providing.
agencies. Informal jirgas and lashkars have proven to And while nearly one-third of respondents (30.7 percent)
be more effective as the decisions are taken at a more wanted FATA to be fully integrated into KP, 24.9 percent
local level and their implementation is underpinned by still wanted provincial autonomy. Those content with
the strong social contract between tribes. For instance, the current arrangement decreased from 23 percent
casualties in armed conflicts are compensated for through (2008) to 21 percent (2009) and dipped even further to
a communal support fund system. a low 7.9 percent in 2010. Unsurprisingly, support for
the Political Parties Act of 2002 has remained consistent.
Traditional governance structures also constitute an Nearly 60 percent of the respondents welcomed
important element of the region's identity. Although President Zardari's announcement of a political reforms
criticized for bearing a high risk of elite capture, package for FATA in 2009.

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Elusive reforms in FATA limited engagement with locals under the existing
governance mechanism potentially undermines
Improving the governance structures for people living its ability to control conflict in the area.
in FATA has long been on the federal and provincial
governments' agenda.5 In August 2009, the Government The table below provides details on the envisaged
of Pakistan announced a reform package for FATA, which reforms and the extent of progress made thus far.
addressed some of the longstanding issues such as
amendments to the FCR. Implementation of the publicly Neglected tasks of state-building
announced FATA reform package could potentially
rebuild citizens' confidence in the state's capacity to The table highlights how little progress has been made
address their concerns, improve security, and guarantee in introducing reforms despite the apparent political
their rights as equal citizens of Pakistan. While the commitment. It is feared that the government will be
adoption of the reform package demonstrated the perceived as either unwilling or incapable of
political will of the Federal Government for embracing implementing its announcements, further eroding the
change, its implementation has proved challenging. On legitimacy of the federal government. State-building
the one hand, the implementation of the reforms has appears to be the foremost need of the people in FATA.7
been put on hold (reportedly on request by the military) State legitimacy is a direct function of the level of
until the conflict subsides and the state is in control of efficiency and effectiveness of public service delivery.
the situation again.6 But on the other hand, the state's But peace-building remains an important pre-requisite

Table 1: Proposed reforms and progress

Reform Details
Lifting restrictions on political party Extending the Political Party Order (2002) to FATA. However, little or no progress has been
activity made on implementation.
Curtailing the bureaucracy's arbitrary Amending FCR to limit the PA's powers of arrest and detention, including items concerning
powers of arrest and detention right to bail; requiring an accused person to be produced before an Assistant Political Agent
(APA) within 24 hours of his or her arrest; referring the case to a jirga within 10 days; and
ensuring that the jirga submits its findings to the political administration within 90 days.
Under this proposal, the collective responsibility clause will be applicable only to an alleged
offender's family rather than the whole tribe. However, there has been little progress in
bringing about any amendments to the FCR.
Excluding women and minors from Extending the application of the reforms to women and children under 16 years of age.
collective responsibility under the law

Establishing an appellate tribunal Establishing and enforcing the right to legal defense. Presently, the PA's judicial decisions,
including arrests and punishments, cannot be appealed in any court. Furthermore, since the
PA exercises both appointing and appellate power over jirgas, FATA's judicial system is entirely
subservient to the PA. An appellate tribunal comprising a retired high court judge, a retired
government official with knowledge of the law, and another official with knowledge of the
tribal areas and traditions has been proposed. While providing an avenue of appeal is certainly
necessary, this body's decisions cannot be appealed further.

Audits of funds received and No progress has yet been reported on this by the FATA Secretariat.
disbursed by the Auditor-General
High level committee The government formed a high level committee in 2009 to steer FATA reforms. However, its
effectiveness to articulate the reform agenda remains unclear.

