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Navigating the Perils of a Banana Republic: Lessons from Pakistan's Economic Crisis

Zaman, Khalid (2023): Navigating the Perils of a Banana Republic: Lessons from Pakistan's Economic Crisis. Published in: Politica , Vol. 1, No. 1 (10 February 2023): pp. 33-41.

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Banana republics have been a persistent phenomenon in developing countries facing socio-economic, environmental, and geopolitical issues. This study focuses on the economy of Pakistan, a developing country facing severe economic challenges. Due to high currency devaluation in terms of US$, Pakistan is on the brink of default. The strict policies of the International Monetary Fund (IMF) towards developing countries like Pakistan are preventing them from accessing dollars to stabilize their economic indicators. As a result, Pakistan is not receiving loans from neighbouring and foreign countries. Political instability and conflicts between political parties are hindering the country's progress, while poverty is increasing at an alarming rate due to high inflation, food inflation above 40%, and skyrocketing petrol prices. Additionally, terrorism and domestic violence are increasing, while the judiciary and establishment are becoming politicized. The environment is deteriorating, and the country faces food insecurity risks, earthquakes, and wars with neighbouring countries where disputes are in a cold war. This study uses a qualitative case study approach to analyze Pakistan's challenges and potential policies to address them. The study focuses on five dimensions: economic, political, social, judicial and establishment, and geopolitical risks and challenges. The findings suggest that comprehensive and integrated policies are necessary to address the root causes of Pakistan's economic challenges. The study emphasizes the importance of promoting economic diversification and investing in social protection programs to reduce poverty and inequality. It also highlights the need for democratic governance, a strong judiciary, and an independent establishment to promote stability and development. Finally, the study stresses the importance of addressing environmental risks and geopolitical challenges to ensure sustainable development.

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