Institutional change

THE ‘catch-up’ hypothesis in economics holds that per capita income in poor countries will eventually catch up with the per capita income of rich countries. Although China, some East Asian and Latin American countries have experienced a modicum of ‘catch up’ over the past half a century, a large number of states have been less fortunate. Research into reasons for the failure of ‘catch up’ suggests that poor countries remain poor primarily because their institutions, or systems, are poor. A narrative on how some of Pakistan’s institutions constrain the country’s economic growth follows.