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So why has Pakistan fallen behind others over the last four decades? In my view, the single most important factor is Pakistan’s **eroding state capacity**. 1/n
State capacity is essential for providing the environment that enables individuals, firms and markets to flourish. Pakistan's state has not only retreated, but essentially reneged in providing this capacity. For example, 2/n
consider public education, an obvious state responsibility. A quarter of Pakistan’s school-age children remain out of school, and many who do end up in school learn next to nothing. 3/n
A 2008 study found that only about half the students in grade three could perform at a grade one level! Those who have the means, are ditching the local education system in droves - 200K students took O levels last year, essentially "importing" high school education. 4/n
State's capacity in protecting life and liberty has also greatly diminished due to the rise of extremism, which in turn has scared away both physical and human capital from Pakistan. 5/n
Investment to GDP ratio is only 15% for Pakistan, when it is over 30% for both India and Bangladesh. Extremism has isolated Pakistan. e.g. air flights per capita have increased four times for India since 1980 but have actually decreased for Pakistan! 6/n
Unfortunately the rise in extremism was engineered (perhaps unwittingly) by the state itself. It was done through legislation such as blasphemy laws and defining "muslimness". It was done through explicit indoctrination in the education system and media. 7/n
A corollary of eroding state capacity is that state gives up on channeling domestic resources. It seeks Koreans to build highways, Turks to build city transit, and Chinese to build everything else. But doing so builds large deficits that ultimately collapse. 8/n
The erosion of state capacity is also evident in a number of other areas, including revenue collection, health, environment and water. 9/n
The new government that comes to power must reverse this erosion of state capacity with single-minded focus if Pakistan's economic slide is to be reversed. n/n
