CAN PAKISTAN REPLICATE CHINA’S ECONOMIC SUCCESS? KEY LESSONS FOR LONG-TERM GROWTH

Abstract

Pakistan faces significant economic challenges, including industrial underdevelopment, limited foreign direct investment (FDI), high poverty rates, and low human capital. In contrast, China’s economic policies have driven remarkable growth, lifting over 800 million people out of poverty and transforming the country into the world’s second-largest economy. Despite these successes, Pakistan struggles with a low industrial contribution to GDP (20.9% in 2023) and a poverty rate of 25.3%. The gap between China’s economic growth and Pakistan’s stagnation highlights the need for effective policy adaptation. This paper analyzes China’s economic strategies, focusing on industrialization, export-led growth, FDI, infrastructure development, and human capital investment, and evaluates how these can be applied in Pakistan. The study identifies key lessons from China’s experience, such as the importance of diversified industrialization, sustained infrastructure investment, and innovation-driven growth, and examines the challenges Pakistan faces in implementing similar policies. Key findings show that Pakistan’s industrial sector is underdeveloped, FDI inflows remain insufficient, and the country’s human capital development is limited, with a Human Capital Index (HCI) of just 0.41. China’s targeted poverty alleviation programs, strong industrial base, and focus on innovation provide a model for Pakistan to follow. The paper proposes a "National Innovation and Industrialization Fund" for Pakistan to boost industrial growth, R&D investment, and human capital development. The implications suggest that adopting these strategies could help Pakistan address its structural issues and foster sustainable economic development.