Institutional Analysis and Public Policy

Table of Contents
Institutions- An Introduction .........................................................................................................................................2
Institutional Characteristics ...........................................................................................................................................3
Political Ideologies and Economics................................................................................................................................3
Ideology.....................................................................................................................................................................3
Democracy and Totalitarianism ................................................................................................................................4
Economic systems .....................................................................................................................................................5
Public Policy ...................................................................................................................................................................6
The Instruments of Public Policy ...............................................................................................................................6
Who sets Agenda?....................................................................................................................................................8
From Problem to Issue: How to get Problems on the Agenda ..................................................................................8
Policy Formulation ....................................................................................................................................................9
Who Formulate Policy ...............................................................................................................................................9
Tools for Policy Formulation ...................................................................................................................................10
Legitimating Policy Choices .....................................................................................................................................11
Kinds of legitimation ...............................................................................................................................................11
Evaluation and Policy Change......................................................................................................................................12
Policy Change ..........................................................................................................................................................13
Economic Policy ...........................................................................................................................................................14
The Goals of Economic Policy..................................................................................................................................14
The Instruments of Economic Policy .......................................................................................................................15
Educational Policy........................................................................................................................................................17
Issues in Educational Policy.....................................................................................................................................17
Pakistan Education Policy 2017-25..........................................................................................................................18
Goals of Education Policy 2017-25 ..........................................................................................................................18
Key Areas of Education Policy (2017) ......................................................................................................................19
Health Policy ................................................................................................................................................................20
Philosophy of Healthcare: Right to Health ..............................................................................................................21
Healthcare Financing...............................................................................................................................................21
National Health Vision Pakistan 2016-2025 ............................................................................................................21
Challenges in Healthcare in Pakistan ......................................................................................................................22
Energy Policy................................................................................................................................................................23
Energy Sources ........................................................................................................................................................24
Measures used to Produce an Energy Policy ..........................................................................................................24
National Power Policy 2013 (Pakistan) ........................................................................................................................25
Challenges ...............................................................................................................................................................25
Targets.....................................................................................................................................................................25
Environmental Policy ...................................................................................................................................................26
Scope of the Environmental Policy..........................................................................................................................26
Instruments of Environmental Policy ......................................................................................................................26
Environmental Policy Pakistan (2005) .....................................................................................................................27
Key Aspects .............................................................................................................................................................27

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Institutions- An Introduction
Institutions are "stable, valued, recurring patterns of behavior".As structures or mechanisms of
social order, they govern the behavior of a set of individuals within a given community.
Institutions are identified with a social purpose, transcending individuals and intentions by
mediating the rules that govern living behavior. The term "institution" commonly applies to both
informal institutions such as customs, or behavior patterns important to a society, and to
particular formal institutions created by entities such as the government and public services.
Primary or meta-institutions are institutions such as the family that are broad enough to
encompass other institutions.Examples of Institutions include;
Family: The family is the center of the child's life, as infants are totally dependent on others. The
family teaches children cultural values and attitudes about themselves and others.
Religion: Some believe religion is like an ethnic or cultural category, making it less likely for the
individuals to break from religious affiliations and be more socialized in this setting. Parental
religious participation is the most influential part of religious socialization—more so than
religious peers or religious beliefs
Peer groups: A peer group is a social group whose members have interests, social positions and
age in common. This is where children can escape supervision and learn to form relationships on
their own. The influence of the peer group typically peaks during adolescence however peer
groups generally only affect short term interests unlike the family which has long term influence
Economic systems: Economic systems dictate "acceptable alternatives for consumption," "social
values of consumption alternatives," the "establishment of dominant values," and "the nature of
involvement in consumption". Capitalist society may encourage the growth of centralization and
interdependence under the control of an elite. Socialism may encourages democratic, bottom-up
control by the people and their communities.
Legal systems: Children are pressured from both parents and peers to conform and obey certain
laws or norms of the group/community. Parents’ attitudes toward legal systems influence
children’s views as to what is legally acceptable
Language: People learn to socialize differently depending on the specific language and culture in
which they live.A specific example of this is code switching. This is where immigrant children
learn to behave in accordance with the languages used in their lives: separate languages at home

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and in peer groups (mainly in educational settings). Depending on the language and situation at
any given time, people will socialize differently.
Mass media: The mass media are the means for delivering impersonal communications directed
to a vast audience. The term media comes from Latin meaning, "middle," suggesting that the
media's function is to connect people. The media can teach norms and values by way of
representing symbolic reward and punishment for different kinds of behavior

Institutional Characteristics
Institutions have following characteristics
Structure (Formal/Informal)
Institutions have formal or informal structure. Formal institutions include institutions such as
legal system, while, informal institutions may include family, civil society, and so on.
Stability
Institutions are stable over certain period of time. Institutions are relatively permanent entity and
remain functioning for certain period of time.
Regulator of Individual behavior
Institutions have influence on individual and regulate individual behavior. For example, religion
describes what is right code of behavior as what is acceptable and what is not acceptable.
Shared values
Shared values of the society are reflected in the institutions. For example, government is one of
the institutions which reflect the shared values of the society.
Legitimacy
Legitimacy means public acceptance for certain institution and their action. For example, if
public accept the monarch system so the legitimacy is there. On the other hand, if public do not
like monarchy, but the monarch is there because of hold of power, so legitimacy is very weak for
monarch institution.

Political Ideologies and Economics

Political ideologies and economics are discussed below.

