Pakistan’s Ambition to Become a Fighter Jet Exporter Amidst a Crumbling Economy
Photo: @AADIL for ADN
By Nasir Khattak
The fundamental problems in economics are to determine what to produce and for whom to produce as the resources are scarce. Though seemingly simple, if not addressed properly by policymakers, it can spark a scarcity crisis, which has the potential to bring down regimes and stir revolutions.
To be clear, an economy struggling to meet its ends-meet needs to focus on producing necessary goods for mass consumption, in order to ensure the welfare of its citizens; otherwise, the scarcity can lead to a spiral of rising inflation, rising inequality, and rising economic injustice. This crucial economic lesson seems to be missed by Pakistan’s leaders.
In 2025, Pakistan reached an export deal of military hardware worth $10 billion, the highest in its records. The export profile includes the Sino-Pak joint venture JF-17 fighter jet and the Mushshak trainer aircraft. This revenue-generation pattern is somewhat similar to what the Political Economist Kalecki called out as the armament economy, where such an economy focuses on the expansion of the armed forces (through higher military budget allocations) and production of arms and ammunition.
Though Pakistan has presented itself as a formidable alternative international arms market to Africa, Europe, and the Gulf, it has many bridges to cross domestically. First, the sale of jets is presented as a panacea for its debt trouble and future IMF bailouts. However, the production of the JF-17 jet, jointly ventured with China, has a significant manufacturing cost. This manufacturing cost is ridden with foreign exchange problems as many of the components need to be imported from China, Russia, and the UK[1]. Besides, Pakistan is striking deals with risky partners like Libya, which, under the UNSC and Western sanctions, is not allowed to make defence procurements. So, the logistics of such deals remain a gaping issue.
Second, Islamabad is yet again seeking a solution to its macroeconomic instability through extensive military involvement. This approach has never worked, and the chances are bleak that it will, this time. The extensive intervention by the military, working as the shadow government, has given it immense power over foreign policy, legislative procedures, and fiscal policies. The government, under the influence of the military, has been engaged in economically antithetical and ethically appalling practices of cutting a larger share of its pie to the defence sector year after year. As per the 2025 budget, Pakistan raised defence spending by 20 percent, reaching $9 billion, while making a 7 percent cut in overall spending. Major components of the budget are allocated to generous military pensions, which on 2024-25 budget represented more than 50 percent of the total federal pension budget[2][3]. Thus, the rising defence budget not only gives more fiscal power to the military, thereby increasing its inventory role, but it also reflects a government mandate: Choosing drones over development.
This brings us to our third and final point on the development predicament of Pakistan. Going back to the discussion on the ‘what’ and ‘for whom’ to produce for an economy, Pakistan’s apparent enthusiasm to be a fighter-jet supplier to the world comes with a baggage of many developmental concerns.
As mentioned, the much-anticipated achievement of self-reliance through selling off the fighter jets will also be accompanied by a massive outflow of monetary shares to the foreign collaborators. Besides, from the lens of development and socio-economic justice issues, the entire hullabaloo about Pakistan’s defence diplomacy has little to offer the Pakistani citizenry. The expansion of the defence sector would lead to job growth, but only in limited sectors, namely aviation and defence sectors.
Though the spending multiplier enthusiasts will welcome this move as a way to trickle down resources to other sectors, these benefits might be very limited in ameliorating the dismal state of public institutions in Pakistan. First, the jet exports cannot fully alleviate Pakistan’s estimated $300 billion debt burden, and hence “bombs for bailout” deal might not work sustainably as it worked in 2023.
Second, though experts have time and again reminded Islamabad of its dismal state of development, rising poverty, and an urgent need to revamp institutions, the government’s current focus seems to have no bearing on these long-standing structural issues. Many institutions in Pakistan, like the taxation system, are stuck in a poor-institution trap with weak and extractive institutions, substandard surveillance, and a low level of compliance. These taxation institutions have been regressive for the salaried class for a long time; however, no effective reforms have taken place yet. Besides, poverty figures have seen an 11-year surge, reaching 29% in 2024–25, up from 21.9% in 2019, with approximately 70 million people living below the poverty line[4].
The current economic situation is characterized by fragile recovery, high inflation, substantial debt obligations, and significant vulnerability to external shocks, including potential oil price hikes. Despite claiming to be a market economy, the essential components of the economy are determined in extra-market space[5]. Subsidies are often negotiated, with tax exemptions given to those with an elite political voice: mostly an economy working on patronage politics and elite capture[6].
Hence, the paradox: While the economy suffers with many loose ends on energy, logistics, digital infrastructure, education, poverty, and employment, the government vies to establish itself as a major exporter of fighter jets. And it again begs reiteration that the celebrated JF-17 is not kosher, as many of the parts are imported and the foreign suppliers need to be paid in foreign currency, leading to lower net earnings. Thus, the economy, barely coming in terms of survival with high vulnerability to external shocks, is betting on its notorious defence sector for correcting its macroeconomic vitals. And we are left with an economy, where yet again, policy makers choose to produce ‘guns over butter’; and produce it for the chosen elite over the deprived masses.
Nasir Khattak specializes in the China-Pakistan region, with a particular focus on the economic relations between the two countries.
Note: The contents of the article are of sole responsibility of the author. Afghan Diaspora Network will not be responsible for any inaccurate or incorrect statement in the articles.
[1] https://idrw.org/pakistans-jf-17-export-boom-faces-reality-check-as-foreign-components-erode-profit-claims/
[2] https://www.thehindu.com/news/international/pakistan-reduces-pension-benefits-of-retired-civil-armed-forces-personnel/article69052856.ece#:~:text=Many%20serving%20federal%20government%20employees,made%20by%20them%20through%20salary.
[3] https://tribune.com.pk/story/2571940/experts-wary-of-pension-reform
[4] https://timesofindia.indiatimes.com/world/pakistan/pakistan-poverty-explodes-inequality-at-27-year-high-as-economic-crisis-deepens/articleshow/128640989.cms
[5] https://tribune.com.pk/story/2597957/pakistans-economic-paradox
[6] https://tribune.com.pk/story/2597957/pakistans-economic-paradox
