Economic Growth and Stock Market Performance Under Different Regimes in Pakistan: A Comparison of Dictatorial and Democratic Regimes

Pakistan is a developing country with a history of cyclical regimes, from democratic governments to dictatorial reigns. Literature provides inconclusive evidence as to whether democratic governments or dictatorial regimes yield better economic outcomes. This study provides a chronological description of different ruling regimes of Pakistan since 1960 and relates to economic outcomes like economic growth and stock market performance of relative regimes. It is noted that dictatorial regimes in Pakistan had better economic outcomes. It is also noted that dictators enjoyed longer and more powerful tenure in Pakistan, while democratic governments remained very unstable. We argue that better economic and stock market outcomes under dictatorial regime could be a result of consistent and stable policy making. Thus, there is a need to strengthen political processes in the country and devise policies for long time horizons to improve economic outlook of Pakistan.