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On Wednesday, the 25^th of July, 2018, Pakistanis went to the polls for their 11^th general election in 70 years of statehood. It was also the third election in the last 10 years, and marked the first time the country has seen two democratically-elected legislatures complete their full, five-year terms in succession.

While official confirmation of results from 272 National Assembly seats, and nearly 600 seats across four provincial legislatures were still awaited, headline results have emerged showing the Imran Khan-led Pakistan Tehreek-i-Insaf (PTI) take a commanding lead in over 114 National Assembly seats. With the help of allies and independently elected candidates, it looks set to form a government both in the centre, and in the provinces of Khyber Pakthunkhwa and Punjab.

The task confronting the government is immense, no less so because of its own ambitious agenda set out in a 100-day plan and the election manifesto document. Key takeaways from these two documents, as well as Khan’s victory speech, shows the party directing intensive focus on governance reform, accountability reform, improved social sector outcomes, and revitalizing growth by raising foreign and domestic investment. A common theme across its development vision is the strengthening of institutions through de-politicization in their functioning and meritocratic appointments.

The reforms being discussed and proposed would sound familiar to those who’ve followed the normative policy conversation in the country. Many of the issues confronting the country’s development path are familiar, and have been diagnosed at length. However, the repeated failure to resolve them showcases a number of deeper problems that confront any government.

In that sense, the incoming government will face many of the same challenges that previous governments have encountered upon entering office. The first and foremost challenge remains the macro-economy, where fast-dwindling foreign currency reserves have pushed the country to the precipice of another balance of payment crisis. This will likely only be resolved with the help of the International Monetary Fund (IMF), and talks are already underway for the largest bailout in the country’s history. The conditional reforms accompanying the IMF’s program, such as rollback of subsidies, reduction in the fiscal deficit by curbing government spending, and privatisation of loss-making state owned enterprises, will likely be the toughest seen to date. The stabilization route will reduce the policy space available for the new government, and may limit the extent to which it can undertake development spending along the priorities it laid out earlier.

Secondly, while it looks likely that the centre and the Punjab government (the most well-resourced subnational entity in the country) will remain with the same party, the majority in both legislatures will be very small. This means that the policymakers may be confronted by an array of competing interests and stakeholders, that will exercise varying degrees of influence on the policy process. In the absence of breathing room in government, taking tough decisions – such as those pertaining to existing rents, discretionary tax breaks and subsidies, and the preferences accorded to some sectors of the economy over others – will be more difficult. For example, the winning party has spoken at length about water conservation and improving irrigation efficiency. Will it be able to push through much-needed reforms in water pricing and usage, given that it is relying on the support of rural agriculturalists for its formation?

Lastly, while the overall messaging and rhetoric has been encouraging, the government will be confronted with a public sector workforce that continues to suffer from a lack of capacity and efficiency. The existing conversation around the issue has mentioned civil service reform, which would enable the government to bring in talent from outside the system. However, much of the everyday functioning of the state rests with the provincial and local bureaucracies, which are likely to continue to resist change. At the same time, actualization of any development agenda will require reforming the way these bureaucracies work, reducing their inefficiencies, and improving the general state of interface between the public sector and the citizens. On this front, the thinking is less clear and requires much more deliberation.

These are just some of the challenges that await the incoming government, regardless of whatever final form it eventually takes. One positive outcome from the election phase, and the years preceding it is that the appetite for a policy conversation has grown in the country. Political stakeholders now actively compete on claims of service delivery, and general discourse has expanded its ambit to include greater focus on institutional reforms. It is thus timely for the next government to engage with researchers and see what sort of reforms are both feasible, applicable, and offer the greatest amount of impact given the cost calculus involved.

Umair Javed is the Program Manager and an Affiliate at the Consortium for Development Policy Research (CDPR).

The weeks leading up to the 2018 General Elections have involved violent terrorist attacks on political meetings, arrests of party workers, curtailments on press freedom, and reasonable skepticism among political parties and observers about the existence of a fair playing field. Taken together, it is more than enough to fuel a general sense of cynicism about the democratic process, and a loss of faith in the legitimacy of the upcoming election.

As a political scientist working on a project on women’s voter participation, the news from Peshawar, Bannu and Mastung made me wonder whether designing interventions to encourage women to turnout to vote was a disingenuous exercise under the circumstances.

