Partition is usually remembered through territory, refugees, violence and the creation of two states. Yet it was also an immense economic reordering. It moved not only people but also skills, commercial relationships, accumulated knowledge, financial resources and access to markets. In Sindh especially, one established mercantile world departed while another arrived. That double movement helps explain both the speed of Pakistan’s early industrialisation and some of the tensions that later gathered around it.
Before 1947, Sindh possessed an important Hindu commercial and professional class, particularly in Karachi, Hyderabad and Shikarpur. Sindhi merchant networks were not confined to the province; some stretched across India, Central Asia and overseas. Partition produced a large-scale exodus of non-Muslims from Sindh, including many members of these trading and professional communities. The result was a serious discontinuity in the province’s urban commercial life, just as the new state was beginning the task of economic reconstruction.
This point requires care. It would be wrong to infer that Sindhis as a community lacked entrepreneurial ability, or to describe all departing Sindhi Hindus as industrialists. Pre-Partition Sindh did not possess a large modern industrial sector comparable to what would emerge later. Its Hindu communities were, however, disproportionately represented in trade, finance, moneylending and the professions, while much of the Sindhi Muslim elite remained rooted in agriculture, large landholding and a predominantly feudal social order. Partition therefore altered the social composition of entrepreneurship; it did not reveal any inherent difference in economic capacity.
Into the same space came Muslim migrants with substantial commercial experience of their own. Another important component of this migration was human capital. The incoming population, particularly the urban-origin migrants who settled in Karachi and other cities, brought levels of literacy, education and professional experience that were relatively high in comparison with much of the predominantly rural population they encountered. The 1951 Census already reflected this educational advantage, particularly in Sindh, where migrants were disproportionately concentrated in the cities. Many came from established urban centres of India with traditions of schooling, professional employment, administration and commerce.
Their arrival therefore helped Pakistan overcome an acute shortage of educated manpower at a time when Partition had removed many Hindu and Sikh professionals, traders and skilled personnel from West Pakistan. Migrant enterprise was consequently reinforced by migrant human capital; educated administrators, professionals, technicians, managers and commercially experienced families helped staff the institutions of the new state and the expanding private economy. In Karachi especially, this combination of literacy, urban experience and entrepreneurial capability became an important force in the city’s rapid emergence as Pakistan’s administrative, financial and industrial centre.
Memons, Khoja Ismailis, Bohras and other Muslim mercantile communities arrived from Gujarat, Kathiawar, Kutch, Bombay and elsewhere in western India, while Punjabi and other business groups also became important. They did not all arrive as wealthy industrialists with large pools of capital. Many came as traders and merchants, but brought with them something equally valuable: business networks, market knowledge, family-enterprise traditions, managerial experience, international connections and a willingness to take commercial risks.
They entered a city that already possessed important commercial communities of its own, among them Karachi’s long-established Parsis, who had played a significant role in the city’s business, professional and civic development before Partition. Christian missionary schools in Sindh’s urban centres also played an important role in widening access to modern education and producing a more literate, professionally trained population.
The success of the migrant entrepreneur should not, however, be understood in isolation from the society that received them. Sindh, and Karachi in particular, provided the physical, institutional and human environment within which migrant capital and talent could flourish. The newcomers entered an established port city with commercial infrastructure, transport links, civic institutions and a diverse population whose contribution to Karachi’s economic life long pre-dated Partition.
Local communities and institutions also absorbed an extraordinary refugee influx, notwithstanding the inevitable pressures and tensions that accompanied such rapid demographic change. Migrant enterprise brought networks, skills, education and risk-taking capacity; the receiving economy provided land, labour, infrastructure, markets and an economic hinterland. The transformation was therefore reciprocal: migrants helped build modern Karachi, but Karachi and Sindh also provided the platform upon which migrant enterprise succeeded. Their eventual economic success became not merely the success of a migrant community, but of Karachi, Sindh and Pakistan itself.
Pakistan did not, therefore, create its entrepreneurial class from scratch. But neither did migrant businessmen simply inherit an industrial economy. They entered a country with a remarkably narrow modern industrial base and expanded within opportunities created by the new state. Through development planning, import protection, industrial licences, development finance, credit, infrastructure and tax incentives, the government encouraged private investment. The resulting industrialisation was neither purely state-created nor purely private-sector-driven. It was, in important respects, a partnership between an entrepreneurial class and a developmental state.
Partition was not merely a territorial and demographic rupture; it was an immense economic reordering that displaced established commercial networks while bringing new pools of entrepreneurial experience, human capital and market connections into Pakistan.
The transformation had begun well before the celebrated growth of the 1960s. During the 1950s, Pakistan’s overall economic performance remained constrained by sluggish agriculture and rapid population growth, but its industrial expansion was striking. Manufacturing grew by roughly 7.7 per cent annually over the decade, while large-scale manufacturing expanded at about twice that rate. Industrial production more than doubled, and the real output of large-scale industry increased several-fold as Pakistan rapidly established industries that had scarcely existed at independence. The 1950s were, in this sense, the decade of Pakistan’s industrial take-off.