Ideology
An ideology is a set of integrated beliefs, theories, and doctrines that helps direct the actions
of a society. Political ideology is almost always intertwined with economic philosophy. For
example, the political ideology of the United States is grounded in the Constitution, which

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guarantees the rights of private property and the freedom of choice. This has helped lay the
foundation for US capitalism. A change in this fundamental ideology would alter the economic
environment of the United States. The same is true, for example, for China and the
former USSR republics. Simply put, the political and economic ideologies of nations help
to explain their national economic policies. Political systems
Democracy and Totalitarianism
In the extreme, there are two types of political systems: democracy and totalitarianism.
Democracy is a system of government in which the people, either directly or through their
elected officials, decide what is to be done. Good examples of democratic governments include
the United States, Canada, England, and Australia. Common features of democratic
governments include (1) the right to express opinions freely, (2) election of representatives
for limited terms of office, (3) an independent court system that protects individual property
and rights, and (4) a relatively non-political bureaucracy and defense infrastructure
that ensure the continued operation of the system.
Totalitarianism is a system of government in which one individual or political party
maintains complete control and either refuses to recognize other parties or suppresses
them. A number of types of totalitarianism currently exist.
 Communism is an economicsystem in which the government owns all property and
makes all decisions regarding theproduction and distribution of goods and services. To
date, all attempts at national communismhave led to totalitarianism. The best example of
communism is Cuba.

 Theocratic totalitarianism is form of government, in which a religious group

exercisestotal power and represses or persecutes non-orthodox factions. Iran and some of
the sheikdomsof the Middle East are good examples.
 Secular totalitarianism is form of government, in whichthe military controls the
government and makes decisions that it deems to be in the bestinterests of the country.
Examples of this are communist North Korea and Chile.
Political systems typically create the infrastructure within which the economicsystem
functions; in order to change the economic system, there often needs to be a changein the
way the country is governed.

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Economic systems
The three basic economic systems are capitalism, socialism, and mixed. In a market-driven
economy, goods and services are allocated on the basisof demand and supply. If consumers
express a preference for cellular telephones, moreof these products will be offered for sale. If
consumers refuse to buy dot-matrix printers,these goods will cease to be offered. The US and EU
nations have market-driveneconomies. In a centrally-determined economy, goods and services are
allocated based on aplan formulated by a committee that decides what is to be offered. In these
economiespeople are able to purchase only what the government determines should be sold.
Cuba isthe best example.
Market-driven economies are characterized by private ownership. Most of the assets of
production are in the hands of privately-owned companies that compete for market share
by offering the best-quality goods and services at competitive prices. Centrally-determined
economies are characterized by public ownership. Most of the assets of production are in
the hands of the state, and production quotas are set for each organization.
In examining economic systems, it is important to remember that, in a strict sense, most
nations of the world have mixed economies, characterized by a combination of marketdriven
forces and centrally-determined planning. Mixed economies include privatelyowned
commercial entities as well as government-owned commercial entities. Governments
in mixed economies typically own the utilities and infrastructural industries—railroads,
airlines, shipping lines, and industries considered to be of economic and strategic
importance—for instance, petroleum and copper. For example, the United States, a leading
proponent of market-driven economic policies, provides health care and other social
services to many of its citizens through government-regulated agencies, which gives it some
aspects of central planning. Other democratic countries with mixed economies include
Great Britain, Sweden, and Germany, all of which have even stronger social welfare systems
than the United States.
Another example of the role of government in the economy is that of promoting business
and ensuring that local firms gain or maintain dominance in certain market areas. The
US and EU governments continually pressure the Chinese to open their doors to foreign
MNEs, and the Chinese government is very active in helping its local firms do business

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with the West. Over the last decade or so, an increasing number of countries have begun moving
towardprivatization, the process of selling government assets to private buyers. To understand the
reasons for, and the economic impact of, this process, it is helpful to examine
both the potential benefits of government ownership and the advantages of moving to
privatization.
There are six common, and sometimes interdependent, reasons for countries to
control
business assets, a process known as nationalization. These include
(1)promoting economicdevelopment, such as by coordinating the assets of many businesses into
one overall masterplan;
(2) earning profits for the national treasury;
(3) preventing companies from goingbankrupt and closing their doors;
(4) enhancing programs that are in the national interest;
(5) increasing the political or economic control of those in power; and
(6) ensuring goodsand services to all citizens regardless of their economic status.
The opposite situation, privatization, can take two forms. The most common form is
divestiture, in which the government sells its assets. The other is contract management, in
which the government transfers operating responsibility of an industry without transferring
the legal title and ownership. The major trend today is toward divestiture

Public Policy
Public policy is the sum of the activities of government, whether acting directly or
through
agents, as it has an influence on the lives of citizen. There are three levels of policy based
on the
degree to which they make real changes in the lives of citizen. At the first, we have policy
choices- decisions made by politicians, civil servants, or others and directed towards using public
power to affect the lives of citizens. At the second level, policy output is the policy choices being
put in to action. At this level, government is doing things; spending money, hiring people, or
promulgating regulations that will affect the economy and society. The third level is policy
impact- the effects of policy choices and policy outcomes on citizens.
The Instruments of Public Policy
Government have a number of instruments by which it can influence society and the economy
and produce changes in the lives of citizens. The choice of which to employ in any particular6
instance may depend on the probable effectiveness of instrument, its political palatability, and
tradition. Key instrument of public policy are as under.
Law
Law is a unique resource of government. It is not available to private organizations who have
access to other instrument of policy. Governments have the right to make authoritative decrees
and to backup those decrees with the legitimate power of the sate. In most cases, simply issuing
the law is sufficient to produce compliance, but monitoring and enforcements are also crucial to
the effectiveness of this instrument.
Services
Government also provide a number of services ranging from defense to education to recreation.
Example of services provided by the government include education, defense, healthcare and so
on. Traditionally, these services are provided by the government and its subsidiary institutions
itself; however, now there is also trend of contracting these services to the third party.
Money
Government also provide citizens, organizations, and other governments with money. Example
of money paid by the government include unemployment benefits (common in most European
countries), income support program (such as Benazir Income support program in Pakistan),
subsidies.
Taxes
The government collect taxes from the public and use that money for running government
machinery, developing and maintaining infrastructure and redistribute some of the money
collected to those who are needy. Taxes may be used more directly to implement policy
decisions. Tax incentives are a subset of all incentives available to governments to encourage or
discourage certain activities.
Other Economic Instruments
Government has a number of other economic weapons at its disposal. For example, government
can supply credit for activities such as farmers’ purchase ofland and supplies. It can also
guarantee loans thus making credit available more easily for certain activities. For example, in
Pakistan, there is ‘youth loan scheme’ initiated by government.

