Impact of Political Instability On Economy
Impact of Political Instability On Economy
Impact of Political Instability On Economy
Instability on the
economic growth
of Pakistan
Shahrukh Alaya
20171-22140
Table of contents
1-Introduction
2-History of Political Instability in Pakistan
3-Literature Review
4-Significance of Political Instability on Economic
Growth
5-Political Instability effecting Pakistan’s economy
6-Lack of Law and Order
7- Economy Under Imran Khan’s Leadership
8-Conclusions
9-Recommendations
Introduction
PoliticalInstability means: when there is a propensity of
government downfall due to the competitiveness, conflicts
and violence between political parties.
Pakistan’s economy does not extend from agriculture and textiles. The
economy grows with the expansion of the industries.
Pakistan’s lack of expansion of export base has detoriated the economy and
made the country vulnerable to the shift in world demand
Historically, In World Bank’s Governance Indicators Datasets, Pakistan has not been
on good figure in ‘the Rule of Law’ indicator. This indicator measures the extent to
which agents have confidence in and abide by the rules of society. (Fig 1)
Even within South Asia, it is not doing well as well as with its competitors, except for
Afghanistan which has been experiencing a war since 2001. (Fig 2)
Figure 1 Figure 2
Economy Under Imran
Khan’s Leadership
In 2018, Imran Khan became the PM of Pakistan
Khan sought the bail out from IMF.
In exchange for the bailout, Khan's government slashed subsidy
spending in the energy sector and unveiled an austerity budget to curb
the fiscal deficit and limit government borrowing.
Pakistan's overall balance of payment's position improved significantly
following record-high remittances in 2020, which stabilized the central
bank's foreign exchange reserves
The fiscal deficit narrowed to less than 1% of GDP by 2020 due to the
government's austerity policies.
The rate of debt accumulation had significantly slowed, but Pakistan's
debt remained high due to the high borrowing of previous governments
in which the current government had to allocate $24 billion to pay off
loans taken during the tenure of previous governments.
Conclusion
As discussed, we now know that the political
instability in Pakistan, terrorism, lack of law and
order have an adverse affect on the economical
growth.
The economical growth is inversely proportion the
political instability.
The constant shift in governments, inconsistent
policies, ethnic diversity, ethnic conflicts makes
Pakistan an untrustworthy for the foreign investment.
Recommendation
Pakistan’s legal system has many obstacles, weaknesses that needs to be
addressed. If we remove the weaknesses from our legal system and legal
infrastructure, there is an immense amount of growth potential.
The economic policies should be consistent, long term and sustainable. It should
be independent to political dispension.
To have an growth in economy and overall country, Pakistan must have a rule of
law, ensure transparency, ruthless accountability and consistent economic policies.
The political leaders should look for the interest of the country instead of their
own interest.
Zero tolerance against corruption should be the main goal for Pakistan’s future
economic policies.
Strengthen the law enforcement institutions, and promote the national integration,
as it would improve the internal security and will defend the country against
interal and external threats.
Pakistan must establish responsive criminal judicial system.