Pakistan Institute of Development Economics

PDR

THE PAKISTAN DEVELOPMENT REVIEW 

Market or Government: Lessons from a Comparative Analysis of theExperience of Pakistan and India (The Distinguishedl Lecture)

In the 1980s a remarkable consensus developed that alleconomies, including the Less Developed Countries (LDC), will achieveboth more rapid growth and alleviation of poverty with greater relianceon a market oriented strategy and minimal government direct control andownership in the economy. The disputes that remain have to do withmarginal issues: how fast to move from dirigiste to private enterprisesystems and the extent to which there is a residual role for governmentin dealing with market imperfections. There remain a few unregenerateinterventionists, especially in South Asia, but they are definitely abeleaguered minority. Even more remarkable is that the consensus is notonly with respect to the economic efficiency of the market, but isnearly as great on its effectiveness in reducing poverty. A powerfultool for analyzing whether greater reliance on markets indeed issuccessful in raising the rate of growth and reducing the extent ofpoverty is to compare the experience of similar countries with differentstrategies in that respect A comparison of the experience of India withthat of Pakistan and Bangladesh during the last 40 years can beparticularly fruitful because:

Gustav F. Papanek

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