Agenda Setting
Before a policy choice can be made, a problem in society must have been accepted as a part of
the agenda of the policy making system. Many problems, if they are not perceived by

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authoritative actors, are not given further consideration. Some problems are not part of the policy
agenda, as they are rather considered part of some other problems or policy related issues. For
example, in USA, throughout history, poverty was perceived not as a public problem but as
merely the result of the proper operation of the free market. However, after the growing
mobilization of poor people brought the problem of poverty to the agenda. Issues sometimes go
through an ‘issue attention cycle’ in which they are the object of greater popular concern for a
shorter period and generate some response from government.
Who sets Agenda?
Establishing an agenda for society or for even one institution is a manifestly political activity and
control of the agenda gives substantial control over ultimate policy choices. Three important
theoretical approaches to the exercise of political power can give us better understanding of the
dynamics of agenda setting. Their details are as under.
Pluralistic approaches
The pluralistic approach assumes that policy making in government is divided into a number of
separate arenas and that those who have power in one arena do not necessarily have power in
others. For example, The American Medical Association may have a great deal of influence over
health legislation, but it does not have much influence over education or welfare policy.
Elitist Approaches
The elitist approach assumes the existence of a ‘power elite’ who dominate public decision
making and whose interests are served in the policy making process. Mostly, under elitist
regime, the same interests in society consistently win, and these interests are primarily those of
the upper and middle classes.
State-Centric Approaches
The state centric approach assumes that the political system itself is responsible for its agenda.
This approach thus makes a sharp distinction with earlier two approaches of pluralistic or elitist
approaches which consider that the major source of agenda items is the environment of the
policymakers or some powerful interest groups in the society. Thus, under this approach,
government is not pursuing policies for purposes of personal gain of some interest group. The
state-centric approach places the major locus of competition over agenda setting in government
itself, rather than in the constellation of interests in society.
From Problem to Issue: How to get Problems on the Agenda
A number of aspects of problem can affect their chances of becoming a part of the agenda.
Details are as under.

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The Effect of the Problem
The first aspect of a problem that may influence its placement on an agenda is whom it affects
and how much. The related aspects are extremity, concentration, range, and visibility of
problems. The extremity of the effects of a problem should be related to its being placed on the
agenda. For example, an outbreak of a disease causing mild discomfort is unlikely to produce
public action but the chance of an outbreak of a life threatening disease may provoke public
action. The concentration of unfortunate results in one area may produce public action.
Unemployment of large number of employed at scattered places across the country may not get
the attention, but if workers are in one particular area, then it will get the attention. The range of
persons affected by a problem may also influence the placement of an issue on the agenda. In
general, the more people affected or potentially affected by problem, the greater the probability
that the issue will be placed on the agenda. The visibility of a problem may affect the placement
of an issue on the agenda.
Analogous and Spillover Agenda Setting
The presence of an analogy for an issue related to other public program also affects its being
placed on an agenda. The more a new issue can be made to look like an old issue, the more likely
it is to be placed on an agenda. Furthermore, the existence of one government program may
produce the need for additional programs which is called the spillover effect.
The Availability of Technology
A problem is less likely to be placed on the agenda until there is a technology that is believed to
be able to solve the problem.

Policy Formulation
After the political system has accepted a problem as a part of the agenda for policy making, the
next step is the process of policy formulation means the development of a mechanism for solving
a public problem. At this stage in the process apolicy analyst can begin to apply some analytic
techniques to attempt to justify one policy choice as superior to others. Economics and decision
theory are both useful in assessing the risks of certain outcomes or in predicting likely social
costs and benefit of various alternatives. Rational choice however always is not dominant as the
habits, traditions, and standard operating procedures of government may also prevail over rational
activity in making the policy choice.
Who Formulate Policy
Policy may be formulated by different groups. Their details are as under.

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The Public Bureaucracy
The public bureaucracy is the actor most involved in taking the lofty aspirations of political
leaders and translating them into more concrete proposals. Bureaucracies are central to the
process of most policy formulation. Bureaucracies are presumably the master of routine and
procedure which is at once their strength and their weakness. It is strength since bureaucracies do
know how to use procedure sand how to develop programs and procedures to reach desired goals.
Think Tanks and Shadow Cabinets
Other source of policy formulation are the think tanks which are organizations of professional
analysts and policy formulators. These think tanks may exhibit greater creativity and innovation
in policy making as compare to the public bureaucracies.
Interest Groups
Interest groups are also important sources of policy formulation. In addition to identifying
problems and applying pressure to have them placed on the agenda, successful interest groups
have to supply ready cures for those problems.
Legislature
Legislature are also source of policy formulation. Example includeparliamentarians in Pakistan
or Congressman in USA who are involved in policy formulation.

