The World Bank has recently released a report titled “From Swimming in Sand to High and Sustainable Growth” which highlights the need for Pakistan to allocate its resources and talent in a more productive manner in order to achieve sustainable economic growth.
According to the report, Pakistan’s inability to utilize its resources and talent effectively has resulted in stunted economic growth. The report suggests that in order to overcome this issue, Pakistan must implement reforms that increase productivity by reducing the economic distortions that prevent it. This includes harmonizing direct taxes across sectors, reducing the anti-export bias of trade policy, and supporting growth through “smart interventions” rather than blanket subsidies.
The report also highlights the importance of reducing regulatory complexity, harmonizing the general sales tax across provinces, reforming investment laws to attract foreign investment, and upgrading insolvency laws. Additionally, the report points out that Pakistan’s low female labor force participation rates are a hindrance to productivity and highlights the potential for significant GDP gains if the employment gap for women were to be closed. The report also identifies a need for increased investment rates and tapping into Pakistan’s estimated $2.8 billion annual untapped foreign direct investment potential.
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