When General Pervez Musharraf seized power in a 1999 military coup, Pakistan was nearly bankrupt and under numerous international sanctions. And, if one was merely reading the news of the past few weeks – namely, Islamabad’s Red Mosque crisis, internal wrangling over Chief Justice Chaudhry’s dismissal and reinstatement, Musharraf’s apparent reaching out to former Prime Minister Benazir Bhutto, increased Islamic radical activity and, of course, the Taliban – one may conclude that Pakistan may be worse off than before.

However, economically, things have improved under Mr. Musharraf and his prime minister, former Citibank executive Shaukat Aziz. As noted in a recent Wall Street Journal editorial, annual GDP growth averaged 7.2% in the past three years, and the inflation rate, which hovered at 23.8% in 2000, has fallen to 7.7% (still high, but certainly measures better than in 2000). Foreign direct investment rose to $2.2 billion in 2005 from $308 million five years earlier

It is true that many of these benefits haven’t reached the majority of Pakistanis and future political instability also threatens these hard-earned economic gains. Standard and Poor’s recently lowered its outlook on Pakistan’s credit rating, and I – personally – believe that Pakistan (rather than Iraq, Afghanistan, or other “hot spots” currently in the news) will be among the most serious and nettlesome foreign policy issues of the next few years, but it does stand to reason that it is a market to be evaluated carefully. There are some world-class companies in Pakistan and, as with many such “black sheep” markets, these examples of efficiency and profit are lost in the generalization of Pakistan as being uncertain, chaotic, and dangerous. We’ll be sure to look at some of these opportunities in the months ahead.