The Pakistani economy has experienced roller-coaster development since Pakistan's formation as a state. Despite an early phase of impressive growth, the country’s economy was unable to realize its potential for improving the lives of millions of Pakistanis, thereby contributing to the repeated crises facing the state today.
Carnegie’s S. Akbar Zaidi explored the core challenges facing the Pakistani economy, its impact on political and social development, and how it might be transformed in ways that help Pakistan become a successful state. Carnegie's Ashley J. Tellis moderated.
Tellis noted that what happens to the Pakistani economy will determine the long-run path for the country, making Pakistan’s economy a more critical issue than many of the immediate and transient crises plaguing Pakistan. Zaidi examined some of the signs of Pakistan’s economic illness:
Zaidi described the Pakistan as having a “rollercoaster” economy – it grows for a few years at 5-7 percent, then slows and ekes out only a few percentage points a year before returning to its previous rate of growth. As a result, Zaidi said, there has not been any long-term, consistent growth. Although there are many reasons for this, he focused on three key aspects:
The recent rise of the media and the judiciary is an important change in Pakistan, Zaidi said, but the military could easily return to power in the near future. Tellis added that since the election of President Zardari, there has been a space created for representative government, which, if negotiated properly, could have momentous consequences.
Zaidi concluded that while tax and aid reform are both incredibly unlikely at the current moment, there is potential for a real reconciliation with India. If this occurred, he said, it would be revolutionary – there is a massive potential for trade between India and Pakistan, and if this were realized, then there would be concurrent massive changes in the political and social economy of the country. In this sense, Zaidi argued that Pakistan’s future lies with New Delhi, not Washington. Both Tellis and Zaidi concluded that the recent effort for Pakistan to grant Most Favored Nation (MFN) status to India could thus be extremely significant, and the beginning of a positive cycle that eases many of the Pakistani economy’s ailments. Whether the MFN deal will go through or not, though, remains questionable.
The Carnegie South Asia Program informs policy debates relating to the region’s security, economy, and political development. From the war in Afghanistan to Pakistan’s internal dynamics to U.S. engagement with India, the Program’s renowned team of experts offer in-depth analysis derived from their unique access to the people and places defining South Asia’s most critical challenges.
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