Key Features of Pakistan’s Political Economy
Key Features of Pakistan’s Political Economy
- Dependence
on Agriculture
- Agriculture
employs ~36% of workforce but contributes less to GDP.
- Issues:
water scarcity, outdated farming methods, land concentration.
- Industrial
and Trade Policies
- Over-reliance
on textiles and low-value exports.
- Protectionist
policies discouraged diversification.
- Trade
deficits are chronic.
- Role
of Foreign Aid & IMF
- Pakistan’s
economy often relies on foreign loans and aid.
- Political
bargaining shapes loan conditionalities and reforms.
- Elite
Capture & Rent-Seeking
- Political
elites, landlords, business families, and military often dominate
resource allocation.
- This
leads to corruption, tax evasion, and inequitable policies.
- Remittances
- A
major source of foreign exchange, often stabilizing the economy when
exports fall short.
- Taxation
& Fiscal Crisis
- Very
narrow tax base (only ~2% population pays income tax).
- Political
unwillingness to tax elites creates fiscal deficits.
- CPEC
& Geopolitics
- Strategic
projects under CPEC highlight how Pakistan’s economic future is tied to
regional politics.
