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Growth Diagnostics in Pakistan

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  • Abdul Qayyum

    (PIDE)

  • Idrees Khawaja
  • Asma Hyder

Abstract

Following the Hausmann, et al. (2005) methodology, we attempt to identify the constraints to growth in Pakistan. We argue that governance failure and institutional shortcomings are the heart of the matter : corruption is rampant, judicial independence is low, educational institutions do not furnish the right kind of labour force, legal institutions do not protect the lenders against loan defaults, ambiguous land titles constrain mortgage financing and construction activity, labour market institutions restrict hiring/firing, State Bank of Pakistan (SBP) has not done its duty to contain the rising interest spread, and SECP/stock market has not played its due role in the transfer of funds from savers to investors. We identify three binding constraints to growth in Pakistan. These are : (i) poor state of governance, (ii) poor state of institutions, and (iii) lack of competitive environment (that restricts innovation and hence growth). Without improving the state of governance and that of institutions, sustainable growth cannot occur even if other factors, like a reasonable savings rate, are put in place.

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Bibliographic Info

Paper provided by East Asian Bureau of Economic Research in its series Development Economics Working Papers with number 22218.

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Date of creation: Jan 2008
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Handle: RePEc:eab:develo:22218

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Keywords: economic growth; Institutions and Growth;

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References

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  1. Zafar Mueen Nasir, 1998. "Determinants of Personal Earnings in Pakistan: Findings from the Labour Force Survey 1993-94," The Pakistan Development Review, Pakistan Institute of Development Economics, Pakistan Institute of Development Economics, vol. 37(3), pages 251-274.
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  18. Qayyum, Abdul & Kemal, A. R., 2006. "Volatility Spillover Between the Stock Market and the Foreign Exchange Market in Pakistan," MPRA Paper, University Library of Munich, Germany 1715, University Library of Munich, Germany.
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Citations

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Cited by:
  1. Adnan Haider & Musleh ud Din & Ejaz Ghani, 2011. "Consequences of Political Instability, Governance and Bureaucratic Corruption on Inflation and Growth: The Case of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, Pakistan Institute of Development Economics, vol. 50(4), pages 773-807.
  2. Mohammad Irfan, 2009. "Pakistan’s Wage Structure, during 1990-91–2006-07," Labor Economics Working Papers, East Asian Bureau of Economic Research 22979, East Asian Bureau of Economic Research.
  3. constantine, collin, 2013. "Why Guyana's self discovery is the missing link in its development strategy," MPRA Paper, University Library of Munich, Germany 44205, University Library of Munich, Germany.
  4. Mehmood, Sultan, 2013. "Terrorism and the macroeconomy: Evidence from Pakistan," MPRA Paper, University Library of Munich, Germany 44546, University Library of Munich, Germany.
  5. Mohammad Irfan, 2009. "Pakistan’s Wage Structure, during 1990-91–2006-07," PIDE-Working Papers, Pakistan Institute of Development Economics 2009:54, Pakistan Institute of Development Economics.

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