Revisiting the Constraints to Pakistan's Growth

This paper revisits the identification
of the binding constraints to investment and growth in
Pakistan by rigorously applying the growth diagnostic
framework. It has a central finding: Pakistan's
economy faces two major groups of constraints emerging and
structural. The emerging constraints include infrastructure
(energy) deficit, high macro-fiscal risks, and inadequate
international financing (high country risks and low FDI
inflows). The structural binding constraints that
persistently affect prospects of sustainable growth in
Pakistan are low access to domestic finance, high
anti-export bias, bad taxation system, micro risks (bad
governance, excess business regulations, and poor civil
service) and slow productive diversification.