Comment on “Pakistan's Economy: Fallout of 2022 Economic Distress Magnified the Need for Structural Reforms”

Abstract

Van der Eng (2025) provides a balanced overview of problems faced by Pakistan's economy today. First, as a development economist watching Pakistan since the mid-1980s, I agree with the structural reforms that are needed for Pakistan to sustain growth and reduce poverty in the coming decades. It is disappointing to find similar remarks repeatedly on the need for structural reforms but that elite capture is the underlying source of the difficulties for these reforms. In 2002 and 2003, I was involved in a project to prepare a long-term country strategy paper for the Japanese government with respect to official development assistance to Pakistan. Our final report pointed out the root cause of the less than expected performance of Pakistan as the weak and fragile monitoring capacity of citizens against the rent-seeking ruling elites (JICA, 2003). Pakistani economists cited by van der Eng (2025) vividly indicate that the problem still remains after more than two decades.

Second, I would like to attempt to enrichen the analysis by van der Eng (2025) with a longer term horizon covering the pre-independence period. It is highly appropriate for van der Eng (2025) to pay attention to long-term perspectives, with an excellent summary on the industrialization during the 1960s under the military government of Ayub Khan. The industrialization during the 1960s contributed to the higher gross domestic product (GDP) per capita in Pakistan than in India in the 1980s. I once estimated GDP separately for areas currently in India, Pakistan, and Bangladesh, for the period c.1900–1947 (Kurosaki, 2017) and have recently revised those estimates (Kurosaki, 2024). Figure 1 shows that the high growth period during the 1960s was preceded by positive economic growth in Pakistan during the 1950s and the pre-independence period. Kurosaki (2017) shows that agricultural growth driven by institutional reforms just after independence and the canal irrigation development during the colonial period were the main factors of this early catching up. Areas currently in Pakistan indeed started from a much more unfavorable level than indicated by van der Eng (2025).

This has two policy implications. First, the achievement of Pakistan's economy has been more substantial than indicated by analyses focusing on more recent periods. In other words, the recent economic distress was indeed more damaging to the welfare of Pakistanis with a longer time horizon. Second, the agricultural sector has been important, and considering its current productivity level below the global frontier, the sector still has potential to contribute to economic growth and poverty reduction in Pakistan in the coming years.