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Growth diagnostics in Pakistan

Qayyum, Abdul and Khawaja, Muhammad Idrees and Hyder, Asma (2008) Growth diagnostics in Pakistan. PIDE-Working Papers, 2008:47. Pakistan Institute of Development Economics, Islamabad, Pakistan.

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Identification Number: 2008:47

Abstract

Following the Hausmann, et al. (2005) methodology, we attempt to identify the constraints to growth in Pakistan. We argue that governance failure and institutional shortcomings are the heart of the matter: corruption is rampant, judicial independence is low, educational institutions do not furnish the right kind of labour force, legal institutions do not protect the lenders against loan defaults, ambiguous land titles constrain mortgage financing and construction activity, labour market institutions restrict hiring/firing, State Bank of Pakistan (SBP) has not done its duty to contain the rising interest spread, and SECP/stock market has not played its due role in the transfer of funds from savers to investors. We identify three binding constraints to growth in Pakistan. These are (i) poor state of governance, (ii) poor state of institutions, and (iii) lack of competitive environment (that restricts innovation and hence growth). Without improving the state of governance and that of institutions, sustainable growth cannot occur even if other factors, like a reasonable savings rate, are put in place.

Item Type: Monograph (Working Paper)
Official URL: http://www.pide.org.pk/pdf/Working%20Paper/Working...
Additional Information: © 2008 Pakistan Institute of Development Economics
Subjects: H Social Sciences > HB Economic Theory
JEL classification: O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O12 - Microeconomic Analyses of Economic Development
O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General
Sets: Research centres and groups > Asia Research Centre
Collections > Economists Online
Date Deposited: 17 Mar 2009 11:03
Last Modified: 18 May 2011 09:54
URI: http://eprints.lse.ac.uk/id/eprint/23344

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