Faculty / School

Faculty of Business Administration (FBA)

Department

Department of Economics

Document Type

Book Chapter

Publication Date

2019

Author Affiliation

Chairman at Centre for Excellence in Islamic Finance, IBA.

Book or Conference Proceedings Title

Seventy Years of Development: The Way Forward

ISBN/ISSN

9789693531732

First Page

7

Last Page

32

Publisher

Sang-e-Meel Publications

Place of Publication

Lahore

Keywords

Asia, Sustainable development

Abstract / Description

Pakistan’s economic performance over the last 70 years can be divided into two distinct phases. In the first phase, covering the first 40 years since its independence, the country was one of the best performing economies among the developing countries with recorded average annual growth rate of 6 percent, far ahead of India and Bangladesh. The second phase which started in 1990 and spanned over the next 25 years witnessed Pakistan becoming an economic laggard, trailing behind other countries in the South Asia region. This chapter explores the possible explanation for this divergence in economic and social outcomes. Five different explanatory hypotheses for the decline of the economy, oft cited in the literature as well as preponderant in popular opinions were tested against empirical evidence. None of these hypotheses could be validated. The study, then, carefully examined other theoretical and empirical evidence and came to the conclusion that it was the differentiation in the institutional capacity and behaviour, which provides a relatively more persuasive answer to this puzzle. Looking beyond these 70 years, it is argued that a selective and incremental approach for restructuring of at least two dozen key institutions responsible for security, growth, equity and transparency and accountability would be politically feasible instead of across the board reforms in order to put Pakistan on its past trajectory.

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