Gwadar port

Pakistan is a developing country that has faced many economic crises over the years. Though Pakistan has achieved a lot from where it had started still we are much lower in terms of our economic performance compared with other countries of the region. The stagnancy in the economic growth is due to certain economic challenges that our country had to face in the past and is facing in the present as well. We are now going to discuss some of these challenges in detail.
Insecurity.

Law and order situation is one of the major challenges that Pakistani economy has to face. It is an economic challenge not only in itself but it has the direct relation to many things that affect the economy of a country. Bad law and order situation stops the inflow of foreign direct investment and Tourists. FDI is necessary for starting energy projects, establishing industry, increasing per capita income and so on. Tourism is not only of great importance to the economic prosperity of the locals but help improve the overall image of the country in the global array. Currently, Pakistan is facing law and order situation which is hampering the flow of foreign direct investment into the country as well as of tourists. Security has improved a lot in the wake of Zarb-e-Azab operation in the lawless tribal areas and combing operations in the cities but still, a lot has to be done.

Energy Shortage

Energy is another major area of concern. Pakistan is facing massive energy shortage from a decade now and successive governments have not done much, resulting in the downsizing of labor in industry or complete bankruptcy of the industrial groups. Foreign investors are also reluctant to invest money in wake of a severe energy crisis looming on their head. Now the government has started working on many energy projects linked to CPEC under the auspicious of Chinese 51 Billion dollars investment. It is a great prospect for the future in terms of our economic development and especially the energy sector but will take some time to join the national grid.

Red-Tapism

Bureaucratic delays are another major reason for the reluctance of foreign investors to invest in Pakistan. Pakistan has the old British Bureaucracy system that needs to be restructured to get something out of it. Bureaucracy uses old tactics of delay to get economic gains through bribery. This severely discourages foreign investors from investing money into the country. The government needs to bring all interested foreign investors under a one-window operation which will ease the process and will reduce the time-spend.

Political Instability

This is also directly related to the economic prosperity of a country. Politically stable countries tend to be more rapidly progressing than those that are unstable. This is particularly evident from the cases of China and India. China got its independence two years later as compared with Pakistan but due to one-party rule and political stability, China has become the economic superpower of the world and is challenging America on the global sphere.

India is another prime example, Both India and Pakistan got their freedom from the British Empire on the same day but after experiencing these many harsh days, India is now on the path of economic prosperity whereas Pakistan is lagging behind in almost all aspects. The major reason is the political instability and martial laws in Pakistan which has hampered our economic progress right from the start.

Corruption

Corruption is another major cause of our economic disparity. Corruption has ruined the very essence of our economic goals. The state makes a future plan for the economic progress that will be utilized in coming years but is hindered by many obstacles and corruption is the biggest of these obstacles. Money allocated for the public well-being is shrunk heavily when it reaches the door of the poor so he doesn’t get anything from that money. Corruption needs to be eradicated if we want to be a developed nation.

Population

The population is of utmost importance for future planning and economic progress. Nations make future plans for their economic development keeping in view the population growth but when population increases too much it becomes almost impossible to even provide all the basic necessities of life. Pakistan’s population growth rate is above 2% and if we kept on increasing our population at this rate, our country will be the fifth largest populated in 2050. We need to keep a lid on this time bomb because it will become impossible for us to provide jobs to the upcoming generation.

Budget Deficit

The budget deficit is one of the most important factors if not the most important for economic progress. Pakistan has depended on the foreign aid right from 1947 and that trend has not changed an inch. Pakistan has been facing the burden of debt of billions of dollars and we have to go to IMF and World Bank now and then to meet our budget requirements. If we want to have rapid economic progress we have to be resilient in all aspects.

Foreign Direct Investment

Countries rely heavily on foreign direct investment for their economic progress. Pakistan being a developing country is in dire need of foreign direct investment to create jobs for the younger generation but FDI is heavily dependent on the security issues and bureaucratic culture of a country. We have to improve our security situation and bureaucratic behavior to be able to attract massive foreign investment.

These are some of the challenges that Pakistan has been facing over the years on its road to economic prosperity. There are many other challenges as well  that we are facing such as change of fiscal policies by successive governments, no or less use of technology in many sectors and especially agriculture, under-utilization of resources, less technical education, brain drain, border issues with neighbors, difference between exports and imports and lack of facilities for tourists.