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Growth Diagnostics in Pakistan

Author

Listed:
  • Abdul Qayyum

    (Pakistan Institute of Development Economics, Islamabad)

  • Idrees Khawaja

    (Pakistan Institute of Development Economics, Islamabad)

  • Asma Hyder

    (NUST Business School, Rawalpindi)

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.

Suggested Citation

  • Abdul Qayyum & Idrees Khawaja & Asma Hyder, 2008. "Growth Diagnostics in Pakistan," PIDE-Working Papers 2008:47, Pakistan Institute of Development Economics.
    • Handle: RePEc:pid:wpaper:2008:47
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    Cited by:

    1. Matthew McCartney, 2015. "The Missing Economic Magic: The Failure of Trade Liberalization and Exchange Rate Devaluation in Pakistan, 1980–2012," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 20(Special E), pages 59-86, September.
    2. Tehmina Sattar, 2012. "A Sociological Analysis of Education as a Prerequisite for the Process of Development: A Case of Southern Punjab (Pakistan)," International Journal of Learning and Development, Macrothink Institute, vol. 2(2), pages 112-132, April.
    3. Younis, Fizza & Chaudhary, Aslam & Akbar, Muhammad, 2015. "Pattern of Development and Sustainable Economic Growth In Pakistan: A Descriptive Analysis," MPRA Paper 71473, University Library of Munich, Germany.
    4. constantine, collin, 2013. "Why Guyana's self discovery is the missing link in its development strategy," MPRA Paper 44205, University Library of Munich, Germany.
    5. Abdul Qayyum & Idrees Khawaja & Asma Hyder, 2008. "Growth Diagnostics in Pakistan," Development Economics Working Papers 22218, East Asian Bureau of Economic Research.
    6. Mohammad Irfan, 2009. "Pakistan’s Wage Structure, during 1990-91–2006-07," PIDE-Working Papers 2009:54, Pakistan Institute of Development Economics.
    7. 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, vol. 50(4), pages 773-807.
    8. Nadeem Ul Haque & Musleh-ud Din & Lubna Hasan, 2007. "Research at PIDE: Key Messages," PIDE Books, Pakistan Institute of Development Economics, number 2007:2.
    9. Mohammad Irfan, 2009. "Pakistan’s Wage Structure, during 1990-91–2006-07," Labor Economics Working Papers 22979, East Asian Bureau of Economic Research.
    10. Shujaat Farooq, 2015. "Job Mismatches in Pakistan: Is there Some Wage Penalty to Graduates?," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 54(2), pages 147-164.
    11. Sultan Mehmood, 2014. "Terrorism and the macroeconomy: Evidence from Pakistan," Defence and Peace Economics, Taylor & Francis Journals, vol. 25(5), pages 509-534, October.
    12. José Lopez-Calix & Irum Touqeer, 2013. "Revisiting the Constraints to Pakistan's Growth," World Bank Publications - Reports 17858, The World Bank Group.

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    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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