Political scientists have a name for this phenomenon: “deliberate disengagement”. On the one hand, evidence from advanced democracies suggests that more educated citizens are more likely to participate in politics. However, a study from the electoral authoritarian context of Zimbabwe shows that educated voters tend to participate at lower rates. The authors of the study argue that this may be because “education increases critical capacities, political awareness, and support for democracy” and in a situation where freedoms are curbed, “educated citizens may believe that participation is futile or legitimizes autocrats.”

Indeed, it is challenging to study the very behavior in which you are participating. Good science demands some level of objectivity and distance; civic engagement requires commitment and personal investment. Studying Pakistani politics means staying up to date on political developments. But being informed about the repressive environment and acutely aware of its dangers makes it especially difficult to remain optimistic about the prospects of political participation. I could sense a similar tension plaguing many others I interacted with in Pakistan.

How do we begin to reconcile this tension with the impetus to go out and cast our votes on 25 July? The notion that voting is a civic duty is well and good, but it does little to help adjudicate whether voting can really have any positive consequences.

Luckily, we presently live in a research rich world when it comes to Pakistani politics to help adjudicate exactly this question. More and more scholars in Pakistan and around the world are testing theories of democratic politics using evidence from Pakistan, developing new theoretical models, and helping us understand us the nuances of the political landscape like never before (for a review of recent research on the political economy of Pakistan see here).

What some of this research provides us is evidence-based reasons to be cautiously optimistic that the continued democratic process in Pakistan — hurdles, hiccups, and fatal threats aside – is yielding some positive outcomes.

Electoral competition matters for legislators’ financial behavior.

Analysis of recently released tax payment data of 2018 electoral candidates indicates that average tax payments are on the rise. Importantly, among incumbent legislators who are running for reelection, this growth in tax payments is concentrated in competitive electoral constituencies.

This is in line with previous findings from a study of legislators’ tax payments for the 2012-13 and 2013-14 fiscal years, which finds that tax payments of competitively elected legislators increased at a significantly higher rate than those of other legislators.

Electoral competition matters for service delivery and spending.

Research on municipal service provision in the Lahore district shows that urban citizens’ access to services improves when there is greater competition at the provincial and national constituency level and politicians have a greater incentive to respond to local demands.

This mirrors findings from other countries, for instance, research from Mexico shows that greater electoral competition was associated with higher spending on primary education in Mexican states between 1999-2004. This is especially salient given that one of the key issues raised by civil society around the upcoming election has been that of education reform in Pakistan.

Who gets elected matters for security.

One reason for disillusionment from the electoral process is the perception that all parties are essentially the same and it does not really matter who ends up in power. A new study using data on elections and violence from 1988-2011 suggests that levels of violence depend on which party gets elected, and the electoral pressures they face from their support bases.

All this evidence points a common direction: Competition Matters. Competition can incentivize elected legislators to behave better and deliver more; and it can push opposing candidates and parties to try just a little harder.

So how do we increase electoral competition? One side of this is political parties and candidates. Competition is greater when more parties and candidates are vying for office. The emergence of strong new parties at the national and provincial level is a rare event due to high barriers to entry: successfully entering national level politics requires significant resources.

However, it is somewhat easier at the local level where barriers to entry are lower – recent research from village level elections in KPK shows that a simple conversation can be effective in convincing citizens, who wouldn’t otherwise consider it, to stand in elections.

The very real present threat to the health of Pakistan’s democracy is the purposive dampening of electoral competition through practices that essentially constitute pre-poll rigging. But staying home on election-day won’t help. Low turnout in this election can only further dampen competition.

Repressive environments have a real psychological impact yielding feelings of disempowerment among citizens. But competition remains a real lever of pressure that the ordinary citizen can exercise. We must vote to keep this competition alive, and the pressure on our representatives. It is on this faith, backed by evidence, that I’ll be casting my vote on 25 July.

This was earlier published on Dawn Blogs, see here. 

Sarah Khan is a graduate researcher at Institute of Development and Economic Alternatives (IDEAS). She is completing a PhD in political science at Columbia University. She tweets at @_sarahkhan

On the 6^th of July, the Consortium for Development Policy Research (CDPR), held a policy talk covering Pakistan’s experience of reforms in public sector service delivery. A core area of focus for the panel was the Roadmap approach towards performance improvement in particular social sectors, which has gained popularity with various subnational governments since 2011. Most notably, the Roadmap was first introduced to the country in Punjab’s education sector back in 2011, and it has remained the driving instrument of reform in the province since then.

What is the Roadmap Approach?