Tools for Policy Formulation

There are some techniques which are developed to assist in the policy formulation. In general,
these techniques attempt to make the consequences of certain courses of action more apparent to
decision makers and to provide a summation of the probable effects of the policy along a single
scale of measurement, usually money, so that different policy alternatives can be more effectively
compared with one another. Common techniques include the following.
Cost benefit analysis
The concept cost-benefit analysis is to reduce all the costs and benefits of a proposed
government project to a quantitative and economic dimension and then to compare available
alternative policies, with those economic considerations paramount. For analysis, the total
benefits created by the project are enumerated, including those that would be regarded as
externalities in the private market. The costs are also enumerated, again including social costs
(e.g. pollution). The long term costs and benefits are also taken in to account. Projects whose
total benefits exceed their total costs are deemed acceptable, and then choices can be made

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among the acceptable projects, generally leading to the adoption of the project with the greatest
total net benefit (benefit minus costs).
Decision Analysis
Decision analysis is geared more towards making policy choices under conditions of less
certainty. It assumes that in many or even most cases, government, with inadequate information
is making choices about what to do. In fact, in many instances, government may be almost
playing a game, with nature or a human being as its opponent.
Legitimating Policy Choices
Once it has been decided that a certain policy instrument is required, or is feasible, as a response
to a policy problem, that choice must be made a legitimate choice. It is almost certain that no
matter what course of action is decided on, some citizens will believe themselves disadvantaged
by the choice. At a minimum, any public program or project will cost money, and those who pay
taxes and receive no direct benefit from the expenditures will frequently believe themselves
harmed bythe policy choice. Legitimacy is a fundamental concept in the political science. It is
conventionally defined as a belief on the part of citizens that the current government represents a
proper form of government and a willingness on the part of those citizens to accept the decrees of
that government as legal and authoritative.
One characteristic of legitimacy is that it is psychological. It depends on the majority’s
acceptance of the rightness of government. A government may come to power by all the
prescribed processes, but if the population does not willingly accept that government, then in
practice government does not have legitimacy. Second characteristics of legitimacy is that it has
substantive as well as procedural elements. It matter not only how things are decided but also
what is decided. Third characteristic is that legitimacy is a variable and not a constant. It varies
among the individuals and across time. For example, a series of blatantly unpopular or illegal
acts, a fully legitimated government may gradually erode its legitimate status through time.
Kinds of legitimation
Legitimation is performed through the legislature process and administrative process designed for
the issuing of regulations, through the courts, and through mechanisms for democracy.
Table 1: Kinds of Legitimation
Majority Involvement Majoritarian Non-majoritarian
Mass Referenda -
Elite Legislature Courts; administrative regulations

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Legislature: legislature such as parliamentarian in Pakistan or Congressman in the USA are the
prime legislative body. That is, although several administrative bodies are responsible for writing
regulations in large numbers, legislature must supply the basic legislative framework within
which other bodies may operate.
Regulations and the Administrative Process: Most rules in the industrialized societies is now
done through the regulatory process which include the actions of the executive branch agencies
as well as those of independent regulatory commissions. The regulatory bodies issues binding
regulations that are subsidiary to legislature. Although conducted through a legal process, the
decision making associated with adopting regulations not majoritarian.
Courts: Another non-majoritarian means of legitimating policies is through the courts. There has
been an increase in the involvement of the courts in issuing legitimating decrees.

Evaluation and Policy Change

The final state of the policy process is the assessment of what has occurred as a result of the
selection and implementation of a policy and, if it is found necessary, a change in the current
policies of government. Producing a valid evaluation of government actions is a difficult and
highly political process in itself. Common problems in evaluation of a public program are as
under.
Goal Specification
The first step is to identify the goals of the program, but even this seemingly simple task may be
difficult, if not impossible. One reason is that the legislation establishes policy program are often
written in vague language for different reasons as a result, it is difficult to attach any readily
quantifiable goals to programs. Additionally, the goals specified may be impossible or
contradictory. When an organization is faced merely with impossible goals, it can still do
something positive, but when it is faced with contradictory goals, its own internal political
dynamics will become more important than any legislative statement of purpose.
Measurement
Once goals have been identified and expressed in clear, concrete language, the next task is to
devise a means to measure the extent to which those goals have been attained. In public sector,
measuring results or production is frequently difficult due to the absence of any ready means of
judging the value of what is being produced. Time is also critical factor as for several programs,
the benefits only appear after reasonable time span is passed.

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Targets
Related to the problem of goals is the problem of targets. It is important to know not only what
youintend to do but also to whom you intend to do it. Programs that have significant effects on
the population as a whole may not have the desired effects on target population. One program in
defining a target population and the program’s success in reaching that population is that many
programs are voluntary and depend on individuals who are potential beneficiaries to ‘take up’ the
benefit.
Efficiency and Effectiveness
Measuring efficiency in government programs is related to the efforts to results and assessing the
ration of the two. In public sector, measuring results in difficult in many policy areas, as it is
often quite difficult to assign costs to particular results, even if those results are measurable.
Surrogate measures of the intended results are frequently developed for public programs and
policies, but all require the suspension of disbelief to be accepted as valid and reliable description
of what is occurring in the public sector.
Values and Evaluation
Finally, the analyst who performs an evaluation requires a value system to enable him or her to
assign valuations to outcomes. But value systems are by no means constant across the
population, and even the analyst who is administering a single program may perceive different
purposes and priorities within that policy area. Thus, there may be no simple means of
determining the proper valuation of the outcomes of a program. This is especially true when
theprogram has significant unintended effects that must be weighed against the intended
consequences.

