Humankind & Resource Distribution—XIII: Pakistan—poverty amid abundance

Pakistan’s recurring economic crisis is commonly described as a shortage of resources. Governments speak of fiscal space, external financing gaps, inadequate savings and the impossibility of meeting competing demands. These constraints are real. Foreign exchange cannot be created by declaration, water cannot be consumed twice, and public expenditure must ultimately be financed. But the language of scarcity becomes misleading when it obscures a prior question: how are the resources already available to society owned, allocated, used and replenished?

The preceding instalments have examined the creation of wealth through labour and trade, the institutions that circulate it, the risks of financial extraction and contrasting models of development. Pakistan now provides a demanding test of the argument. 

A country may possess fertile land, rivers, mineral deposits, entrepreneurial ability, a large workforce and extensive commercial networks while failing to translate these endowments into secure nutrition, schooling, healthcare, housing and productive employment. The coexistence of potential and deprivation is not a paradox once institutions and distribution enter the analysis.

This is not an assertion that Pakistan possesses unlimited wealth. Its ecological pressures, energy dependence, low productivity and recurring balance-of-payments difficulties are serious constraints. The claim is narrower and testable: deprivation cannot be explained by aggregate availability alone. The distribution of purchasing power, access to assets, public-service quality and the rules governing markets determine whether productive capacity becomes human wellbeing. Amartya Sen’s work on entitlements remains relevant because access to necessities depends not only on their existence but on people’s effective command over them.[1]

Consider agriculture. The presence of cultivated land does not guarantee food security for landless workers, tenants or households whose earnings fail to keep pace with food prices. Nor does higher agricultural output automatically ensure adequate nutrition when storage, transport, water management, market concentration and household purchasing power intervene. The policy questions then naturally extend beyond acreage and harvests to tenancy, irrigation, farm productivity, access to credit, crop diversification and the ability of families to purchase nutritious food.

Water illustrates the distinction between natural limits and institutional failure. Pakistan faces genuine water stress, compounded by climate volatility and competing demands. Yet losses in conveyance, inefficient pricing, unequal access and weak management can intensify that scarcity. The economically responsible answer is neither to deny physical limits nor to treat every shortage as inevitable. It is to measure withdrawals, improve efficiency, protect ecosystems and make allocation rules transparent. A resource can be scarce in nature and still be distributed unjustly in society.

Labour offers a similar lesson. Millions work long hours in agriculture, transport, construction, domestic service, small manufacturing and informal trade. Their effort sustains production, but low skills, insecure contracts, weak bargaining power and limited access to technology restrict what they earn. The problem is not simply that labour is abundant. It is that institutions frequently prevent workers from acquiring the education, health, equipment and legal protection needed to raise productivity and retain a fair share of its gains.

The most consequential losses may occur before a person enters the labour market. A child deprived of adequate nutrition, safe drinking water or schooling cannot exercise the same economic choices as one who receives them. Pakistan’s education and human-development challenges have been repeatedly documented by international agencies. Their significance is not confined to welfare statistics: lost learning and preventable illness reduce future earnings, innovation and national productive capacity.[2] Distribution is part of the mechanism through which an economy creates wealth over time.

A second divide separates ownership of assets from access to opportunity. Land, urban property, business capital and financial wealth can yield income independently of the daily labour of their owners. There is nothing inherently illegitimate in returns to genuine investment, enterprise or risk-taking. The concern arises when returns depend primarily on exclusive permissions, protected markets, speculative gains, subsidised access to public resources or the ability to shift losses onto others. The distinction between productive profit and economic rent is indispensable to understanding inequality.

Pakistan’s tax structure reveals another dimension. Heavy reliance on taxes embedded in consumption and transactions can impose burdens on households regardless of their ability to pay, while exemptions, concessions, preferential treatment and uneven enforcement complicate the distribution of fiscal responsibility. The Federal Board of Revenue’s tax-expenditure reporting provides a starting point for examining revenue forgone through statutory preferences, although estimates require careful interpretation and cannot be equated mechanically with recoverable cash.[3] The issue is not simply how much tax is collected but from whom, on what basis and for whose benefit it is spent.

