The Pakistani state was born out of the partition of India an event that was characterized by conflict, lasting enmities, a mass migration and the birth of a theological state.
The state increasingly moved into developmental functions--developing infrastructure, providing services, and managing and curbing markets. This expansion of the state was fuelled by the growing donor community.
The availability of easy financing as well as expanding control over state resources provided bureaucrats with incentives to move in the direction of directed development. Given the resource constraint--both physical and human, the magisterial functions of government that include law and order, property rights and judicial--began to experience a decline. This decline in turn contributed to the decline in governance and reinforced rent-seeking and corruption.
Following the trends of the day, Pakistan also put in place a planned, closed economy for a big push towards and industrial take off in its early days of independence. Central planning quickly assumed the 'government knows best' approach and developed a deep suspicion of the market.
Since the path to success lay with the state and the state used the metric of granting favors to confer success, entrepreneurs began to invest in developing rent-seeking networks with key government officials at the center.
As a result, wealth remained concentrated in the hands of those that the government favored. Consequently, even in private enterprise, merit gave way to government discretion. This did not allow for the development of entrepreneurship in the sense that modern economics and business has come to know--an innovator, a risk-taker, and a builder this environment slowed the growth of entrepreneurship and indigenous enterprise. Keeping the economic definition of entrepreneurship in mind, we see that entrepreneurship in Pakistan is seriously impaired by government policy, legislation and regulation. The government has continuously been of the opinion that investment especially at the large industrial level is entrepreneurship. As a result, it has been unable to promote genuine entrepreneurship and promoted Cartelization and rent-seeking instead. The beneficiary of the cheap credit was the investor and the government both of whom found it easy to default. Deep capital controls were adopted along with foreign travel restrictions ostensibly to conserve foreign exchange. The closed economy as well as the well-meaning dictates of planning saw financial repression as an easy means of taxation. In the final analysis, even the banking system was nationalized so that it could be a full partner in the planning effort.
The state increasingly moved into developmental functions--developing infrastructure, providing services, and managing and curbing markets. This expansion of the state was fuelled by the growing donor community.
The availability of easy financing as well as expanding control over state resources provided bureaucrats with incentives to move in the direction of directed development. Given the resource constraint--both physical and human, the magisterial functions of government that include law and order, property rights and judicial--began to experience a decline. This decline in turn contributed to the decline in governance and reinforced rent-seeking and corruption.
Following the trends of the day, Pakistan also put in place a planned, closed economy for a big push towards and industrial take off in its early days of independence. Central planning quickly assumed the 'government knows best' approach and developed a deep suspicion of the market.
Since the path to success lay with the state and the state used the metric of granting favors to confer success, entrepreneurs began to invest in developing rent-seeking networks with key government officials at the center.
As a result, wealth remained concentrated in the hands of those that the government favored. Consequently, even in private enterprise, merit gave way to government discretion. This did not allow for the development of entrepreneurship in the sense that modern economics and business has come to know--an innovator, a risk-taker, and a builder this environment slowed the growth of entrepreneurship and indigenous enterprise. Keeping the economic definition of entrepreneurship in mind, we see that entrepreneurship in Pakistan is seriously impaired by government policy, legislation and regulation. The government has continuously been of the opinion that investment especially at the large industrial level is entrepreneurship. As a result, it has been unable to promote genuine entrepreneurship and promoted Cartelization and rent-seeking instead. The beneficiary of the cheap credit was the investor and the government both of whom found it easy to default. Deep capital controls were adopted along with foreign travel restrictions ostensibly to conserve foreign exchange. The closed economy as well as the well-meaning dictates of planning saw financial repression as an easy means of taxation. In the final analysis, even the banking system was nationalized so that it could be a full partner in the planning effort.
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