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Frequent change in governments hit economy, says Dr Ishrat

KARACHI: State Bank of Pakistan (SBP) Governor Dr Ishrat Hussain on Saturday said that frequent changes in governments in past proved harmful for the national economy.

Strikes and political unrest from 1988 to 1998 were the major cause of keeping away foreign investment in the country, he observed while delivering a lecture on "good governance and economic conditions of Pakistan" at the Economics Department, University of Karachi.

He said uncertainty put negative effect on growth rate and foreign investment.

Growth rate, he asserted, can be increased from two percent per annum to 5.3 percent per annum if bureaucratic efficiency was improved and corruption eliminated. Institutions like media, NGOs and other organs of society can help the government end corruption.

Pakistan's per capita income can be doubled within a short span with the help of good governance and small government, he added.

He said, "We have lost the trust of foreign investors and we have to do a lot of paper work for transactions due to which our transaction cost has increased up to 16 percent to 17 percent of GDP."

He hoped that with good governance and a system of check and balance we can increase our exports and attract foreign investors to invest their money in Pakistan.ÑPPI

According to a press release of the Department of Economics, Prof. Dr Ishrat Hussain, Governor, State Bank of Pakistan and Adjunct Professor, Department of Economics, University of Karachi, on Saturday delivered a lecture on the relationship between economic development and good governance. Dr Ishrat said, "governance and institutions are not ends in themselves. But it is well known that good governance and effectively functioning institutions are required, along with sensible policies and well designed public investment, to improve resource allocation, comparative advantage, enhancement of productivity and facilitation of more equitable distribution of resources."

He pointed out for factors that can promote good governance. Those included a more efficient civil society, trust and credibility between government and private sector and reduction in the level of corruption.

Answering the students' questions, he said that good governance did not means a specific form of government, good institutions are independent of the form of government.

He appreciated the efforts of the current government regarding accountability and eradication of corruption from the economy. He said that these efforts will promote more strengthened institutions, therefore attract domestic and foreign investment and thereby promote economic development.

Earlier, Vice-Chancellor Prof. Dr. Zafar H. Zaidi welcomed the adjunct professor at the Department of Economics.

Shafiq ur Rehman, chairman, department of economics, presented a vote of thanks for Dr Ishrat and expressed the hope that cooperation between the department and the State bank of Pakistan would continue in future.

The session ended with concluding remarks by the Dean, Faculty of Arts, Prof. Dr Arifa Farid.