Pakistan’s economy featured both growth and setbacks and a significant downturn during the 1990s. In 2001, Pakistan’s growth rate dropped below 2 percent before recovering, caused by a lack of competitiveness in international markets, low technology, low labor productivity and protected and inefficient manufacturing. During the past seven years Pakistan aggressively pursued reforms that paved the way for private sector investment and growth, yet Pakistan still struggles to compete in the global market.
In 2001, after a five year absence from the country, USAID returned to Pakistan and re-started its assistance program. During this process in 2002, USAID recognized the need to rapidly boost Pakistan’s economic growth as a way to reduce poverty. In 2003, USAID initiated a $72 million, five-year Economic Growth Program to quickly implement programs to support the Government of Pakistan’s reform efforts and augment inclusive economic growth.