The Pakistani government is pursuing a wide range of structural reforms, including attaining financial conditions, improving corporate governance and enhancing the investment climate, which are expected to respond to chronic balance of payments problems and generate more sustainable and stable growth, according to the Asian Development Bank (ADB).
The Asian Development Bank said in its latest report, Asia’s 50 Years Road to Prosperity, Market and Technology, Pakistan’s economic growth has been unstable over the past half century, driven by periodic political instability, geopolitical factors and crisis.
During the first three decades of its creation, Pakistan undertook a state-run policy of industrialization with import and substitution.
Till 1960s, the government supported certain industries (especially sugar, jute, and chemicals) through import licenses, export subsidies, and multiple exchange rates; She added that the interventions were considered relatively harmless and the private sector flourished in the country.
ADB added that growth accelerated in the 1960s due to industrial expansion, a green revolution that bolstered the agricultural sector, and foreign aid and investment flows due to geopolitical factors linked to the Cold War.
However, the rise was due to rising inequality, especially between East Pakistan and West Pakistan, culminating in civil unrest leading to war with India and East Pakistan’s withdrawal in 1971 to the independent state of Bangladesh.
Pakistan then followed the socialist-inspired nationalization by taking over large manufacturing companies and creating many state-owned enterprises.
By the late 1970s, economic and political instability led to the second military coup in 20 years.
The new government completely changed socialist policies in the early 1970s and privatized much of the industry controlled by the previous government.
Growth in private investment, foreign aid flows, and increased remittances from the Middle East have contributed to sustained growth since then.
We hope that these reforms will solve long-term balance of payments problems and lead to more sustainable and stable growth.
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