Public spending must face the same scrutiny. A budget allocation is not a social achievement until it produces an accessible service. Expenditure on schools means little if children do not learn; healthcare budgets cannot be judged by buildings alone; infrastructure should be assessed by who uses it, its maintenance costs and the productive opportunities it creates. Subsidies presented as support for growth may instead protect inefficient producers or influential consumers. Transparent incidence analysis is needed to identify who ultimately receives the benefit.

The distribution of credit also matters. When viable small enterprises and farmers cannot obtain reasonably priced finance, while established borrowers enjoy easier access and superior collateral, productive possibilities remain unused. 

A banking system should be assessed not merely by profitability and balance-sheet expansion but by the extent to which it mobilises savings for new production, employment, innovation and broad participation. This does not justify politically directed lending without safeguards; poorly governed credit schemes can produce defaults, patronage and further public liabilities.

Pakistan’s external debt problem cannot be separated from these domestic arrangements. Borrowing may finance essential investment and smooth temporary shocks, but repeated borrowing to cover structural imbalances can transfer resources from future taxpayers without generating the productive capacity needed for repayment. 

The World Bank’s development assessments and the IMF’s programme documents identify structural constraints, though their prescriptions should themselves be evaluated for distributional effects.[4] A stabilisation measure that improves an aggregate indicator while eroding basic capabilities may undermine the foundations of longer-term growth.

Nor should poverty be treated as a uniform national experience. Regional disparities, gendered barriers, disability, exposure to disasters and differences between urban and rural services shape opportunity. Floods and heat can destroy assets accumulated over decades, pushing vulnerable families into debt or distress sales. Climate resilience is consequently a distributional issue as well as an environmental one: those least responsible for environmental damage may have the fewest resources with which to withstand it.[5]

A serious reform programme would begin with measurement rather than slogans. It would map household deprivation alongside the ownership and use of land, the incidence of taxation and subsidies, access to credit, learning outcomes, health protection and regional public investment. It would distinguish lawful informal livelihoods from organised illicit accumulation. It would publish timely, comparable data and permit independent scrutiny of official claims. Without such evidence, both claims of unavoidable scarcity and promises of effortless abundance remain political assertions.

The aim is not to replace markets with administrative command or to assume that redistribution alone creates prosperity. Competitive markets, secure property rights, credible contracts and incentives for investment are indispensable. So are public goods, fair competition, social insurance and institutions that prevent privileged actors from capturing the rules. The relevant choice is not between production and distribution. It is between arrangements that allow the two to reinforce one another and arrangements that make growth coexist with exclusion.

The proposition developed throughout this series can now be stated more precisely. When resources are distributed in ways that improve nutrition, education, health, mobility, access to capital and participation in economic decisions, they can increase the productive capacity of the next generation.  Conversely, concentrated opportunity can leave human potential idle even when physical resources exist. This relationship is open to empirical investigation: outcomes must be compared across regions, programmes and time, with costs, trade-offs and alternative explanations examined rather than ignored.

Pakistan does not need a comforting fiction that wealth is limitless. It needs a more exact account of why available resources so often fail to become shared prosperity. A society’s economic success should be measured not only by what it produces or what its wealthiest members own, but by how effectively its institutions convert collective effort and natural endowments into enduring capabilities for all. 

The next stage of this inquiry must move from diagnosis to the architecture of an equitable economic order: its principles, financing, safeguards and tests of success.

Notes

1. Amartya Sen, Poverty and Famines: An Essay on Entitlement and Deprivation (Oxford: Clarendon Press, 1981). Publisher record: 
2. World Bank, Pakistan Human Capital Review: Building Capabilities Throughout Life (2023), and UNICEF Pakistan, Education. 
3. Federal Board of Revenue, Tax Expenditure Reports (2020 to 2026)
4. World Bank, Pakistan Development Update (country publications); International Monetary Fund, Pakistan country reports and programme documents
5. World Bank, Pakistan Country Climate and Development Report (2022), on climate vulnerability and development choices

[To be continued]

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Dr. Ikramul Haq, Advocate Supreme Court, Adjunct Faculty at Lahore University of Management Sciences (LUMS), member Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE), holds an LLD in tax laws. He was full-time journalist from 1979 to 1984 with Viewpoint and Dawn. He also served Civil Services of Pakistan from 1984 to 1996.