Financial Repression , Financial Development and Structure of Savings in Pakistan

Ashfaque H. Khan


The mobilization of domestic resources is one of the key
determinants of sustained economic growth. Improving domestic resource
mobilization involves raising the level of national savings to enable a
higher level of investment, hence a faster rate of economic growth.
Pakistan's saving performance and its overall economic performance
appear to be incongruous. Over the past several years, Pakistan has
maintained an economic growth of more than 6 percent which is laudable,
but her performance with regard to savings has been poor. In fact,
saving as a fraction of the Gross National Product (GNP) is one of the
lowest among the developing countries. The current saving rate of about
14 percent of GNP fares badly with 23 percent for other low-income
developing countries. 1 What are the reasons for such a poor performance
of savings in Pakistan? This paper attempts to provide some explanations
for the causes of low savings in Pakistan.

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