Can entrepreneurship save Pakistan?

We know that decades of aid haven't worked, writes guest blogger Dane Stangler. So what do we try now?

The tragic assassination of Salman Taseer, governor of Punjab province in Pakistan, once again raises the difficult question of the links between economic opportunity, stagnation, and radicalism. Our recent work on Expeditionary Economics proceeds in part on the premise that economic growth is an integral part of social stability and national security for any country. We reject, however, any simplistic link between poverty and terrorism. As Joshua Foust has sardonically observed: "luckily, wealthy countries like Saudi Arabia never promote terrorism."

In this sense, Pakistan presents a challenge and an opportunity (or maybe those are the same thing). The country's economy is in dire straits and the running subtext in the aftermath of Taseer's killing has been that the Pakistani government subsequently rejected IMF demands to appease any further radical violence. It remains to be seen if that will work, but it seems unlikely that the IMF and international community will cease providing aid to a country as geopolitically vital as Pakistan simply because the country broke its pledge on fuel prices. What is more certain is that the country needs economic improvement, quickly. The flood of aid money into the country over the past two or three decades has not reduced poverty and has helped to further entrench the elite's control (particularly the military's) over the economy. The pressing question here is, can entrepreneurship save Pakistan's economy and, thus, save the country from going over a cliff?

Many people think so. Nadeem Ul Haque, now Deputy Minister for the Planning Commission, has written extensively and eloquently on the promise of entrepreneurship, particularly in the face of the country's growing "youth bulge." Governor Taseer himself told the Financial Times not long before his assassination: "Our youth are radicalised not because of ideology but because there are no opportunities. You give jobs to the young people and you begin to overcome the nuisance of the mullahs."

Such propositions are intuitively appealing, but difficult to prove in anything but a messy and uncontrolled environment. The promise of entrepreneurship is not simply material--increased living standards, a growing economy. As Kauffman president Carl Schramm has observed, in a neat twist on Marxist thought, entrepreneurship allows the people of a country to own the economy. It brings material benefits but also a greater sense of dignity, of control over one's destiny. It offers a source of mobility outside the stultified channels of politics and religion.

We cannot say that entrepreneurship or economic growth are panaceas to the problems of radicalism. The well-known preponderance of engineers, for example, among some terrorist organizations should give pause to any temptation to draw mono-causal links. (This link apparently may have something to do with the type of ideology and the correspondence between different disciplines of study.) But what is absolutely clear is that foreign aid, whether through international financial institutions like the IMF or through the U.S. military, has done little for the economic prospects of Pakistani citizens. Entrepreneurship may be the best answer. The next, more difficult question, of course, is: ok, so what do we do now?

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