Summary of article The missing take off
by Waqar Wadho
Published in Dawn in April 4-2026
Introduction
Pakistan frequently experiences what policymakers describe as “windows of opportunity,” such as IMF programs, debt relief, diplomatic support, and promises of foreign investment. Each time, expectations rise that the economy will finally achieve sustained growth. However, recent evidence shows that these hopes have not translated into lasting improvements for ordinary citizens, as poverty, inequality, and economic instability continue to worsen.
Rising Poverty and Economic Decline
According to the Planning Commission, nearly 29% of Pakistan’s population (around 70 million people) now lives below the poverty line, up from 22% in 2018–19. Rural poverty is even higher, exceeding 36%. This marks a major reversal of earlier progress and reflects deeper structural weaknesses in the economy. Inflation, reduced purchasing power, and weak job creation have further intensified economic hardship.
Limits of External Explanations
While external shocks such as COVID-19, global inflation, floods, and geopolitical instability have impacted the economy, they do not fully explain the persistent rise in poverty. Even periods of international financial assistance have failed to produce sustained recovery, suggesting deeper internal structural issues.
Political Economy and Structural Imbalance
The economy is heavily shaped by a system of rents rather than competitive rewards. Economic gains are often linked to policy advantages such as tax exemptions, subsidies, protection, and political connections rather than productivity or innovation. This system discourages competition and favors elite interests, making structural reform difficult.
Low-Growth Trap and Misallocation of Resources
Instead of investing in productivity and human capital, resources are often directed toward real estate, protected industries, and politically connected businesses. This leads to weak innovation, limited export growth, and low job creation. Over time, this reinforces a cycle of slow growth, rising inequality, and concentrated wealth.
Role of Elites and Resistance to Change
Sustained economic transformation would reduce monopoly power and increase competition, which can threaten entrenched interests. As a result, there is often limited incentive among powerful groups to support deep reforms, even if broader society would benefit from them.
Impact of External Assistance
International financial support helps stabilize short-term crises but does not change underlying incentive structures. In some cases, repeated bailouts may reduce pressure for reform by allowing existing systems to continue without fundamental change.
Conclusion
Pakistan’s rising poverty levels reflect not just economic shocks but a deeper structural problem rooted in a rent-based political economy. The system favors control over competition and access over productivity, leading to persistent inequality and weak long-term growth. Without structural reform that shifts incentives toward innovation, productivity, and fair competition, economic progress is likely to remain limited and uneven.
Discussion
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