Why Pakistan needs robust institutions

LAHORE: Pakistani institutions are too weak to offer predictable and acceptable settlements. This weakness wreaks havoc during economic distress, making it difficult to fairly distribute the remaining resources among all stakeholders.

A comparison of the outcomes of strong and weak institutions on citizens of any country reveals how badly Pakistan needs effective, fair and robust institutions.Strong institutions play a crucial role in mitigating the challenges and hardships that arise during periods of economic distress by providing stability, predictability, and support to citizens. They manage social tensions and prevent conflicts from escalating during economic downturns. In contrast, weak institutions often exacerbate the miseries of citizens, leaving them vulnerable to the full impact of the crisis. This is happening in our country.

Strong institutions, such as government agencies and social welfare systems, provide safety nets during downturns through unemployment benefits, social security, healthcare and food programmes. These mechanisms help alleviate the stress on individuals who lose jobs or face economic hardships, ensuring that basic needs are met. In countries with weak institutions, the absence or inefficiency of such programmes exacerbates poverty and suffering during economic shocks.

Strong institutions uphold rule of law, ensuring that conflicts arising from economic downturns are resolved fairly. When the legal framework functions effectively, citizens feel protected, knowing they have access to justice in disputes over labour, contracts or other economic issues. In weak institutional settings, where rule of law is compromised, social tensions escalate, and vulnerable groups suffer from exploitation and injustice.

Strong institutions foster trust among citizens and between the state and society. When people trust institutions to act fairly, transparently and responsibly, they are more likely to cooperate and support each other during economic crises. This social cohesion reduces the likelihood of unrest and social tension. In contrast, weak institutions erode trust, making it difficult to foster unity and collective effort in managing crises.

In times of economic distress, strong institutions provide effective crisis management, coordinating resources, guiding recovery plans and implementing policies that stabilize the economy. Central banks, financial regulators and fiscal authorities play vital roles in maintaining economic stability. In weak institutional environments, poor crisis management can worsen the economic downturn, leading to social unrest, loss of livelihoods, and increased crime.

Strong institutions promote economic resilience by facilitating long-term planning, education and innovation, allowing societies to adapt better to economic downturns. A robust education system, for example, can retrain workers for new opportunities when industries shrink. Weak institutions often lack the foresight and resources to enable such adaptability, leaving citizens trapped in declining sectors and facing intensified economic stress.

Economic downturns often expose underlying social tensions related to inequality, discrimination or resource allocation. Strong institutions can mediate conflicts, ensuring peaceful resolutions through democratic processes, legal systems and open dialogue. Weak institutions may be unable to address grievances, leading to protests, strikes, or even violent conflict.

Strong institutions safeguard civil, economic and social rights, ensuring that citizens are not deprived of their freedoms or opportunities during crises. This protection fosters a sense of security, which can buffer against the stress caused by economic downturns. In weak institutional settings, rights may be infringed upon, leading to increased vulnerability and exploitation. Strong institutions are crucial for alleviating the burdens of adversity by providing safety nets, upholding rule of law and maintaining trust.