What Pakistan can learn from Saudi Arabia’s economic revolution

Geopolitical tensions over the last few years have put our world into a churn. The old international order, once steady and predictable, is now splintering into rival blocs led by the US and China. 

In a new book “The Fractured Age,” Neil Shearing argues that our world is fracturing into US and China-led blocs, where the US bloc holds a larger share of global GDP, technological control and financial dominance. Shearing predicts that eventually most nations may well align with the US, leaving China as a relative loser owing mainly to its slowing economic growth and demographic challenges. 

However, Martin Wolf, a leading economics commentator, has challenged this idea. Wolf contends that lately the US has been becoming weaker due to unreliable leadership, weakening trust and alliances. Wolf also finds Shearing too bearish on China and suggests that China’s massive growth potential and policy adaptability make a sharp, prolonged economic slowdown very unlikely.

The Strategic Mutual Defense Agreement with Saudi Arabia offers Pakistan more than security. It offers a pathway.

- Dr. Aqdas Afzal

What this means is that in this new age of economic warfare and uncertainty, nations that do not have a clear and resilient strategy risk being left behind. In the case of Pakistan, this moment demands more than just short-term fixes, it demands a bold, long-term vision. Perhaps the most powerful blueprint for such a transformation is to be found not in the West, but with the brotherly nation of Saudi Arabia.

Saudi Arabia’s Vision 2030 is not just a policy document, it is a national revolution. In just over a decade, the Kingdom has moved from oil dependency to economic diversification, from closed governance to global investment and from social restrictions to the empowerment of its young people, especially women. 

Saudi Arabia did not abandon oil, but turned oil revenues toward building new industries, massive infrastructure projects, while also investing in technology, tourism and renewable energy. Today, nearly half of Saudi Arabia’s government revenues come from non-oil sources. As a result, the Saudi economy is no longer at the mercy of global crude prices. It can be said that the Saudi people are already preparing for a post-oil future.

By contrast, Pakistan remains trapped in what might be called an “unstable stability,” at best. While inflation has eased from historic highs and foreign reserves have improved, Pakistan’s fiscal foundations remain fragile. Servicing debt obligations consumed PKR 8.9 trillion in FY25, over half of total federal revenues, while the tax base remains narrow. The public sector is bloated, economic growth is stagnant, while the youth— millions of whom enter the job market each year— are being left behind.

The recent Strategic Mutual Defense Agreement with Saudi Arabia offers Pakistan more than security. It offers a pathway, but in order to tread this path, Pakistan must be willing to learn and to act.

First, Pakistan must fix its finances, not merely through austerity, but through institutional reform. Saudi Arabia did not just cut spending, it was able to create new sources of revenue like a value-added tax, while also shifting spending from subsidies to investment. For Pakistan, a practical step would involve the creation of independent fiscal commissions, both at the federal and provincial levels, that are free from political pressure. These fiscal commissions will monitor spending, enforce responsibility and ensure transparency. 

Second, Pakistan must redefine the role of the state. Saudi Arabia is privatizing state assets, inviting foreign investment and empowering the private sector. For Pakistan, it’s time to stop protecting loss-making state enterprises and start leveraging them to fund development. The recent successful privatization of national airlines must serve as a springboard for continued progress toward more privatization. Pakistan can focus on low-hanging fruit like profitable power distribution companies, while using the proceeds to invest in infrastructure, quality education and technology.

Third, and perhaps most importantly, Pakistan must invest in its people. Vision 2030’s most notable accomplishment is the focus that it places on human capital. Saudi Arabia is training its youth, encouraging entrepreneurship and unleashing the potential of Saudi women. Pakistan needs education curriculum reform that focuses on skills, not just degrees. Moreover, Pakistan needs to bring women into the economy, not as an afterthought, but as national priority.

Where economics is certainly important, Pakistan’s policymakers must strive toward developing a new mindset just like Saudi Arabia’s shift from short-term patronage to long-term stewardship. To that end, Pakistan’s agreement with Saudi Arabia can serve as a catalyst, not merely for security cooperation— which is vitally important— but also for shared prosperity. It can open doors to investment, expertise and integration into new global supply chains. 

Let this be the year when Pakistan drafts its own “Vision 2035.” Let it be bold, specific and accountable so that Pakistan’s economy can finally move from unstable stability to enduring strength. The world is changing. It’s time Pakistan did, too.

- The writer completed his doctorate in economics on a Fulbright scholarship.

X: @AqdasAfzal