Pakistan's economic system is a mixed economy combining market and state roles, based largely on agriculture, textiles, and services, ranking as the 24th largest economy by purchasing power parity. What type of economic system does Pakistan have? The 2026 Index of Economic Freedom ranks it 150th globally as repressed, while Freedom House rates it 32 of 100 as Partly Free.
What is the economic system of Pakistan? The economy of Pakistan is based on a mixed economy. The country’s economic system combines elements of a market economy and a planned economy.
Pakistan’s economy is largely based on agriculture, textiles, and services. It is the 24th largest economy in the world by purchasing power parity.
No country is purely capitalist or purely communist.
What do the freedom indexes tell about the economic system of Pakistan?
For instance, according to the 2026 Index of Economic Freedom, which measures the ability of every human to control his own labor and property, Pakistan is ranked 150th globally and 32nd in Asia-Pacific, indicating that the country has a repressed economy.
In a similar way, the 2026 Freedom House index evaluates the state of political rights and civil liberties globally. Pakistan gets a score of 32/100, which qualifies it as Partly Free (as of 2026).
Pakistan is considered to have a government that does not control what people do, and people can make their own economic decisions, but it is only considered an electoral democracy, lacking full liberal democratic protections.
The Link Between Public Sector Employment and the Economic System of Pakistan
An indicator of the extent to which the State is involved in the economy is the number of public sector employees. In Pakistan, according to ILOSTAT, the number of public sector employees as a percentage of the total workforce is 7.3% (2021).
In the country’s mixed economy, the number of public sector employees as a percentage of the total workforce varies based on the specific policies and practices adopted by the State. Some economic activities are left to the private sector while others are under government control. The bigger the public sector the closer is the economy to being a command economy.
The historical factors that have influenced the economic system of Pakistan
The mixed economy system of Pakistan is the result of a combination of factors, including the country’s colonial history, post-independence economic policies, and current economic and political environment.
Colonial rule left Pakistan with a legacy of state-led economic development, while post-independence policies focused on import substitution and industrialization. The current economic and political environment has led to a greater reliance on the private sector and foreign investment.
Sources
- List of countries by the public sector size
- ILOSTAT
- 2026 Index of Economic Freedom
- Freedom in the World 2026
Last updated: June 20, 2026
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