The Persistent Challenges to Development in Pakistan

Nearly seventy-nine years since it came into being, Pakistan stands at a critical juncture: it is nuclear armed and has the world’s twelfth largest military, but its economy is flailing, the society is polarised, and it has become an arena for contesting claims for national identity. With a young population of almost 260 million,^[1] a labour force of 80 million,^[2] and a median age of 20 years, Pakistan has immense potential to leverage its human capital and strategic location for economic growth. Instead, successive Pakistani governments have failed to invest in their people, turning the country’s potential demographic dividend into a massive demographic challenge. The situation is compounded by the dominance of the Pakistani military, as well as longstanding fault lines within the country’s society and political elite.

Low Human Development and High Gender Disparity Pakistan’s population has increased more than sevenfold since independence, and the country has the highest fertility rate in South Asia. It has one of the youngest populations in the world, characterised, however, by a low literacy rate. While the literacy rate among younger Pakistanis is higher than that of adults, the overall literacy rate has dropped to 60 percent in 2025 from 63 percent a year earlier.^[3] Male literacy rate stands at 68 percent while that for women hovers around 52 percent.^[4] There is an urban-rural divide, with the literacy rate in urban areas registered at 74 percent and in rural areas at a far lower 51 percent.^[5]

The provincial disparity is also notable. According to the latest Pakistan Economic Survey, the literacy rate in Punjab is at 67 percent, followed by Sindh with 58 percent, Khyber Pakhtunkhwa at 51 percent, and Balochistan at 42 percent. In 2017, 61 million Pakistanis were not literate. Today, that number stands at 69 million.^[6] Pakistan also has the world’s second largest out of-school population. Approximately 44 percent of children between the ages of five and 16 do not go to school.^[7] According to data from the 2022-23 Economic Survey, the disparity among Pakistan’s regions is stark: 47 percent of children were out of school in Baluchistan, followed by Sindh with 44 percent, Khyber Pakhtunkhwa (KP) at 32 percent, and Punjab with 24 percent.^[8] The gender disparity is also significant in terms of educational outcomes. In Balochistan, Pakistan’s largest province by area, 78 percent of girls are out of school compared to 63 percent of boys.^[9] As of 2022, while male literacy in the country stood at 70 percent, the literacy rate for girls was a much lower 48 percent.^[10]

At 23 percent, Pakistan has a very low rate of female workforce participation, compounded by societal, educational, and economic factors, including limited access to resources and cultural barriers against female advancement.^[11] Lower rates of literacy among women often translate to a larger share of women’s representation in the informal sector and in jobs that are vulnerable to economic shocks, such as farm labour and domestic service.^[12] As is the case with girls’ participation in education, a similar provincial disparity exists, with only 10 percent of women in Balochistan, Khyber Pakhtunkhwa, and Sindh in the workforce, and primarily in the agrarian sector. With unequal access to education and the workforce, early marriages and early childbirth are common.^[13] 

Compared to its South Asian neighbours and peers in Asia and Africa, Pakistan lags in all areas of human development, not just in education.^[14] The UN Human Development Report continues to place Pakistan under the ‘low human development category.’^[15] The country’s public health spending stands at 1 percent of its GDP (Gross Domestic Product) and educational expenditure at 0.8 percent according to the latest Economic Survey.^[16] Pakistan ranks 168 out of 193 countries, and its Human Development Index score, a summary measure of achievement in key aspects of human development such as life expectancy and standard of living, has steadily declined over the last few years.^[17] 

Similarly, Pakistan ranks 145th out of 147 countries in the 2024 World Economic Forum’s Global Gender Gap Index.^[18] It ranks 167th out of 170 on the Georgetown Institute for Women, Peace, and Security Index.^[19] Pakistan also has a high incidence of violence against women. Around one-third of women between the ages of 15 and 49 have experienced physical violence at some point in their lives.^[20]

 Economic Challenges

 Cities are often referred to as engines of wealth. Pakistan has the highest rate of urbanisation in South Asia; however, instead of boosting economic growth, it is only compounding the pre-existing challenges. With nearly half of the population projected to live in cities by 2050, low literacy rates, a largely unskilled labour force, and unplanned urban sprawl are placing enormous pressure on housing, transport, water, and sanitation.^[21] Migration, both internal and regional, has created pockets of inequality and further burdened under resourced urban municipalities. 

