The Three P's of Pakistan's Economy: Progress, Problems & Perspectives

Topics: Economics, Economic growth, Macroeconomics Pages: 23 (6092 words) Published: October 17, 2010
Three P’s in Pakistan’s Economy: Progress, Problems & Perspectives

*Saarang Soomro
*[1]Dr. Subhan Gaad


This paper aims to investigate the impact of macroeconomic variables on economic growth in Pakistan. In doing so, study utilizes the data from Pakistan Economic Survey, IMF and the World Bank reports. Pakistan’s economy has suffered a lot from 1950s to date. Various factors including our macroeconomic policies, mismanagement, negligence and corruption have thrown in their share in exponentially increasing problems for economic growth. The existing weak institutions in Pakistan have also contributed to the adverse conditions for growth. This study focuses on an often unnoticed key factor in Pakistan’s long-term development: the need to cultivate the formation of an independent and fair government apparatus, supported by a strong civil society, an efficient private sector, and institutions that offer oversight of government actions. This type of governance arrangement can be shaped by the backing of targeted external aids. This article endeavors to disclose the absent ingredients essential for continual socio-economic development in Pakistan.


The economy of Pakistan faced an unparalleled set of challenges during 2008-09. Pakistan has endured many shocks in last few years. Domestic security challenges have intensified which in result have enacted an extremely high cost on the economy, both in terms of direct costs of the fight against extremism, as well as in terms of a knock-on effect on investment inflows and market confidence. This study examines the vulnerability of Pakistan’s economic growth by looking at the sector’s governance structure and a score of indicators.

Finally Pakistan is by some accounts on the path of growth. But majority of Pakistan is still plagued by terrorism, deteriorated by mismanagement and smeared by corruption. A look at the society contrasting the official data gives pause for thought. Despite some recent progress, after all income per capita in Pakistan (measured in dollars) is elevated today than it was few years ago (see Figure 1).

However, the increasing level of education or of capital cannot explain Pakistan’s higher per capita income. Social and economic indicators reveal that Pakistan is more educated today than it was few years ago. Indeed, our literacy rate now exceeds 50 percent. Though these are not the perfect measures of human capital, they do show that human resources in Pakistan are not being deteriorating.

The swelling effect of these challenges has been a noteworthy loss of growth impetus in the economy. Pakistan’s economy has demonstrated a fair degree of suppleness over the past few years. Pakistan is among a handful of countries with a positive rate of growth compared to other countries affected by the global financial crisis. Remarkably Pakistan is among a very few with the lowest decline in real GDP growth. (See Table 1).

The Three P’s

In this section the three P’s of Pakistan’s economy are discussed. The introduced three P’s are: Progress, Problems and Perspectives. First of all the progress in the last few years of economic growth is discussed which follow by the problems which Pakistan’s economy have and still is facing and in the last, the perspectives.


Per capita income is not the proper measurement of the welfare in any economy because it imbeds a wide range of fluctuations behind the number. However, still it is treated as one of the foremost indicators of the depth of growth and general well-being of an economy. Per capita income, defined as Gross National Product at market price in dollar term divided by the country’s population, grew by a meager 0.3 percent mainly because of slower economic growth and depreciation of Pak-rupee (Pakistan Economic Survey 2008-09).


Per capita income has grown at a much stronger pace since last few years. It has, in dollar terms has increased from $ 586 in...
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