Country Analysis

Submitted To:

Sir Atta Ali Political, Economic and Social Settings of Business

Submitted By:

Saif ur Rehman Khan Roll # 807-MBA-2011

Management Studies Department Government College University Lahore

Country Analysis

1. Strategy

Achieving Growth through Eradicating Poverty and Extremism Pakistan is located at one of the best strategic locations of the world. Since gaining independence, Pakistan's history has been characterized by periods of military rule, political instability and conflicts with neighbouring India. The country faces challenging problems including terrorism, poverty, illiteracy and corruption. Pakistan government along with other none state actors has set various economic, social and political goals to cope with these problems. These goals are; y y y y Eliminating Poverty through continuous Growth. Eradication of Extremism in a state. Providing basic education to Youth. Providing Employment opportunities. It must be kept in mind that these issues faced by Pakistan, interlink with one another and therefore, causes severe problem to the state as a whole. However there are many more goals set by the government but for the purpose of my assignment, I am just taking these four only because of limited number of pages. Further Pakistan needs to work with foreign governments for formulation of policies to fulfill its goals. Government has set different policies for the fulfillment of these goals. These policies can be fiscal, monetary and could be broader, including social, cultural and political policies. These Policies are; Policies for Eradicating Poverty y The government is making targeted interventions to address poverty and generate income and employment through public works (Khushal Pakistan Program, Tameer-e-Pakistan Program, Tameer-e-Punjab, Tameer-e-Sarhad Programs, Drought Emergency Relief Assistance and micro-credit to improve life in the rural areas, and facilitating

Country Analysis

development of small and medium enterprises. The policy of targeted interventions will continue as one of the fundamental pillars of the growth and poverty reduction strategy. y y y y y Providing deserving families with Benazir Income support card. Accelerating economic growth while maintaining macroeconomic stability. Improving governance. Investing in human capital. Targeting the poor and the vulnerable.

Policies for Eradicating Extremism

Utilization of all elements of national power Military, Economic, Political and Diplomatic in confronting the problem. Incorporating support from elected Local, Provincial and National leaders. Involving non state actors to take ownership of the war. To kill the root of terrorism and systematically change the attitude of those people who are involved in it.

y y y

y y

Providing basic education to people of those areas which are highly causing extremism. Providing employment to people specially youth that is contributing towards Extremism because of unemployment.

2. Context
2.1. In Pakistan half the adult population cannot read and write, under-employment is high in many areas, and the population will increase by half again in the next twenty years. This means there is a vast mine of hidden talent and productivity which needs to be developed and tapped, even as the country wrestles with painful but essential reforms to cut waste and increase tax returns, if Pakistan is to become the prosperous and dynamic country it has the potential to prove.1 Economic growth and poverty reduction go hand in hand; getting more people on jobs helps them fight poverty, creates more consumers, drives more production and demand for
1

Professor Alan Winters (UK chief economist and world leading specialist)

Country Analysis

services, increase tax returns, and allows the government to improve everyones living standards by investing in schools, hospitals, and other infrastructure. Governments cant achieve growth all by themselves, but can surely play a pivotal role in helping the private sector expand and diversify through setting appropriate and fair policy; implementing effective regulation; and allowing firms the flexibility to innovate all critical for a vibrant, stable, and competitive economy. Poverty has many dimensions in Pakistan. The poor in Pakistan have not only low incomes but they also lack access to basic needs such as education, health, clean drinking water and proper sanitation. The latter undermines their capabilities, limits their opportunities to secure employment, results in their social exclusion and exposes them to exogenous shocks. The vicious cycle of poverty is accentuated when the governance structures exclude the most vulnerable from the decision making process.

The incidence of poverty increased from 26.1 percent in 1990-91 to 32.1 percent in 2000 01, reversing the declining poverty trend in the 1970s and the 1980s. The reversal in poverty decline happened in the setting of a decade long slowdown in economic growth, decline in private and public investment, increase in fiscal and current account deficits and rapid debt accumulation. These adverse economic outcomes pointed towards deep structural flaws in the economy that needed urgent attention.2

The development challenges for Pakistan include achieving high and sustained broadbased economic growth particularly in rural areas; reducing poverty; providing essential social and economic services and infrastructure to the poor; creating job opportunities, and improving governance. Noticeable progress has been achieved over the last three and half years. However, poverty reduction is still a major challenge.

