Entrepreneurship in Pakistan

Entrepreneurship is Pakistan disregarded since from its independence. This was happening just because of Rent-seekers. Rent seekers turn policies in their favors for taking more profits. Some government institutes are still working under the indirect influence of rent seekers. Examples of such government provided wealth transfer are conferring of monopoly through a license, obtaining resources at below the market prices(e.g. publicly provided land at cheaper rate than market to influential groups), protection from competition and the manipulation of government subsidies, tariff and Tax policies. Note that not only wealth transfer unproductive, it is also often disturbing other market activities.

Thus entrepreneurship is much important for the success and growth of country, may at times turn into rent seeking. The purpose of entrepreneurship is profit generation, if the more profit are to be had from the rent seeking, then the agent would be rent seeker than an entrepreneur. As mentioned earlier at times rent seeking might be preferred over entrepreneurship. The foregoing explains that entrepreneurs may be tempted to turn to rentseeking if the payoffs so warrant. Therefore, it is important to avoid policy intervention that ends up in providing rent-seeking opportunities to the favoured few and foreclose the rent-seeking opportunities that derive from other sources. For example, the historical success of Britain can be attributed to the institutionalization of the rule of law, well defined property rights, protection from arbitrary confiscation of property, effective enforcement of contracts and a variety of other protections that made rent-seeking difficult. On the other hand the poor record of technological progress in ancient Rome, Medieval China and more recently in the Soviet Union, despite the many impressive inventions that each one was able to generate, is attributable in good part to ready availability of rent-seeking opportunities.

This together with obstacles to entrepreneurship in those economies accounts for the failure to put the inventions to productive use. The incentive regime has created a rent-seeking businessman used to gaming and (mis)using policy. These new classes of businessmen that acquired wealth and learnt ways to manipulate policy are now dominant. As a result, wealth remained concentrated in the hands of those that the government favored. Consequently, even in private enterprise, merit gave way to government discretion. This environment slowed the growth of entrepreneurship and indigenous enterprise.

Keeping the economic definition of entrepreneurship in mind, we see that entrepreneurship in Pakistan is seriously impaired by government policy, legislation and regulation. The government has continuously been of the opinion that investment especially at the large industrial level is entrepreneurship. As a result, it has been unable to promote genuine entrepreneurship and promoted cartelization and rent-seeking instead.

This was happening and some big rentseekers still exists in the economy.