The country’s economy is noted for low productivity agriculture,^[22] along with slow industrialisation and stagnant labour productivity, resulting in youth unemployment and underemployment. Widespread unemployment and underemployment mean that, like other countries in the region, Pakistan has suffered from brain drain. 

While the country’s balance of payments has benefited from remittances, Pakistani society appears to be losing its best talent to brain drain. According to the Pakistan Institute of Development Economics (PIDE), the country ranks sixth globally in human capital migration.^[23] A 2025 Gallup survey also found that 66 percent of Pakistanis believe that individuals who move abroad are more intelligent than those who remain in the country.^[24] Pakistan’s Gini coefficient—a measure used to indicate income inequality—is the worst in South Asia.^[25] According to the United Nations Development Program’s annual reports, the top 1 percent of earners in Pakistan own 9 percent of the national income, while the bottom 20 percent account for just 7 percent.^[26]

Even more telling is that over 37 percent of public expenditure benefits the wealthiest, while less than 15 percent reaches the poorest. This is reflected in the taxation system, which focuses on indirect taxes that disproportionately target the middle and lower classes. A significant portion of the revenue of the state comes from indirect taxes such as GST and excise duties, the burden of which is overwhelmingly shouldered by the middle and lower classes because they allocate a greater share of their income for buying basic necessities like food and fuel. According to some estimates, a person who is exempt from income taxes may still end up paying over 40 percent of their income in indirect taxes.^[27] This elite capture exacerbates the pre-existing economic, social, and ethno-religious crises, in turn worsening internal instability.

Pakistani Nationalism and Identity Economic and demographic challenges only serve to deepen the fissures in Pakistani society and polity, the foremost being the issue of identity and nationalism. Since 1947, Pakistanis have debated whether theirs is a “Muslim-majority” nation or an “Islamic” one. This fault line plays out in politics, society, educational curriculum, economy, and foreign policy. 

The entity called ‘Pakistan’ did not come into existence until the Partition of 1947, with the exit of the British Raj. Pakistan’s nationalities and ethnicities predate the creation of the country, but the state has sought to impose an overarching Islamic ‘Pakistani’ identity,^[28] denying the history and cultural identities of the regions that constitute it. For Pashtuns, the Baloch, and the Sindhis, this represents an attempt by the more numerous Punjabis, who dominate the military and bureaucracy, to subjugate them. 

The state’s biggest fear remains a repeat of 1971 when East Pakistan broke away to become Bangladesh. Baloch and Pashtun irredentism, as well as Muhajir and Sindhi nationalism,a are seen as a threat to Pakistan’s security and integrity. The state has emphasised Islam as a national unifier, resulting in state support for Islamist organisations and militant outfits to fulfil regional foreign policy goals as well as domestic political purposes.

Pakistanis have suffered at the hands of terrorists nurtured to target Afghanistan and India, as domestic-terrorism-related fatalities have been increasing in recent years. According to the South Asia Terrorism Portal, there were 284 terrorism-related incidents in Pakistan in 2019, but that number has increased every year since and was pegged at 1,720 in 2025.^[29] The Afghan Taliban’s return to power in Kabul has led to a rise in attacks by its ideological counterpart, the Tehreek-e-Taliban Pakistan (TTP). There has also been a steady rise in attacks by Baloch insurgent and militant groups. 

The state’s response to these threats has varied, oscillating between seeking to negotiate and kinetic strikes against the TTP. Further, the Pakistani state has always preferred to use the iron fist when dealing with Baloch insurgents and Pashtun and Sindhi nationalists. This includes enforced disappearances, unlawful arrests, and violent crackdown against peaceful protestors.