Policy Change
After evaluation, the next stage of the policy process is policy change. Rarely are policies are
maintained in exactly the same for over time; instead, they are constantly evolving. This may be
the direct result of evaluation, but more often it is the result of changes in the environment,
learning on the part of those administering the program, or simple elaboration of existing
structures and ideas. When a policy or program is reconsidered or evaluated, three outcomes are
possible; Policy maintenance, policy termination, or policy succession. Policy maintenance
occurs rarely as a conscious choice, but it happens as a result of simple failure to make decisions.
Policy termination means bringing end to a policy or program. Once begun, programs have a life

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of their own. They develop organizations, and those organizations hire personnel. Programs also
develop a clientele, who come to depend on the programs for certain services. Once client use the
services of a program, they may find it difficult ever to return to the market provision of goods or
services. Policy succession means replacing existing program/policy with new program/policy. It
can take several forms.
Linear: linear succession involves the direct replacement of one program, policy, or organization
by other, or the simple change of location of an existing program.
Consolidation: some succession involve placing several programs that have
existed
independently into a single program.
Splitting. Some programs are split into two or more individual components.

Economic Policy
Economic policy is both a central concern of government and a by-product of other policies. One
important step that a government must take is to form a set of policies intended to manage the
economy. Factors important in that policy are the results of decisions about matters such as
spending for public programs, patterns of taxation, and prices charged by public enterprises.
Economic policy also depends heavily on the actions of people over which governments have
little or no control.
The Goals of Economic Policy
Economic policy has a number of goals, all of which are socially desirable, but some of which
are not always compatible. Few major goals of economic policy of any country are as under.
Economic Growth
Economic growth is a prime objective of any economic policy. Economic growth has been a
boon both to citizens and to government. Economic growth means greater economic activity in
the country, increase in real GDP, GNP, per capital income, and so on. The result of economic
growth is that there is decrease in poverty and people move up in the socio-economic hierarchy.
Full Employment
Full employment or near full employment is a major goal of economic policy. Full employment
means all people who are willing to work are able to find work. The opposite of employment is
unemployment which is major issue for government across the world. In Pakistan, there is new
labor force added to the labor market every year. There should be so much space in the economy

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that the newly added youngsters should be able to find the work. In case of high unemployment,
there are other social and economic problems which takes birth in the country such as crimes.
Stable Prices
Stable prices are another objective of economic policy. This is because if prices are not stable,
then there is inflation or deflation which also disturbs the economic activity. In Pakistan,
particularly, inflation remains a major issue throughout the history. The result of higher inflation
is that employed people find it difficult to save or improve their quality of life.
A Positive Balance of Payment
Balance of payment is the net result of the cost of imports and the cost of exports. If a country
spends more money abroad than it receives from abroad, it will have a negative balance of
payments. Naturally, a country that spends less overseas than it receives will have a positive
balance of payments. A favorable balance of payment is also an objective of economic policy due
to its favorable outcomes for the economy.
Structural Change
The final goal of economic policy is structural change or the changing of the industrial and
regional composition of production. Some regions of a country may be more depressed than
others such as in Pakistan, KPK and Baluchistan remains under-developed. The goal of economic
policy is to make such structural changes such as bringing improvement for the underdeveloped
region or changing economy from agriculture base to industrial or to service based economy.
The Instruments of Economic Policy
Government has number of instruments at their disposal to try to influence the performance of
the economies. Some major instruments are discussed below.
Fiscal Policy
The fiscal policy is an important instrument available to the government to achieve the goals of
economic policy. The fiscal policy revolves around the budgetary process as a mean of allocating
resources among government agencies and between the public and private sectors of the
economy. Simply stated, if government wants to stimulate the economy, it should run a budget
deficit. Such deficit would place in circulation more money than the government had removed
from circulation, thereby generating more demand for goods and services as citizens found more
money to spend. This additional money, as it is circulated through the economy, multiplies in
magnitude to an extent that depends on the propensity of citizens to spend their additional
income rather than save it. Likewise, if a government seeks to reduce inflation in an ‘overhead’

15
economy, it would run a budget surplus, removing more money from circulation in taxes than it
put backs in through expenditure. This would leave citizens with less money than they had before
the government’s action and should lessen total demand.
Monetary Policy
The monetary policy is also an important instrument available to government. It stresses the
importance of the money supply in controlling economic fluctuations. Increasing the amount of
money in circulation is presumed to stimulate the economy. The extra money makes it easier for
citizens to borrow for investments or for purchases, and this encourages economic activity.
Likewise, reducing the availability of money makes it more difficult to borrow and to spend, thus
slowing down and inflationary economy. In Pakistan, the State Bank of Pakistan mainly
responsible for monetary policy development and implementation. The central bank of any
country normally use three tools i.e. open-market operations, the discount rate, and reserve
requirements. Open market operations means central bank control the supply of money by selling
or purchasing the securities, exchanging money for bonds or bonds for money, and so on. The
discount rate is the rate of interest at which member banks can borrow money from the central
bank. Obviously, this rate will affect interest rates in the economy as a whole, as member banks
will have to increase their interest rates to compensate for the increased cost of borrowing money
from the central bank. And with the basic monetary paradigm, making money more difficult to
borrow will slow down economic activity and presumably inflation. Changing in reserve
requirement is also a tool available to the central bank. This is a percentage of the total amount
that commercial banks have to keep reserve with central banks for their outstanding loans. If
central bank raises the reserve requirement, then banks have to deposit more money to the central
bank thus reducing the amount available to give loans. On the other hand, if the central bank
reduces the reserve requirements, commercial banks will have more money available for loans
and increase economic activity.
Regulations and Control
Regulations and control by government is another important tool and used for achieving
economic and social goals such as cleaner environment, consumer safety and so on. Such
regulations have an effect on overall economic growth, as they make it more or less profitable to
engage in certain economic activities. Also some regulatory activities, such as antitrust
regulations have a pervasive impact on the economic structure of the society. Example of other
type of control include wage and price control.

