Pakistan : Path to Rapid Growth and Job Creation

Pakistan's rebound from the global
financial crisis has been slow and fragile, and unless it
changes course swiftly, it could face the prospects of a
second balance of payments crisis in less than five years.
Its recovery from the 2008-09 global financial crisis has
been the weakest in South Asia, featuring a unique
double-dip growth pattern. With high fertility, Pakistan
will double the size of its already young population by
2025. The only way to convert this massive demographic bulge
from a political and social burden to an exceptional
dividend is through rapid and inclusive growth that creates
millions of new and better jobs. In sum, the two main
challenges are improving the types of jobs available and
enabling people to move into those more productive
activities. The binding constraints to Pakistan's
growth are both emerging and structural. Emerging
constraints include massive cuts in electricity access and
macroeconomic instability, leading to high country risk and
a sudden stop in external and domestic financing. Structural
constraints include low access to domestic finance and
government and market failures (micro risks) that impede
investment, entrepreneurial activity, and competitiveness,
blocking the transition from low-productivity to
high-productivity jobs. Pakistan is at a turning point. It
could stick to a status quo of piecemeal reforms leading to
partial and unsatisfactory outcomes, which at best would
lead it to recover its modest historic growth rate of 4-4.5
percent, or it could aim for a bold reform agenda supporting
rapid growth (on or above 7 percent) and job creation. Both
options are possible, but the former would make it very
difficult for Pakistan to meet the aspirations of its
people, and especially of its youth.