Through defence
PAKISTAN does not have the luxury of choosing between a well-funded military and economic growth. We share a border with an increasingly belligerent adversary several times our size. Defence is not a policy preference; it is an existential requirement. The relevant question, therefore, is not whether we can afford our defence sector, but whether we can afford for it to remain economically unproductive.
The historical record is unforgiving. Nations that industrialised successfully did so by keeping defence spending modest during their critical growth phases. America before World War II, China after 1978, post-war Europe and Japan all followed this pattern. They developed first and armed later (in Europe’s case, they chose to not arm much at all.) The implication is grim: large militaries and lower-income economies do not coexist with rapid development. Pakistan appears locked into the wrong side of this equation.
But there are exceptions, and they matter more than the rule. South Korea maintained defence expenditure above five per cent of GDP throughout the 1970s and 1980s, higher than Pakistan’s current ratio, while achieving the most compressed industrialisation in modern history. It managed this because Park Chung-hee deliberately routed military procurement through the country’s large industrial conglomerates. Hyundai, Samsung and Daewoo all maintained defence divisions, so the spending cycled back into firms that were simultaneously building civilian industrial capability. The defence burden was real, but the system was designed to make it productive.
Israel achieved something similar through different means. Conscription created a universal technical training pipeline, military technology units functioned as incubators, and personnel moved between defence and civilian sectors without obstruction. In both cases, the decisive variable was not how much was spent, but whether the spending was permitted to generate civilian value.
Can our defence sector afford to be economically unproductive?
The American example is the most commonly cited. Jet engines, semiconductors, GPS and the internet all emerged from defence-funded research that later transformed civilian life. But America’s spillovers worked because a vast private sector and world-class universities already existed to absorb and commercialise them. Defence spending did not build the American economy; it accelerated one that was already built. Pakistan cannot rely on that sequence. The absorptive capacity must be constructed alongside the conversion itself.
The question is how. Pakistan already possesses defence production infrastructure and a substantial base of technical expertise demonstrated by its indigenous fighter jet and drone programmes. What it lacks are the institutional linkages that would allow this capability to generate civilian economic returns. Our defence production operates in near-total isolation from the private sector. The skills, processes and technological knowledge generated within these establishments rarely find their way out. This is not a funding problem. It is a design problem.
Nor is it an accidental one. Vertically integrated defence sectors tend to develop cautious institutional cultures. Knowledge stays within because the structures incentivise it. Reversing this requires not just good policy on paper, but deliberate institutional willingness to create outward linkages where none currently exist.
This must be done firstly by routing selected defence procurement through private Pakistani firms. Turkiye, an example not cited above, opened defence procurement to private firms and built an ecosystem around them. Baykar, now a global leader in unmanned systems, began as a small firm manufacturing automotive parts. Pakistan’s defence production, by contrast, remains almost entirely state-owned.
Secondly, joint research programmes between military establishments and universities would need to be established. Thirdly, dual-use investment will need to be concentrated in domains where military need and commercial potential naturally overlap (unmanned systems, cyber defence, satellite communications etc.) Pakistan’s defence R&D budget lacks the scale of larger powers, which means resources cannot be spread thin and concentration is necessary; fewer domains, pursued with enough depth to reach critical mass.
None of this requires compromising operational capability or dismantling the security apparatus. It requires recognising that a defence sector which produces military strength but almost no civilian economic benefit is itself a long-term vulnerability. Armies are sustained by economies. A defence burden that does not convert into productive capacity will, over time, erode the very security it is meant to guarantee.
The writer is a barrister and entrepreneur.
Published in Dawn, March 16th, 2026