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Public Support for Business
Public support for business is also important tool available to the government for achieving
economic activity. Governments can provide a number of direct subsidies to industry. For
example, government provides direct support to the businesses through supporting research and
development, subsidizing credit, and variety of grants.
Public Ownership
Public ownership of certain kinds of industries may also be important for economic management,
especially influencing the location of certain industries. These public corporations perform a
variety of functions for government such as providing revenue to government, provision of
services at low cost and at some required level to the public and so on.
Incentive
Governments can also attempt to influence economic change through incentives. Most incentives
come through the tax system and are directed primarily at encouraging investment and change.
Example includes tax free zones which gives incentive to the industrialist to invest in some
particular location or in some particular industry/sector.
Moral Suasion
Finally, government can also attempt to use persuasion to influence the behavior of citizens and
industries. Persuasion works best in times of national emergency, but economic circumstances
may be sufficiently dire to create the perception of such an emergency. National leaders such as
president or prime minster using their power as spokesmen for the nation, are central to the use
of suasion to control economic behavior. They can use a variety of symbols to try to influence
the citizens. Example include ‘buy American’ slogan which influenced American consumers to
buy American products for maintaining jobs in America or creating a favorable balance of
payment account.

Educational Policy
Educational policy consists of the principles and government policies in the educational sphere
as well as the collection of laws and rules that govern the operation of education system.
Issues in Educational Policy
The following are the common issues in education and need to be given consideration while
developing educational policies.

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The Quality of Education
A common issue in education is quality of education which is below standards in several
countries. For example, in America, the common complaint against the school is that schools are
failing in their fundamental task of teaching basic skills such as reading, writing, and
computation. Another criticism about the educational system is that it is excessively rigid and
stultifying. In Pakistan, historically, the public sector schools across all provinces failed to meet
the standards and lags behind the private schools (as reflected in exam results and other criteria).
Classes in education system in Pakistan is also a serious issue. It is generally accepted that there
are different type of education scheme and associated curriculum which is being taught at
different system. Common typology includes the Madrassa system (deenialoom), public sector
schools, medium level private sector schools, and private schools teaching American and British
curriculum. Parent’s choice of selection of type of school is largely determined by the economic
condition of parents.
Religion and Education
There is also issue of dealing religion in education system. For example, in America, attending
school prayer changed from mandatory to voluntary after a court decision. Similarly, influence
of religion through curriculum is also big issue which need due consideration. For example,
question such as how many religious courses and at what rigor level should be added to the
program need to be answered.
Unionization and Management
The issue of how to handle teachers unions also needs to be addressed. Whether union should be
allowed or not allowed need to be answered.
Pakistan Education Policy 2017-25
The government has started work on preparation of National Education Policy, 2017 to update
and relate the policy provisions after the devolution process to the development of good human
beings, inculcate moral values, socio-economic development, and national unity as well as
transforming our children into good Pakistanis. It will ensure fixing the minimum standards to
improve the quality of education. The major effort is to provide access to education to all, reduce
the dropout rate in schools and avoid repetition rate.
Goals of Education Policy 2017-25
 Character building (character building through taleem, tarbiyya, and tazkyaaand on the
basis of universal Islamic values)
 Meeting the learning needs of the child including learning tools and learning contents

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  Pakistani nationhood and national integration (promoting and fostering ideology of
Pakistan and creating a sense of Pakistani nationhood among students)
 Right to Education: Expanding Access (Universalization of education up to matric by
2020 on emergency basis)
 Quality of Education and Institution Building (quality assurance in academic programs
and promoting culture of research and innovation)
 Enhancing Education Budget(Increasing investment in education to 4% of GDP)
 Science and Technology (promotion of science and technology for economic
development)
 Harmonization of Curriculum and Standards

Key Areas of Education Policy (2017)

The new education policy will focus on the following Key Areas.
1. Ideology based Vision and Mission aimed at Unity, Faith and Discipline.
2. Character building through Taleem, Tarbiyya and Tazkia.
3.Holistic development of child (Physical, Social, Intellectual, Moral, Spiritual and Cognitive
etc.)
4. ECD: Comprehensive Early Childhood Education and Development (3-5 years age group
children) assigning priority to 4 – 5 years age group.
5. Primary Education: Universalization of Primary Education (Grade 1 – 5)
6.Elementary Education: Expansion of Elementary (middle level VI – VIII) Education through
both formal and non-formal modes of education.
7.Non-Formal Education: Effective short-term non-formal education programs to be developed
and used to speedily integrate students in the formal system of education.
8.Non formal education and distance learning for Secondary Education: Expansion of Secondary
level education through formal and distant learning program.
9.TVET: Introduction of Technical and Vocational education in non-formal middle level schools.
10.Technical Education Stream: Reintroduction of Technical Education stream along with
Science and Humanities in selected high schools and intermediate colleges to prepare
vocationally and technically empowered human capital.

