Understanding snags in the Economy of Gilgit Baltistan (GB)

GB represents a socioeconomic system that has undergone several epochs of economic transformation during its course to relative prosperity of present-day. Owing to its harsh geography and cold climate, the region remained isolated for the most part of its history from rest of the world except for seasonal trade linkages of groups of local people with Eastern China and Kashmir. The indigenous communities had developed a cohesive and culturally integrated social system whereby survival was dependent on ample food supply from the available livestock and agriculture through reciprocated cooperation. The need for generating incomes and earning wages having been reduced to minimum in the society for absence of money, transactions of any magnitude used to be settled traditionally in kind through barter exchange. Each state entity in the region had devised its own set of governing laws and customs that informed the communal decisions regarding land and labor. The marginal economic growth was essentially subject to the local people’s ability in harnessing and channeling water resources from the mountains to bring additional land under cultivation using traditional forms of technology. The food production was more or less sufficient only for immediate consumption. Barring any surplus, people had to cope with spells of food shortages during and after long and severely cold winters. This survival economy however was characterized by indigenous people’s resilient qualities of self-help, self-sufficiency and self-reliance in the face of hardships.

During the late 70s and 80s of the preceding century, two decisive events changed the course of the regions’ economy. The first was the construction of Karakorum Highway (KKH) that linked mainland Pakistan with Western China through mountain ranges of GB. This remarkable feat ended the centuries old isolation of the region and opened up several new possibilities for tourism, trade and economic integration with Pakistan and China. The second was the inception of AKDN in the region that built on the traditional social systems and formulated a development model organized around the indigenous strengths and resources in a bid to accelerate the economic growth and enhance the livelihoods in the region. The AKRSP in particular provided human, social and financial capital in fostering self-sustaining community development systems focused on increasing the rural production output as means of improving the GDP per capita in GB. Over the period of four decades, these efforts have contributed tremendously towards human development, poverty eradication and having the average incomes of the people nearly trebled in the meanwhile. Despite these illustrious achievements in community development, the GDP per capita of GB is held to be nearly 40% lower than that of mainland Pakistan.

Today, GB is recognized as an area laden with natural and mineral resources to such a great extent that effective management of water and mineral resources found in the region can make it the most prosperous and richest part of Pakistan. This possibility is however choked up in the clouds due to lack of mechanisms for self-governance and economic independence. This impediment is rooted deep in the uncertainty lingering around the political and constitutional status of GB; seven decades lapsed, but Pakistan’s indecision as yet to respond clearly to the people of the region whether GB is entitled to be a formal federating unit despite their vocal and unconditional support for the country, is fueling systemic and structural problems. This ambiguity permeates the constitutionally decapitated regional government structure that finds it hard to plan and execute its own develop agendas based on the priorities and aspirations of the indigenous population. The consequences of this ambiguity are ominous that has languished the fiscally dependent regional economy making it difficult to realizing its transition from a traditional towards a more developed and modern system of economy.

The idea of transition from traditional sector of economy to a modern one is fundamental for the economic growth to occur in a sustainable way. The traditional sector uses manual agriculture as basis for producing sufficient food by employing the available land and labor resources to feed its population and thus remains self-contained – this has been the case in GB for centuries. But when it faces food shortages due to growing demand from increasing population; or produces surplus due to supply of more labor from population rise, a good part of its population moves to a relatively developed modern sector in search of greener pastures. The modern sector then employs the surplus labor coming from traditional sector paving the way for pro-industrialization. The innovations coming from proto-industrialization in modern sector provide opportunities for modernizing the traditional agricultural sector improving its production releasing more of its labor eventually giving way to a matured modernization of the economy. A similar phenomenon was at work in Europe and particularly in United Kingdom before industrial revolution – boost in agriculture gave way to a successful episode of proto-industrialization turning more labor to modern sector and eventually maturing as the industrial revolution. In Japan, tremendous increase in rice production due to land reforms of Meiji period provided basis for quasi-industrialization that nurtured modernization of its economy on a global scale.  The circumstances in China were no different – after massive focus on agricultural production for decades, a better part of population outgrew the traditional sector and pursued small scale entrepreneurial ventures in manufacturing leading to massive market reforms. China, once known for cheaper low quality products is now growing fast as the ‘manufacturing hub’ of quality products and the world’s economic super power; sitting in our neighborhood.

The experience of economic development in GB though on a smaller scale to date is complex and bitter sweet for several reasons. The more traditional agriculture sector was revived after decades of focused and meaningful interventions of development institutions in the region. But the progress achieved so far in traditional sector could not be successfully consumed into a semi-industrial or a subsequent modern sector in GB. Despite the organized efforts of the civil society, a rudimentary and cursory form of government in the region is unable to provide an effective medium for the economic transition to be effectual. For example, when it comes to encourage small industries in the private sector, people instead have to confront the glitches and derivatives of the limping and unsure political arrangement running the show in the region. Energy and power needed to provide stimulus to small industries is lacking in the region; keep aside the high potential of generating low cost hydropower hanging in the mouth of the so called political disputes. GB is endowed with mineral treasures, but their ownership and effective management is in limbo ab initio. High value investment can be attracted but who will invest in a region that is left in a vacuum where no workable policy exists for trade, industry, investment and finance. When it comes to linkages and access to the markets around the world, how this can be possible in absence of a strong and effective local market system in the region. Due to lack of transparent and relevant regulatory frameworks in operation, the private businesses devoid of formal opportunities for growth are forced to operate informally. Several of these systemic issues have added merely to diminish the economic indicators that can best be described as stunted and underdeveloped.

The region has managed to boast its growing social and human indicators; particularly so because of tremendous progress of the region’s people in education and in accumulating human capital. But however, due to lack of opportunities for a better future in GB, an increasingly educated young generation finds it viable to engage in more developed areas around the country and in other parts the world. The educated diaspora of GB as such is unable to contribute directly in the economic development of the area. The agriculture sector on the other hand is fast losing its labor force in the hands of changing social dynamics. Any advancement towards a modern system is blockaded due to fundamental and structural issues in the local political economy – that suggests the description of a model that is stagnated and is neither traditional nor modern in its existing form.  All the outstanding problems of constitutional and political nature are overshadowing the potential of enterprising people of the region. This has to change. The time has come to think and act seriously that GB is more than picnic spot. People of the region rightfully want a better and secure future for themselves. Positive steps need to be taken in this regard before it gets too much and too late.

The contributing writer specializes in economic and social issues. He is based in Islamabad and can be reached at:  asahab.baig@gmail.com

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