Pakistan’s elites choose power at the cost of economic prosperity

Pakistan's rulers have consistently prioritized retaining power over promoting economic prosperity, despite the potential benefits of better policies and institutions. This behavior echoes a historical pattern observed in 19th-century Habsburg Empire, where rulers feared industrialization would undermine their political control.

The puzzle lies in why elites choose arrangements that may not maximize national income or their immediate economic gains. They also consider how changes could affect their political power and ability to capture future returns, known as the political replacement effect. Regressive policies in local governance, fiscal federalism, and technology adoption illustrate this phenomenon.

Despite the potential for improved services, accountability, and prosperity, elected local governments are often delayed or weakened, creating new competitors and reducing the political influence of existing elites. Fiscal federalism, too, evolved into a parallel system that undermines transparency and provincial autonomy. However, technology, such as rooftop solar, also poses a threat by decentralizing power generation and weakening established revenue and regulatory instruments, thus protecting elite interests.