Corruption in Pakistan: An Institutional Economics Perspective

Pakistan has suffered from pervasive corruption since its foundation. It deals with an unstable political atmosphere and unsustainable economic development due to its fragile institutional setting. The predominance of military power that does not hesitate to overrule any government when it faces a potential threat to its economic-profit channels plays an important role in institutional fragility. Moreover, incompetent civilian rules and the British heritage comprise a vicious cycle that is hard to break. An anemic institutional environment struggles within an embedded cultural structure exacerbated by corruption. This paper discusses corruption in Pakistan from historical, institutional, and economic standpoints. It provides a historical background of corruption. Then, it analyzes the negative economic reverberations of the corruption phenomenon. As an institutional case study, the paper concentrates on National Accountability Bureau (NAB), suggesting that institutional quality can be accomplished through bureaucratic accountability and determination, not through political victimization and abuse of institutions.