Why sustainable growth demands a new government-business compact

LAHORE: Sustained economic growth is not just about numbers -- it is about vision, trust and long-term commitment. When governments and the private sector operate primarily in pursuit of short-term or narrow self-interest, economic transformation remains elusive.

We need a shared national purpose to drive long-term growth -- one that demands collaboration and coordinated reform. Without it, development is fragmented and fragile. Adversarial relationships between the state and business undermine investment, innovation and institutional capacity.

No country has grown sustainably while its institutions remain weak and its stakeholders divided. Governments that serve petty interests face many pitfalls. When driven by political expediency -- as almost every government in Pakistan has been -- structural reforms are delayed, as seen in areas such as taxation, energy pricing, privatisation and the legal framework. These governments prioritise populist policies over economic efficiency, enabling corruption and elite capture through weak enforcement. Self-serving rulers fill public institutions with ineffective or politicised appointments.

As a consequence, the standard of governance declines, public funds are wasted, investor confidence erodes, and institutional decay leads to inefficient government and poor service delivery.

The private sector’s short-sighted behaviour is equally damaging. In pursuit of short-term profits, many evade taxes or operate informally. Cartels are formed to stifle competition. Innovation and labour welfare are neglected, ultimately harming productivity. A highly skilled labour force alone cannot deliver efficiency. Workers’ welfare, safe working conditions, medical care, and subsidised food are equally vital to achieving global competitiveness.

Instead of pursuing global standards, a self-centred private sector often lobbies for protectionist policies. These efforts frequently succeed in influencing government decisions in their favour, weakening the country’s industrial base. Job quality deteriorates, exports stagnate, and reforms such as digitisation and compliance face resistance.

This creates a vicious cycle of mistrust. The government tightens control out of distrust for business, and businesses, in turn, conceal operations out of distrust for the government. The result is excessive regulation, harassment, and non-cooperation on critical reforms. This dynamic fuels informality in the economy, as is currently the case in Pakistan. Mistrust breeds informality, and informality limits scale, productivity and growth.

To address the deep-rooted challenges afflicting our economy, the government must ensure the rule of law, prioritise structural reforms, improve service delivery, reward merit and professionalism, and partner with industry. The private sector, in turn, must embrace documentation, invest in R&D and human resources, comply with labour and environmental standards, avoid rent-seeking and compete fairly and transparently.

Both sectors must jointly build export capacity, invest in skills and technology, develop industrial zones and logistics, and promote formalisation and financial inclusion.

It is time for a mindset shift. Sustainable growth requires a move from transactional thinking to transformational planning. If both the government and the private sector stop chasing short-term wins and start investing in national strength, growth will not only be possible -- it will become inevitable.

Let us replace mistrust with partnership, and petty interests with national priorities. Only then can sustained economic growth become a shared national reality.