At its simplest, the Roadmap approach is a system of setting targets and goals for a defined sector or sub-sector, and a way to manage its implementation through accountable practices. This is done, usually but not exclusively, at higher-levels of policymaking, such as at the level of the Chief Executive, or the head of a particular department. In that sense, it remains a top-down strategy, designed to harness support of key decision-makers and generate momentum from above.

Although the Roadmap approach draws many of its basic premises from general management theory, part of its design also comes from the experience of delivery units, and the general practice of ‘deliverology’, pioneered during the Tony Blair administration in the UK. Delivery units are conceived of as small teams, which draw on the explicit backing of the key decision-maker for the purpose of mobilizing high-level political support and coordination to see through a particular set of reforms. Shostak et al. (2014) further state that such units carry the mandate to use the authority of the chief executive to: 1. focus on improving results, as measured by citizen outcomes in a limited number of priority areas; 2. unblock obstacles when monitoring shows that progress is off track; and 3. build understanding and capability for strengthening the underlying actors and systems/processes’.

In this backdrop, the Roadmap approach can be viewed as both a way to resolve the pressing issue of ‘political will’ in development processes – a concern that has gained increasing centrality in recent years – as well as a technical intervention to bypass capacity constraints in outdated or under-resourced bureaucracies. In particular, the ability to collate and analyse data for benchmarking, and use it to strategize and prioritise reform interventions is the added-value that Roadmap teams bring to the table.

The Case of Punjab

 Punjab’s experience with the Roadmap approach echoes many of the general underpinnings highlighted above. It was first implemented in the education sector, as the Chief Minister’s Roadmap for Education, launched to drive effective delivery of education reform in Punjab by harnessing high level political commitment and accountability. The Chief Minister himself chairs the education reform agenda, with management support from a specialist Roadmap team and UK Special Representative for Education Sir Michael Barber through the stocktake meetings, which double as an accountability forum. Progress is delivered through the School Education Department (SED) and attached departments, with results measured at the district level. Crucial to the functioning of this system is the data collection regime instituted through the Program Management and Implementation Unit (PMIU), which uses field-based monitoring officers to collect school-level data across a wide range of learning/teaching quality, human resource, and infrastructure indicators.

In 2015, the Chief Minister inaugurated a set of ambitious 3-year targets to be tracked and implemented through the Roadmap:

1. Enrolment and access: 95% minimum participation rate for 5 to 9 year olds;
2. Teaching quality: 75% score on six-monthly assessment;
3. Schools and teachers: 36,000 new classrooms, 46,000 new teachers, 100% functioning facilities in schools;
4. And Public private cooperation: 2.6 million students enrolled by Punjab Education Foundation (PEF) schools by 2018

To achieve these, a number of interventions were piloted and then scaled up, including many that involved reforms in key organizations related to teacher training, textbooks and curricula, and examinations. The data regime allowed for close tracking of progress, keeping province-level goals as the collective end-point. Each district was assigned targets in consultation with the provincial team, the DCOs, and the EDOs/DEA CEOs, keeping in mind their respective district baselines. A system of incentives (bonuses – typically worth twice their monthly salary – and other material rewards) and punitive actions (reprimands and transfers to low-status designations) was introduced to motivate district managers to meet these targets.

By 2018, the Roadmap has achieved varying degrees of success in the 4 target areas identified. Gains have been made in both school participation, retention, and learning outcomes, though all have fallen short of the targets set in 2015. Other areas of success have been in improving infrastructure – such as the provision of basic facilities to all schools – and improved human resource management, which has seen teacher and student attendance rise to an average of above-90%.

The Way Forward

 

The sector gains identified as a result of the Punjab Education Roadmap has led to its replication in a number of sectors and areas in Pakistan. In Punjab, Roadmaps are in place for water and sanitation, healthcare, and solid waste management. Similarly, there is an education roadmap in operation in Khyber-Pakhtunkhwa, led by the provincial education minister, and one currently being designed for the province of Sindh as well.

At this stage, there are few independent evaluations of the Roadmap approach, and the data from Punjab’s experience shows a modicum of success, which has driven the expansion and replication process. However, there are several key questions that emerge from Pakistan’s experience, which need to be interrogated more thoroughly.

The first relates to the long-term value of a top-down, centralized approach in sectors that require more diverse set of reforms and devolved decision-making. This is an issue that has been highlighted for the education sector, where targets being measured against a fixed set of variables may be insufficient in capturing localized school-level dynamics and nuances.

