In

In The
The Name
Name OfOf Allah,
Allah, Most
Most
Beneficent,
Beneficent, Most
Most Merciful
Merciful
 Acknowledgment
We
We are
are thankful
thankful to Almighty Allah,, Who
to Almighty Who has
has
granted
granted us
us strength
strength and
and provided
provided us
us chance
chance to
to achieve
achieve
our
our goals
goals in
in life.
life.
We
We would
would like
like to
to thank
thank
SIR
SIR SHAHID
SHAHID YAQUB
YAQUB
for
for providing
providing us
us opportunity
opportunity to
to study
study and
and discuss
discuss
Entrepreneurship
Entrepreneurship in
in Pakistan.
Pakistan.
 Group “A”
 Muhammad Kaleem. (Leader)
 Tanveer Tahir.
 Aashiq Hussain.
 Abdul Ghaffar
 Muhammad Shahid.
 Muhammad Wajid.
 Introduction
Economic development

Economic Aids
 Reasons
Reasons For
For The
The failure
failure of
of
 Economic
Economic development
development
 Economic
Economic Aids.
Aids.

 Rule
Rule of
of law
law
 Democratic
Democratic Institution
Institution
 Judiciary
Judiciary
 Property
Property Rights
Rights
 Free
Free Media
Media
Rule of Law
Democratic Institution
Judiciary
Property Rights
Free Media
 Easterly(2005)
“Growth happens only when policy and
management in every level of economy
turns entrepreneurial”.

 Krueger(1974)
“The system of incentives that a country
sets up in its governance mechanism
promote healthy entrepreneurship”.
 Dejardin(2004 and 2005)
“Growth is the result of knowledge
accumulation and entrepreneurship”.

 Romer, Grossman and Helpman

“It is idea and growth that drive
growth not just by infrastructure
development and investment promotion”.
 This article focus on the subject of
entrepreneurship in Pakistan.

 It aims to provide a general understanding

of entrepreneurship.
Understanding Entrepreneurship
 Understanding innovation and bearing risk.
 Innovation belong to Entrepreneurship and
economic growth.
 Economic development means.
 Continuous service of new business.
 New resources, market and new organization
 Innovation and Entrepreneurial process
wash out old with process of reallocation of
resources of old to new.

 Higher out put of new then old.

 Innovation increase profit and imitation

and completion decrease profit.
 Start small firms
Start at small scale, even if it is
inefficient one.
If the idea is a success firms become
larger through the process of expansion and
consolidation other wise these die out.
 Implementation of ideas
 Entrepreneurial Economy.

 Free flexible market.

 Availability of financial system.

 Educational system
Entrepreneurship as Rent Seeking
“Rent Seeking is a situation in which an
individual or firm makes Money by
manipulating economic environment rather
than by profit making through trade and
Production of Wealth.”

“Rent seeking can also be describe as

corruption, where Politicians and Bureaucrats
manipulate the existing institutional
framework so that in future it serves their on
private interest.”
 Entrepreneurship turn into Rent
Seeking
Examples of Influences:-

 Monopoly through a licenses.

 Obtains recourses below the market price.
 Protection from competition (restriction
of number of in the market)
 Drawbacks of Rent Seeking
 Distortion of the structure of Social cost
incentives.
 Misallocation of resources.
 Leading to heavy welfare losses and
social cost.
 Rent Seeking hinders economic growth
and Social development.
 How to Avoid from Rent seeking
 By implementing rules and regulations.

 By defining property rights.

 By effective enforcement of contracts

and a variety of other protections that
made rent-seeking difficult.
 Group “B”
 Muhammad Ahmad. (Leader)
 Iqra Iram.
 Aimen Farooq.
 Muhammad Asif.
 Saqib Hussain.
 Ahsan Faraz.
 Rahman Zulfiqar.
How did Entrepreneurship Develop
In Pakistan?
 Policy always biased towards the elite.

