Objectives under Output 3 could have been pursued further through other ADB modalities when the AETP (Accelerating Economic Transformation Program) was discontinued (as in Output 1 on energy and social protection). The lack of structural transformation had been presented as one fundamental reason why the BOP (balance of payments) crises are recurrent in Pakistan. There was a strong consensus during subprogram 1 and subprogram 2 that resource mobilization, internal or external, is not what constrains Pakistan development in normal times (i.e. outside crisis episodes). BOP inflows, credit-fueled increases in private demand and pro-cyclical fiscal policies actually seem to push aggregate demand forward at rates that eventually become inconsistent with external balance in Pakistan. Structural transformation, the industrial and export development process through which a country acquires, over time, capabilities in products whose exports grow faster per percentage point of world economic growth, seems to be the only way to break the boom-bust macroeconomic pattern of recent decades. Substantial policy work during subprogram 1 and subprogram 2 had produced a number of policy avenues for subprogram 3 and subprogram 4.
Accelerating Economic Transformation Program