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Dr. Hasan first emphasized Pakistan’s geopolitical significance and set the context for its economic growth through history and within the subcontinent. As one of the most populated Muslim nations, Pakistan will provide an important test case for modernization. Additionally, Pakistan’s nuclear capacity and geographical location underscore the country’s role in international security. Over the past 50 years Pakistan achieved a number of successes in the social and economic spheres. Despite periods of economic mismanagement, Pakistan has enjoyed an average annual per capita GDP growth (2%) similar to India and greater than Bangladesh for the past fifty years. Female enrollment at the primary education level still lags at 60%, but the absolute number of females in primary education increased 50-fold in as many years. The rise of a middle and professional class also provided tremendous opportunities for social and economic advancement. Hedging his optimism, Dr. Hasan noted that Pakistan’s poor public image is not without merit. The last decade was rife with political instability, slow economic growth, rising poverty, abysmal social indicators, sectarian violence, weak public institutions, and a steadily waning confidence in the government.

Stressing the great promise of Pakistan’s economy during the 1960s, Dr. Hasan outlined the factors contributing to a failed take off into self sustained and equitable growth. Poor leadership failed to stress the rule of law and the necessity of strong, yet transparent, public institutions. Democratic leaders were particularly unsuccessful in implementing the fiscal policy adjustments required to make the country more self- reliant. While military rulers were reluctant to open the political process, they were far less arbitrary in governance and generally pursued economic reforms more forcefully. Tensions with India and the resulting increase in defense spending also contributed to Pakistan’s economic woes. In strict economic terms, Pakistan’s history of meager savings and its dependence on external financing stifled development and was reflected in a large public savings deficit. The protracted government protections offered to Pakistani industries prevented the modernization of an industrial and export infrastructure.

In the 1990s, economic reforms aimed at strongly promoting the private sector were initiated but failed because there was no strict adherence to financial discipline. In the last few years, Pakistan has pursued macro-economic adjustment as well as structural reforms to put the economy and the society on a sounder footing. Budget deficits continually decreased and are currently averaging 3% of the GDP. Tax revenues continue to increase as the mechanism behind tax collection improves. Public savings that were a negative 3% to 4% of the GDP just a few years ago have now turned positive and can remain positive without foreign grants. Technocrats are curbing corruption throughout the government as a result of a refined selection process based on merit rather than nepotism. Economic institutions such as the State Bank of Pakistan and the Securities and Exchange Commission have garnered greater autonomy and regulatory authority. Finally, Dr. Hasan cited the devolution of the central government’s authority as a positive step towards a stable and modern Pakistani economy.

Ultimately, the most significant steps in Pakistan’s economic development will center on non-economic issues. Reigning in terrorist organizations and sectarian violence, improving relations with India, and devolving central power to the provinces will foster an investor-friendly environment ripe for economic progress. As a compliment to these recommendations, Dr. Hasan suggested that the West assist Pakistan in reducing tensions with India, open their markets to Pakistani goods, and encourage direct private investment within Pakistan.