Necessary path to a development state

In a recent two-part article, “An economic cul-de-sac-I&II” ( Business Recorder July 13-14 2026), I had argued that Pakistan needs a new ‘Charter of Economic Transfor mation’ to be signed between political and institutional forces to usher in reforms needed to transform the state from a failed ’patronage state’ to a new and vibrant ‘development state’. The development state will enshrine a new horizontal and vertical governance structure aligned with goals of rapid economic growth and development. It will entail modern and efficient processes for decision-making and service delivery accompanied by a comprehensive performance evaluation system needed for ensuring the achievement of critical national goals. The path to a development state, however, will be strewn with many obstacles and will face stiff resistance from the entrenched elite running the show. Hence, the importance of a prior national consensus on the broader outlines of the needed reform agenda. Over the past several decades Pakistan has been ruled by a patronage based political order whose economic governance has plunged Pakistan into repeated cycles of recurring economic collapse, IMF programmes and low economic growth. Pakistan is currently limping forward at 3–3. 5 percent growth — barely matching population expansion — delivering IMF-dictated stability but not the economic transformation the nation needs. The patronage state’s grip on rural, urban and sectoral economic policies has been total and disastrous. Its policy formulation, implementation and performance capacity has been self-cantered, anti-growth, anti-markets and anti-development. Flagship of its efforts is an electricity grid, which is the most expensive in the world. Riddled with corruption and miss-governance, most unsuited for the country. With a decaying rural economy and an urban economy in the doldrums the economy has emerged at the bottom of global productivity and competitiveness tables and Pakistan has been relegated to the lowest ranks of ‘inward looking trading nations’ in the world. In the garb of numerous IMF-imposed austerity programmes, the patronage state has plunged almost half the population into extreme poverty, subjected 40 percent of children to stunting, and kept 25 million children out of school. With one in five persons unemployed the economic system has run the country into the ground. Considering Pakistan’s pathetic per capita national income and its bottom rank in human development and other development indices the patronage state can be classified as an abject failure. Even long-term financiers, including the IMF, World Bank and Asian Development Bank have started distancing themselves from the performance of the ruling governing cabal. With almost 90 percent of the population under 45 years of age the country requires three million new jobs every year. When the already unemployed of around thirty million persons is added, the true impact of a slow growth, meritless and moribund economy becomes glaringly apparent. Jobs is the number ‘1’ priority of the teeming youth bulge that only a modern high growth investment driven market economy can deliver. Similarly, our national security requires a build-up of military prowess. Military might is only sustainable when it has a firm economic foundation. It needs huge funds for modernization that only a rich, high growth market economy can provide. In short, Pakistan requires an economic growth rate of 7 to 10 percent a year. This will need a renewed focus on investment. The current investment to GDP ratio of 14 percent needs to be doubled in the shortest possible time. But the state is unwilling and unable to do the needful reforms. It is quite clear that we urgently need to transform our governance model from a low growth patronage-cum-predatory model to a more dynamic investment-driven high growth “development” model in line with national aspirations. This economic transformation is not only a demographic requirement but also a top national security priority around which national unity can be achieved. A patronage state survives by keeping discretion alive and rules vague. The bigger the bureaucracy, the more posts there are to distribute as favours. The more licenses and permissions required to do business, the more opportunities to extract rent for granting them. The more centralised the treasury, the more a small elite controls its disbursement. The more dependent an economy on one captured sector — land, sugar, textiles, — the more that elite’s interests define policy. The more opaque the rulebook, the more only insiders can navigate it. The more arbitrary the application of law, the more it depends on who you know rather than what you did. And the weaker the vote, the less the citizen needs are a priority. A development state has to change all these destructive interlocking characteristics of the patronage state. How to transform this unaccountable ‘patronage state’ into a responsible ‘development state’ is the paramount challenge facing us? To simplify understanding of the complex economic rationales involved, it is useful to Package the reforms in an easily understood framework. I have tried to summarize the elements of such a package in a succinct manner and labelled it as the ‘8Ds Framework’. The 8 Ds Framework is a straight path leading to the development state. It is not a slogan but a specific architecture, built through eight deliberate reforms: Downsi zing, Deregulation, Digitisation, Decen tralisation, Diversification, Dem ystification, Due Process, and Democracy. Downsizing: Build a Lean, Efficient and Technically-sound Governance System needed for a development state. To achieve this it would be necessary to reverse the existing ministerial and bureaucratic sprawl. In the process a deliberate benefit is the slashing of the associated tax and regulatory burden on the productive sectors of Pakistan. The oversized federal and provincial cabinets will be cut to about twenty professionally qualified members respectively. Deregulation: It is a natural extension of downsizing. All rules and regulations made for the convenience of the bloated ministries will face the guillotine, every NOC or license that depends on an officer’s signature will be replaced, if required, with a published short checklist. Rules-based, time-bound decisions would become the norm. Digitisation: It is closely intertwined with downsizing and deregulation; it removes the human gatekeeper from routine transactions. It will pave the way of eventually inducting artificial intelligence in the decision-making processes Decentralisation is critical to breaking the federal and provincial governments’ monopoly over decisions and resources. It will empower effective local governments. An essential component of decentralization would be devolution of economic decision-making to local elected mayors whose remit (with full support from federal and provincial governments) would include developing district development plans based on exploiting local competitive advantage for entry into global and domestic markets. Paving the way for more product diversification and a more globally competitive economy. Diversification: It will be closely related to Decentralisation and will free the economy from dependence on sectors the ruling elite happens to control. It will broaden the entrepreneurial spatial base embedded in the district development plans of both urban and rural economies. New business opportunities will be promoted and value chain-driven policies would be formulated and implemented at the district level. Demystification: It involves having a communication strategy that makes the rules of the game legible to ordinary citizens, not just well-connected insiders navigating dense, scattered regulation. Due process: It will guarantee rule of law and a known, predictable, enforceable procedure regardless of who a citizen is, or whom they know. It is what makes every other reform durable; without it, an official can simply choose not to follow the new rule. Democracy: It closes the 8 Ds loop, the mechanism by which citizens can remove a government that does not perform or reverts to patronage, thus reinforcing the incentive structure rewarding politicians for delivering services rather than favours How Long Will This Take: Visible momentum in 1-3 years, meaningful institutional shift in 3-6 years, full consolidation in 6-10 year, It is clearly a multi-government project. Countries that made this transition — South Korea, Taiwan. China — did not do it in one administration; they did it across several, with reforms surviving leadership changes. The path from a patronage state to a development state is not a technical fix or a single flagship project. It is a redistribution of power — away from those who benefit from discretion, toward citizens owned functioning rule. The eight Ds are a checklist for that redistribution; the hardest tests of whether a country has the political will to work through all eight, not just the convenient ones will be the litmus test. ‘Charter for Economic Transformation’ is a necessary first step. Copyright Business Recorder, 2026

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