AI revolution: Pakistan’s youth dilemma

2026-03-04 - 20:23

Madeeha Gohar Qureshi PAKISTAN today stands at a critical demographic crossroads, with nearly 60 percent of the population under 30. This youth bulge has long been described as a potential “demographic dividend,” but dividends only materialize when young people are productively absorbed into the economy. While Pakistan entered its demographic transition in the 1990s, fertility decline slowed after 2000 and population momentum ensures millions will continue joining the labour force. The real question is whether Pakistan can convert this demographic pressure into economic opportunity. Policymakers now view the technological revolution, particularly artificial intelligence (AI) and internet-based outsourcing, as a potential pathway. Initiatives under URAAN Pakistan (2025), coding boot camps, vocational training through NAVTTC and TVET and expanding AI-related university programs indicate growing recognition that digital skills may offer global integration opportunities. Yet history urges caution. Pakistan has missed transformative windows before: in the 1990s, partial adoption of trade liberalization limited growth, family planning policies faltered in the 2000s and CPEC’s structural promise was constrained by political instability and inconsistent policies. The current AI wave could represent a fourth opportunity, but structural realities remain. Pakistan’s productivity challenge extends beyond a skills gap. Weak institutions, limited industrial diversification and inconsistent economic policies cannot be offset merely by coding or digital training. Urbanization trends further highlight structural weaknesses. By 2050, nearly half of Pakistan’s population will be urban, but much of this reflects demographic pressure rather than a shift into high-value, technology-intensive industry. New entrants are often absorbed into informal or low-productivity sectors rather than dynamic, export-oriented employment. Technological revolutions are inherently disruptive. AI automates routine tasks in customer service, data processing and even programming. Economies with strong innovation ecosystems can adapt, but limited research and industrial capacity risks job displacement rather than sustainable employment. The digital divide exacerbates this challenge, as unequal access to reliable internet, especially in rural areas, may deepen existing inequalities, concentrating benefits in already advantaged urban populations. To make AI and outsourcing engines of inclusive growth, several conditions are essential: institutional stability and consistent policies to attract investment; nationwide, high-speed digital infrastructure; training programs aligned with industry demand; support for innovation ecosystems including research funding and university-industry linkages; and macroeconomic stability to reduce uncertainty for entrepreneurs and foreign clients. Crucially, the focus must be on sustainable employment creation rather than short-term gig work vulnerable to automation and global competition. If managed strategically, AI can enhance productivity, expand exports and empower a digitally skilled generation. Approached superficially, it risks widening inequality, increasing job insecurity and frustrating young people. For Pakistan’s youth, the technological revolution is neither a panacea nor a peril; it is a tool. Its potential to become a demographic dividend or a liability depends on policy choices made today. The window of opportunity is open—but not indefinitely. —The author is a Research Economist at the Pakistan Institute of Development Economics (PIDE). (madeeha.qureshi@pide.org.pk)