LAHORE: Global coordination is important but real economic transformation in the new economic paradigm will be driven locally, through context-specific industrial strategies, workforce development, and collaboration between governments, businesses, and communities.
This is because the world is entering a new economic age. Climate transition is no longer optional, hyper-globalisation is retreating, middle classes are under pressure, and poverty reduction in developing countries has become harder than at any point in the past three decades.
A recent Project Syndicate essay argues that these shifts demand a fundamental rethinking of whom economies serve and how growth is generated. Its central insight is stark but hopeful. Pakistan stands at the intersection of nearly all the challenges identified in the article. Growth remains volatile, manufacturing is stagnating, exports are narrow, informality dominates employment, and the middle class — once the backbone of political stability — is under visible strain. At the same time, climate shocks, energy transition pressures and rapid technological change are reshaping the global economy in ways that Pakistan is ill-prepared to navigate.
The article highlights how backlash against globalisation in advanced economies has been driven by neglected regions and displaced workers. In Pakistan, the story is not backlash but exclusion. Large segments of the population were never meaningfully integrated into global value chains in the first place. Premature de-industrialisation has left the country with a weak manufacturing base, while the services sector — where most new jobs are created — remains low-productivity and informal. Traditional industrial policy, focused narrowly on manufacturing, is no longer sufficient. Instead, governments must broaden industrial strategy to include skills development, support for small and medium enterprises, supplier networks, technology diffusion and service-sector productivity. This is precisely where Pakistan has struggled the most.
For decades, Pakistan’s industrial policy has been centralised, episodic and incentive-driven, relying on tax concessions, protection or ad hoc subsidies rather than capability-building. Workforce development remains fragmented, underfunded and poorly aligned with market needs, leaving millions of young Pakistanis under-skilled for modern jobs.
The article rightly emphasises that job creation in services will not happen automatically. It requires active intervention on both the demand and supply sides of the labour market. Pakistan’s experience confirms this. Retail, transport, construction, and personal services absorb labour, but mostly in low-wage, insecure forms. There has been little systematic effort to raise productivity in services through technology adoption, firm upgrading or targeted financing for high-growth small enterprises.
Crucially, commentary does not argue for a retreat of the state. Instead, it calls for a smarter, more enabling role: articulating a vision for structural transformation, ensuring access to finance, skills, and social protection, and coordinating across public and private actors. Pakistan is still far from meeting this standard. Fiscal stress constraints spending, but the deeper problem is not money alone — it is weak coordination, regulatory unpredictability, and an absence of long-term goal setting.
Pakistan has been locked out of emerging technologies due to skills gaps and allowing digital platforms to expand without improving job quality or earnings. Without policy direction, technology may deepen inequality rather than drive inclusion. Perhaps the most important takeaway for Pakistan is that the distinction between developed and developing countries is narrowing in terms of policy needs. The country’s lagging regions, informal workers, and vulnerable middle class require the same tools now being rediscovered in advanced economies — place-based development, skills-first growth and institutional coordination.
Pakistan is still far, but not without pathways forward. The country has the demographic scale, entrepreneurial energy, and institutional presence at provincial and local levels to pursue decentralized, context-specific strategies. What it lacks is coherence — a shared understanding that structural transformation, not short-term stabilization, must be the organising principle of economic policy. Structural transformation is now the name of the game. For Pakistan, embracing this reality is no longer a matter of ideology or ambition. It is a matter of economic survival.