In 1947, Pakistan’s founding father, Muhammad Ali Jinnah, may have promised the country’s minorities that they would be treated as equals; that remains unfulfilled. Smaller Muslim sects—Ahmadis and Shias—and non-Muslims— Christians, Hindus, and Sikhs—face persecution, targeted violence, extrajudicial killings, and mob lynching. The country’s blasphemy laws are among the most stringent in the world, resulting in several high-profile assassinations, including those of politicians and judges.^[30] 

Looking Ahead

The Pakistani state has long had ambitions of attracting investments and becoming a trade and transit route, and, in turn, a key regional actor. The current global geoeconomic and geopolitical environment has led Pakistani leaders, both civilian and military, to believe that this time around the country may be able to leverage its location and global attention for economic gains. However, such a transformation would not be possible without building the country’s human capital.

Pakistan’s smaller South Asian neighbours, Bangladesh and Sri Lanka, rank higher on human development and gender indices. The country has ignored the interests of its people in favour of military competition with India. Militarisation has prevented the state from building human capital, growing the economy, and stabilising the polity. If Pakistan’s leaders seek to benefit from the current global environment, they will need to invest in human capital, especially women, implement structural economic reforms such as in taxation, and boost manufacturing and services to provide employment. 

The country faces multiple internal conflicts between civil and military, religious and secular elites, ethno-linguistic sub-nationalities versus an imposed Islamist identity, and between rich and poor, and rural and urban. Its society is polarised and characterised by a multi-dimensional tussle for power and division of limited resources among its ever-increasing population. To create a society that is conducive for human development, Pakistan’s leaders would benefit from a territorial national identity instead of a religiously oriented one, as the former would help assimilate all minorities, religious as well as ethnic. 

As a nation of 260 million and currently the second most populous Muslim-majority country, in a critical geostrategic location, Pakistan has always had potential. Unfortunately, Pakistan’s dominant military-intelligence establishment along with some within the technocratic and political leadership have chosen to focus the country’s resources on an eternal competition with India instead of on building the country’s economic and human potential. Pakistan’s way forward lies in sustained investment in its people and better relations with its South Asian neighbours, instead of being involved in regional great games or proxy wars. 

Read the full collection of reports in Pakistan in Perspective: A Post-Operation Sindoor Analysis.

