Development planning in Pakistan started in the mid-1950s; growth strategies since then have followed an essentially similar pattern. They focused on the arbitrarily set growth and investment rates; provided more or less detailed projections for investment by the public sector with some rather general indications of that by the private sector, even though the latter was described as the major engine of growth and; relied on the government playing a lead role through sector picking and market controls. It is perhaps not surprising that the plans had only limited success. Of the nine Plans that have been prepared so far, only the Second Five-year Plan (1960–65) managed to meet a significant number of its macroeconomic targets.

Growth diagnostics point to two important constraints to economic growth: Inadequate market development, (lack of competition, tax, tariff and policy distortions, entry barriers, government involvement, poor regulation, etc.), and lack of efficient public sector management to provide core governance goods such as security of life, property, transaction and contract; facilitate markets and investment with informed policy and competent regulation; and promote deepening of physical, human and social infrastructure.

This growth strategy is informed by the latest in economic thinking and seeks to strengthen both government and markets. It is not a 'government versus markets' approach but a 'government and markets' approach. An efficient government underpins a vibrant market. The strategy is based on sustained reform that builds efficient and knowledgeable governance structures, and markets in desirable, attractive and well-connected locations. It recognizes the severe resource constraint that the country faces and therefore focuses on 'productivity'-improving the efficiency with which assets are used. Global indicators such as 'competitiveness' and 'cost of doing business' also highlight factors such as 'management', 'innovation', 'quality of regulation and governance' and 'research and development', as the more immediate constraints to growth. The thrust of this strategy, therefore, is to focus on the 'software' of economic growth (issues of economic governance, institutions, incentives, human resources, etc.) so as to provide an environment in which the 'hardware' of growth (physical infrastructure) could be expanded and made more productive at every level.

In short, the strategy aims to increase investment in the country and to make investment more productive. While physical investment will be required for growth, such investment can only happen in an enabling environment.
   
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