16
 Spring 2011

for the formulation and implementation of sustainable establishing a potent police force. Army operations in
policies. Similarly, providing political representation and the region must be followed by a smooth handover of
democratic rights to the people of FATA alone will not administration to civilians and representatives of the
be enough to eliminate systemic weaknesses of local population, together with compensation for
governance in the region. Together with such collateral damages and economic opportunity costs.
entitlements, its executive set-up must also be given Currently, there are 23500 khassadars — locally recruited
effective crime-fighting ability along with an efficient tribal levies — that are poorly trained, and lack authority.
justice system. The executive must also possess the The Levy Force regulation (2010) requires full
additional capacity for undertaking tasks related to implementation in order to modernize the region's
service delivery, budgeting, complaints redressal and security force, expanding its duties beyond counter-
the like. Further, widespread corruption within the terrorism to policing, patrolling and crime-fighting.
governance process needs to be tackled. The next section Further, the lashkars formed to ward off the threat of
highlights some key reform areas that the government indigenous militants need to be handled with care, as
needs to consider to ensure that the pending task of these anti-Taliban elements are being systematically
state-building in FATA is achieved. targeted by the militants. The government needs to
fulfill its end of the bargain and provide these informal
Guaranteeing full citizenship and democratic rights: security units with a protective environment
Full citizenship and democratic rights (comparable to in the context of overarching state-based support.
those in other provinces of Pakistan) need to be
guaranteed to people living in FATA. Given that the Implementing a formal justice system: The lack of a
Constitution of Pakistan empowers the President to formal justice system and the draconian FCR has resulted
introduce changes in the administrative status, informal in the erosion of public confidence in the state. This
and formal governance institutions need to be rebuilt situation is exacerbated by, what may at times, be
and their capacity strengthened. It is important that perceived as partiality of jirgas (which have recently
Parliament carefully weigh the option of FATA's been weakened as noted above). The lack of
representation in the provincial assembly as part of KP independence, impartiality, and the inability to appeal
or as a separate province.8 within the informal justice network in FATA plays into
the hands of the militants who have used this historical
Improving public administration: Due to the conflict weakness to garner support amongst the populace
in FATA, it is crucial that competence in critical areas through speedy and arbitrary forms of public
within the public administration be strengthened, punishment. Irregularities in the disposal of appeals
especially with respect to basic service delivery and post- against jirga decisions need to be examined. There also
conflict reconstruction. While this emergency capacity remains a critical need for a full-time appellate tribunal
is enhanced, efforts must be made to selectively and an extension of the Ombudsman's jurisdiction to
transform these functional areas through modest FATA.
improvements in administrative procedures and IT.
Further, it is vital to make the formal institutional Jirga reform: For effective counter-radicalization and
arrangements responsive to communities. Rebuilding reconciliation, jirgas could play an important role. Jirga
trust in formal institutions needs to be seen both as a reform and synchronization with the Pakistani
process, as well as an outcome, in these efforts.9 Constitution and formal governance structures would
entail the strengthening of village jirgas. Establishing
Establishing an institutional crime-fighting structure: cluster organizations at the union council level will be
Alleviating the lack of an institutional crime-fighting necessary to involve jirgas in development and peace-
structure in FATA requires a multi-pronged effort, building activities.
targeting the military presence in the region and

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Strengthening the formal accountability institutions: infeasible. Nevertheless, a phased approach may be
Corruption in FATA, as studies reveal, is more widespread adopted whereby those agencies where counter-militancy
than in KP. The PA's office is surrounded by operations are not underway be sites for full
institutionalized 'irregularities'. Tackling corruption in implementation. The Parliament needs to re-open the
FATA would require strengthening the formal debate on FATA, amend the FCR and improve its justice
accountability institutions, as well as working with and security apparatus on an emergency basis. If the
informal institutions such as jirgas. It would be useful Pakistani state does not enhance its legitimacy among
to employ the traditional accountability and grievance the people of FATA, further erosion of public trust might
redress mechanisms that work along tribal, sub-tribal or make the task of state-building even more challenging,
neighborhood networks. if not impossible.

Improving technichal capacity: There is limited technical Raza Ahmad is a policy adviser, development
capacity within the directorates and departments of the practitioner, and writer. He may be reached at
Civil Secretariat FATA. Already, most offices find it difficult [email protected].
to meet their targets for assigned development
responsibilities. The agency revenues that relate to the References and Further Reading
PA's authority to collect funds are deposited and spent
at the sole discretion of the PA. The Auditor General of Government of NWFP. (2009). FATA Development
Pakistan does not audit the utilization of these funds. Statistics 2009. Peshawar: Bureau of Statistics, Planning
It is important as envisioned by the reform package, and Development Department.
that the PA's office and its revenue generation be made
transparent and open to scrutiny. Government of Pakistan. (2006). FATA Sustainable
Development Plan, 2006-2015. Peshawar: Civil Secretariat
Strengthening civil society institutions: State-building FATA.
will also require the need to strengthen civil society
institutions in order to build trust and social capital. Government of NWFP. (2009). Comprehensive
Civil society has been disrupted due to violence targetting development strategy, 2009-2015. Peshawar: Provincial
jirga leaders, NGO activists and other prominent Disaster Management Authority.
personalities. Formal and informal civil society institutions
have, by and large, ceased to function. An effective civil Government of NWFP. (2009). The cost of conflict in
society is the key to citizen empowerment and inclusion NWFP. Peshawar: Planning and Development
in the governance process. In the absence of a Department.
functioning and relatively harmonious civil society, the
legitimacy and stability of political institutions is likely Government of Pakistan, United Nations, World Bank
to be short-term and fragile. As part of state-building & Asian Development Bank. (2010). Post crisis needs
efforts, civil society organizations need to be encouraged assessment: Khyber Pakhtunkhwa and Federally
and provided with programmatic support. Administered Tribal Areas.

