Why do We Have Less Investment than China and India?

Abstract

Pakistan has experienced macroeconomic instability since the early seventies. Because of the country’s persistent macroeconomic uncertainty, savings and private investment have been discouraged, resulting in low aggregate investment and volatile output levels. It has one of the lowest investment-to-GDP ratios that is 15 percent, about half of the South Asian average of 30 percent. Here we will review the evidence from Pakistan to inform policymaking and local research about (1) The investment trends and patterns in the economy and comparison with its regional counterparts. (2) The factors which can stimulate the investment.