Secondly, there are concerns that high-intensity accountability structures, such as the stocktake process with its system of reprimands, may generate incentives to ‘game’ the system. This remains an empirical question, and one that has to consider the quality of data being generated through the monitoring process.

Lastly, given its reliance on political will and the buy-in of senior decision-makers, there remain valid question marks over the sustainability of the approach beyond one election cycle or shifts in key personnel. Given that an election is around the corner in Pakistan, it would be interesting to see how the approach interacts with a change in government, and whether it is able to adapt to the new circumstances.

Umair Javed is the Program Manager at Consortium for Development Policy Research.

Pakistan has become the fifth most populous country in the world, with a fast expanding workforce, especially in the informal sector. This growing workforce needs innovative solutions to ensure adequate access to social protection, in order to mitigate the risks faced by workers on a regular basis. Sustainable development goals now also demand pro-poor policymaking and inclusive growth.

 Government’s social protection programs target either the ultra-poor or the formal sector with a missing focus on those in between. Lack of access to social protection is so common across the unregulated sector that it has come to define informal employment.

Challenges in designing and delivering social protection systems for informal sector workers arise not only from their lack of access to traditional forms of social protection, but more generally from the heterogeneity of the sector itself. It spans a broad spectrum of employment that includes street vendors, home-based workers, self-employed workers, and workers who are paid wages. The problem is further compounded by lack of credible data that makes informed decision-making by policymakers difficult.

Pakistan’s informal economy is estimated at 40 percent of the GDP and extending social protection to this diverse and expanding sector remains a major policy challenge.

Pakistan’s informal sector

With a population of over 200 million and the tenth largest labour force in the world, Pakistan’s informal sector has grown faster than its formal sector. Close to 72 percent of all non-agriculture workforce is informal of which three-fourths are women. Women also form a staggering 80 percent of the estimated 12 million home-based workers in Pakistan. Self-employment – often vulnerable and seasonal –  is high at 60 percent of total employment.

The informal sector is dominated by family units or microenterprises –  small and medium sized enterprises with less than ten employees. Due to their size, most labor laws (such as those determining minimum wage, terms of employment and occupational safety) and social insurance regulation are not applicable to small businesses. SMEs and informal establishments often hire contractual labor (mainly outsourced) and circumvent labor legislation. Labor Inspections cover only registered factories and shops.

Social Protection Coverage in the informal sector

Spending on social protection remains relatively low in Pakistan. According to the World Social Protection Report 2017, the country spends the least within South Asian on social protection. Such programs cover just 2 percent of the population. Coverage is narrow even within the formal and public sectors.

Pakistan started off with a rights-based approach to social protection and put in place contributory schemes for employees’ benefits and old-age pension. Over the years, the social protection policy has entirely shifted towards assistance to the marginalised through non-contributory, tax-financed benefits. Even though social protection expenditure is dominated by spending on social insurance (over 70 percent of total social protection expenditure), social insurance covers only 17 percent of the total beneficiaries. Coverage rates for key target groups (unemployed, underemployed, poor, persons with disabilities, children, elderly) is under 20 percent.

Apart from pension schemes for government employees and army personnel, coverage of contributory social welfare schemes for workers is mainly limited to a small number of registered employees in the formal sector.

 Profile of informal workers

Informal workers in Pakistan are more prone than their formal sector counterparts to transitory poverty. Those engaged in the informal work are mostly uneducated, lack adequate core skills, have minimal income to enable savings, belong to large families with a significant number of dependents, and experience seasonal fluctuation in employment. Household incomes of informal workers hence remains irregular.

A recent study on informal workers funded by the Asian Development Bank found 30 percent of those surveyed were uneducated and lacked basic numeracy and literacy skills. Only 4.3 percent had received any formal skills training. These workers also belonged to households larger than Pakistan’s average household (6.7 versus 6.1 persons per household). Close to 45 percent were working without any written or oral employment contracts with over half contracted as daily wagers or temporary staff. Even though on average informal employees worked longer hours (6.6 days a week for 10 hours a day), they earned just around or below the minimum wage.

Access to social safety nets and information and knowledge about social protection is limited as is the incentive to invest in social insurance schemes. Less than 5 percent of the workers were part of any social protection scheme. There is general reluctance to register with contributory social insurance schemes as they were unable to understand the potential benefits of doing so.