Conclusion Government of Pakistan, UNICEF, & World Food

Program. (2009). Multiple Indicator Cluster Survey
The Government of Pakistan has already announced an (MICS): FATA Pakistan. Peshawar: FATA Secretariat,
ambitious reform package for FATA. It may not be Planning and Develpment Department.
comprehensive but it is a step forward. The critical need
is to implement it. It is true that continued conflict in Human Rights Commission of Pakistan. (2006). State of
the region could make universal implementation Human Rights in 2006 (Annual Report). Lahore: Human

18
 Spring 2011

4International Crisis Group (2009) Pakistan: Countering Militancy

Rights Commission of Pakistan.
in FATA, Crisis Group, Asia Report No 178 (2009).
5Two major political parties — Pakistan People's Party and the Awami
International Crisis Group. (2009). Pakistan: Countering National Party — comprising the ruling coalitions in Islamabad and
militancy in FATA (Crisis Group, Asia Report No. 178). KP highlight FATA reform as a priority in their respective manifestos.
Brussels: ICG. 6Based on media reports and interviews conducted by the author
between July-August, 2010 .
7OECD defines it as “an endogenous process to enhance capacity,
Shinwari, N. A. (2008). Understanding FATA: Attitudes
towards governance, religion and society in Pakistan's institutions and legitimacy of the state, driven by state-society
relations. Positive state building processes involve reciprocal relations
Federally Administered Tribal Areas: Volume IV. Peshawar: between a state that delivers services for its people and social and
Community Appraisal and Motivation Program (CAMP). political groups who constructively engage with their state.”(2008).
8A representative opinion survey in FATA reveals that almost a

Shinwari, N. A. (2009). Understanding FATA: Attitudes quarter of the sample (23.9 percent) are unsure whether FATA
towards governance, religion and society in Pakistan's should be integrated into the province (single highest answer
mentioned), while 21.8 percent believe the present status quo
Federally Administered Tribal Areas: Volume III. Islamabad: should be preserved. Only a year ago, 34 percent of the population
Community Appraisal and Motivation Program (CAMP). perferred full integration of FATA into the KP province (Shinwari,
2009). This rapid change in opinion might indicate a high degree
Transparency International. (2008). Corruption of uncertainty among the people on how they wish to be ruled in
Perception Index. Retrieved from http://www. the future.
9Government of Pakistan and the United Nations (with the support
transparency. org/news_room/in_focus/2008/
of other development partners) prepared a Post-Crisis Needs
cpi2008/cpi_2008_table. Assessment (PCNA) framework in 2010. It outlines a broad roadmap
for the development of the region and should be implemented as
Transparency International. (2009). Corruption a matter of urgency.
Perception Index. Retrieved from http://transparency.
org/policy_research/surveys_indices/cpi/2009/cpi_20
09_table.

Riano, J. (2009) Global Coruption Barometer 2009.

Berlin: Transparency International.

World Bank. (2005). Islamic Republic of Pakistan,

country policy and institutional assessment.Washington,
DC: World Bank.

Notes
1The Tribal Agencies include Bajaur, Mohmand, Khyber, Orakzai,
Kurram, North Waziristan and South Waziristan. The Frontier Regions
are F.R. Bannu, F.R. Dera Ismail Khan, F.R. Kohat, F.R. Lakki, F.R.
Peshawar and F.R. Tank.
2By governance the paper refers to the political, economic and
administrative authority to manage the affairs of a nation or political
territory. It is the sum total of processes and institutions through
which citizens exercise their legal rights and obligations, articulate
their interests and mediate their differences.
3Historically, the role of the Governor, through the Political Agents
(PA), was to disburse the tribal allowances that had been agreed
upon in treaties with tribal leaders, ensuring that the tribes fulfilled
their responsibilities.