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12.Merit based, professionally qualified and competent, dedicated, committed and ideologically
sound recruitment of teachers who meet National Professional Standards of Teachers.
13. Rationalize and create a balance between demand and supply of quality teachers.
14. Expansion and Strengthening of teacher training programs to non-formal education including
DeeniMadaris (focusing on multi grade teaching), Higher Education Teachers, educational
managers/administrator, planner, policy makers, supervisors, paper setters. Curriculum
developers, textbook writers and publishers etc.
15.Capacity building of education personnel through creating a balance demand and supply,
merit based recruitment, and expansion and strengthening of teacher training programs
16.Curriculum Reforms and Standard Setting through development, approval
and implementation of a national standardized consensus base curriculum framework and setting
17.Literacy and Lifelong learning
18.Financing of education through dedicated education budget (allocation of 4% of GDP for
education and training )
19.Education governance and community involvement by establishing, expanding, and
strengthening parent-teachers and school community relationship
20.Quality initiatives (setting up quality assurance cells in all public universities)
21.Higher education (Updating curriculum, research centers, low cost split degree)

Health Policy
Health policy can be defined as the "decisions, plans, and actions that are undertaken to achieve
specific healthcare goals within a society (World Health Organization, 2011). Policy in healthcare
is vitally important as it sets a general plan of action used to guide desired outcomes and is a
fundamental guideline to help make decisions. The purpose of healthcare policy and procedures
is to communicate to employees the desired outcomes of the organization. An explicit health
policy can achieve several things: it defines a vision for the future which in turn helps to establish
targets and points of reference for the short and medium term. It outlines priorities and the
expected roles of different groups; and it builds consensus and informs people.

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Philosophy of Healthcare: Right to Health
Many countries and jurisdictions integrate a human rights philosophy in directing their
healthcare policies. The World Health Organization reports that every country in the world is
party to at least one human rights treaty that addresses health-related rights, including the right to
health as well as other rights that relate to conditions necessary for good health. The United
Nations' Universal Declaration of Human Rights (UDHR) asserts that medical care is a right of
all people. There remains considerable controversy regarding policies on who would be paying
the costs of medical care for all people and under what circumstances. For example, government
spending on healthcare is sometimes used as a global indicator of a government's commitment to
the health of its people. On the other hand, one school of thought emerging from the United
States rejects the notion of health care financing through taxpayer funding as incompatible with
the (considered no less important) right of the physician's professional judgment, and the related
concerns that government involvement in overseeing the health of its citizens could erode the
right to privacybetween doctors and patients. The argument furthers that universal health
insurance denies the right of individual patients to dispose of their own income as per their own
will.
Another issue in the rights debate is governments' use of legislation to control competition among
private medical insurance providers against national social insurance systems, such as the case in
Canada's national health insurance program. Laissez-faire supporters argue that this erodes the
cost-effectiveness of the health system, as even those who can afford to pay for private healthcare
services drain resources from the public system.
Healthcare Financing
Many types of health policies exist focusing on the financing of healthcare services to spread the
economic risks of ill health. These include publicly funded health care (through taxation or
insurance, also known as single-payer systems), mandatory or voluntary private health insurance,
and complete capitalization of personal health care services through private companies, among
others
National Health Vision Pakistan 2016-2025
Vision Statement
To improve the health of all Pakistanis, particularly women and children, through universal
access to affordable quality essential health services, and delivered through resilient and

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responsive health system, ready to attain Sustainable Development Goals and fulfill its other
global health responsibilities.
Challenges in Healthcare in Pakistan
 Some improvement in average life expectancy which increased from 59 years by 1990 to
67 years by 2015. Mortality ratio of live births 276 per 100000 (2006-07 survey), infant
under 5 mortality rate of 66/1000; and stagnant neonatal mortality rate and rising toll of
stillbirths of 43/1000 live births.
 Burden of disease issue which is higher in poor while many of these conditions can be
controlled at relatively low cost interventions and best practices through primary and
secondary care levels. Communicable diseases, maternal health issues and under-
nutrition dominate and constitute about half of the Burden of disease.
 Non-Communicable Diseases along with Injuries and Mental health issues, now
constitute other half of the BoD, causing far more disabilities and premature deaths
among an economically productive adult age group
 Population Explosion: The BoD is rendered worse by an increasing population, with
Pakistan now the sixth most populous country in the world. Decline in population growth
rate has been slow, and the current population growth rate of 1.9% per annum is driven by
increasing age at marriage in urban areas
 Health Access and Inequities: Pakistan has seen progress in access to health care services;
however, the gains are uneven across different service areas as out of pocket expenditure
is still around 70% despite having network of (primary, secondary and tertiary) health
care system in place. Access to and affordability of essential medicines is low. Evidence
shows that low income groups are likely to have lower levels of health, nutrition,
immunization and family planning coverage
 Health Systems: Pakistan has a mixed health system, which includes government
infrastructure, para-statal health system, private sector, civil society and philanthropic
contributors. A major strength of government’s health care system in Pakistan is an
outreach primary health care, delivered at the community level by 100,000 Lady Health
Workers (LHWs) and an increasing number of community midwives (CMWs), and other
community based workers who have earned success and trust in the communities.

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 Complementary, alternative and traditional system of healing is also quite popular in
Pakistan
Health system faces challenges of vertical service delivery structures and low performance
accountability within the government, creating efficiency and quality issues. Largely unregulated
for quality care and pricing, there is also duplication of services by the private sector
The National Health Vision of Pakistan 2016-2025 strives to provide a responsive unified
national direction to confront various health challenges, while ensuring adherence to Universal
Health Coverage as its ultimate goal. The principle values include:
a) Good governance
b) Innovation and Transformation
c) Equity and pro-poor approach
d) Responsiveness
e) Transparency and Accountability
f) Integration and cross sectorial synergies
National Health Vision has adopted the following objectives in order to improve the health and
well-being of the Pakistani society:
g) Provide a unified vision to improve Health while ensuring provincial autonomy and diversity
h)Build coherence to Federal & Provincial efforts in consolidating the progress, learning from
experiences and moving towards the universal health coverage.
i) Facilitate synchronization for commonality across international reporting and international
treaties
d)Facilitate coordination for regulation, information collection, surveillance, and research for
improved health systems
e) Provide a foundational basis for charting and implementing SDGs, in partnership with other
sectors.

Energy Policy
Energy policy is the manner in which government decides to address the issue of energy
development including energy production, distribution, and consumption.

