Entrepreneurship in Pakistan

Entrepreneurship is viewed by economists to be a combination of innovation and risk taking. When such activity thrives, high growth rates are achieved as well as opportunities offered to all of society, including the poor. They offer benefits through growth and employment. In Pakistan, innovation and risk taking is severely inhibited by the intrusive role of government of country. From the starting days of strategy, when protection and subsidy policies determine winners in the market, entrepreneurship has been diverted to government favours. Government’s economic policy is also seeking to promote growth through a basically ‘mercantilist’ approach where local commerce through serious neglect is regulated. This sector either employees most of the poor or offers them entrepreneurial opportunities although deregulating this sector could be a priority in and anti-poor planning.

To development of an entrepreneurship culture in the Pakistan, the system of laws and policies that are promoting it will have to be dismantled. Entrepreneurship development as a conscious mechanism in Pakistan is a recent post-colonial phenomenon. This has been an exciting period in which international aid was sought with the purpose of achieving economic development. The international networking of research with fledgling local counterparts dedicated themselves to developing policy instruments for delivering this noble purpose. Sadly, even after 60 years poverty persists and other countries, like Pakistan, are caught in poverty.

Entrepreneur growth requires institutes prerequisite which underpin human transactions. Those prerequisite are those that human civilization has evolved over the many years. Economical aid is working only where the policies and institutional environment is good. This again lends support to the ‘primacy of institutional’ arguments. A society that gets the institutional set up described above goes on to achieve economic development. Entrepreneurship may be directed towards the accumulation of wealth through unproductive enterprise. The system of incentives that a country sets up in its governance mechanism can either promote healthy entrepreneurship leading to economic growth and prosperity or rent seeking where productive activities are at a discount. In the latter case, a society gets stuck in a low poverty-low growth trap.

In Pakistan, the policies have always been biased towards the high class of country. This is true of the economical policies which have been biased towards the high scale sector. Rather than entrepreneurship, policies are planned for investors and investments became the norm. Incentives were offered to attract investment. Such incentives included licensed monopolies in protected markets, cheap land and credit and subsidised inputs.

Promoting entrepreneurship has its own importance. According to Global Entrepreneurship Monitor’s 2010 report, Pakistan lags in start-ups, with less than half the rate of early-stage entrepreneurial activity found in other factor-driven economies. Part of the problem is that most young people coming out of universities prefer searching for a job instead of exploring entrepreneurial career opportunities – one of the key findings of CIPE-P@SHA dialogue with students and start-ups. Even young people who choose to enter paid employment often have trouble finding a job, are badly paid, or wind up in casual or informal jobs, according to the World Bank.

To help encourage a more entrepreneurial spirit among youngsters, the Islamabad Chamber of Commerce and Industry recently organised a major conference for young entrepreneurs focusing on the theme of “Inspiring a New Wave of Entrepreneurship,” part of the Young Entrepreneurs’ Forum. Established in 2008, the goal of the Forum is to encourage young entrepreneurs to take on a role in policy advocacy and nurturing the next generation chamber leadership. The conference was sponsored by the US Embassy, with additional support from CIPE Pakistan.

MUHAMMAD HASSAN RANA

Lahore