Increasing Space For Investment & Entrepreneurship Through Reducing The Footprint Of Government On The Economy In Pakistan

Raja Rafi Ullah and Usman Qadir
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Raja Rafi Ullah: Pakistan Institute of Development Economics
Usman Qadir: Pakistan Institute of Development Economics

No 2021:10, PIDE Research Report from Pakistan Institute of Development Economics

Abstract: One of the main reasons behind Pakistan’s long term downward growth trajectory is the chronically low level of private investment in the economy which is one of the lowest in the region. Successive governments have tried to spur economic growth by encouraging private investment in economy with little success. One fundamental reason behind low private investment is the fact that owing to its large footprint on the economy, the government in Pakistan crowds out private investment. Using an innovative methodology, we have illustrated that the total footprint of government on the economy in Pakistan amounts to at least 67 percent of Pakistan’s GDP, which is substantially higher than what Pakistan government’s general yearly expenditure as a percentage of GDP (22 percent) might suggest.

Pages: 26
Date: 2021
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