Path to Prosperity

PPakistan’s economy goes through the cycle of boom and bust. Now, all indicators point towards stability in macroeconomic indicators. Strict measures were very prudently adopted in the backdrop of the IMF programme at the cost of slowing down the economy. However, in a short span of time, noticeable achievements that have been made are: reduction in the rate of inflation, which paved the way to reduce interest rates, growth in FX reserves, stability in the currency exchange rate, and improvement in the country’s risk rating. A key question arises: whether all of the above are sustainable and/or are short-lived.

Pakistan government has rightly emphasized growth through exports and not necessarily relying solely on local consumption. This would highly depend upon the private sector taking a leap forward and venturing into entrepreneurship. As businesses and markets are becoming very competitive, traditional businesses will not be able to make a quantum jump in exports. Entrepreneurship involves creating new ventures with innovative ideas and high risks, while businesses [Pakistan style] often can be classified as operating an existing model with lower risk and focus on short-term profits. Entrepreneurs are innovative with a long-term vision, with an earnest desire to create value and change the way business is done. They take high risks, focus on high achievers amongst employees, and often seek external funding like venture capital to achieve long-term goals.

A businessman, on the other hand, relies on personal savings and bank loans and operates by using traditional methods with calculated risks to achieve short-term profits by monitoring daily operations.

If we draw parallels with the most advanced entrepreneurial country (the USA), one can extrapolate various lessons. According to Babson College reports, primarily through the Global Entrepreneurship Monitor (GEM), the USA highlights (2022-2024) that many start-ups are driven by necessity (job security), fewer run mature businesses facing challenges like financing. Key findings point to record rates for women and younger entrepreneurs, a growing role of veterans and immigrants, and a focus on social impact alongside economic growth, while underscoring the need for support for established businesses.