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Energy Sources
Sources of energy are as under.
 Fossil Fuels (Petroleum related products)
 Natural Gas
 Coal
 Nuclear Power
 Hydroelectric power
 Solar power
 Wind energy
 Tidal Energy
The choice of relying on different sources of energy depends on availability of input,
infrastructure arrangements, and environmental concern associated with each option. For
example, a country with abundance of fossil fuel may depend heavily on fossil fuels for fulfilling
its energy needs, but the heavy consumption may create environmental problems. Further, some
sources are renewable such as solar while other are depleting such as fossil or gas.
Measures used to Produce an Energy Policy
 Statement of National Policy regarding energy planning, generations, transmission and
usage
 Legislation on commercial energy activities (Policy regarding private production and
distribution of energy products)
 Legislation on energy usage (energy consumption for domestic and commercial
activities)
 Instructions for state owned energy sector
 Fiscal policies for energy products and services (taxes, import duties on energy products)
 Demand supply mismatch (Ways of dealing mismatch, increasing supply/decreasing
demand)
 Environmental issues

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National Power Policy 2013 (Pakistan)
Vision: Pakistan will develop the most efficient and consumer centric power generation,
transmission, and distribution system that meets the needs of its population and boosts its
economy in a sustainable and affordable manner.”
Challenges
Pakistan’s power sector is currently facing the following challenges.
 Supply demand gap
 Highly expensive generation of electricity (Rs 12/unit)
 Inefficient power transmission and distribution system (23 to 25% losses)
 Theft and high cost of generation resulting in circular debt and subsidies.
Targets
Key targets are as under.
Supply demand gap: Target is to decrease demand supply gap from 4500 – 5000 MW to 0 by
2017
Affordability: Target is to decrease cost of generation from 12c/unit to 10c/unit by 2017
Efficiency: Target is to decrease transmission and distribution losses from 25% to 16% by 2017
Financial Viability and Collections: Target is to increase collection from 85% to 95% by 2017.
Governance: Target is to decrease decision making processing time at the government machinery.

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Environmental Policy
Environmental Policy refers to the laws, regulations, and other policy mechanisms concerning
environmental issues. Environment refers to the physical ecosystems, but can also take into
consideration the social dimension (quality of life, health) and an economic dimension (resource
management, biodiversity). Policy can be defined as a "course of action or principle adopted or
proposed by a government, party, business or individual". Thus, environmental policy focuses on
problems arising from human impact on the environment, which retroacts onto human society by
having a (negative) impact on human values such as good health or the 'clean and green'
environment.
Scope of the Environmental Policy
The scope of the environmental policy include but not limited to the following;
 Air
 Water
 Waste management
 Eco system
 Bio diversity
 Natural resources
 Wildlife and endangered species
Instruments of Environmental Policy
To achieve the objectives/targets of the environmental policy, following instruments are
available to a government.
Economic Incentives
Economic incentives such as taxes and tax exemptions, can be very effective to encourage
compliance with environmental policy
Market based incentives
Market based incentives such as taxes, permit fee, tradable permits can also be used to encourage
compliance with environmental policy
Bilateral agreement
Bilateral agreements between the government and private firms and commitments made by firms
independent of government requirement are examples of voluntary environmental measures.
Another instrument is the implementation of greener public purchasing program

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Environmental Policy Pakistan (2005)
The National Environment Policy provides an overarching framework for addressing the
environmental issues facing- Pakistan, particularly pollution of fresh water bodies and coastal
waters, air pollution, lack of proper waste management, deforestation, loss of biodiversity,
desertification, natural disasters and climate change. It also gives directions for addressing the
cross sectorial issues as well as the underlying causes of environmental degradation and meeting
international obligations.
Goals
The National Environment Policy aims to protect, conserve and restore Pakistan’s environment
in order to improve the quality of life of the citizens through sustainable development.
Objectives
The objectives of the policy are:
 Conservation, restoration and efficient management of environmental resources
 Integration of environmental considerations in policy making and planning processes
 Capacity building of government agencies and other stakeholders at all levels for better
environmental management
 Meeting international obligations effectively in line with the national aspirations
 Creation of a demand for environment through mass awareness and community
mobilization
Key Aspects
Key aspects of the environmental policy of the Pakistan are as under.
Water Supply and Management
Water supply and management is important aspect of environmental policy which aims to
provide sustainable access to safe water supply and effectively manage and conserve the
country’s water resources
Air Quality and Noise
For preventing and reducing air pollution and noise, government aims to introduce different
measure related to industry and automobile
Waste Management
Measures such as self-monitoring, reporting system for industry related to the liquid and solid
waste produces are going to be introduced for preventing and reducing waste related pollution.

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Forestry
For promoting forestry government may take different measures such as promoting social, farm
forestry and irrigated plantations.
Biodiversity and Protected Areas
The policy aim is to promote the conservation and sustainable use of Pakistan’s biodiversity and
effective management of protected areas, and equitable sharing of benefits arising thereof for the
wellbeing of the nation. In this regard, Biodiversity Action plan which is already developed
should be revised, updated, and being followed.
Climate Change and Ozone Depletion
Government may develop different institutional bodies and starting to promote different
technologies which help overcome the climate change issues.
Energy Efficiency and Renewables
The aim is that government would promote energy efficiency and renewable sources of energy in
order to achieve self-reliance in energy supplies and as a means to sustainable development.
Agriculture and Livestock
Government promotes sustainable agricultural and livestock development through actions such
as promoting organic farming and encouraging ecologically compatible cropping systems.
Multilateral Environmental Agreements
For environment protection, government would continue to play a proactive role to ensure
protection of regional and global environment and cooperate with the International community in
promotion of sustainable development.

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