Pakistan repeats aid-seeking behaviour without structural information: Report
New Delhi, May 4
Pakistan's repeated cycles of episodic external assistance stabilised its economy in crisis many times without delivering structural transformation, and the country moved into a "rent‑seeking equilibrium" behaviour, a new report has said.
An opinion piece from The Express Tribune said Pakistan witnessed a recurring cycle of episodic relief and concessional financing since its independence in 1947.
The report cited development specialist and supply chain management expert Syed Khizar Ali Shah said that Pakistan's reliance on aid has often been shaped by geopolitical considerations rather than economic strategy.
The reliance on aid has led to core weaknesses in productivity, fiscal capacity and left institutional governance unaddressed.
"Periods of high inflows have coincided with moments of strategic alignment with global powers, not necessarily with domestic reform agendas. As a result, aid has functioned less as a catalyst for development and more as a cushion against crisis," the report said.
The analyst cited grants received by previous regimes led by Ayub Khan, Zia‑ul‑Haq and the post‑9/11 era under Pervez Musharraf as examples of the pattern.
Large aid from strategic partners has cushioned balance‑of‑payments shocks and helped in debt servicing, yet they have not catalysed broad‑based industrialisation, durable tax reform or sustained human capital improvements.
The report cited an economist's thesis, which argued that development requires more than financial inputs.
"External aid, while useful for stabilisation, cannot substitute for these foundational changes. In fact, when repeatedly relied upon, it may create a form of 'rent-seeking equilibrium,' where policy incentives shift towards securing external inflows rather than building internal capacity," the economist said.
The report urged Pakistan's government to prioritise productivity-enhancing investments, institutional strengthening and human capital development, while being subject to rigorous accountability and performance metrics.
— IANS
Reader Comments
While the report is correct about the cycle, we also need to remember that ordinary Pakistanis are victims of their corrupt leadership. The people want progress but the establishment keeps them stuck. Hope they break free from this trap soon 🙏
I find it ironic that Pakistan criticises India for not doing enough on trade but they can't even fix their own economy without IMF bailouts. Rent-seeking equilibrium indeed - their whole system is built on getting aid instead of producing anything.
The report mentions Musharraf era - that was peak Pakistan receiving aid for being US ally in war on terror. What did they achieve? More terrorism and economic mess. Meanwhile India grew without bending to anyone. Make in India > begging for aid 🇮🇳
To be fair, we shouldn't gloat too much. Pakistan's situation is a cautionary tale for all developing nations. Aid dependency is a real trap. India needs to ensure we don't end up in similar cycle despite our current growth. Self-reliance is key.
Rent-seeking equilibrium is the perfect term. Their army and bureaucracy have zero incentive to reform because they get rich from foreign aid. Sad reality is that common Pakistani will continue to suffer while their elite enjoys borrowed money.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.