The objective of this article
is to shed light on the government's policies and their result on boosting the
entrepreneurship as a business venture in Pakistan. Entrepreneurship is defined
as a process to bring a vision to life through bearing the risk and creating an
innovation to accumulate profits. This paper assumes that the government in
Pakistan pertains to the approach of strict controlling economic regulations. It
is established in the beginning of the paper that non-productive
entrepreneurship is a result of a heavily regulated economy; according to that
premise, the basic motive for entrepreneurs in Pakistan is to make money through
exploiting the loopholes in the existing economic structure and the regulations.
Much has been said about the phenomenon of rent seeking in the literature
regarding entrepreneurship, and its grave consequences have also been listed,
but its connection to the heavily regulated economy has not been made clear,
except for ing that the policies lean in the favor of those who readily
profit the governmental agents and planners i.e the corruption plays an upper
hand. But, then again, such type of corruption and practices of rent seeking are
also fairly common in totally capitalist deregulated economies such as USA,
where cartelization is promoted through lobbying and close ties with policy
makers. Example being, low tax rate and cheap capital for the biggest
corporations such as general motors and general electric, also such corporations
are successful in bagging the bailouts provided by the government. My point
being that if the author proposes a system of deregulation with its objective to
curtail the form of corruption known as rent seeking, then it may prove futile
in the future. I second that a free economy is necessary for new ideas and
innovation to prosper but on the other hand, it does make the entrepreneur prone
to a cutthroat competition. So in the end, it also benefits the big fish of the
economy as does a closely regulated system, as proven in the text through the
examples of different shifts in regulation structures during the last six
decades.
I agree with the author's opinion that each successive political regime brought
with itself new kinds of economic reforms that were based on a variety of
regulations. Eg, in the 50s, import regulation system was introduced, in which
different tariff rates were imposed on different kinds of goods, which resulted
in promoting industrialization in the ayub regime, but this economic spurt and
its perks were only confined to the 37 monopoly houses. In 70s, the Bhutto
regime focused on nationalization that was targeted to break the monopolistic
structure, but still the culture of gaining favors though connections marred
these efforts and the results were devastating losses to the banks and
nationalized organizations. Zia era reforms were focused towards privatization
which couldn’t prove successful either, but the single factor common in all
these regimes was that they inadvertently or consciously benefited the structure
of monopoly and the large scale enterprises. Throughout this period, no
attention was given to SMEs or small manufacturing concerns, which are the
driving force of growth in an economical structure. The agricultural reforms
ironically ended up benefiting the feudals owning large parts of agricultural
land. The subsidy system on exports resulted in profiting the large scale
industries. As a result, all the government's interventions led to the
unintended consequences of increasing bank defaults, and dearth of innovative
entrepreneurship. Wide ranging reforms for domestic economical framework, not
deregulation are necessary to promote entrepreneurship.
lopsided urban development is infact a real impediment for the budding
entrepreneurs, since the high-rise buildings and other commercial structures are
not easily available because even the most modest commercial structures are
taxed punitively, and availing such a space is also not possible without
lobbying, also the industrial protection policy restricts the import of heavy
construction machinery, which could be used to develop real estate and in turn
more employment and opportunities.
It has been established that the policies prevalent in Pakistan are excessively
hostile for risk-takers; such a venture may simply not survive, thus blaming the
businessmen for not "innovating" doesn’t make much sense. When their demands for
protective regulations are highly criticized.
Also, it’s only logical that the businessmen require regulations that protect
the interests of small business concerns in order to shield them from
destructive competition; such a demand cannot be considered preposterous.