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The Economy Of Pakistan

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The Economy Of Pakistan

Challenges and Prospects

Let’s start with the consuming attitude of the people. It is a fact that in Pakistani society, people spend more than what they earn. Our domestic saving rate is 12.3% (2019) while this rate in India and China is 29.32% and 44.9%, respectively. To rely on its domestic financial sources, a country should have a 25% saving rate; otherwise, it will have to depend on foreign resources to meet its expenses. Pakistan does the same. To meet the country’s expenses and stabilize the economy, the government of Pakistan rather than drawing up policies to encourage domestic savings prefers to go to IMF to seek bailout packages.

Lack of strategic planning is a major fault made by the country’s ruling class. Whenever the country gets a bailout packages from IMF, it comes out of the immediate economic crisis only, but, in the long run, the “boom-and-bust” cycles continue which mars the ability of the financial system to be on the path of sustainable growth that is essential to breaking the vicious cycle of poverty and creating employment opportunities for the citizens.

It is true that providing employment opportunities to the youth is quite a difficult task for the state, but what adds fuel to this fire of ineptness is that the cost of doing business is also high in the country. Even if foreign investors are, somehow, convinced to invest in Pakistan, the problematic and long procedures as well as other problems they go through deter them from bringing their money to Pakistan. A dire shortage of electricity, water and gas, numerous rules and regulations, lack of coordination among the government agencies, delays in the court procedures, infringement of intellectual property rights and evasion of taxes by competitors are the factors that hamper foreign direct investment and dissuade the investors.

The perennial crisis of governance also presents a serious challenge to the country’s economy. An overwhelming majority of policies in different sectors, e.g. education, health, trade and agriculture, are almost the same as they were fifty years ago. In spite of that, there is no significant record to prove that even these have been implemented in letter and spirit, and were able to achieve the stated objectives. All successive governments, whether military or civilian, tried to introduce their own policies whenever they came to power; they rejected the policies introduced by the previous government with a single stroke of the pen to make people believe that only they have the solutions to the country’s problems and that the previous administration was completely inept and did not care for the people. The projects of their predecessors have no worth for them. This behavior not only proves costly – it washes away all the investments made by the previous government, leading to increased cost of the same if someone later chooses to revive these projects – but also causes inordinate delays.

In the same way, political instability and lawlessness also are a formidable threat to the economy of Pakistan. In a country where ills like poverty, corruption, increasing population, unequal distribution of wealth, illiteracy and an ever-soaring inflation are already weakening the economy, political instability only creates further problems for its economy. Therefore, there is a dire need to complete the reorientation of the present governance model.

Although the economy of Pakistan is facing several mighty challenges, yet there are some significant factors that have considerable potential for the country’s economic growth. The first on this list is the huge youth force the potential of which can be harnessed for the economic development of the country. Proper education should be provided to them so as to make this huge human capital a real asset of the country. Pakistan and India are two countries where the number of young people in the total population is high.

The country’s youth should be provided abundant employment opportunities as it is necessary to avoiding the cancer of brain drain. They must be trained to work in various sectors of the economy and the government should make policies to attract foreign investment in those sectors.

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