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A way forward to improve economic growth – Entrepreneurship in Pakistan

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[author image=”” ]Masood Karim is a development practitioner having worked with United Nations Children’s Fund (UNICEF) for about 2.4 years under a project of child protection with Planning and Development Department of Gilgit-Baltistan. Currently he works for the water and sanitation extension program (WASEP) at Aga Khan Planning and Building Services, Pakistan – an agency of the Aga Development Network (AKDN).[/author]


Entrepreneurship is one of the most effective and fertile drivers for economic growth for any nations in today’s world. Entrepreneurship contributes significantly in the economic development of a country by creating new job opportunities, providing citizens with variety of choices at reduced cost and through innovation. In Pakistan, however, the development of entrepreneurship has lingered since its establishment. Entrepreneurship has remained at the mercy of poor government policies, intrusive role of state in market affairs and bad governance.

When we talk about entrepreneurship, words like innovation, newness, free-market, market competiveness and research & development flash through our mind. Unfortunately, all of these provisos which symbolize entrepreneurship have least mushroomed in Pakistan, instead protectionism, tariffs, quotas, subsidies and other pertinent tools have been utilized-  hence, promoting and encouraging rent-seeking environment.

State policy, of course, through rule of law and good governance play vital role in nurturing entrepreneurial environment in a country, however, in Pakistan the state machinery has rather impeded the growth of entrepreneurship. For instance, during the Ayub Khan’s regime, a critical examination reveals that 65% of the total loans disbursed by the public sector financial institutions went to 37 monopoly houses, with the largest 13 of these accounted for borrowing 70% of these loans- thus favoring big businesses. This fact also reveals the lack of fundamental understanding of entrepreneurship; as developing big businesses have remained synonymous for entrepreneurial development. Furthermore, green revolution was followed by Bhutto’s regime, characterized by nationalism. In this regime, big industries, financial institution and manufacturing sector was overtaken by the government-hence concentrating economic and political power in few hands. Even in Zia’s regime, the importance was given to the development of large businesses and industries.

In addition to the poor government policies, education system that develop competencies of entrepreneurs, promote skills of workers, and where research and development and technological advancement nurture, has done so little in the development of entrepreneurship. For example, if we look at the development of entrepreneurship in Silicon Valley, where 60 new entrepreneurs make their marks each day- has a symbiotic relationship between Silicon Valley, Massachusetts’ Route 128 corridor and North Carolina’s Research Triangle and the California’s university system. Our education system may have produced good and efficient employees but it failed to produce employers…

Furthermore, we lack institutions which promote entrepreneurship through advocacy and sensitization to the government and to public sector. Even in urban areas the number of venture capital firms, consultants for devising business plans, business incubation centers and institutions for feasibility studies are negligible.

To sustain in an era where ideas drive entrepreneurship and entrepreneurship drive economies, Pakistan needs reforms in its policies and in the rule of law that would lead to eradicate the rent-seeking environment and promote market competition. It needs to divert its focus, primarily in the planning apparatus, towards encouraging research and development. The conventional strategy of supporting large businesses, through subsidies, export licenses needs to thwart, instead it should align its policies for the encouragement of start-ups, building protective environment for innovation and R&D, and for the development of small and medium enterprises. Besides, education system and academia has to play significant role in nurturing the young entrepreneurs.

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