At E Haven, our blog dives deep into technology and fashion, but we also explore key global economic trends that impact emerging markets. Today, we’re turning our focus on Pakistan’s potential economic trajectory through alliances like the Shanghai Cooperation Organisation (SCO) and BRICS.
Building Momentum SCO Success and BRICS Aspirations
Following Pakistan’s successful hosting of the SCO summit, the country has expressed a growing interest in joining BRICS—a significant bloc of emerging economies originally comprising Brazil, Russia, India, China, and South Africa. With the recent inclusion of countries such as Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE, BRICS has evolved to encompass a broad and diverse membership, enhancing its influence in global economic and political affairs.
Though both SCO and BRICS prominently feature China, Russia, and India, these organizations differ in focus. The SCO, originally a Eurasian organization with a strong emphasis on security, has gradually expanded into economic collaboration. Meanwhile, BRICS was initially a platform for emerging economies to counterbalance Western dominance, but it’s now embracing a more prominent political role in shaping the global landscape.
Pakistan’s Strategic Move
Joining the SCO was a calculated decision by Pakistan, one that underscored its intentions to bolster its presence in the regional geopolitical sphere. Now, its potential bid for BRICS membership highlights a broader ambition to secure economic gains and reinforce its independence on the global stage. However, history shows Pakistan must take a proactive approach if it hopes to realize tangible benefits from these international alliances.
Historically, Pakistan’s engagement in multilateral organizations has had limited economic impact. For example, despite being a founding member of the General Agreement on Tariffs and Trade (GATT) in 1948 and subsequently the World Trade Organization (WTO) in 1995, Pakistan has often lagged in adapting its trade policies. While countries like China and Vietnam reaped significant gains by aligning their domestic policies with international standards, Pakistan’s restrained approach has hampered its global trade growth.
Regional Engagement and Economic Realities
In South Asia, Pakistan has similarly maintained a reserved stance. With the establishment of the South Asian Free Trade Area (SAFTA) after the 12th SAARC Summit in Islamabad in 2004, there were high hopes for regional trade growth. However, Pakistan’s trade volume with key SAFTA members like India has not only failed to grow but, in fact, shrunk over time. By contrast, countries like India and Bangladesh have seen bilateral trade surge by over 600% from $2.5 billion in 2005 to a remarkable $16 billion in 2023.
To harness the economic advantages of membership in organizations like the SCO and BRICS, Pakistan must rethink its inward-looking policies. In particular, the recent SCO summit underscored emerging opportunities in technology, digitalization, artificial intelligence, and e-commerce—all sectors that could spur economic progress.
Unlocking the Economic Power of Modern Agreements
While most SCO members are actively engaged in WTO negotiations around digital trade, Pakistan has taken a back seat. The country has yet to join the WTO’s Information Technology Agreement (ITA), a pivotal accord that has driven the global technology sector since its inception in 1997. All SCO members within the WTO framework are ITA participants, positioning them to drive forward the digital economy.
As speculation grows around the possibility of SCO and BRICS members trading in regional currencies instead of the U.S. dollar, there may be opportunities for Pakistan to reduce its dependency on foreign currency reserves. However, this shift would require significant cooperation and policy adaptation, both domestically and regionally.
Emphasizing Geoeconomic Partnerships
Pakistan could significantly benefit from prioritizing membership in geoeconomic-driven alliances over geopolitical ones. For instance, joining the Regional Comprehensive Economic Partnership (RCEP), a powerhouse for Asia-Pacific trade, could provide Pakistan with access to rapidly growing markets and increase its economic integration within the region.
At E Haven, we believe that Pakistan’s potential lies in leveraging its geographical position for enhanced regional trade and adopting forward-looking economic policies. Abandoning protectionist stances and engaging more robustly in international agreements related to technology, digital trade, and e-commerce will be critical steps toward economic transformation.
A Call for Forward-Thinking Policies
Pakistan’s membership in regional or multilateral organizations will not inherently yield economic benefits. Instead, it must actively reform policies to foster a more open and trade-friendly economy. By embracing its strategic position as a trade hub and aligning with global technology standards, Pakistan can secure a stronger economic future.
At E Haven, we explore the intersection of global developments and regional opportunities—insights that not only impact the global economy but resonate with the aspirations of emerging economies, including Pakistan.
