Pakistan built the highways, lit up the power plants, and dredged Gwadar into a working port. What it has not built is a way to turn any of that into more exports. A decade after the China-Pakistan Economic Corridor broke ground, the country’s export-to-GDP ratio has actually fallen from 15.4 percent in 1999 to just 10.4 percent in 2024; a slide that lands at the heart of an uncomfortable question now circulating in policy circles: what was all that connectivity for? The answer, increasingly, is that infrastructure was never going to be enough on its own and CPEC’s next phase will be judged not by how many roads it adds, but by whether it can finally convert concrete into commerce.
CPEC’s first phase delivered real, visible assets: the M-5 and Hazara motorways, an upgraded Karakoram Highway, a functioning Gwadar port and East Bay Expressway, and a wave of new power generation that eased the blackouts of the 2010. By most measures, Pakistan’s historic infrastructure deficit, the thing CPEC was designed to fix has been addressed.
But infrastructure was always meant to be the first link in a much longer chain, one that runs from transport connectivity through logistics efficiency, trade facilitation and market access, before it ever reaches export competitiveness, industrial growth and rising incomes. Pakistan built the first link and stalled. Freight still moves overwhelmingly by road because rail and dry-port networks remain underdeveloped. Customs and inter-agency clearance remain slow and unpredictable despite the rollout of a single trade window. And of the nine Special Economic Zones envisioned under CPEC, only a fraction are genuinely operational years after ground was broken.
Pakistan’s Logistics Performance Index tells the story bluntly. The country ranked 68th in 2016, slipped to 122nd by 2018, and lacked sufficient data to be ranked in 2023. High logistics costs erode whatever price advantage exporters gain from better roads, discouraging the investment that would otherwise follow; a self-reinforcing loop of weak logistics, high costs, thin exports and low investment that no amount of new asphalt can break on its own.
Pakistan is not the first country to face this fork in the road, and the experience of others is instructive. China concentrated its early reform energy on a handful of special economic zones, Shenzhen chief among them — getting them genuinely operational with streamlined customs and investor services before replicating the model nationwide, rather than launching many zones at once with limited institutional capacity. Vietnam paired export-processing zones with a deliberate, FDI-led industrial strategy and a dense web of free trade agreements, wiring itself into global electronics and garment supply chains rather than treating its zones as generic industrial land. Thailand built its Eastern Economic Corridor as a single integrated package — infrastructure, one-stop investment services, customs facilitation and targeted incentives designed together from day one rather than bolted on after construction finished.
The answer, increasingly, is that infrastructure was never going to be enough on its own and CPEC’s next phase will be judged not by how many roads it adds, but by whether it can finally convert concrete into commerce.
Kazakhstan and Georgia offer a different lesson: that transit competitiveness is decided as much at the border as on the highway. Both countries treated customs simplification and cross-border coordination as core infrastructure in their own right, not an afterthought to road and rail investment. The common thread is unmistakable. No country reached competitiveness through construction alone. Each paired its infrastructure spending with customs reform, logistics modernization, targeted industrial policy and critically institutions capable of coordinating across agencies that too often work at cross purposes.
Pakistan’s challenge, therefore, is no longer financing infrastructure but building the institutions that allow infrastructure to generate exports, investment and productivity. If CPEC's second phase is to deliver what the first could not, the priorities are already visible in the gaps: a genuinely multimodal logistics network that shifts freight off the roads and onto rail and dry ports; It also requires risk-based customs inspection; SEZs held to realistic, enforced operational timelines instead of open-ended construction schedules; and a single accountable body empowered to cut through the overlapping federal and provincial mandates that currently slow every reform to a crawl.
None of this is exotic. It is the same sequence, institutions first, logistics and industrial policy next that took Shenzhen, Ho Chi Minh City and the Eastern Seaboard of Thailand from newly connected to genuinely competitive. What those places understood, and what Pakistan has yet to fully act on, is that roads and ports create the potential for trade. They do not create trade itself.
Pakistan does not need another motorway to prove that point. It needs a customs system that clears goods in hours rather than days, SEZs that actually produce and export, and an export ratio that finally starts climbing again after twenty-five years of decline. The infrastructure question has been answered. The competitiveness question is still wide open and it is the one that will define whether CPEC's second decade looks any different from its first.