Doom-laden narratives about Pakistan have always found eager audiences. The latest tells us that we are condemned to an eternal wait for Godot – forever trapped in elite capture, incapable of reform.
But history tells a different story. Ours has never been a static tale of extraction alone. It has been an interrupted journey, with detours and disappointments, yes, but also marked by resilience, bursts of reform and episodes of reinvention that defy the script of perpetual despair.
What such sweeping critiques rarely acknowledge is the fundamental role of political instability, regime discontinuity, repeated policy shocks and geopolitics. Since independence, every time the economy has gathered momentum, it has been disrupted by wars, abrupt regime changes, sanctions, external pressures or internal reversals. No country can sustain long-term development when its policy horizon is repeatedly cut short by crisis. Reducing this complex history to a morality tale of ‘elites versus people’ may be emotionally satisfying, but is intellectually lazy and analytically insufficient.
The story of Pakistan is not one of unrelenting extraction. It is also a story of episodic reform, pockets of excellence and surprising resilience against heavy odds. In the 1960s, industrialisation, major infrastructure projects and the Green Revolution made Pakistan one of the fastest-growing developing economies, with rising exports and industrial capacity.
The 1970s, despite political upheavals, saw ambitious nationalisation alongside a significant expansion in higher education and social sector spending, reshaping the state’s welfare role. The 1980s, often remembered for their geopolitics, also witnessed economic liberalisation, remittance inflows and the rise of small-scale enterprises that broadened the consumer base.
The 1990s, marked by instability and frequent government changes, nevertheless brought financial reforms, early privatisation and the groundwork for a more open economy. By the early 2000s, bold reforms in telecommunications, banking and higher education unleashed unprecedented growth in services, created millions of jobs and set the stage for digital inclusion. More recently, fintech, freelancing and digital governance have shown that innovation can flourish even in weak institutional environments.
These episodes reveal that when incentives align and continuity is preserved, Pakistan can reform and reinvent itself.
Yes, elite capture has been real. Rent-seeking in the power sector, sugar industry and land policies has cost the nation dearly. But even here, the picture is more complex than is painted. The Independent Power Producer (IPP) contracts, now invoked as symbols of elite privilege, were born initially of genuine power shortages in the 1990s. They reflect not just rent-seeking but also poor regulation, weak foresight and inadequate contract management.
Similarly, the sugar industry’s capture of policy space is undeniable, yet successive governments have attempted, albeit inconsistently, to rationalise prices and promote alternatives. A nuanced view would distinguish between systemic rent-seeking and policy failures born of institutional weakness and discontinuity.
Global shocks, too, are conspicuously absent from one-dimensional critiques. Pakistan’s economic trajectory cannot be understood without factoring in the oil shocks of the 1970s, the destabilising effects of the Afghan conflict, repeated sanctions and the global financial crises that disproportionately hit emerging markets. To attribute Pakistan’s path solely to domestic elites is to ignore the harsh realities of geopolitics and the vulnerabilities of small open economies. Policymaking in such an environment is a constant struggle for survival.
None of this is to absolve elites of responsibility. Their privileges, tax exemptions and rent-seeking have widened inequality and weakened the state’s legitimacy. But to claim that the system is designed only for their enrichment is to slip into a determinism that leaves no room for change. Political economy is not static. Coalitions shift, institutions evolve and crises force recalibration. Even within elite-dominated systems, reformist alliances have emerged in Pakistan, delivering meaningful outcomes.
The more relevant question, therefore, is not whether Pakistan is organised for extraction or development, but how the balance can be tilted decisively towards a developmental state. This does not require demolishing the entire system but restructuring incentives in a way that makes rents costly and productivity rewarding. Tax breaks and subsidies that entrench privilege must be replaced with policies that promote innovation, exports, and investment in people. Regulation should reward transparency and competition rather than patronage and protection.
Human capital is the most critical lever. Pakistan’s persistent underinvestment in education, health and skills has been its greatest constraint on productivity. But the challenge is compounded by the country’s high population growth rate of 2.55 per cent. A nation expanding at this pace cannot realistically register intensive development unless it simultaneously invests in its people. The arithmetic is simple: more mouths to feed, more young people entering the workforce and fewer resources to spread across an already strained system. Without serious attention to population management and human capital, any gains from reforms will be quickly diluted, leaving Pakistan trapped in a low-productivity cycle.
Reform also requires stronger accountability and institutions. Procurement digitisation, transparent budget allocations and empowered regulators can gradually dismantle rent-seeking architectures. Equally vital is to recognise new forces for change: the urban middle class demanding better services and a global diaspora eager to invest if rules are predictable. These groups represent constituencies for reform that can counterbalance entrenched interests.
The pessimistic narrative that Pakistan is condemned to extraction alone may grab attention, but is analytically thin and politically paralysing. A more balanced view acknowledges the undeniable costs of elite capture but also recognises episodes of resilience, the potential of reform and the agency of citizens and policymakers.
Pakistan’s history has been uneven and disappointing at times, but it is not foreordained. There is ample evidence, both at home and abroad, that nations can and do change course. Pakistan has that choice too: persist with the rentier status quo or commit to becoming a developmental state. What it needs now is not despair, but deliberate action, policy continuity and a collective resolve to organise for development – for all.
The writer is the vice-chancellor of the Pakistan Institute of Development Economics (PIDE), and a former chief economist of Pakistan.
