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Pakistan’s Industrial Paralysis and Economic Future at Risk

Miss Iqra Ali

Miss Iqra Ali, CSS GSA & Pakistan Affairs Coach, empowers aspirants expertly.

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6 August 2025

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This editorial explores Pakistan’s prolonged industrial stagnation, marked by outdated infrastructure, over-reliance on textiles, and lack of diversification. Despite being central to economic growth and employment, the industrial sector has failed to evolve with global market demands or support high-value manufacturing. Weak regulatory frameworks, elite capture, and insufficient investment in human capital continue to obstruct innovation and competitiveness. The analysis underscores the need for a coherent national industrial policy, improved energy reliability, skilled labor development, and institutional reform to revive industrial productivity and ensure sustainable economic progress.

Pakistan’s Industrial Paralysis and Economic Future at Risk

In Pakistan's complex constitutional landscape, few developments have shaped its federal structure more profoundly than the 18th Amendment. Enacted in 2010, this landmark reform sought to reverse decades of centralized authority and reassert the vision of federalism embedded in the 1973 Constitution. By devolving legislative, administrative, and financial powers to the provinces, the amendment aimed to enhance participatory governance and correct longstanding imbalances between the federation and its units. Yet, years later, the amendment remains a subject of contention. While some hail it as a democratic milestone, others question its implementation and implications for national cohesion and policy coherence.

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The 18th Amendment marked a pivotal shift in Pakistan's political trajectory by removing the distortions introduced by successive authoritarian regimes. Under General Zia-ul-Haq and General Pervez Musharraf, constitutional amendments had gradually concentrated power in the presidency, weakening parliamentary sovereignty and provincial autonomy. The 18th Amendment reversed many of these changes. Among its key features was the abolition of the Concurrent Legislative List, a colonial-era mechanism that allowed both federal and provincial governments to legislate on shared subjects. With this deletion, nearly 47 subjects, including health, education, and environment, were devolved exclusively to the provinces. The abolition of the Concurrent List meant provinces now had full authority to legislate on vital sectors such as education and health, fundamentally redefining the center-province power equation.

Financial devolution also followed through the National Finance Commission Award, which reallocated resources more equitably among the provinces. The share of the provinces in the federal divisible pool increased to 57.5 percent. This was not merely a fiscal adjustment but a rebalancing of the federal bargain. Moreover, the amendment also gave constitutional cover to the Council of Common Interests (CCI), strengthening the role of an inter-provincial coordination body that had previously been underutilized. This institutionalization was intended to provide a regular forum for addressing disputes between the federation and provinces.

However, the success of the amendment rests not only in its enactment but in its implementation. Many provincial governments initially lacked the capacity to absorb newly devolved responsibilities. Weak bureaucratic structures, limited financial management expertise, and underdeveloped regulatory frameworks made it difficult for provinces to formulate coherent policies. For example, despite education being devolved, provinces have struggled to standardize curricula, resulting in fragmented learning outcomes across the country.

In addition, federal ministries were reluctant to cede control. Some functions, such as higher education and health regulation, were reintroduced at the center through the creation of new federal bodies, raising questions about the spirit of devolution. Critics argue that this trend reflects a creeping centralization that undermines the constitutional vision. On the other hand, proponents of a stronger center maintain that national standards in sectors like education and health are essential for cohesion, especially in a country as ethnically and linguistically diverse as Pakistan.

Another challenge lies in the political dynamics that shape federal-provincial relations. While the amendment empowered provinces, it also made them more responsible for governance outcomes. In the absence of genuine accountability mechanisms at the provincial level, the quality of governance has varied widely. In Sindh, for instance, health indicators have declined in certain districts despite increased provincial funding, pointing to governance and capacity failures. This divergence fuels perceptions of inequity and mismanagement, which opponents of the amendment use to argue for greater federal oversight.

Moreover, the amendment's long-term success depends on evolving mechanisms for inter-governmental coordination. While the CCI has been given constitutional status, its effectiveness remains uneven. Meetings are irregular, and decisions are often delayed or poorly enforced. Without a strong coordinating role, policy fragmentation between the center and provinces could deepen. This becomes particularly problematic in areas that require nationwide coherence, such as climate change policy, water management, and disaster response. The absence of coordinated water-sharing policies between provinces continues to inflame tensions, especially during periods of drought or flood.

The 18th Amendment also raises questions about the future of fiscal federalism in Pakistan. While provinces receive a greater share of resources, the federal government retains responsibility for debt servicing, defense, and major infrastructure. This mismatch between expenditure obligations and revenue generation capacity strains the federation's financial sustainability. Debates over resource allocation are therefore intensifying, particularly in times of economic crisis.

Yet, despite its flaws, the 18th Amendment represents a critical step toward deepening democratic governance. It reflects a consensus among political forces to honor the federal spirit of the constitution and empower citizens through provincial institutions. The real challenge lies in ensuring that these institutions are equipped, accountable, and responsive. That will require sustained investment in provincial capacities, robust oversight mechanisms, and a renewed commitment to cooperative federalism.

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Pakistan's political future hinges on its ability to reconcile provincial autonomy with national unity. In a diverse federation, centralization may offer short-term administrative convenience, but it risks alienating regions and communities that feel historically marginalized. The 18th Amendment offered a new federal contract based on inclusion, equity, and partnership. To abandon or dilute it without addressing the underlying issues of implementation would not only reverse democratic gains but also destabilize the delicate balance of the federation.

Ultimately, the amendment’s promise must be matched by institutional transformation and political will. Without this, the gap between constitutional ideals and governance realities will continue to widen. That would be a disservice not only to the spirit of the 1973 Constitution but also to the citizens who seek more responsive and locally accountable government. The 18th Amendment should be seen not as the end of the reform journey but as its beginning. A more cooperative, transparent, and functional federalism remains a goal worth pursuing.

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6 August 2025

Written By

Miss Iqra Ali

MPhil Political Science

Author | Coach

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Miss Iqra Ali

GSA & Pakistan Affairs Coach

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