PAKISTAN periodically receives what policymakers describe as a ‘window of opportunity’: debt rollovers, IMF programmes, diplomatic goodwill, or the promise of foreign investment. Each time, hope returns that the economy will finally take off. Yet tangible, sustained improvement for ordinary Pakistanis remains elusive. Recent official data now show why. Poverty is rising sharply, purchasing power is shrinking, inequality is widening and the economy shows little sign of genuine take-off.

According to the Planning Commission’s latest poverty assessment, nearly 29 per cent of the population (around 70 million) now lives below the national poverty line, up from about 22pc in 2018-19. Rural poverty exceeds 36pc. This is a reversal of nearly two decades of progress and is happening at precisely the moment when policymakers talk most about stabilisation and external support. It tells us something fundamental has gone wrong, not just with growth, but with the structure of the economy itself.

The standard explanation points to external shocks: Covid-19, global inflation, floods and geopolitical instability. These factors matter. But they do not explain why poverty continues to rise even when Pakistan secures international financial support, nor why each recovery seems weaker and shorter-lived than the last. Political economy offers the unsettling explanation that Pakistan is stuck in a bad equilibrium that powerful actors have little incentive to change. Modern political economy theory teaches us that economic take-off is not merely a technical challenge; it is a political one. Sustained growth requires creative destruction; new firms, new sectors, rising productivity, expanding exports, and........

© Dawn