Before we move to the crux of our discussion, let me tell you a story. A while back, I was watching “The Daily Show with Trevor Noah,” a famed late night talk show in the US, in it the host mentioned the term “State Capture” and laughed about how it had now become a cliché in his home country (South Africa). This was despite the fact that the term had recently become mainstream in the country. But what does this have to do with what we are talking about?
State Capture-What it is?
The term State Capture refers to a type of political corruption in which private interests significantly influence a state’s decision-making processes to their own advantage. In South Africa’s case, the country has faced severe economic stagnation despite being one of the most economically promising countries in the world.
If you still do not know where I am going with this, then that is on you! As I write and you read this article, chances are legislation is being crafted in Islamabad that does not seem to benefit anyone. Who do you think benefits if artificial shortages result in increased prices for essentials such as fruits? Who do you think benefits if subsidies are given out without a particular framework in place for who gets them?
I do not know, but I am sure you can figure it out!
State Capture-What it does?
What I do know is State Capture is detrimental for any country that may face it. For instance, in South Africa it has led to billions of dollars of public money going missing which has resulted in an economic fallout which is expected to shrink the country’s GDP by 4% this year (2020). Many economists believe that it is also further exacerbated if Politicians have some skin in the game. For example, they or their children running businesses (which may be awarded state contracts), or campaigning for elected office while also having corporate interests.
Thank God in Pakistan we do not have politicians and their children doing anything of the sort! 🙂
Conclusion
In essence, State Capture can have a grave impact on any country’s economy. Thus, it is prudent that countries recognize this threat and adapt accordingly. Otherwise, it may result in the downfall of economic output and hinder a country’s overall prosperity.