19
Social Science and Policy Bulletin, Volume 2, No. 4

Do Parents Spend Equally on their Sons and Daughters?

By Hadia Majid

and non-labor income on specific products, namely

education and clothing, for both sons and daughters.
In total, four distinct categories of educational and
clothing expenditure across boys and girls, are examined.
The analysis serves a dual purpose: to highlight spending
differences between mothers and fathers while also
considering child gender.

The focus on these particular children's goods is driven

T he intra-household allocation of resources between
parents and children remains a matter of debate within
by two factors. First, the products, particularly education,
relate directly to child welfare outcomes and their analysis
the economic literature. The question of how much is is important from a policy perspective. Insight into which
spent by which parent and on which child can have far- parent is more concerned with child-care and how
reaching implications not only on the extent of human income source factors into the decision-making process
capital formation in the economy, but also on the is needed to propose effective child welfare policies.
outcome of any successful policy initiative. Yet it is Studies such as this can help determine the
almost impossible to a priori determine whether appropriateness of recent policy trends that target
mothers as compared to fathers will spend more on mothers in conditional cash transfers, labor market
their daughters, or if mothers and fathers give overhauls and asset redistribution policies. Second,
precedence to son-related expenditures and clothing and education are likely to represent very
subsequently pool total household resources. Essentially different investment motives for the parents. Relative
it becomes an empirical question, with results varying to investment in children's clothing, spending on
not only by country but also in accordance with income education has a greater probability of having a lasting
sources under consideration. influence on the household's future income stream. It
is possible then that parents have different decision-
Income pooling by mothers and fathers is viewed as a making processes (collective vs. unitary) for these
manifestation of the unitary model within the household different variables and it would be interesting to compare
decision-making literature (Bourguignon, Browning, & the two.1 While the literature generally tends to support
Chiappori, 1993; Thomas, 1990). This model considers the rejection of parental pooling of resources, when it
the household a single unit, usually with an altruistic comes to spending on children, the issue may become
'dictator' who controls income and makes decisions for quite complex.
the entire household, usually keeping the benefit of
individual members in mind (Becker, 1974). In contrast, On the one hand it may be argued that children represent
under the collective model of decision-making, individual important long-term investments for the entire
members make their spending decisions in isolation, household in terms of future income streams. In this
such that mothers and fathers do not allocate their case we should expect to find both husbands and wives
income in the same manner (Burton & Phipps, 1998; acting in cohesion with regard to child consumption
Lundberg, Pollak & Wales, 1997). products in line with the unitary model. On the other
hand, existing literature indicates that mothers generally
This article tests the unitary and collective models of tend to spend more on child welfare, discriminating
decision-making by examining the allocation of labor particularly in favor of daughter. This indicates that

