How Will Pakistan’s Economy Play Out Considering the Ongoing Political Chaos?

Nauraiz Rana (Economist, World Bank) sits down with Shahram Azhar (Professor of Economy, Bucknell University), and Danish Khan (Asst. Professor & Director of Inequality, Poverty, Power and Social Justice, Franklin and Marshall College) for a riveting discussion on Pakistan’s political economy, specially in light of the ongoing political chaos. They delve into the necessary conversation about adapting an interdisciplinary approach to understand Pakistan’s economic upheavals and ongoing financial deviations. All three speakers discuss their respective viewpoints on answering the often deliberated question of what causes Pakistan’s economic crisis. Nauraiz Rana, upon sharing the concerning statistics of Pakistan’s food inflation and currency depreciation poses the question of whether the recent social uprisings were also a consequence of the economic oppression that people are facing. He shares that financial fluctuations in the country most brutally impact low and middle income houses which may compel them to finally mobilize. However, as an alternative angle, Danish Khan reminds us that the nature of political instability is not unprecedented, and provided an analysis of 2012’s debilitating economic situation owed to the country’s terrorism prevalence and power outages. Khan shares that as economists, it is essential to study a greater arch than just the one that falls within a time period of 12 months- particularly in Pakistan where the economy follows a turbulent trajectory. Other themes explored are of the economic model that Pakistan follows and whether current socio-economic realities necessitate it to be revisited. Shahram Azhar expresses an interesting analysis as he says that Pakistan’s economy doesn’t even encourage capitalist growth, instead it’s tailored for a particular type of profitability that emanates from absolute control over the value chain end to end. He holds this as one of the reasons for the economic downturn as such a model increases input costs and is precisely why the country’s fertilizers are three times more expensive than those in India or UAE. For Nauriaz, the catalyst for economic instability is Pakistan’s inability to redefine the parameters of success. Rana shares that while economic growth is a strong signal of development, factors like institutional changes need to be considered more strongly. For Professor Danish, the beneficiaries of Pakistan’s economic growth and development are limited to the country’s elite, out of which the landed elite play a critical role in determining economic and political trajectories. Khan predicts that it is only when the size of the pie is increased, that stability will ensue.