The Political Economy of Pakistan’s Development
Feudal culture, patronage and rent-seeking underpin the political economy of Pakistan. The term ‘political economy’ has been traditionally defined, first, as the interrelationship between political power, society and the economy and, second, as the macroeconomic situation and public policies, that is, how public finances are raised and how the State spends them. To these two components could be added the competitive standing of a country vis-à-vis others in the global trading system in terms, say, of its exchange rate and trade agreements. The organization and structure of its agriculture, industry and services would also become relevant in terms of the pattern of ownership. Finally, the framework of law and practices that govern the economy also have a bearing on political economy issues. Legitimate questions thus arise with regard to the existing distribution of power and of rewards in society and the impact policy and institutional change are likely to have on them in the future. The neoliberal faith in the role of markets in allocating resources efficiently has to be seen against the background of these different components of political economy. Here, we need to understand how Pakistan’s political economy is likely to impinge on the country’s development in the years ahead.
KeywordsExchange Rate Political Economy Land Reform Rural Economy Islamic Bank
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