Pakistan keeps converting relevance into rent

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Pakistan has rarely lacked geopolitical importance. It has often lacked much else.

Pakistan is once again approaching a familiar moment. The next checkpoint under its IMF program is due shortly, in a country that has entered 25 Fund-supported arrangements since joining the IMF in 1950. Each has offered breathing space. Few have changed the underlying economy.

That is the deeper problem. Pakistan has repeatedly converted strategic importance and external assistance into temporary relief. It has rarely converted either into economic transformation.

Borrowing can postpone adjustment; it cannot manufacture productivity. - Javed Hassan

Borrowing can postpone adjustment; it cannot manufacture productivity.

The pattern began in the 1960s. Under Ayub Khan the economy grew at more than 5 percent a year. The World Bank called Pakistan one of the most promising developing countries.

The growth was real. So was what it was producing. Industrialization concentrated wealth among a narrow group. Import licenses, subsidized credit and protected markets rewarded connections more readily than competitiveness.

Mahbub ul Haq, one of the strategy’s principal architects, became one of its most devastating critics. In November 1968, he told the Pakistan Economics Association what a decade of planning had delivered: 22 families holding two-thirds of industrial assets, 80 percent of banking capital and 70 percent of insurance. His retrospective judgment was starker still. Economic and political power, he wrote years later, had “gravitated toward a small minority,”........

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