20
 Spring 2011

parents may well have differing preferences based on ownership. Finally, yearly average non-labor income for
the gender of the child.2 Such evidence points towards either parent tended to be significantly lower than labor
the suitability of the collective model. A further point income. Both mothers and fathers had roughly the same
to consider is the nature of the product under study. average educational level, although the standard
Certain categories of consumption products could be deviation for mothers was approximately twice as large
deemed more influential for a child's long-term earning as that for fathers.
capabilities, and by extension, the future income stream
of the household. These include spending on health, Results
food and education, making it more likely for parents
to behave as a single unit in their purchase. Other The results indicate that both mothers and fathers tend
categories such as clothing and toys may have less of to spend more on children's products relative to all
an impact on a child's earning abilities, thereby increasing other household expenditures as their earned income
the probability of parents having separate preferences increases. On the other hand, unearned income is not
on their expenditure. Thus, this article disaggregates allocated in the same manner as earned income, with
child consumption products into clothing and education parents substituting away from educational spending as
for boys and girls, and investigates the likelihood of unearned income source improves. In fact, testing
income pooling for each category. showed that fathers do not pool the different sources
of non-labor income, nor do they combine earned
Data income with non-labor income for each of the four
categories of goods. This result also holds for mothers.
The data source used is the 2005 round of the Mexican
Family Life Survey.3 The four independent variables refer A particularly interesting finding is that while father's
to questions regarding household expenditure in the asset valuation has negative effects on girls' total and
last 12 months on education and clothing across boys boys' clothing expenditures, mother's asset valuation
and girls. These were then expressed as fractions of total has positive effects on all four categories, with a positive
household expenditure on all consumption products.4 and significant difference between spending on clothing
Income variables were divided into four categories for and education. It may well be argued that the
mothers and fathers: earned/labor income, improvement in spending on children's goods due to
unearned/non-labor income, assets and Oportunidades greater asset valuation is driven by the connection
income.5 between asset ownership and the mother's status within
the household. If asset valuation is considered a wealth
The sample was made up of 2,685 households and a indicator, then the greater the asset valuation of the
total of 16,543 individuals were surveyed, of which 33 mother, the higher her bargaining position within the
percent lived in urban, 44 percent in rural and the rest household. Lastly, father's Oportunidades income is
in semi-urban areas. It is worth noting that only three seen to have a negative effect on all four categories of
percent of sampled household heads were identified as consumption products as well as a negative effect for
mothers. the mother on all but girls' clothing. This result is
unexpected as Oportunidades income is particularly
A summary analysis of key household characteristics aimed at improving educational outcomes of the
showed that household expenditure on boys' education household. The fact that expenditure on children as a
and clothing (as a fraction of total household fraction of total household expenditure is actually
expenditure) was greater than that for girls'. Furthermore, declining in Oportunidades income merits further
more was spent on education than clothing across investigation, but could primarily be construed as misuse
gender. Also, on average, fathers brought in more labor of the transfer.
income, while mothers had greater average asset

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Social Science and Policy Bulletin, Volume 2, No. 4

It is also discovered that as fathers become more households generally have lower levels of labor/non-
educated, spending on all children's goods increases. labor income. One plausible explanation is that markets
While this result also holds for maternal expenditure on in rural areas are more likely to be remote. Market
children's education, in the case of mothers,the effect thinness would then drive up prices. Thus, any clothing
is negative and significant for boys' clothing. A more purchases made by rural households would command
educated parent may show greater appreciation of the a greater fraction of total household spending as
importance of children's education, from both an compared to urban households.
investment perspective and for the child's general well-
being. Income Sources and Pooling

There exists a similar result for father's age— positive While informative, the above-mentioned results are not
and significant effects for all four categories. On the directly relevant to the question of income pooling.
other hand, as the mother ages, spending on children's Specific tests were performed to investigate if parents
goods actually declines. This could signify the importance exhibit varying preferences regarding labor/non-labor
of separate spheres of activity for mothers and fathers income expenditure on children's products. The tests
within the household. Thus, as the father ages and his were done at two levels. In the first instance specific
earning horizon declines, households invest more heavily categories were tested, for e.g. whether mothers and
in children as the expected role of children as primary fathers pooled their respective labor incomes. Additional
bread winners assumes importance. Yet as the mother tests were also performed on all income sources to
ages, her ability to do housework declines. Children ascertain whether mothers and fathers pooled incomes
must then dedicate more of their time to household irrespective of source, when making their spending
chores than education, resulting in decreased spending decisions. The results of these tests are given below.
on education. One caveat is that the current study does
not include interactive terms of mother's age and the Table 1 shows that parents do not pool income received
four income categories. It could well be that the negative from the four distinct categories for the consumption
effect of mother's age is stronger for earned income, of goods under investigation. Earlier it was hypothesized
but not for unearned or asset income. In that case, the that parents were more likely to view educational
tendency for household level income-smoothing in light expenditures on children as important, long-term
of the shortened earning horizon could apply to both investments into the household's future income stream
mothers and fathers. and thus pool income for this category of consumption
spending as opposed to clothing. Furthermore, in light
It is interesting to note that while both male- and female- of previous empirical evidence the decision-making
headed households spend on girls' education, the latter process was anticipated to differ due to the gender of
have a greater intensity of spending. They are also more both the child and parent. However, it is seen that
likely to spend greater amounts on boys' education, parents adhere to the collective model of decision-
despite commanding significantly lower amounts of making regardless of consumption category or child
family income as compared to male-headed households. gender.
Finally, while semi-urban households (as compared to
urban) spend less on girls' education and children's Interestingly, testing of the individual income categories
clothing, their rural counterparts spend less on does reveal some distinction based on the consumption
education. This could be due to the inaccessibility of product and the gender of both the parent and the
schools in rural areas relative to urban locales. The child. In short we find that while parents pool asset
inclination, however, of rural households to spend more income, they only do so for boys' education. Also, parents
on children's clothing relative to their urban pool Oportunidades income for boys' and unearned
conunterparts seems strange, especially given that rural income for girls' clothing. Surprisingly, parents do not

22
 Spring 2011

Table 1: Do parents pool income?

