A Country and an Economy in Transition

Abstract

Introduction The main thrust of this chapter is that, in 2013, Pakistan is finally in a position to move forward and set its economy not only on the path to recovery, but also on a trajectory that will ensure high levels of sustainable growth. This could happen since some of structural problems that have dogged the political system since its creation seem to be nearing resolution. Since there is a close connection between political and economic developments, this advance in the former will have positive meaning for the latter. Pakistan may well be on its way to developing a new way of managing its affairs—meaning the way in which the political system is run, how the economy is managed, and how social interactions take place among different segments of the population. With the adoption of an appropriate set of public policies, it may also be possible to pull the economy out of the deep slump into which it has fallen and achieve a much higher rate of gross domestic product (GDP) growth. This way of thinking about the future seems much too optimistic for a time that brings grim news every day—of an economy that is not able to move out of the slow growth groove in which it has been stuck since 2007; of national bankruptcy believed to be just around the corner; and of a country increasingly isolated in a world that is busy reorganizing itself. The GDP growth rate has been on a declining trend since the 1965 war with India. For the last six years, the average rate of growth has been just slightly more than 3 per cent a year— only one percentage point above the estimated yearly increase in population. An unsettled economy and one in which many people fail to respect the rule of law creates costs that are borne largely by the poorer segments of the population.