The Pakistani economy has long been in search of a sustainable path for development, one that ensures inclusive growth and address­es the country’s deep-seated struc­tural problems. Despite its vast potential, Pakistan finds it­self trapped in a cycle of eco­nomic crises, characterized by a recurring reliance on exter­nal borrowing, primarily from the International Monetary Fund (IMF). Central to this search for a new paradigm is the vision of Dr. Mahbub ul Haq, Pakistan’s former Chief Economist, whose ideas about economic develop­ment remain pertinent today. Haq’s em­phasis on human development rather than sheer economic growth is especial­ly relevant in a country where inequality continues to undermine social progress.

Dr. Mahbub ul Haq’s central critique of Pakistan’s economic system was its capture by a small elite. He famously pointed out that the country’s growth had been “hijacked by a handful of fam­ilies.” Even today, this reality persists, as wealth remains concentrated in the hands of a few, leaving the majority of the population to struggle with poor living conditions. Haq’s introduction of the Human Development Index (HDI) was a pioneering effort to shift the glob­al focus from GDP to more meaningful measures of development—education, health, political freedom, and security. In a country like Pakistan, where a sig­nificant portion of the population lives on less than $3 a day, Haq’s vision pro­vides a critical framework for address­ing the nation’s shortcomings. His belief was that without human development, economic growth would be unsustain­able and exclusionary, a lesson Pakistan has yet to fully embrace.

In today’s Pakistan, the current account deficit is a reflection of structural weak­nesses within the economy. The econ­omy’s reliance on imports and a con­sumption-driven model has contributed significantly to this deficit. Short-term policies and emergency measures, of­ten dictated by IMF loan programs, have failed to address the underlying issues. Mahbub ul Haq recognized that without long-term investments in human capi­tal—education, healthcare, and social protection—economic stability would re­main elusive. Unfortunately, successive governments have lacked both the prep­aration and imagination necessary to im­plement the structural reforms needed to move beyond this cycle of dependency.

The country’s current economic situa­tion is one of stagnation, both in terms of exports and investments. The high level of consumption, with 95% of goods be­ing imported, is unsustainable. It has led to a vicious cycle where Pakistan, facing a balance of payments crisis, turns to the IMF for short-term relief. But these loans come with stringent conditions that further constrain economic poli­cy and often lead to austerity measures that exacerbate poverty and inequality. Instead of fostering growth, these pol­icies have led to a situation where the economy is unable to break free from its dependence on external financing.

Excessive consumption has also crowded out investment in productive sectors. This has been particularly ev­ident in the manufacturing and export sectors, where growth has been sluggish at best. The lack of significant exports means that Pakistan is unable to gener­ate the foreign exchange needed to ser­vice its debt or invest in its future. In a country where tax revenues are low and public services are underfunded, the reliance on imports and external bor­rowing has created a fragile economic environment. Structural reform is des­perately needed to correct these imbal­ances and put the economy on a more sustainable path.

The media, in turn, has been largely fo­cused on domestic stories, often missing the broader implications of the econom­ic policies being pursued. The absence of a serious public discourse on economic reform has further entrenched the sta­tus quo. There is a widespread trust def­icit, both within the country and among international investors, which has led to insufficient investment in key sectors. This lack of investment has kept pro­ductivity low, stunted technological ad­vancement, and hampered economic diversification. As a result, Pakistan con­tinues to rely on consumption and im­ports to drive its economy, further exac­erbating its structural weaknesses.

One of the most alarming features of the current situation is that all roads seem to lead to the IMF. Despite various govern­ments’ pledges to break free from IMF de­pendency, the country continues to turn to the institution whenever faced with an economic crisis. The focus on short-term fixes has precluded any meaning­ful discussion about long-term econom­ic strategy. This reliance on IMF loans is not a sustainable solution. Instead, Paki­stan must focus on increasing its exports and attracting investment, particularly in sectors that can provide long-term eco­nomic benefits, such as technology, agri­culture, and manufacturing.

At the same time, Pakistan’s relation­ship with China, particularly through the China-Pakistan Economic Corridor (CPEC), offers both opportunities and challenges. The CPEC projects have pro­vided much-needed infrastructure in­vestment, but the expected benefits in terms of increased exports and job cre­ation have not yet materialized. Export growth remains stagnant, and the prom­ised industrial development along the CPEC route has been slower than an­ticipated. If properly managed, howev­er, the CPEC initiative could provide the kind of investment and technological transfer needed to kickstart Pakistan’s economy. But this will require more than just infrastructure; it will require a com­prehensive strategy to integrate these investments into the broader economy.

To reverse the tide, Pakistan must un­dergo significant structural reforms. These reforms must address the exces­sive consumption habits, the concen­tration of wealth, and the lack of invest­ment in human capital. It must also deal with its reliance on imports and exter­nal financing. As Mahbub ul Haq wise­ly noted, “The real wealth of a nation is its people.” Until Pakistan prioritizes the development of its human resourc­es—through education, healthcare, and political freedoms—the country’s eco­nomic progress will remain stunted. Re­forming the tax system, expanding the export base, and fostering a culture of innovation and investment are crucial steps that must be taken if the country is to break free from the cycle of depen­dency and underdevelopment.

Pakistan’s economic policy has long been driven by a fetish for growth, where the obsession with GDP expansion over­shadows the more fundamental ele­ments of sustainable development. This singular focus often ignores the critical need for equitable distribution, human development, and long-term structural reforms. The growth at any cost mental­ity reflects a deeper issue—myopic love of control-where market signals are ei­ther manipulated or misinterpreted to maintain authority over the economy, rather than allowing for organic, bal­anced growth driven by genuine market forces.

This lack of vision has been com­pounded by a lack of experimentation and evaluation. Governments in Paki­stan have largely relied on traditional, short-term economic measures, such as borrowing from the IMF or raising tax­es, without testing innovative solutions or rigorously evaluating existing poli­cies. There is little room for trial and er­ror, as policymakers remain locked into established paradigms that have shown limited success. As a result, the economy remains stagnant, unable to break free from its cyclical crises.

Adding to these challenges is the coun­try’s self-absorption and global isola­tion. Pakistan has failed to fully engage with the global economy in a way that fosters sustainable trade relationships and technological advancements. In­stead, there is a narrow focus on imme­diate political gains, often at the cost of transparency. Lack of transparency with the public exacerbates trust deficits, leaving citizens disconnected from eco­nomic realities and undermining dem­ocratic accountability. Without clear communication about the country’s eco­nomic challenges and plans, public sup­port for necessary reforms remains elu­sive, further entrenching the status quo.

In this climate, true progress can only come from a shift towards long-term structural reforms, openness to experi­mentation, and a reorientation toward inclusive, human-centered development.

Ultimately, the search for a new eco­nomic paradigm in Pakistan requires a holistic approach. One that does not merely focus on short-term fixes or ex­ternal borrowing but prioritizes long-term investments in human develop­ment. The lessons of Mahbub ul Haq’s HDI framework remain as relevant to­day as ever: economic growth must be inclusive, sustainable, and centered on improving the well-being of all citi­zens, not just a privileged few. Without these reforms, Pakistan will continue to find itself in a perpetual cycle of eco­nomic crises, unable to realize its true potential on the world stage.

Maqsood Hussain
The writer a student at Quaid-e-Azam University, originally from Skardu, Gilgit-Baltistan.