An economic cul-de-sac—II

The second big force that will be the catalyst for change is the enormous youth bulge in the country; with almost 90 percent of the population under 45 years of age the youth bulge is here to stay for the foreseeable future. Three million new jobs are needed every year to absorb the new entrants in the working age group. This requires an economic growth rate of 7 to 10 percent a year.

The patronage-cum-predatory state is incapable of reforms that can replace the current predatory policy focus on taxes, with a renewed policy focus on investment and growth.

The current investment to GDP ratio of 14 percent needs to be doubled in the shortest possible time, but the state is unwilling and unable to do the needful.

On the tip of the youth pyramid is a small group of highly educated and globally connected youngsters who are trying to find a niche for Pakistan in the global market of IT and perhaps will become the pioneers of AI and the vanguard of the fourth industrial revolution in Pakistan.

READ MORE: An economic cul-de-sac—I

The current dispensation based on nepotism and patronage is detested by this group due to lack of merit, ad-hoc policies, poor infrastructure, lack of rule of law, poor property rights and absence of democracy and human rights; all factors that constitute a norm in the developed western world that this group has been exposed to and are working with.

Offshoring operations abroad is a last resort, but is popular with many who can manage it.

At the bottom of the pyramid is the large mass of youth trying to escape rural poverty and migrating to urban areas only to find an equally depressing urban economy that is not producing any jobs. Escaping from rural poverty and ending up in urban squalor without any skills and employment opportunities.

Along with other equally disposed urban youth, together they watch in anger the antics and conspicuous consumption of a small minority comprising the ‘urban rich; a dangerous powder keg ready to explode at any time.

Half of the youth pyramid comprises women emerging from the traditional confines of their homes and looking for employment in a male-dominated society. With a stagnating economy, the meritless patronage state is simply another big hurdle to their path. No country in the world has developed without vigorous participation of women in the workforce. These young women are eager for reforms and are ready for forcing the change.

Finally, the overseas Pakistanis whose ranks have swelled with youth fleeing Pakistan for greener pastures abroad are totally dissatisfied with the state of affairs in Pakistan. This brawn-and-brain drain comprises doctors, engineers, accountants, educators, researchers, skilled and unskilled workers. Their remittances of over thirty billion dollars every year are now the biggest source of foreign exchange for the country. Their funds keep the country afloat yet they get no respect in the country.

Their properties are not safe in Pakistan, and they are regularly fleeced by the state functionaries. They would like to invest in much larger amounts in productive assets but have no trust in the ecosystem of Pakistan. The Pakistani diaspora — particularly in the UK, the US, and Gulf — gives it access to exactly the capital, networks, and institutional knowledge that a developmental push in Pakistan would need.

The disconnect between the status quo and these groups is widening. How the anger of the youth will boil over and convert into an organised political movement is unknown. However, before the moment arrives when the demographic pressure of a young, frustrated, connected population tips from latent anger into organised demand, we should as a nation act to defuse it.

The ruling coalition, representing the traditional politicians, has been running the rent-seeking, dynastic, corruption-embedded political economy for the last five decades.

Any serious reform programme would need to dismantle their system and replace it with a more egalitarian system that delivers growth and development. Recent countrywide opinion polls suggest that the old civilian political class has lost support and is considered an obstacle to modernisation, development and growth. Over whelming majority would support a new youth-based political elite as the only reform option.

The country needs young leadership that is technocratic and reform-oriented, drawing on the same middle-class and diaspora base that pushes for transformative economic reform requiring credible rule of law. The reforms that must also translates into facilitating investors — domestic and foreign alike — who commit long-term capital only when contracts are enforceable, property rights are secure, and the regulatory environment is predictable.

A national convergence is happening in support of change but that alone is not sufficient as a mechanism for economic transformation unless it translates into:

• Stabilising the political environment enough to attract investment;

• Breaking the traditional rent-seeking coalition’s stranglehold;

• Mobilising diaspora capital and goodwill; and

• Giving reform technocrats the political cover to implement painful changes.

This would need a new ‘Charter for Economic Transformation’ committed by all political parties followed by early free, fair and transparent elections. The resulting government should be more growth-oriented than the current one, more stable than the current chaos, and fundamentally equipped for the systemic overhaul that turning a demographic dividend into economic transformation actually requires. This overhaul will require total national will and support of all “Pakistan First” institutions to reconceive their institutional interests to be a strong economy rather than a controlled economy.

In sum, Pakistan’s governance system has pushed the country into a long festering poly-crisis comprising:

• Political stalemate,

• Economic stagnation,

• Social turmoil and

• Technological backwardness

The above poly-crisis (PEST) can only be handled through a national effort, with deft civil-military relationship, and institutional buy-in that can swiftly end the extreme polarisation in the country and rapidly move it towards the much-needed economic transformation.

Copyright Business Recorder, 2026