Key takeaways
- Official data put the urban share at 39%; GIS studies suggest 50–60%.
- World Bank research finds 88% living in areas with urban characteristics.
- The 2008–2012 energy shortages hollowed out urban manufacturing.
- Cities absorb workers into low-value informal services instead of industry.
- Serviced industrial clusters, empowered local governments and cluster-linked skills are needed.
In this Minute Mirror column (February 2026), Dr. Ghulam Mohey-ud-din argues that Pakistan has urbanised without the productivity gains that urbanisation brought to East Asia. People have moved to cities; industry, innovation and good jobs have not.
The argument
Pakistan is more urban than official figures suggest. Government data put the urban share at 39 percent, but GIS and satellite studies estimate 50 to 60 percent, and World Bank research finds 88 percent of people living in areas with urban characteristics. Cities are concentrating population without concentrating productive activity.
The column traces several causes. Urban development favours housing and commercial property, so speculative land markets raise costs for factories. The energy shortages of 2008 to 2012 damaged industrial capacity, and higher tariffs since then have kept manufacturing uncompetitive. As a result, urban employment is dominated by street vending, ride-hailing and domestic work that offer survival incomes rather than rising productivity. High-value services exist, but in narrow enclaves.
Governance compounds the problem. Centralised government leaves cities with little fiscal or administrative power to build transport, housing and utilities at scale. Without vocational training tied to local industries, skill shortages sit alongside educated unemployment.
What needs to change
- Integrate industrial and urban policy through serviced industrial clusters with predictable zoning and export logistics.
- Make formalisation cheaper: lower registration barriers, reliable utilities and digital compliance.
- Devolve genuine fiscal and administrative powers to local governments for transport, housing, water, sanitation and energy.
- Link technical and vocational training to the clusters that need the skills.
The theme is developed at length in Policy Insights No. 001/2026, Urbanization without Productivity.