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Revisiting the constraints to Pakistan's growth (English)

This paper revisits the identification of the binding constraints to investment and growth in Pakistan by rigorously applying the growth diagnostic framework. It has a central finding: Pakistan's economy faces two major groups of constraints emerging and structural. The emerging constraints include infrastructure (energy) deficit, high macro-fiscal risks, and inadequate international financing (high country risks and low FDI inflows). The structural binding constraints that persistently affect prospects of sustainable growth in Pakistan are low access to domestic finance, high anti-export bias, bad taxation system, micro risks (bad governance, excess business regulations, and poor civil service) and slow productive diversification.


  • Author

    Lopez-Calix, José Touqeer, Irum

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    Working Paper (Numbered Series)

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    South Asia,

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  • Doc Name

    Revisiting the constraints to Pakistan's growth

  • Keywords

    access to credit, access to finance, accounting, administrative capacity, availability of credit, availability of finance, balance of payment, balance of payments, bank financing, basis points, binding constraint, Bond, Bond Index, borrowing, borrowings, budgeting, capital accumulation, capital flows, capital formation, capital investment, capital market, capital market regulations, cash payments, central bank, collateral, collateral laws, collateral requirements, commercial bank, commercial bank lending, commercial bank loans, commercial banks, compliance cost, contract enforcement, coordination failures, corporate debt, corruption, country risk, country risks, credit availability, credit constraints, credit histories, credit market, credit risk, currency, current account, current account deficit, current account deficits, demand for credit, deposit, deposits, developing countries, diversification, domestic credit, domestic interest rates, earnings, economic activity, economic agents, economic development, economic efficiency, economic growth, emerging economies, Emerging Markets, Employment Growth, enabling environment, entrepreneurial activity, entrepreneurs, exchange rate, Exchange Rates, expenditure, expenditures, export competitiveness, export growth, export share, export shares, exporters, farmers, financial crisis, financial depth, financial exclusion, financial illiteracy, financial institutions, financial intermediation, Financial market, financial markets, financial needs, Financial outreach, financial products, financial system, financing costs, fiscal deficit, fiscal deficits, fixed investment, foreign direct investment, foreign exchange, foreign exchange market, foreign funds, foreign investment, foreign investments, gender, gender issues, governance issues, government bonds, government revenues, government securities, high interest rates, holding, households, human capital, Human Development, human resources, import costs, income level, income levels, income tax, inflation, information technology, informational asymmetries, infrastructure investment, insurance, interest rates, internal funds, International Bank, international finance, international finances, International Financial Institutions, international investment, international markets, international standards, investing, Investment Climate, investment projects, investment rate, investment rates, job creation, labor market, labor markets, land titles, loan, loan sizes, low interest rates, macroeconomic environment, macroeconomic instability, macroeconomic management, macroeconomic policies, macroeconomic risks, market failures, market price, market structure, microfinance, mobile phone, Monetary Fund, monetary policy, money transfers, moneylenders, national investment, national saving, national savings, natural disasters, oil price, operating costs, opportunity cost, personal income, personal lending, personal savings, physical capital, political stability, portfolio, portfolio investment, prejudice, Price stability, private enterprises, private investment, property rights, public debt, public investment, Public Policy, public spending, Purchasing Power, Purchasing Power Parity, rate of return, rate of returns, rates of return, real exchange rate, real interest, real interest rates, regulatory barriers, remittance, remittance services, remittances, reserve, reserves, return, returns, risk of expropriation, rule of law, savings rate, small businesses, solvency, sovereign bond, State Bank, structural problems, supply of credit, tax, tax rate, tax rates, tax system, terms of loans, trade liberalization, trade regime, trading, transaction, transaction costs, Transition Economies, Transparency, unemployment, women borrowers, women entrepreneurs



Official version of document (may contain signatures, etc)


Lopez-Calix, José Touqeer, Irum

Revisiting the constraints to Pakistan's growth (English). World Bank Policy Paper Series on Pakistan ; no. PK 20/12 Washington, D.C. : World Bank Group.