Test Specific All Income
Category
Boys' Education Parents pool earned No No
Parents pool unearned No
Parents pool assets Yes
Parents pool Oportunidades No
Girls' Education Parents pool earned No No
Parents pool unearned Yes
Parents pool assets No
Parents pool Oportunidades Yes
Boys' Clothing Parents pool earned No No
Parents pool unearned No
Parents pool assets No
Parents pool Oportunidades Yes
Girls' Clothing Parents pool earned No No
Parents pool unearned Yes
Parents pool assets No
Parents pool Oportunidades No

pool their earned or asset incomes for girls' education. compared to boys'. Moreover, the difference in spending
using unearned income source with regard to boys' and
The fact that parents do not pool their asset income for girls' education is significant. Similarly, mothers dedicate
girls' education, but do so for boys' education, may be more resources from their assets towards girls' clothing
indicative of Mexican societal norms that view the male compared to the other three consumption products.
as the primary bread-winner of the household (Pagan Perhaps the most interesting statistic however, is that
& Sanchez, 2001). The average asset income for Mexican with respect to girls' education, the effect of the mother's
households tends to be substantially larger than income asset income is significantly greater than the effect of
from any other source. Thus, the expenditure from this the father's earned income. The reason for this may
significant income source on boys' education (and again lie in the relationship between women's asset
thereby their future earning capacity) is probably viewed ownership and their status within the household. It
as a critical investment in the household's future earnings. seems then that there is greater parental investment
Therefore, it comes as no surprise that parents tend to into girls' products as well as greater spending by mothers
pool their asset income for this category. than fathers.

Household emphasis on girls' clothing is probably a Policy Implications

phenomenon shared across most cultures. It is telling
however that by and large parents exhibit differing Policies aimed at improving child welfare have tended
preferences for spending on children's clothing with to focus on improving income sources for the mother.
only Oportunidades and unearned income (which on The results presented show that the mother's earned
average tend to be a lot lower than earned and asset income has a significant and positive effect only with
income). regard to spending on girls' education. If the policy
objective is in fact to improve educational outcomes for
Examining the relative significance of income effects the female child, expanding labor market access and
across categories, we find that fathers tend to spend opportunities for women seems appropriate. However,
more of their earned income on girls' clothing as asset redistribution in favor of mothers should be

23
Social Science and Policy Bulletin, Volume 2, No. 4

adopted if policy-makers wish to see both larger and male-dominated, there is also an increasing tendency
more extensive gender-neutral welfare effects. to invest in daughters as women become active decision-
makers within the household.
The primary issue with regard to any redistributive or
income policy revolves around the question of access Hadia Majid is a PhD candidate at Ohio State
vs. control — ownership of assets does not necessarily University. This article stems from her dissertation
translate into decision-making authority with regard to research. Please send comments, feedback and
their use or sale (Kantor, 2003). This, along with the suggestions at [email protected]
high general cost of labor market and asset redistributive
policies has led to a rise in conditional cash transfer References and Further Reading
programs. However, as shown in this article, such
programs may be prone to misuse. Becker, G. S. (1974). A theory of marriage. In T. W.
Schultz (Eds.), Economics of the family. Chicago:
Conclusion University of Chicago Press.

