Between claims and reality: the economy of Naya Pakistan

As a pure imaginary, Naya Pakistan promised to be an era of institutional change and economic prosperity. From a political economy point of view, Naya Pakistan had one unique advantage that not many governments in Pakistan enjoyed: it was premised on a cooperative new political coalition; a “hybrid” power-sharing arrangement between the civilian government and the establishment, a new ‘political settlement’ that promised sustained institutional transformation and rapid economic development.

The proof of the pudding is in the eating. Leaving the lofty promises made at its inception aside, what can one objectively say about the economic performance and legacy of Naya Pakistan (2018-2022)? While a lot has been written in recent months on inflationary pressures during this period, a lot less attention has been paid to the issue of economic output. Specifically, what can one say about the evolution of the fundamental measure of the health of any economy - output per capita - under the institutional setup of Naya Pakistan? The answer hinges on three major issues. Since these issues will ultimately shape the contentious discourse around the economic performance of Naya Pakistan, it is important to lay them out clearly before proceeding to see what the data suggests. In this article, for reasons described below, I offer readers a comparative/counterfactual approach by comparing the performance of Naya Pakistan with two regional economies (India and Bangladesh) during the same period.