 Small scale sector continually besieged by state

for its interest to protect large formal sector.

 So focus went on incentives of rent seeking

rather than entrepreneurship.
 Major Constraints
Stability

Inconsistent policies

Lack of role models

Tight fiscal policy towards new entrants

High Interest Rates

 Major Constraints
Two different education system creating inferiority complex

Harassments at the hand of Government employees

No system in place for the revival of Sick Industry

Discrimination between local and FDI

 A) The Big Push for Industry
 Enterprise for the government was
synonymous to large industry only

 Policy measures gave rise to rent seekers

instead of entrepreneurs.

 Government policy was never neutral and

favored big business houses.
 Historical Background
 1947-58 Era of emerging exchange rate and
trade policies and import substitution
industrialization.
 1953-64 Virtually all imports into Pakistan were
regulated by some form of
quantitative controls.
 1950-55 Large scale sector experienced
phenomenal growth rates of over 20%.
 1950’s Introduction and active functioning of
“Import Licensing System”
 Historical Background
 1958-68 The “decade of development”, industry experienced
relatively higher growth rate.

 1958-70 65 % of total loans disbursed by PICIC, went to 37

monopoly houses, with the largest 13 of these accounting for
about 70% of the loans.

 1972-77 Bhutto’s regime characterized by Nationalization.

Caused some dent in elite power. banks continued to lend
on the basis of political and governmental influence.
 1977-88 Zia years of encouragement of private sector,
preference still given to large scale sector.
 Historical Background
 Resulted in losses on bad loans for banks.
Governments had to inject equity of RS.20 billion
and RS.7 billion into United Bank Limited (UBL)
and Habib Bank limited (HBL) respectively to make
these viable for privatization
 B) Neglect of the ‘Small’ scale
 Small scale manufacturing sector developed in the context of a
difficult / biased industrialization process.

 Reality: Informal and Small scale sector dominate our lives.

 Today almost 40%of business takes place in the informal

sector.

 Small scale sector is the breeding ground for innovation but

continues to attract little research
 Small Scale Sector Neglected
 1950-62 Consistent trend of only 2.35% growth.

 1962-69 Stagnant growth rate of 2.95%.

 1977 Consistent trend of 8.4% growth.

 1990 Growth rate fell to stagnant of 5.3 %

 Informal sector & small scale sector employment has

always exceeded large scale sector’s contribution.
 Small Scale Sector Neglected
 Recent study by SMEDA showed that a person could be employed
in a small-scale industry at 1/80th investment of what it takes him
to be employed in a large-scale industry.

 The location problems of the SME‘s are far less than those of the
large-scale industries.

 In the context of an institutional framework, one or the other

government institutions established solely for the facilitation of the
small scale industry and enterprise have always been there.
Institutions for the promotion of SMEs

 1972 Sarhad Small Industries Development

Board (SSIDB)
 1972 Sindh Small Industries Corporation (SSIC).
 1972 Small Business Finance Corporation (SBFC).
 1972 Punjab Small Industries Corporation (PISC)
 1985 Small Business Finance Corporation.
Institutions for the promotion of SMEs
 1985 Regional Development Finance
Corporation (RDFC)
 1998 Directorate of Industries in
Balouchistan.
 1998 Small and Medium Enterprise
Development Authority (SMEDA).
 2002 RDFC and SBFC amalgamated to form
SME Bank
 2004 National SME Development Council.
 C) Agriculture & the Elite bias
 Impressive agricultural 1960 and 1970 ( green
revolution).
 The main elements of the green revolution were tube
wells, tractors and High Yield varieties (HYV)- all the
three elements have been a source of rent seeking .
 liberal credit policy and made numerous loans to
farmers (cheap availability of credit).
 C) Agriculture & the Elite bias
 Overvalued exchange rate made tractors available in
Pakistan at below world market prices.
 HYV of food grains were provided to farmers at
subsidized.
 HYV required plenty of water and therefore mainly the
farmers owning tube wells were able to benefit from HYV
 Thus seventy percent of the tube wells were put in by
farmers owning 25 acres or more
 C) Agriculture & the Elite bias
 Hence, the beneficial effect of green revolution, that
has been the case of incentives from the government,
remained restricted to rich farmers only .