Further, there are following formal and informal policies to be addressed;

Accelerating Economic Growth and Reducing Poverty: The Road Ahead (Poverty Reduction Strategy Paper Secretariat, Ministry of Finance, Government of Pakistan)

Country Analysis

For growth to reduce poverty, it must emanate from sectors that have greater potential to generate employment.

Since various forms of poverty in Pakistan are acute, these require targeted policy interventions to provide quick relief through short-term employment opportunities, social safety nets and financial assistance.

Additional income alone would not eliminate poverty unless the causes of poverty are addressed. Hence the need to improve access to basic needs such as primary education, primary health care, drinking water, access to justice, in order to win the fight against poverty.

Improvement in public service delivery and governance and increase in resources is needed.

Involvement of the poor in the formulation of these policies and management of their affairs is critical in attaining the objectives of the strategy, and there is need to forge a broad-based alliance with civil society and the private sector in this regard.

There is need for a strong program for monitoring and capacity development, as well as impact assessment.

Availability of adequate resources for poverty reduction programs is important in determining the effectiveness of the strategy. Detailed costing of proposed initiatives is expected to take some time as it involves comprehensive exercise at the district, provincial and federal levels.

2.2. Extremism is the most serious social problem face by Pakistan now a days. It has not only degenerated the socio-economic and political fabric of Pakistan but it has also cost serious aspersions on the reputation of Pakistan in the eyes of international community. Problems of unemployment, poverty, Illiteracy and socio-political alienation have compelled youth to join the ranks of militant and jihadists hence enabling them to make the best of both worlds religious satisfaction as well as employment. It has been observed that state has relied upon short-term offensives against militants, civil society is more involved in providing social development services and supporting peace efforts. Although, there is not a single collective strategy, the civil society by and large has

Country Analysis

demonstrated commitment to continuing its work even in the severely affected areas. However, there is a need for the state and society to come together, recognize the issues, accept each other`s roles and come to a shared vision of what needs to be done to get out of the quagmire of terror.3 It calls for a consensus-based strategy aimed both at preventing terrorism and minimizing its effects on social development. National goal of poverty reduction should be considered an essential element of the strategy. Military offensives against militants are necessary but there is no pragmatic strategy to curb terrorism and violence in the country. It is important for the government to ensure a balance between social, economic, and political strategies. Education is the key to fight against ignorance, extremism and terrorism, therefore the government should take a number of steps to promote educational facilities, both for boys and girls.

3. Performance

Poverty and Terrorism are the root causes of all economic, social, environmental and political downturns in the economy. However, government set policies regarding both causes somehow overlaps each other at some point. Therefore, it is necessary that government should use its resources efficiently and effectively and bring other non state actors in solving these problems. Further, lack of policy implementation by the government is affecting the country economically, socially, and politically.

1. Economic Factors 1.1.Extremism and Militancy has resulted into insurgency and terrorism which has directly borne upon industrial productivity and socio-economic infrastructure. Thousands of

Failure of policies, institutions blamed for militancy, Dawn News, March 6, 2011

Country Analysis

Pakistani citizens have lost their lives along with $67 billion loss to national economy. Ten crores of young men and women are unemployed. If one percent adopted the wrong way, it would create serious predicament for the state and society. 1.2.Due to poverty and extremism, Pakistan GDP has fallen in previous years and thus leading to low growth rate in the economy. 1.3.Due to poor security conditions, Pakistan is lacking foreign direct investments thus causing low involvement of foreigners in investing into business ventures resulting in low employment opportunities and growth rate.

2. Environmental Factors The poor are particularly vulnerable to environmental disasters, conflict and competition for scarce natural resources. In addition, their voices often go unheard. Recognizing these linkages helps to identify the opportunities for tackling the root causes of poverty. In this way, it provides a strategic focus for prioritizing practical. Further, due to extremism, fear factor among citizens of state has increased thus causing fear in the whole society.

3. Social Factors On social level extremism and radicalization have created deep fissures and polarization in our society. Society has degenerated into warring groups where right and wrong has become difficult to differentiate. In that state of utter confusion it is the youth which is so vulnerable to be easily preyed upon by the terrorist and Jihadist organizations. That valuable resource could have easily channeled into productive ventures. It must be noted that a single problem if not addressed adequately and timely could become out of proportion and irresolvable.

4. International Factors Due to Terrorism, Pakistan impression in international community is not good, therefore causing a lack on foreign investment in Pakistan.

Country Analysis