Copyright brecorder
As Professor Ren Jiantao of Tsinghua University observes, the state must transition through the Hobbesian, Leviathan, and Lockean stages, shifting from coercive order to state protection and shared prosperity. But an alternative reading suggests all three forces must operate in concert: a Hobbesian capacity to compel, a Leviathan competence to deliver credible public goods, and a Lockean commitment to rights, rule of law, and inclusive growth. In the case of Pakistan, which sits at the crossroads of promise and chronic disappointment, the question arises: Can it achieve harmony among the golden trio? Will the state develop an integrated governance architecture that can simultaneously maintain discipline, deliver public goods, and expand opportunity? It is a paradox that has long unsettled would-be investors and commentators. Beneath the surface of its crisis narratives lies a consequential set of dynamics: ambitious infrastructure, a demographic dividend, and hope of national cohesion, all shadowed by deep-rooted institutional frictions. The devil, as ever, is not the absence of potential but the failure to translate windfalls into durable prosperity. Stalled at the gate: the false comfort of incremental reform Pakistan’s business climate remains a battleground between aspiration and reality. The World Bank’s ease-of-doing-business ranking, stubbornly around 108, has persisted for a decade, a sobering indictment of reform momentum. The problem extends beyond red tape; weak fiscal federalism and fragmented inter-provincial coordination produce policy that is unpredictable and easily captured by incumbents. A tangle of tariffs, licensing bottlenecks, and opaque regulations has nurtured a rentier class that fears innovation more than it fears competition. Manufacturing, concentrated among a few large groups, has limited incentive to compete globally. The result is not just slower growth but a self-imposed irrelevance in the global economy. The marketization mirage and the security squeeze A post-liberalization Pakistan, with China-Pakistan Economic Corridor (CPEC)–backed investments and a youth bulge nearing 100 million, should be shedding old orthodoxies and embracing a more dynamic, market-friendly frame. Instead, privatization proceeds at a glacial pace, state-owned enterprises still constitute a sizable share of GDP, and financial depth remains limited. Pakistan’s stock market capitalization remains at less than 20 percent of GDP, compared to India’s over 100 percent. Even in a labour market with swelling ranks of young talent, unemployment and underemployment remain chronic, and the system struggles to convert population advantage into productive dynamism. The security gains of the last twenty years, hard won through counterterrorism operations and historic tribal area integration, now appear fragile. After an encouraging decadal drop in terrorist incidents, violence has picked up once again; extremist groups, especially in borderlands, sense opportunity in uncertainty. Without further progress on the rule of law and local governance, the security dividend may well erode, just as investors start to gauge the risks of Pakistan’s next developmental leap. When infrastructure becomes an albatross The CPEC was designed to remove bottlenecks and unlock growth. In some dimensions, progress is undeniable: electricity capacity has expanded, and major highways have multiplied. Yet the upside has come with a price tag. Electricity utilization last year was at just 55 percent, with idle capacity alone costing an unsustainable $5 billion annually. Road and highway utilization remains below 70 percent. Instead of catalyzing a virtuous cycle, this overbuild risks triggering a vicious one: sinking fiscal resources into excess capacity, draining funds from human development, and reinforcing the syndrome of overambitious, under-planned investment. It is a distinctly 21st-century tragedy; Pakistan is, in effect, suffering from first-world overcapacity with third-world levels of productivity. Can the youth corridor hybrid model be the answer? A way forward hinges on policies that translate the energy of youth into productive employment and entrepreneurial opportunity, while providing avenues for risk-taking within a transparent, predictable framework. This can be termed the Youth Corridor Hybrid Model (CYHM), which uses CPEC as a backbone, mobilizes Pakistan’s large youth cohort into entrepreneurship, and fuses public and private sectors to pursue green, inclusive growth. The proposal envisions institutional coherence to build governance based on independent courts or arbitration mechanisms, transparent public procurement, and performance-based budgeting that links resource allocation to measurable outcomes. Regulatory regimes must seek to attract private capital while safeguarding public interests, to unleash private innovation within a framework that reduces political rents and strengthens the rule of law. And most importantly, it must expand education, vocational training, and social safety nets in ways that preserve incentives for work and investment. The ambition is to create millions of high-salary jobs, a rising share of manufacturing in GDP, and a vibrant tech ecosystem. Success is not the model but its implementation Yet a model is only as strong as the system that implements it. The risk is that without coherent governance, competitive pressure, and a credible reform pathway, the CYHM will remain a blueprint rather than a pathway for change. The future hinges on building a polity and market that absorbs risk, rewards talent, and disciplines entrenched interests that have long stifled reform. Copyright Business Recorder, 2025
