Why Pakistan Won’t Be A Failed State – OpEd


Pakistan’s economic performance over the past seven decades has been a mixed bag. The country, which started off virtually from scratch and was almost written off by many analysts at the time of its inception, has bounded ahead in the face of enormous challenges.

Today, Pakistan offers the most liberal trade and investment regime in the region. It is fully integrated into the multilateral economic and trading systems. In order to appreciate the impediments faced by Pakistan on the road to economic development and prosperity, it is imperative to take stock of the country’s economic predicament at the time of its birth. 

Since independence in 1947, the economy of Pakistan has emerged as a semi-industrialized one, the on textiles, agriculture, and food production, though recent years have seen a push towards technological diversification. Successive governments in Islamabad have been working tirelessly to uplift the country be it economically or socially. The major focus of the previous governments had been socio-economic area. The economic situation of Pakistan is satisfactory because rapid growth rate has resulted in a quadrupling of per capita incomes and reduction in poverty levels by one half despite fairly high population growth. Structural changes have transformed a predominantly agrarian economy to a more diversified production structure. Manufactures account for 80 percent of the country’s exports.

The governance issue prevails in many parts of the planet. Several countries are faced with this conundrum. It is not denying the fact that governance plays a key role in the growth of any state. The absence of governance causes various issues that lead this state towards abysmal shambles. In this contemporary world, developing countries present the worst-case scenario in this regard in order to achieve long-term economic stability. They are the mercy of developed states and leading global financial institutions. 

In the first decade after independence, Pakistan’s economy grew on average 3.1%. Despite the overall modest growth, manufacturing grew at a healthy rate of 7.4%. During the 1960s, the growth rate more than doubled to reach 6.8%, which was underpinned by 5.1% growth in agriculture, 9.9% growth in manufacturing and 6.7% growth in services. However, the healthy growth rate could not be sustained and the next decade saw it come down to 4.8%. The nationalization policy is stated to be one of the factors which put the brakes on the economic march. While the services sector nearly maintained its robust expansion, agriculture and manufacturing growth fell to 2.4% and 5.5% respectively. 

The economy regained momentum during the decade of the 1980s with overall growth of 6.5%. But as in the past, the growth rate fell to 4.6% during the 1990s as the country remained in throes of political instability as well as struggled to undergo structural economic transition. The next two decades also witnessed modest growth rates of 4.7% and 4.4% respectively. During this period, Pakistan has waged an epic struggle to ward off an existential threat posed by terrorism. The war against terror has tolled upon the national economy (we will come back to the economic costs of terrorism later). 

As per the data available with Pakistan Bureau of Statistics, like most other developing economies, fiscal deficit has been a norm in Pakistan. In the 1960s, the average fiscal deficit made up 2.1% of the GDP, which more than doubled to reach 5.3% in the 1970s and further to 7.1% during the 1980s. During the 1990s, fiscal deficit came down marginally to 6.9% before falling significantly to 4.6% during the 2000s. During the current decade on average 6.2% fiscal deficit has been recorded.3 In 2017, Pakistan’s fiscal deficit was 4.5% of the GDP compared with India’s 6.5%, Bangladesh’s 4.9% and Sri Lanka’s 4.8%.4.

In the US-led war against terror, no other nation has sacrificed as tremendously in terms of both men and materials as Pakistanis have done. The nation’s incessant and intrepid campaign against the militancy has tested the resilience of the economy. Between 2001-02 and 2017-18, the direct and indirect economic cost of the war on terror has teetered on the edge of $127 billion, which accounts for nearly 40% of Pakistan’s present GDP of $319 billion.

The road and highway network in Pakistan spans 260,000 kms – more than five times the length inherited in 1947. Modern motorways and superhighways and four-lane national highways link the entire country along with secondary and tertiary roads.

Despite these harsh challenges both at domestic and international fronts, Pakistani governments fought well to uplift the country. They worked on infrastructures, roads and industries in order to gain maximum economic benefits and enhance their exports. Even during the Covid-pandemic, Pakistan’s currency and economy were flourishing at high pace. Pak Rupee was the best currency during Covid era. 

At strategic fronts, Pakistan is having very troubled neighborhood. In its Eastern side, India is located, which never missed a single chance to destabilize Pakistan economically, politically and strategically. With already having limited economic resources, Pakistan spends major chunk of GDP in defense sector due to the hegemonic and warmongering designs of Indian government. Likewise, on the Western front, Afghanistan is located, which has witnessed many civil wars. The Afghan soil has become cauldron of non-state actors. The security situation in Afghanistan is having spill-over affect over Pakistan’s security and economic situation. To curb the menace of terrorism and extremism on Western front, Pakistan is spending huge sum of money, which is hurting overall economic environment. The influx of Afghan refugees has further complicated the matter for Pakistan. 