That momentum broadened considerably in the following decade. Historical World Bank assessments put GDP growth at about 6.6 per cent a year during 1960–65 and 6 per cent during 1965–70, while manufacturing output grew by almost 12 per cent annually in the first half of the decade and about 8 per cent in the second. For a state that had begun with limited industrial infrastructure, shortages of managerial and technical capacity, and an overwhelmingly agrarian economy, what began in the 1950s as rapid industrial expansion had, by the 1960s, developed into a much broader economic transformation.
The significance of that performance becomes clearer in comparative perspective. A contemporary World Bank assessment noted that industrial production in Pakistan rose by about 71 per cent between 1958 and 1963, compared with roughly 55 per cent across the Asian economies in the relevant United Nations regional grouping, excluding Japan. Such comparisons require caution because Pakistan was starting from a low industrial base, but they nevertheless confirm that the pace of expansion was substantial by the regional standards of the time.
The expansion was not confined to simple consumer goods. Pakistan moved from early import substitution into a wider range of intermediate and capital goods, including engineering, chemicals, fertiliser and cement. Karachi became the country’s principal port, financial centre and industrial city, while important industrial centres also developed in Punjab. The economy remained structurally weak in several respects, but by the late 1960s Pakistan had acquired a private industrial sector and a class of indigenous business groups that had not existed on anything approaching that scale at independence.
The social composition of this industrial elite is revealing. It was never linguistically a single Urdu-speaking bloc. A substantial proportion consisted of migrant Muslim mercantile communities particularly Memons, Khojas and Bohras from Gujarat, Kathiawar, Kutch and Bombay, many of whom settled in Karachi and made the city the principal base of their commercial, financial and increasingly industrial activity. Although Gujarati, Memoni, Kutchi and related languages remained important within these communities, many became, over time, part of Karachi’s broader Urdu-speaking and subsequently Mohajir social and political identity.
They were joined by important Punjabi and other entrepreneurial groups based elsewhere in the country. Karachi thus became not merely Pakistan’s principal port and financial centre, but also the principal meeting ground of migrant commercial capital, banking, industry and entrepreneurial talent. Matthew McCartney’s study of Pakistan’s political economy notes explicitly that Sindhis did not figure among the famous “22 families” that came to dominate important commercial and industrial sectors. That absence should not be interpreted as evidence that there were no Sindhi businessmen. The more secure conclusion is narrower: indigenous Sindhi Muslim families were conspicuously under-represented among the largest industrial groups of the period.
Part of the explanation lies in the Partition-induced transformation of Sindh’s commercial society. An established Hindu mercantile class had largely departed, while commercially experienced Muslim migrants became increasingly central to Karachi’s new industrial economy. The paradox is striking: Partition depleted Sindh of one important indigenous commercial class while simultaneously creating the circumstances in which another commercially sophisticated population established itself and helped turn Karachi into the economic centre of the new state.
East Pakistan presented a different but related problem. It was central to Pakistan’s export economy, especially through jute, yet Bengali ownership remained limited at the highest levels of large-scale industry and finance. Major industrial houses operating in the eastern wing were often non-Bengali. This did not mean that Bengal lacked entrepreneurs; it meant that economic growth did not generate a proportionate Bengali capitalist class at the commanding heights of the national economy. That imbalance added an economic dimension to regional grievances that eventually became politically explosive.
It was against this background that Mahbub ul Haq’s famous “22 families” argument entered Pakistan’s political vocabulary. Haq drew attention to the concentration of industrial, banking and insurance power in a relatively small number of family groups. The problem was real. Rapid growth had created wealth faster than Pakistan’s institutions had learned to disperse opportunity, regulate monopoly, widen access to finance or prevent privileged access from becoming entrenched.
But Haq later supplied an equally important qualification. The 22 families, he argued, were “a symptom, not a cause” of the system that had created them. That distinction is essential. The concentration of wealth required reform; it did not follow that private enterprise itself had failed. A more durable response would have sought to democratise capitalism through stronger competition, progressive taxation, broader access to credit, better corporate governance, deeper capital markets, labour protection and deliberate encouragement of new entrants and small and medium enterprises. The strategic question should have been how to create hundreds, and eventually thousands, of additional entrepreneurs, including new regional business classes capable of competing with established houses.
Pakistan’s first two decades therefore contain two lessons, not one. They demonstrate how entrepreneurial skill, migration, public policy and capital formation can transform a weak post-colonial economy with remarkable speed. They also show the danger of allowing successful industrialisation to harden into concentrated economic power. By the end of the 1960s, Pakistan did not need to dismantle the entrepreneurial ecosystem it had created. It needed to broaden it. What followed in the 1970s would turn that necessary reform into a far more disruptive experiment and alter the country’s development trajectory for years to come.