Hyped for decades as a nation rich in potential, Pakistan has repeatedly found itself on the verge of economic transformation-only to let the moment pass. Its economic story is neither one of outright despair nor unqualified success, but of partial gains undermined by structural flaws, policy discontinuity, and a chronic inability to seize opportunities. As South Asia rises-with Bangladesh, India, and Vietnam advancing toward industrial and technological maturity-Pakistan remains trapped in a cycle of brief spurts that never sustain.
The mirage of growth
Pakistan's GDP has seen promising spells, such as 2004–2007 and 2016–2018, with growth reaching 5–6%. Yet these gains collapse under macroeconomic imbalances, political instability, and external shocks. Growth has been consumption-led and debt-driven, not based on productivity or innovation. When foreign aid, remittances, or loans slow, so does momentum. The IMF, once a last resort, has become a routine fixture in Pakistan's economic playbook.
The missed industrial and digital revolutions
In the 1960s, Pakistan was considered a development model-South Korea studied its planning institutions. But while East Asia pursued long-term, export-led industrialisation, Pakistan abandoned its roadmap, remaining reliant on low-value textiles. Its global export share fell to 0.12% in 2023, compared to 0.19% for Bangladesh and 2.61% for India.
The digital revolution has also bypassed Pakistan due to poor infrastructure, weak innovation ecosystems, and negligible R&D spending-just 0.16% of GDP, compared to 0.30% in Bangladesh and 0.6-0.7% in India. Without urgent action, the window of opportunity offered by the Fourth Industrial Revolution will close.
Policy paralysis
Pakistan's core handicap is the absence of policy continuity. New governments discard existing plans for political reasons, sacrificing long-term reforms in tax, energy, and civil services for short-term populism. CPEC, once billed as a game-changer, lost momentum due to poor coordination, weak institutions, and lack of transparency.
Demographic dividend, underused
With over 60% of its population under 30, Pakistan holds a demographic advantage many nations envy. Yet high unemployment, outdated curricula, and low female labour force participation waste this potential. Excluding women from the workforce not only curtails GDP growth but entrenches inequality.
The rentier state
Elite capture, rent-seeking, and debt-financed growth have defined Pakistan's development path. Public debt now exceeds 80% of GDP, with little to show in industrial capacity or public services. The power sector exemplifies the dysfunction-circular debt has reached Rs. 2.4 trillion, and electricity costs nearly triple those in Bangladesh due to subsidies, inefficiencies, and opaque contracts favouring Independent Power Producers.
Agriculture and climate: Neglected priorities
Agriculture employs a large share of the population but suffers from outdated practices and low productivity. Pakistan failed to invest in agri-tech and climate resilience even as climate change became an existential threat. The 2022 floods caused billions in losses, and recent cloudbursts in Gilgit-Baltistan highlight the urgency of disaster preparedness and resilient infrastructure.
Bright spots
Despite systemic weaknesses, Pakistan has areas of promise. The fintech sector is expanding through digital wallets and mobile payments, while e-commerce and logistics startups continue attracting foreign investment. Emerging technologies, especially AI, offer potential breakthroughs in healthcare, agriculture, governance, and education. The Special Investment Facilitation Council (SIFC) could improve the investment climate if implemented transparently. The diaspora remains a vital source of remittances that stabilise the external account.
The way forward
To avoid another lost decade, Pakistan must:
1. Secure policy continuity through a cross-party economic charter.
2. Invest in education, vocational training, and digital skills.
3. Shift from import substitution to export-led competitiveness.
4. Prioritise women's economic participation.
5. Reform taxation, expanding the net while reducing regressive taxes.
6. Build climate resilience through water management and disaster-ready infrastructure.
7. Strengthen local governments and depoliticise economic planning.
A narrowing window
Pakistan stands at a crossroads. While its past is littered with missed opportunities, sustainable and inclusive growth is still possible – if political courage, elite consensus, and structural reforms replace short-termism. Development is not just about GDP; it is about dignity, opportunity, and a shared future. The promise of Pakistan is still alive, but the time to act is now.
— Dr Noor Fatima is the winner of prestigious Martin Luther King Award, United States