Both India and Pakistan after independence from the British rule took an entire decade to stabilise. There was not much difference in the economic development in terms of GDP per capita between both the countries, at that time, So when did Pakistan lost way to economic growth?
Over the course of time despite of being an emergent economy with great potential, Pakistan lost way to economic growth somewhere by neglecting enhanced investment in agriculture infrastructure that is improvements in the existing irrigation and canal system and timely development of ports to facilitate foreign trade.
Moreover industrial advancement that commenced in 1960s was halted midway after the 1965 war. Political unrest and the removal of the then government caused great damage to the process of industrial take off.
Urbanization, which is a well thought-out process, commenced in Pakistan with little planning. Owing to the presence of a strong feudal system, the rural workers were neither properly trained nor sufficiently educated.
Moreover the urban cities lacked sufficient number of jobs to accommodate the influx of population. This resulted in a sort of social divide between the urban and displaced rural workers.
Although Pakistan developed a robust textile sector supported by abundant cotton crops, its failure to produce its own capital goods industry rendered the otherwise vibrant textile sector globally uncompetitive.
We also failed to strike a dynamic sectoral balance. Agriculture sector that contributed 46% to GDP in 1960 gradually scaled down to 26% by 1999. Since then it has been struggling to keep itself above 20% mark.
The inherent topographical strength decrees Pakistan to keep its agricultural share in the economy at the level where it is now, but of course with certain radical changes that include abolition of the feudal system and modernization of the sector.
To keep the population pressure off the urban centers, proper education, training and monetary incentives have to be offered to the farm workers to make them a decent member of the agricultural community.
Agriculture presently contributes very little to the government treasury. Investment in the suggested reforms will be more than compensated through increase in tax receipts.
The shift from agriculture to industry never occurred as it should have. The industrial base was not broadened in line with the shrinkage in the agriculture sector. Financial and communication sectors were quick to develop ahead of the industrial sector.
This anomalous development hindered sustained economic growth. While the communication sector failed to attract capital formation, the financial sector became a rentier instead of the economic growth engine.