Ayub Era-II: Fact and Fiction Of Ayub’s “Economic Miracle” - 2/3 (1962-65)
Athar Osama August 20th, 2007
By: Athar Osama*
In the last episode of this series, we looked at Pakistan under Ayub Khan’s “Presidential” Democracy during the second part (1962-65) of his three-part 11-year tenure at the helm of the affairs. Prior to that, we had also looked the early-years of the Martial Law regime that, owing to the intensity of its policy activism, saw some dramatic changes in a whole array of policy domains. In this episode we dig deeper into two key areas policy change in Ayub Era, namely, economic and foreign policy.
(Figure -Right: Ayub Khan’s “Talent Cabinet” which was responsible for much of the regime’s policies during the 1960s. Notice: Zulfikar Ali Bhutto–who was a portege of Ayub Khan–and is known to have called the latter “daddy” on occasions.)
During the early-to-mid 1960s, Pakistan saw what appeared to be dramatic advancements in its economic affairs. In the 1960s, Pakistan’s economic progress is known to have been an envy of a number of Asian countries. It was also during this era that Pakistan’s economic planning processes, institutions, and documents—particularly the Second Five-Year Plan—are known to have been adopted by countries like South Korea who themselves where trying to chart a development trajectory for themselves. This recognition aside, Ayub’s economic policies are perhaps one of the most misunderstood aspects of this 11-year rule. While there is little disagreement on the growth rates that Pakistan experienced in GDP, industry, and agriculture during Ayub Khan’s era, what experts tend to disagree upon is how that growth occurred and what were its implications on Pakistan’s economy and society (Zaidi, 1999, p. 97). We look at Ayub’s industrial and agricultural policies, in particular, to see how they fared and why.
On the foreign policy front too, Ayub Government found itself in the midst of some truly significant changes and events and the actions it took—or failed to take—had serious repercussions for Pakistan. In fact many have argued that the 1965 War between India and Pakistan which, in many ways, Ayub and his advisors—Foreign Minister Zulfiqar Ali Bhutto, being the main protagonist—brought upon themselves marked the beginning of the end of Ayub’s Era. Before we look into that next week, we will examine how we got there. But first, a closer look at Ayub’s economic “miracle”…
Trade and Industrial Policy and Development in the Sixties
Pakistan had inherited an industrial base that was at a very nascent stage of its development. In its statement of industrial policy in 1948, the Government of Pakistan stated that:
“The most striking feature of Pakistan’s present economy is the marked contrast between its vast natural resources and its extreme industrial backwardness. A country producing nearly 75% of the world’s production of jute does not possess even a single jute mill…” (quoted in Zaidi, 1999, p. 91)
Dr. Mahbubul Haq (figure-right)–an eminent development economist from Pakistan who is considered one of the founders of the Human Development Theory and who along with Nobel Laurette Amertya Sen of India created the Human Development Index–who was, most ironically, General Zia-ul-Haq’s Finance Minister (1982-84) is known to have said that twenty-two families controlled 66% of Pakistan’s total industrial assets, 70% of insurance, and 80% of all banking assets in Pakistan at the height of Ayub’s power. While these claims have remain unsubstantiated (Zaidi, 1999), there is little doubt that Pakistan experienced considerable concentration of wealth–by both legal and illegal means–in the 1960s and beyond. Rashid Amjad’s work on industrial concentration in Pakistan considerable evidence in his own research.
With the power firmly in the hands of the Chief Martial Law Administrator, he set upon the task of creating country of his vision. Feldman (1967, p. 44) describes the state of the President’s mind in the following words:
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