 Akmal Hussain… “The new technology made it

possible to accelerate agricultural growth
substantially through an elite-farmer strategy” which
concentrated on the new inputs on large farms only.
 D) Subsidies for Exports
 In 1960s , the dual exchange rate system was
used to subsidize machinery imports and
penalize consumer imports while offering a
large subsidy to exporters.

 This policy again favored large scale

industrialist and exporters at the expense of
small scale producers
 D) Subsidies for Exports
 Businesses have grown on the back of various
protective measure that had a tilt towards rent-
seeking rather than welfare improvement.

 Protections available to businessmen reduced

their risks
 Group “C”
 Muazzam Imtiaz (Leader)
 Maryem Shakoor
 Zaheer Abbas
 Sadaf Shafique
 Nadia Shoukat
 Muhammad Tariq
Zoning and Land allocation rules
& regulations
The following commercial land regulations

1. Defense Housing Authority Lahore ordinance (1992)

2. Commercial policy of punjab(1999)
3. The Punjab local govt. rules(2004)
4. Capital development Authority ordinance(1960)
5. Cantonments ordinance(2002)
6.Cantonments Acts(1924)
 Salient Features of
Commercialization Polices
 Single family homes vs. flats.
 Commercializing Process.
 Commercialization Fee.
20% regular land
50% Cantonments lands
 Building height involvement.
 Permission of Neighbors.
 Utility rate converted.
 The city centre land in most major cities is owned by the Govt.
for offices, housing and leisure spaces for the elite members of
govt.If we measure the difference of potential of this land b/w
its currents use and city developments, employment generation
and entrepreneur activities. what is best?, Obviously city
developments, employment generation and entrepreneur
activities generate more tax than other activities.

 At summing up zoning laws and commercialization policies

are best for entrepreneur activities regarding land rather than
each and every lands
 Group “D”
• Zahid Masood (Leader)
• Sohaib Tahir.
• Muhammad Nawaz.
• Toheed Saeed Toor.
• Shahzad Ali.
• Muhammad Irfan Irshad.
• Arsalan Iftikhar.
• Ehsan Ellahi Zaheeer.
 Group “E”
 Mahnaz Ashraf ( Group Leader)
 Fatima Irfan.
 Habiba .
 Nasira Bashir.
 Nazish Huma.
 Rana Shoaib.
 REINVENTING THE ROLE OF
GOVERNMENT & INSURING RULE
OF LAW
Removing the instruments
of Rent-seeking
 Rent-seeking

A situation in which an individual or firm makes money by

manipulating economic environment rather than by profit
making through trade and production of wealth.
Several areas of reform suggestion

Stop the policy of Sector-picking & providing Incentives to

support
Reforms of Civil services & Government services
Government involvement
Role of Cooperative housing society
Land acquisition law
 BUILDING GROWTH CITIES
Nadeem Ul Haque says:
“Cities grow when they are allowed to function
as decentralized, coherent administrative
units…….”
Cities as engines of growth
Decentralization
City management
Commercialization
 Identifying “Lemons”

 Brand Development and Brand Management

 Guarantees/Warrantees/Returns
Releasing the energy of the
domestic sectors
 Emphasis on Domestic sector growth.
 Openness at the cities level.
 Certain Recommendations.
 Establishment of specific units.
 Commercial Activities.
 Domestic Commerce allowed for Entrepreneurs in
best areas of cities.
 Employment Opportunities.
 Broad based reforms Agenda Should be made.
 Develop new ideas.
 Required more autonomous research & debate.
Question & Answers