Economic Reforms in Pakistan: One Step Forward, Two Steps Backwards (The Quaid-i-Azam Lecture)

Ishrat Husain


In 1998 I was invited by Dr Sarfraz Qureshi, the then Director
of PIDE to deliver a lecture on “The Political Economy of Reforms: A
Case Study of Pakistan”.1 This lecture was subsequently published by
PIDE as a monograph. A year later, in December 1999, I had the honour of
becoming the Governor of the State Bank of Pakistan and actually
participated actively in the formulation and implementation of economic
reforms. During the six year period of public policy making I realised
that my knowledge about the political economy as manifested in my PIDE
lecture was incomplete. The narrative was more complex than I had
developed as an outsider. Now, six years later after my retirement from
the State Bank of Pakistan I again reflected upon this topic as an
observer and analyst rather than a participant. I realised that my
learnings have become much richer by applying these different
prisms—those of an international development economist, a public
policy-maker and now an independent analyst. I am grateful to Dr Rashid
Amjad and Dr Musleh ud Din and their colleagues at PIDE for providing me
this opportunity to share these learning with my colleagues, peers and
other scholars present here today. The political economy of economic
reforms and structural adjustment has become focus of growing attention
in the literature drawing at the inter-disciplinary tools of analysis
and cross-country comparative perspectives. Detailed case studies of
country situations do throw useful insights which are not captured
through cross-country studies. The key question that is explored by this
group of researchers is: if policy and institutional reforms are
associated with high economic pay offs, then why are these reform
programmes not sustained and implemented consistently? Why are they
derailed? I would like to focus the discussion on Pakistan only and
address the following questions:

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