As it struggles to contain a growing insurgency, Pakistan has aroused concern that it is a failing or fracturing state. One aspect of the international community's response has been to place new focus on its economic weaknesses. However, there are many prescriptions that could help improve the health of Pakistans economy. Foremost for the countrys economic revival is the crucial need to improve the existing law and order situation. The countrys political and military leadership must adopt the most severe measures to restore normalcy in the country. Unless this is ensured, there will be no increase in investment. Output will stagnate and unemployment will continue to rise. This will threaten to tear apart the fabric of the state. Politicians, both in the government and the opposition, and senior government functionaries are aware that a lack of policies and vision has contributed to the present state of affairs. Further, due to poor governance the management of resources available to the federation centrally and to each of its provinces has not been sufficiently strong to obtain the best value for money. Honest and diligent officials have generally been sidelined; the population is faced with a political and bureaucratic system, which is not accountable and is not responsive to their needs. In these unpredictable circumstances, the entrepreneur is faced with a set of policies that contradict each other, are counterproductive and are designed to assist in increasing corruption. Having tried governance through martial law, basic democracy, grass root democracy and extended military rule by semi-literate generals, the current parliamentary democracy appears to be going nowhere. If duly empowered Pakistans private sector can shore up the state. Experts are of the view that this will be possible only if visionary policies are formulated for boosting production and trade, investing in developing Pakistans energy, water and transport infrastructure; and making economic aid programmes more transparent. But an uncertain political climate and unwillingness to risk long-term investments have so far limited engagement of the private sector in supporting the desperate state of the country. Besides, infrastructural constraints, corruption, weak intellectual property rights, and a feudal system of land distribution are some of the major bottlenecks preventing a more effective and vibrant private sector in the country. Also, increased violence in recent years has made the private sector more reluctant to invest. According to the World Bank, "Pakistan suffers from a dearth of infrastructure in the water, irrigation, power and transport sectors; infrastructure which is essential for sustained growth and competitiveness both in the local and international markets." Growing militant violence and resulting instability have been major concerns for both domestic and international investors. However, numerous studies have established that creation of greater economic opportunities could help curb it. Analysts also agree on the link between poverty and extremism. Senior Western diplomats are of the view that almost 70 percent of the Taliban joined the terrorist groups in Afghanistan simply because of the money offered to them. This trend must be reversed through enhancing economic opportunities for the poor, and in this the private sector could play an important role. But to do that, it will have to become more competitive. The World Economic Forum's 2008-2009 Global Competitiveness Report ranks Pakistan's economy 101 out of 134 countries. It ranks particularly low in indicators related to health, education, labour market efficiency and technological readiness. The report lists government instability, corruption and inefficient bureaucracy as the most problematic factors of doing business in the country. According to the Asian Development Bank (ADB), Pakistan's private sector is by far the biggest contributor to GDP and is the biggest employer in the country. Starting, in the early 1990s, a strategy of privatisation, deregulation and good governance to promote private sector development was successfully undertaken. An environment that would "encourage the private sector to become the growth engine in the economy needs to be created. When this happened earlier, 77 percent of the commercial banking sector, all of the textile and telecommunications sectors and significant parts of the cement, sugar, automobile and fertiliser sectors were privately owned. It also contributes to power generation and electricity distribution. Pakistan's private sector, in partnership with domestic non-governmental organisations, could also prove an effective partner for the international donor community to help stabilise the state. ADB says that the country's private sector must help the public sector to develop the necessary institutional frameworks; improve infrastructure, especially in the energy sector; and high quality education and healthcare delivery mechanisms. According to its recommendations, the private sector must also lead in improving technological readiness in the manufacturing and services sectors; investing more resources in research and development; and adopting international standards of corporate management and sophisticated business practices for greater efficiency and higher competitiveness. Based on current approach, it is not difficult to state that strengthening the role of the private sector for the survival of Pakistan is not on the radar screen of the government. n The writer is a retired Secretary of the Government of Pakistan. He belongs to the former Civil Service of Pakistan. Email: