Since the restoration of democracy in 2008, Pakistan has not been able to profit from relatively high economic growth rates in Asia. Its external and internal political conflicts, in combination with the weak institutional framework, have resulted in setting other priorities than focusing on economic policy reforms. This country study analyses the different challenges for economic policy making on the way to the �Economy of Tomorrow�. It argues that Pakistan is currently standing on the �knife edge� which could go either way. But it also identifies the most important factors for change, with the objective to promote a debate about more inclusive and sustainable economic policies.