Pro-business and pro-market reforms in Pakistan: economic growth and stagnation 1950–51 to 2011–12

ABSTRACT

This paper uses a new method to analyse the causes of growth and stagnation in Pakistan between 1950–51 and 2011–12. It provides support for the argument that pro-business reforms have been an important driver of Pakistan's economic growth. This result holds across two episodes of growth and one episode of stagnation. These findings lead to a clear policy implication: if Pakistan is to return to fast growth, policy needs to move away from pro-market reforms, learn these lessons of history, and promote the profitability of business to incentivise private investment and so boost economic growth.

KEYWORDS:

• Economic growth
• state
• industrialisation
• profits
• market
• business

JEL classification:

• O47

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. 1992–93 denotes the financial year from 1 July 1992 to 31 June 1993. This convention is adopted throughout the paper.

Additional information

Notes on contributors

Grace Kite

Grace Kite is PhD at SOAS, University of London. She is consultant economist and econometrician undertaking projects for blue chip companies, NGOs, and government departments. NGO clients include Overseas Development Institute, Centre for Development Policy Research, Scaling Up Nutrition Alliance and Save The Children. Her research studies include the quantitative research and econometrics to evaluate marketing and policy decisions. Her recent publication is Kite, G (2014), “Linked In? Software and Information Technology Services in India's Economic Development.” Journal of South Asian Development 9:2, pp.99–119.

Matthew McCartney

Matthew McCartney is Director of South Asian Studies and associate professor in the Political Economy and Human Development of India, School of Interdisciplinary Area Studies (SIAS) University of Oxford. His research interests include the economic development, human development and political economy of South Asia (Bangladesh, India, Pakistan, Sri Lanka) since independence; tax policy in developing and transition economies; the state in development; trade and development; the economics of growth and macroeconomics; human development including welfare systems in South Asia (particularly employment guarantee and nutrition programmes), education, health, the political economy of public service delivery. He has authored numerous articles on these research interests. He has worked on consultancy projects with UNDP, USAid, EU and World Bank.