This article tested income pooling for four categories Bourguignon, F., Browning, M., & Chiappori, P. A. (2009).
of child consumption products: boys' and girls' education Efficient intra-household allocations and distribution
as well as clothing. Looking across categories we found factors: Implications and identification. Review of
differences in expenditure levels between boys' and Economic Studies, 76(2), 503-28.
girls' products and the tendency of mothers to spend
more than fathers. Kantor, P. (2003). Women's empowerment through
home-based work: Evidence from India. Development
On the one hand, where parents tended to pool their and Change, 34(3), 425-445.
asset income for boys' education, mothers spent more
than fathers on girls' education. They were also prone Katz, E. G., & Correia, M. C. (2001). The economics of
to invest more in clothing for girls than boys. The result gender in Mexico: Work, family, state, and market.
for boys' education may be driven by continued cultural Washington, DC: World Bank.
norms that consider men as the main source of income
within the household. The results with respect to girls Lundberg, S. J., Pollak, R. A., & Wales, T. J. (1997). Do
and mothers, on the other hand, may be explained by husbands and wives pool their income? Evidence from
considering that although Mexican society today is still the United Kingdom child benefit. Journal of Human
largely patriarchal with men being the primary decision- Resources, 32(3), 463-480.
makers, the roles of men and women have also witnessed
a greater degree of overlap in the past few years (Katz Phipps, A. S., & Burton, P. S. (1998). What's mine is
& Correia, 2001). Furthermore, urban and rural areas yours? The influence of male and female incomes on
have seen greater female labor-force participation in patterns of household expenditure. Economica, 65,
recent years (Pagan & Sanchez, 2001). As mothers earn 599-613.
more labor income, their bargaining power within the
household is likely to rise; the same holds true with Thomas, D. (1990). Intra-household resource allocation:
regard to asset ownership. Mothers may then be more An inferential approach. The Journal of Human
likely to invest in their daughters in order to improve Resources, 25(4), 635-664.
their earning capacity, allowing them to enter any future
contract (marriage or otherwise) at an advantage. Thus, Notes
the results seem to represent the transitory nature of
1This article assumes away altruistic spending motives on the
Mexican society where, although society remains largely

24
 Spring 2011

parents' part. Thus, parents are believed to be investing in children

to secure future earnings for the household.
2See for example, Duflo (2000).
3This round was the second in a series of longitudinal, nationwide

representative surveys conducted in rural, urban and semi-urban

areas (the first was conducted in 2002) and contains social, economic
and demographic information at the individual, household and
community level.
4It is important to note that total household expenditure has been

adjusted for self-cultivation. The income variables were constructed

from individual level questions on labor and non-labor earnings in
the last 12 months.
5Unearned/non-labor income included earnings from indemnities,

retirement, life insurance and property income, while the asset

category incorporated livestock, domestic electric appliances and
transport vehicles. Oportunidades is a Mexican governmental
sponsored conditional cash transfer program intended to provide
households the means for human capital formation (such as
spending on education).

25
Social Science and Policy Bulletin, Volume 2, No. 4

Revealing Facts: The Arab Awakening

The quality of governance in a country is an important indicator of the strength of its institutions. According to
governance indicators developed by the Worldwide Governance Indicators ( WGI) project, the Middle East region
does not perform well relative to countries with comparable per capita incomes.
Figure 1: Governance Indicators—Regional Comparison (2009)
Voice and
Accountability
70
60 Algeria
50
40 Bahrain
Control of 30 Political
Corruption Stability Egypt
20
10 Libya
Saudi Arabia
Government Tunisia
Rule of Law Effectiveness Yemen
N.B. Percentile Ranks (0-100) indicate the percentage of countries worldwide that rate below the selected country. Higher
values indicate better governance.
Source: World Bank Worldwide Governance Indicators (2009). Available at<http://info.worldbank.org/
governance/wgi/index.asp>

It is unlikely that the unrest being witnessed in the Middle East could have been predicted despite the poor
governance record seen above. Countries facing mass protests have ranged from those which score high in terms
of political stability to ones which do not, indicating that different factors may have been at play. Apart
from the obvious “Arab” connection between these countries, could there be other similarities?
Figure 2: HDI Rankings

Yemen
Tunisia
Saudi Arabia
Libya
Jordan
Egypt
Bahrain
Algeria

0 20 40 60 80 100 120 140

N.B. A value of 1 indicates the highest HDI value relative to the other 182 countries. A rank of 183 indicates the lowest HDI
value.
Source: UNDP Human Development Report (2010). Available at <http://hdr.undp.org/en/statistics/>

26
 Spring 2011

It seems that most countries currently facing dissent have much to achieve in the areas of education and health.
While many of these countries may fall into the middle-income category, their standards of living are rather low.
This is apparent from the fact that, according to HDI, only Bahrain ranked within the top fifty countries in the
World.

