The economic reform agenda under the guidance of the International Monetary Fund (IMF) is not yielding the desired results. It has probably saved Pakistan from a possible sovereign default. Exports remain depressed, foreign direct investment (FDI) is very low and GDP growth is not up to the mark.
The rising debt burden is fast pushing the country towards a debt trap, as debt servicing consumes almost half of the annual budget, leaving little room for development. What could be a viable economic plan to put Pakistan on a fast track to economic recovery by attracting investment, boosting exports and achieving a high-growth trajectory?
Pakistan has immense economic potential but lacks a smart, transformative plan to turn it into economic stability, sustainability and prosperity. It is a country of intelligent and capable people. The dynamism of its youth is at its zenith. They are innovative and result-oriented in their approach but they need a coherent economic plan. The young population, comprising nearly 60 per cent of the country, is a major source of strength if its potential is properly utilised, particularly in IT and IT services. Digital transformation of trade to boost IT exports through AI-backed social media tools could be a smart pathway to growth.
The AI revolution is rapidly transforming the world. The World Economic Forum (WEF) meetings in Davos largely focused on AI and its near-term impact on jobs. Davos was effectively transformed into a high-powered tech conference with the presence of Tesla CEO Elon Musk, Nvidia CEO Jensen Huang, Anthropic CEO Dario Amodei and Microsoft CEO Satya Nadella. While acknowledging AI’s transformative potential, there were also concerns about a possible AI bubble. Technology and its far-reaching impact across all sectors of life and business dominated the discussions. Countries like China are focusing heavily on AI-related chip manufacturing and rare-earth critical minerals to gain an edge over competitors such as the United States of America. This is clearly the future.
Artificial intelligence is both an edifice and an artifice of human intelligence. However, it also holds an advantage over humans, as its rapid processing mechanisms are largely error-free. Data has now gained prime importance and has effectively become a goldmine, strengthening both security and business promotion. Generative AI has emerged as a key data-driven tool for robots and chatbots, including platforms such as Midjourney and ChatGPT developed by OpenAI.
A global race is underway to dominate the high-tech industry through AI-powered social media platforms. Companies such as OpenAI, Apple, Google and Microsoft, along with firms from China and Russia, are investing billions of dollars to develop these platforms and capitalise on emerging markets. The future lies with AI-backed platforms such as xAI and ElevenLabs, voice AI startups that have achieved unicorn status following recent fundraising rounds.
AI has become so important to business promotion that OpenAI CEO Sam Altman is reportedly planning to invest billions of dollars in a network of AI chip factories. The growing relevance of AI can also be seen in the fact that the US edtech platform Coursera adds a new user to its AI courses every minute on average, largely due to the popularity of ChatGPT.
AI has also opened new avenues for creative industries, allowing artists to generate AI-based art through platforms such as Google Labs. There are countless possibilities for using AI-generated tools in business promotion. Cybersecurity is another critical feature of these platforms, though it has also become a subject of debate as AI-driven systems may increase vulnerability to cyberattacks. It is widely believed that the rise of AI could increase such threats.
AI-backed social media platforms are a significant source of income generation. Software exports and e-commerce have become major sources of employment for young people. The government of Pakistan must devise a policy framework to enable unemployed youth to channel their energy and potential into economic growth. There is an urgent need to provide high-speed internet access not only in urban centres but also in rural areas.
The Gen Z and Alpha generations are dynamic and possess the capacity to boost the economy through software exports. They are adept at finding innovative ways to earn through e-commerce, supporting their families while contributing to the national economy. Internet infrastructure should be developed through public-private partnerships to extend connectivity to towns and villages. Establishing internet cafes as part of this infrastructure could significantly boost exports and income generation.
Second, all taxes related to this sector should be abolished. Instead, targeted schemes should be introduced to train youth in using digital platforms for export promotion. If the government facilitates young people, often perceived as a liability, it could spark a major economic transformation. In reality, they are a valuable asset for a country like Pakistan.
Developed nations are facing demographic challenges, including shrinking youth populations due to changing societal trends. Pakistan, by contrast, has a rapidly growing youth population that is technologically eager and capable of contributing significantly if properly facilitated. Smartphones and digital platforms can trigger an economic revolution. The growth of IT companies and social media-based businesses can modernise the economy and generate billions of dollars in revenue.
The use of digital platforms by youth can significantly boost trade and commerce. With proper government support, this could revolutionise the economy. A comprehensive policy framework is required to fully harness the benefits of this transformation. According to some estimates, Pakistan could earn up to $500 billion over the next 10 years through IT and IT services exports if adequately supported.
Young people are already engaged in e-commerce and software exports, generating substantial income. What is needed is a state-of-the-art IT infrastructure to enhance their capacity. IT exports have the potential to surpass traditional exports such as textiles and textile-related products. The tax structure must also be reformed to encourage growth in IT and IT services exports. This is the way forward.
Pakistan is already trapped in debt and will be unable to benefit from rare earth critical minerals, the blue economy and its vast consumer market unless it reduces this burden. Phased debt retirement is essential and requires a comprehensive debt restructuring plan. Economic potential can only be fully realised through broad-based reforms, particularly in debt and tax restructuring. Effective debt management is urgently needed to alleviate the mounting burden.
A long-term policy framework is the need of the hour. Pakistan can become a thriving economy within the next decade if its youth are empowered through a smart economic plan. Digital platforms can transform the economy by boosting exports through e-commerce.
The proposed smart economic plan emphasises GDP growth through e-commerce, software exports and technology-driven services. Robust IT platforms and infrastructure are foundational in the digital age. Pakistan can achieve significant progress by leveraging AI-backed social media platforms and expanding high-speed internet access. The government must actively engage and facilitate youth to enhance technology-driven exports and place the country on a high-growth economic trajectory.
The writer is a former additional secretary and can be reached at: [email protected]