Gender Perspective

Lack of supportive facilities such as child care, transport, and accommodation in the formal sector discourages women from gaining formal employment. In the absence of facilities for these women, extended family support systems often fill the void, although not all working women have access to such systems. Further, the uneven division of household labour makes full-time employment difficult for many women, particularly poor women who cannot afford the cost of child care, even when it is available. SMEs also struggle with regulations that require them to provide maternity leave and other benefits for women and this acts as a disincentive to hire women

As a result, women are largely concentrated in the informal sector and are particularly vulnerable. They mostly engage in home-based work and have lower overall average wages than their male counterparts.

Policy Environment

Social protection is now a devolved subject. Currently only Punjab has a dedicated social protection authority and has drafted a social protection policy along with Khyber Pakhtunkhwa (KP) while work is underway to draft a policy in Sindh. Minimum wage boards, constituted in each province, recommend wage levels for workers of different skills levels across industries. Only Punjab has a labor policy, the rest of provinces are still developing one.

Benazir Income Support Program (BISP) remains the largest social safety net program in Pakistan. The programme targets the ultra-poor. All its direct recipients are women. It is also currently conducting a farmer census (separately collecting information on poor farmers) and considering launching an employment guarantee scheme.

The provincial governments in Punjab and Sindh have recently passed bills to recognize home-based workers a special category of workers. The government is yet to implement these policies, following which home-based workers may register with public social security institutions and be entitled to a minimum wage.

Government also plans to expand the Prime Minister’s National Health Program to all over Pakistan by 2022. The program provides social health insurance), by issuing health cards to families living below the poverty line. More recently, the Securities and Exchange Commission of Pakistan (SECP) also proposed an Awami Pension Scheme for the informal sector.

 What can governments do?

Despite institutional and legal frameworks for securing basic workers’ rights, implementation excludes the vast majority of informal workers from social protection. These programs need to move away from schemes designed specifically for formal, full-time and life-long (mainly male) workers towards accommodating more dynamic and unpredictable work patterns that have increased with the informalization of work. This will impact how contributory schemes work, whether coverage for low-income workers will have to be subsidized through pooled funding mechanisms and how social protection programs are designed to adapt to a moving workforce.

There is need for compulsory coverage of social protection for informal sector workers by allowing workers to self-register with social security institutions. Where applicable, payments linked to social protection provisions should be matched to the status of the enterprise concerned and ability of the worker to pay.

Governments should use social protection as a tool to create an environment that encourages entry into the labor market, addressing vulnerabilities of the workers. For example, social assistance through cash transfers can supplement low wages while a universal health insurance can provide maternity cover to women whose employees are not providing them with such benefits.

Any effective and well-grounded skills development strategy should incorporate the informal sector workers and identify areas for appropriate interventions. Since many informal workers are poor and have little education, courses must be tailored to their needs.

Flagship social protection programs like BISP can design additional insurance instruments to target informal and agriculture sector workers. It has both outreach and capacity to engage technical expertise and ensure robust targeting.

A formal structure within the existing legal framework can be made for contractors who supply informal labour to factories and other establishments. Companies could be allowed to hire only from registered contractors. This would, in turn, provide an incentive for contractors to register themselves as a prerequisite for operating in the labour market.

In the end, much needs to be done –  but can be done – to integrate informal workers into mainstream social protection programs beyond short-term targeted social assistance. A growing demand for social support, extending the coverage of social protection benefits and improving the job quality of workers will be among Pakistan’s major challenges in future.

This is based on the chapter “Social Protection for Informal Workers in Pakistan: A Case Study of Small and Medium-Sized Enterprises” published in a book funded by the Asian Development Bank – Social Protection for Informal Workers in Asia which can be accessed from here https://www.adb.org/publications/social-protection-informal-workers-asia

Hina Shaikh is a Country Economist at the International Growth Centre (IGC).

With a population of 110 million, Punjab, the largest province of Pakistan, is bigger than most countries in the world and contributes more than half of the country’s GDP. However, despite its impressive growth ambitions, Punjab still has a rather primitive industrial base, dominated by textiles, leather goods and other labor-intensive sectors. While the government has shown considerable interest in establishing new industrial estates or providing infrastructure, it has, historically, shied away from more substantive issues, such as changing the legal and regulatory structure, and providing or withholding incentives to spur industrial expansion. Arguably, controversies and political issues surrounding approval or withdrawal of support and subsidies have remained the key culprit behind this inaction.

