Pakistan’s Path to Economic Freedom

Pakistan has sometimes been referred to as a “failing state,” given its economic, sectarian, and terrorism challenges. However, a close look at Pakistan’s economy over the last couple of years shows some signs of recovery and modest improvements with regard to economic freedom. Still, the country continues to suffer from the lack of structural economic reform. Large sections of the population live in poverty and survive on subsistence agriculture, while inefficient but omnipresent regulatory agencies inhibit business formation throughout the economy. Lack of access to bank credit undermines entrepreneurship, and the financial sector’s isolation from the outside world has slowed down innovation and growth.