Experts urge Pakistan to empower local governments to spur growth

Pakistan's next phase of economic growth will depend on empowering local governments with greater political, administrative and financial authority, according to experts featured on the latest episode of Kamran Khan's On My Radar, which contrasted Pakistan's centralized governance with China's decentralized development model.

The program argued that nearly all successful economies rely on strong local governments to solve urban challenges and drive economic expansion. It cited China as a leading example, saying the country built its economic rise on a system that gave local governments broad authority over investment, infrastructure and industrial development.

Former State Bank of Pakistan Governor and economist Ishrat Husain said Pakistan could accelerate economic growth by adopting key elements of China's local government model, where cities compete to attract industries, investment and jobs.

According to the program, local governments in China have played a central role in developing industrial parks, attracting billions of dollars in foreign investment, expanding urban infrastructure and supporting industrial growth. It argued that strong local governments were instrumental in transforming China into an economic superpower.

The program said Pakistan has followed the opposite path, with successive democratic governments delaying local elections or limiting the authority of elected local representatives even after polls were held. As a result, real political, administrative and financial powers have largely remained with provincial governments and the bureaucracy.

It noted that Article 140-A of Pakistan's Constitution requires the transfer of political, administrative and financial authority to elected local governments, but said the provision has yet to be fully implemented.

The episode cited a recent World Bank report showing that spending through local governments in Pakistan has fallen to less than 5% of total public expenditure, down from nearly 10% in 2005, indicating that the role of local governments has weakened further over the past two decades.

By contrast, the program said International Monetary Fund data show that local governments in China account for about 85% of total government spending – among the highest shares in the world. Most decisions on infrastructure, transportation, industrial parks, education, healthcare and local economic planning are made at the local level, it said.

The program also highlighted competition among Chinese cities to attract businesses and investment. When companies such as Foxconn, BYD, CATL and other global manufacturers establish new factories, local governments often provide land, build roads, ensure electricity supply, expedite permits and develop industrial infrastructure.

As a result, Chinese cities have evolved beyond administrative units into major centers of economic growth, the program said.

In Pakistan, however, many local governments lack the authority to build roads independently, launch major transport projects or make decisions on urban planning and investment. Most key decisions are made in provincial capitals, leaving cities with limited resources and decision-making powers.

The program concluded that many experts believe Pakistan's next economic breakthrough is more likely to come from financially autonomous and empowered local governments than from federal or provincial initiatives, arguing that strong cities form the foundation of a strong economy.

Former Finance Minister Asad Umar also appeared in the program to discuss the role of local governments in supporting long-term economic development.