Pakistan’s Development and Asian Experience (The Iqbal Memorial Lecture)

To summarise the conclusions of this paper: 1. Pakistan not only has to deal with a cash flow problem, it also has to make the difficult structural adjustment of living within its means, after nearly 50 years of failing to do so. 2. Despite large resource inflows and periods of good economic management Pakistan’s per capita growth has been less than half of that in rapidly growing Asian economies. The country has therefore failed to reduce poverty as much as it could have. 3. This performance was the result of inadequate export growth, savings and attractiveness to foreign private investment. Two periods of good economic management show the impressive potential of the economy. 4. The heart of an appropriate economic strategy is to make non-traditional exports more profitable. 5. It is appropriate to emphasise the need for further decontrol and greater reliance on the market. But government has an important role in providing infant industry incentives for exports and compensating for externalities. 6. To maintain political support for reforms government must allocate fairly the pain and gains, and reduce corruption.