Figure 3: Potential for Revolution—Relevant social indicators

160
140 Unrest Index
120
100 Corruption
80
Literacy rate (%)
60
40 Unemployment rate (%)
20
0 Internet users (per 100
people)
ria ain pt an ya ia ia en
lA ge ahr Egy Jord Lib Arab unis Yem Median age (years)
B i T
ud
Sa
N.B. Unrest Index (100%=most unstable) as compiled by The Economist, April 2011 and “Corruption” as country rank for
178 countries
Source: BBC News (2010). Available at <http://www.bbc.co.uk/news/world-12482293/>; CIA World Factbook;
World Bank Data; UNDP Human Development Indicators; UNESCO Institute of Statistics

Based on the above figure, it would appear that younger nations characterized by rampant corruption and a large
fraction of under-employed or unemployed populations — populations that are wired into a global awareness —
are more likely to be hotbeds of unrest than others.

27
Social Science and Policy Bulletin, Volume 2, No. 4

Timeline of Events

The timeline below depicts the salient events that have unfolded in the Middle Eastern countries facing the prospects
of revolution. As the battle rages on in Libya and protests escalate in Syria, it will be interesting to see where the
“Arab Spring” leads.
YEMEN
President vows to not
seek re-election in
TUNISIA TUNISIA 2013, after 23 years in
Tunisian President office. Promises son ALGERIA
vendor sets bows to will not succeed him. Crackdown
protests and YEMEN on BAHRAIN Middle East
himself on EGYPT
fire, flees to People take to
YEMEN protestors, Protests at Day of Rage
Saudi Arabia the streets as YEMEN JORDAN Obama as police Pearl Protests erupt in
sparking Thousands Day of Rage as demands Roundabout: 4
19 opposition represses Iraq, Yemen,
protests Unrest tens of
activists are demonstrate democracy for 2,000 casualties from Egypt, and
spreads to thousands take
arrested in Sana’a Egypt demonstrators police clashes Jordan
Jordan to streets

17 Dec 13 Jan 14 Jan 17 Jan 23 Jan 25 Jan 28 Jan 29 Jan 2 Feb 3 Feb 4 Feb 10 Feb 11 Feb 12 Feb 14 Feb 15 Feb 17 Feb 25 Feb 3 Mar

ALGERIA EGYPT EGYPT EGYPT EGYPT EGYPT EGYPT IRAN, BAHRAIN, LIBYA LIBYA
Suicide Man burns Mass protests Mubarak sacks Brutal Egypt’s Day of Mubarak resigns YEMEN Day of Rage in Obama urges
protests in himself against government but crackdown Departure. after 18 days of Increasing clashes Libya leaves 15 Gadaffi to step
Algeria outside Mubarak refuses to step at Hundreds of protests as Egypt dead down
Egyptian regime: call on down. Protests Tahrir thousands gather in celebrates
Parliament him to step escalate. Square Tahrir Square
down.

SAUDI
SAUDI EGYPT YEMEN SYRIA
BAHRAIN ARABIA
ARABIA YEMEN Saudi King
Over 77% President Saleh Death toll rises
LIBYA
Public protests President Saleh Saudi Egyptians vote for LIBYA backs out of a in biggest day YEMEN
announces NATO takes Arabs and West President SYRIA
banned after pledges to create police and parliamentary and plan drawn up of unrest. 22
multi-billion charge of issue unanimous agrees to step US plans
demonstrations parliamentary UAE troops presidential by Gulf states to killed as troops
dollar reforms Libyan call for Gadaffi down within 30 sanctions
by minority system of enter elections within 6 broker an end open fire on
package (incl. assault to step down days against Syria
Shia groups government Bahrain months to his rule protestors
jobs, housing,
pay rises)

6 Mar 9 Mar 10 Mar 11 Mar 14 Mar 15 Mar 18 Mar 19 Mar 21 Mar 23 Mar 29 Mar 8 Apr 9 Apr 11 Apr 13 Apr 19 Apr 24 Apr 25 Apr 26 Apr

TUNISIA SAUDI ARABIA BAHRAIN LIBYA YEMEN SYRIA EGYPT SYRIA SYRIA
Day of Rage President sacks
YEMEN
Ousted President’s Martial Law Operation Odysscy President More than President Saleh Lifts emergency Crackdown on
party dissolved by quelled as declared Dawn: US air and government. 100,000 gather laws after 48 protestors becomes
sacks promises to
Tunisian court security forces missile strikes against MPs pass in Tahrir Square years, but more brutal as tanks
cabinet step down in
come out in Gadaffi’s military Emergency Law pressuring the violence and troops enter
strength in 2013. Protests
ruling military persist. continues towns and villages.
Riyadh to meet Scores killed.
demands

28
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