However, with CPEC’s growing expansion, there is a realization within the government to prepare for upcoming opportunities and risks. With opening up of borders and the development of a new economic corridor, CPEC is likely to offer both unprecedented opportunities to explore new markets and industries, and, at the same time, pose unforeseen risks to local industry. Some domestic businesses might join hands with Chinese counterparts and figure out new partnerships, while others may crumble due to increased competition.

While businesses need to prepare themselves for this upcoming change, there is also a need to have a consistent strategy on the part of the state to develop a coherent response. Such a strategy has to emanate from an industrial policy.

The idea of having an industrial policy is not new to Punjab. The Punjab Growth Strategy clearly identifies the role of the government as a facilitator of private sector-led industrial development. The strategy lays out the role for the Department of Industries, Commerce and Investment in achieving growth through formation of an industrial policy that gives strategic direction and coordinates the efforts of various arms of Government. The Punjab Growth Strategy also calls for providing relevant data and information on constraints faced by businesses, provision of infrastructure, ensuring provision of skilled labor and enforcing quality standards.

Commendably, Punjab has recently embarked on the process of developing an industrial policy for the province, after the government stumbled upon a number of decisions regarding industrial cooperation under CPEC and felt the need for deeper and more systematic deliberation over various early investment proposals. Hence CPEC provides an unprecedented opportunity to think through all these political issues and compensate for the inaction so far. The industrial policy should then inform various actions of the government regarding CPEC and beyond.

Foundation for Punjab’s Industrial Policy

What can be an appropriate framework to develop Punjab’s industrial policy? The future industrial policy can either be horizontal, aiming to cater to a broad range of firms across various sectors, or vertical, prioritizing selected industries as potential ‘winners’. In both cases, the Government of Punjab will need to ensure it opts for the right sector-specific considerations. For instance, the policy must cater to these priorities:
• Avoid a knee-jerk approach – This means focusing on existing industries, which are economically vital for Punjab, and ensuring that they continue to grow. Any sudden shift in policy is likely to lose steam quickly due to political economy reasons and may lead to inadvertent consequences.
• Build on strengths – While it is always exciting to have very ambitious goals, they should not be unrealistic. Therefore, the policy must concentrate on allied industries, where Punjab’s competitive advantage can be developed due to complementary capabilities, aiming at creating better forward and backward linkages.
• Have a clear driving thrust – Despite multiple competing priorities and wide-ranging actions, the policy must have an underlying thread. Innovation can in fact be such a link, providing a clear sight of the goalpost. Therefore, the policy must support industrial diversification, nurturing new industries and capabilities, leading towards industrial (and export) sophistication.

Underlying Principles

Addressing these priorities can be a good start, but are there any underlying principles that must be adhered to? While an industrial policy must be informed through rigorous, context-specific diagnostics, economists do agree on some broad principles that can form the basis of a sound industrial policy. For instance, industrial policies should be targeted, even the horizontal ones, with well-defined objectives aiming to enhance productivity or innovation. Furthermore, any government intervention or support must only be provided to address a market failure such as coordination failures, information gaps and spillovers, etc. and must be provided for a limited period of time, with predetermined sunset clauses. This also means the need for having a sound exit strategy. Industrial policy interventions should always have clear performance benchmarks, which can help track their efficacy. Moreover, across-the-board fully funded subsidies should be avoided and instead substituted by interventions with contributions from private sector.

Policy Levers

Lastly, given the wide mandate of Pakistan’s federal government in areas of tariffs, taxes and duties, the provincial government must be cognizant of the limited choice of policy levers available to it to facilitate businesses and incentivize investments. Some of these levers include tax incentives to the extent of provincial taxes, such as Sales Tax on Services, Urban Immovable Property Tax, Stamp Duty, Professional Tax, etc.; providing industrial parks and export promotion zones or other forms of land leases; subsidizing skills development interventions; business facilitation and investment promotion; and regulatory reforms to have business friendly compliance regimes. Additionally, the government can also think of more innovative means such as putting in place challenge funds to address market failures or introducing venture funds, development funds, guarantees or special purpose vehicles to subsidize high risk finance. The provincial government should also not ignore the federal regulatory space and can assume a strong advocacy role to drive any desired changes at that level.

While the provincial government is in the process of developing an industrial policy, it must realize that any policy, no matter how robust it is, will only be as good as government’s implementation capability. Therefore, there is an urgent need to fix the relevant institutions and develop adequate capacity, which can make use of the policy framework and help lead Punjab towards greater industrialization.

Usman Naeem is a Country Economist at the International Growth Centre.

Hasaan Khawar is a senior international development and public policy professional and a CDPR fellow.