Iran is another neighbor of Pakistan. The country is under direct and most stringent sanctions of US and Western countries. Pakistan cannot continue its trade with Iran freely due to the economic embargos. Despite limited economic options, troubled neighborhood and changing regional geo-strategic environment, Pakistan is performing well by extending all possible facilities to its people. The is absolutely no truth in the reports of Pakistan is going to be default. The country cannot default. 

The war on terror has been most tiring for Pakistan because not has it consumed the state’s strategic and conventional resources but the menace of terrorism has infiltrated into the fabric of society as the biggest challenge ever to grapple with. However, despite all the bloodshed and loss, Pakistan still manages to survive and stands tall in the face of all these challenges.

Most recently, the economic turmoil is putting heavy pressure on Pakistan’s new government, which is currently in long-running negotiations with IMF on a bailout deal to stave off a disastrous default on foreign debt. Likewise, with government and armed forces’ tireless efforts, Pakistan can mop up all its socio-economic and religious political evils from its soil.

In a nutshell, governance is a phenomenon that smoothly steers government and state. However, the game is not over yet. Pakistan can come back on the right path by taking some extraordinary steps in this sphere

The writer is Islamabad based expert of strategic affairs and can be reached at [email protected] 

Asad Ali

Asad Ali is an Islamabad based expert of South Asian Affairs

4 thoughts on “Why Pakistan Won’t Be A Failed State – OpEd

  • February 19, 2023 at 4:50 am

    Mr Malik, you very conveniently missed to narrate Pakistan’s nefarious designs in Kashmir and pumping terrorists, weapons and drugs to ensure high tension with your supremely talented and hardworking neighbour. If Pakistan was an honest, friendly neighbour, India would have opened up both its arms and ensured prosperity of both nations.

  • February 20, 2023 at 6:32 am

    Pakistan was, is and will forever remain a third world basketcase and a failed state. No amount of spinning articles like this will change that fact.

  • February 20, 2023 at 7:08 am

    Pakistan is already a failed state, and it will continue this self-destructive spiral downwards until the real arbiter of its destiny – its military establishment – reevaluate its priorities. Does Pakistan wish to continue its belligerent attitude towards India in the foolish and pointless pursuit of a piece of land that it never possessed in its 75-year existence (and which India is never going to hand them on a plate)? Or does it want to make peace with India by accepting the ground realities and have normal trade relations? Until Pakistan makes a course correction with regards to its relations with India, it is never going to get out of the pit it has dug itself into.

  • February 21, 2023 at 7:24 pm

    India has lot issues going on with in the country like right wing politics, woman issues and education issues. Honey and milk doesn’t flow in India but poverty has reduced. We blame Pakistan only for its terrorist exports to India and to the world. The whole world where Osama was hiding. He was harboured by Pakistan. Indian doesn’t blame Pakistan for its problem except for terrorism especially islamic terrorism. You are partially blaming India for your economic problems. No country was ever pulled out of default like yours. Pakistan treat debt as a disposable income. Now the hen is coming home to roost. If countries ask their money back Pakistan is surprised how they can ask their money back. Pakistan has talent, natural resources and manageable population. They don’t have religious issues like India has because they any how wiped out the minorities and remaining are living in fear. Pakistan can have thriving economy if they prioritize what’s important. Again I am not saying that India is superior to Pakistan but we try to manage the problems without wiping out the minorities. Pakistan has no tolerance for other beliefs and ethnic group. Your own Muslims friends is not ready to help you and more over your big brother China left you behind and made your debtor with billion of dollars to be paid back to drag into this situation. I hope cpec works in the future. The whole world knows about your human rights record but still the world always targets India. Kashmir is part of India until india weakens.(secretly you are praying). India can’t be friend with Pakistan and it will continue to be like that in the future. So focus on important problems and don’t export terrorist, ideology and Islamic fundamentalism rather export stuffs that can be used by people through out the world. Your country has the capacity to bring a thriving economy into Pakistan.Remember it’s the non Muslim friend the IMF is coming to rescue for liquidation. Respect and accept minorities. You can bounce back if religious fundamentalism is shelved into the closet once for all.


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