Endnotes

1. World Population Review, “‘Population of Pakistan’ and ‘Pakistan Religion, Economy and Politics, Data byLocation,” https://worldpopulationreview.com/countries/pakistan. ↑
2. World Bank Group, “Labor force, total – Pakistan,” World Bank Open Data from International Labour Organization (ILO), 1990-2025, https://data.worldbank. org/indicator/SL.TLF.TOTL.IN?locations=PK. ↑
3. Shahid Siddiqui, “Declining Investment in Education,” The News, June 22, 2025, https://www.thenews.com.pk/ tns/detail/1323455-declining-investment-in-education; Kashif Abbasi, “Pakistan’s Literacy Rate on a Downward Spiral,” Dawn, September 9, 2023, https://www.dawn. com/news/1774854. ↑
4. Siddiqui, “Declining Investment in Education”. ↑
5. Siddiqui, “Declining Investment in Education”. ↑
6. Siddiqui, “Declining Investment in Education”. ↑
7. UNICEF, “Pakistan: Education,” https://www.unicef.org/ pakistan/education. ↑
8. Abbasi, “Pakistan’s Literacy Rate on a Downward Spiral”. ↑
9. Fatima Shahryar, “UNICEF & EU Supported Balochistan Basic Education Program Brings Girls Back to School,” UNICEF, February 15, 2018, https://www.unicef.org/ pakistan/stories/unicef-eu-supported-balochistan-basic education-program-brings-girls-back-school. ↑
10. Saira Samo, “The Need to Bridge Gender Gap in Literacy,” The Express Tribune, August 19, 2023, https://tribune.com.pk/story/2431348/the-need-to-bridge-gender-gap-in-l…. ↑
11. “Pakistan Ranks Second-Last in Global Gender Equality Index,” The Express Tribune, March 7, 2025, https:// tribune.com.pk/story/2532948/pakistan-ranks-second last-in-global-gender-equality-index; Samo, “The Need to Bridge Gender Gap in Literacy”. ↑
12. Sundus Saleemi, “How Illiteracy Perpetuates Oppression of Pakistani Women,” Development and Cooperation, August 4, 2021, https://www.dandc.eu/en/article/half-pakistans women-cannot-read-or-write-any-language. ↑
13. “Pakistan Ranks Second-Last in Global Gender Equality Index”. ↑
14. Majid Nabi Burfat, “Pakistan’s Human Development Paradox,” Pakistan Today, November 29, 2025, https:// www.pakistantoday.com.pk/2025/11/29/pakistans human-development-paradox. ↑
15. United Nations Development Program, “Human Development Progress Slows to a 35-year Low According to UNDP’s 2025 Human Development Report,” May 6, 2025, https://www.undp.org/pakistan/press-releases/ human-development-progress-slows-35-year-low according-undps-2025-human-development-report. ↑
16. Ikram Junaidi, “Economic Survey 2024-25: Education Spending Plummets to 0.8pc of GDP,” Dawn, June 10, 2025, https://www.dawn.com/news/1916136; Irshad Ansari, “Pakistan’s Health Spending Below 1% of GDP, Reveals Economic Survey 2024–25,” The Express Tribune, June 9, 2025, https://tribune.com.pk/story/2550010/ pakistans-health-spending-below-1-of-gdp-reveals economic-survey-202425. ↑
17. United Nations Development Program, “Human Development Index (HDI),” Human Development Reports, 2025, https://hdr.undp.org/data-center/human development-index#/indicies/HDI. ↑
18. “Pakistan Ranks Second-Last in Global Gender Equality Index”. ↑
19. Georgetown Institute for Women, Peace and Security (GIWPS), “Consistently Low Rates of Women’s Inclusion Across Pakistan’s Provinces,” GIWPS Stories, https:// giwps.georgetown.edu/index-story/consistently-low rates-of-womens-inclusion-across-pakistans-provinces/. ↑
20. UNFPA, “Gender Based Violence: Pakistan,” https:// pakistan.unfpa.org/en/topics/gender-based-violence-6. ↑
21. Ignacio Artaza, “Urbanisation in Pakistan,” The Express Tribune, June 5, 2019, https://tribune.com.pk/ story/1986926/urbanisation-in-pakistan. ↑
22. Abdul Rauf Iqbal, “Revitalising Agriculture: Prospects and Challenges,” The Express Tribune, March 23, 2026, https://tribune.com.pk/story/2598747/revitalising agriculture-prospects-and-challenges. ↑
23. Ahmad Mukhtar, “Brain Drain Costs Economy $4.2 Billion Annually,” The Express Tribune, July 28, 2025, https://tribune.com.pk/story/2558228/brain-drain-costs economy-42-billion-annually. ↑
24. Gallup Pakistan, “Two-thirds of Pakistanis (66%) Believe that Individuals Who Move Abroad Are More Intelligent Than Those Who Remain in the Country, While 23% Hold the Opposite View. (Gallup & Gilani Survey),” Gallup Pakistan, August 11, 2025, https://gallup.com.pk/ post/38835. ↑
25. Shahid Javed Burki, “Income Inequality and Poverty in Pakistan,” The Express Tribune, March 27, 2023, https:// tribune.com.pk/story/2408328/income-inequality-and poverty-in-pakistan. ↑
26. Asad Hashim, “Elite Privilege Consumes $17.4bn of Pakistan’s Economy: UNDP,” Al Jazeera, April 13, 2021, https://www.aljazeera.com/news/2021/4/13/elite-privilege consumes-17-4bn-of-pakistans-economy-undp. ↑
27. Ahmad Mukhtar, “Is Pakistan’s Tax System Fiscal Terrorism,” The Express Tribune, September 23, 2024, https://tribune.com.pk/story/2497980/is-pakistans-tax system-fiscal-terrorism. ↑
28. Shahzeb Jillani, “The Search for Jinnah’s Vision of Pakistan,” BBC, September 11, 2013, https://www.bbc. com/news/world-asia-24034873. ↑
29. South Asia Terrorism Portal, “Datasheet – Pakistan,” 2000-2026, https://www.satp.org/datasheet-terrorist-attac k/incidents-data/pakistan. ↑
30. “High-profile Blasphemy Cases in the Last 63 Years,” Dawn, December 8, 2010, https://www.dawn.com/ne ws/589587. ↑