WEF Reports More Pakistanis Sharing Fruits of Economic Growth

More and more Pakistanis are sharing in their nation's development, according to World Economic Forum (WEF). Pakistan ranks 47 among 74 emerging economies ranked for inclusive development by WEF released recently at Davos, Switzerland. Inclusive development in the South Asian country has increased 7.56% over the last 5 years. World Economic Forum assesses inclusive development  based on "living standards, environmental sustainability and protection of future generations from further indebtedness."

WEF Inclusive Development Report 2018:

The WEF inclusive development index ranks Pakistan at 47, below Bangladesh at 34 but above India at 62. The 7.56% rate of increase in inclusive development in Pakistan is higher than 4.55% in Bangladesh and 2.29% in India. China ranks 26 and its inclusion is rising at a rate 2.94%.

WEF IDI Rankings. Source: WEF

Pakistan has improved its ranking from 52 last year to 47 this year, while India's rank worsened to 62 this year from 60 last year.  China's ranking also worsened from 15 last year to 26 this year.

Another WEF report compiled by Oxfam said the richest 1% of Indians took 73% of the wealth generated last year.

Income Share Change in Asia's Poorest Quintile: 

The share of national income of Pakistan's poorest 20% of households has increased from 8.1% to 9.6% since 1990 , according to the United Nations Economic and Social Commission for Asia and Pacific (NESCAP) Statistical Yearbook for 2015.  It's the highest share of income for the bottom income quintile in the region.

The countries where people in the poorest income quintile have increased their share of total income include Kyrgyzstan (from 2.5 per cent to 7.7), the Russian Federation (4.4 per cent to 6.5), Kazakhstan (7.5 per cent to 9.5) and Pakistan (8.1 per cent to 9.6).  India's bottom income quintile has seen its share of income drop from 9% to 7.8%.

Bottom Quintile Income Share Change. Source: UNESCAP Statistical Yearbook

Although more people in China have lifted themselves out of poverty than any other country in the world, the poorest quintile in that country now accounts for a lower percentage of total income (4.7 per cent) than in the early 1990s (8.0 per cent). The same unfortunate trend is observed for a number of other countries, including in Indonesia (from 9.4 per cent to 7.6) and in the Lao People’s Democratic Republic (from 9.3 per cent to 7.6).

CPEC Transforming Least Developed Regions:

Development of China Pakistan Economic Corridor (CPEC) is transforming Pakistan.  Among the parts of the contry being transformed the most by CPEC are some of the least developed regions in Balochistan and Sindh, specifically Gwadar and Thar Desert. Here is more on these regions:

Gwadar Port City:

Gwadar is booming. It's being called the next Shenzhen by some and the next Hong Kong by others as an emerging new port city in the region to rival Dubai. Land prices in Gwadar are skyrocketing, according to media reports. Gwadar Airport air traffic growth of 73% was the fastest of all airports in Pakistan where overall air traffic grew by 23% last year, according to Anna Aero publication.  A new international airport is now being built in Gwadar to handle soaring passenger and cargo traffic.




In addition to building a major seaport that will eventually handle 300-400 million tons of cargo in a year, China has built a school, sent doctors and pledged about $500 million in grants for an airport, hospital, college and badly-needed water supply infrastructure for Gwadar, according to Reuters.

The Chinese grants include $230 million for a new international airport in Gwadar, one of the largest such disbursements China has made abroad, according to researchers and Pakistani officials.

New development work in Gwadar is expected to create as many as 20,000 jobs for the local population.

Thar Desert:

Thar, one of the least developed regions of Pakistan, is seeing unprecedented development activity in energy and infrastructure projects.  New roads, airports and buildings are being built along with coal mines and power plants as part of China-Pakistan Economic Corridor (CPEC). There are construction workers and machinery visible everywhere in the desert. Among the key beneficiaries of this boom are Thari Hindu women who are being employed by Sindh Engro Coal Mining Company (SECMC) as part of the plan to employ locals. Highlighted in recent news reports are two Hindu women in particular: Kiran Sadhwani, an engineer and Gulaban, a truck driver.

Kiran Sadhwani, a Thari Hindu Woman Engineer. Source: Express Tribune

Thar Population:

The region has a population of 1.6 million. Most of the residents are cattle herders. Majority of them are Hindus.  The area is home to 7 million cows, goats, sheep and camel. It provides more than half of the milk, meat and leather requirement of the province. Many residents live in poverty. They are vulnerable to recurring droughts.  About a quarter of them live where the coal mines are being developed, according to a report in The Wire.

Hindu Woman Truck Driver in Thar, Pakistan. Source: Reuters

Some of them are now being employed in development projects.  A recent report talked of an underground coal gasification pilot project near the town of Islamkot where "workers sourced from local communities rested their heads after long-hour shifts".

Summary:

More and more Pakistanis are sharing the fruits of development in Pakistan as shown by the World Economic Forum report on inclusive growth. WEF ranks Pakistan at 47, below Bangladesh at 34 but above India at 62. The 7.56% rate of increase in inclusive development in Pakistan is higher than 4.55% in Bangladesh and 2.29% in India.   The share of national income of Pakistan's poorest 20% of households has increased from 8.1% to 9.6% since 1990 , according to the United Nations Economic and Social Commission for Asia and Pacific (NESCAP) Statistical Yearbook for 2015.  It's the highest share of income for the bottom income quintile in the region.  Development of China Pakistan Economic Corridor (CPEC) is transforming Pakistan.  Among the parts of the country being transformed the most by CPEC are some of the least developed regions in Balochistan and Sindh, specifically Gwadar and Thar Desert. 


Comments

Riaz Haq said…
#India's #GDP "Growth (under #Modi) has dipped below the 30-year average" Economist Kaushik Basu. #ModiAtDavos

http://www.thehindu.com/opinion/interview/growth-has-dipped-below-the-30-year-average-kaushik-basu/article22500231.ece

The former Chief Economic Adviser on India’s current slowdown in economic growth and the mix of policies needed to reignite it
In a career spanning more than four decades, economist Kaushik Basu has donned many hats. He was Chief Economic Adviser to the Government of India (2009-2012) and Chief Economist of the World Bank (2012-2016). At present, he is Professor of Economics and the C. Marks Professor of International Studies at Cornell University, U.S. He is also President of the International Economic Association for a three-year term (2017-2020). A prolific author, Mr. Basu explains why demonetisation was a bad idea and the need for the Goods and Services Tax (GST).

You have been a vocal critic of demonetisation and its intended purpose. Do you think its immediate effects are behind us? And, conversely, if there are increased digital transactions and tax scrutiny, as claimed, will that eventually lead to more growth?
I believe that demonetisation’s worst effects on the economy are behind us now. I do not think it will confer any long-run benefits in terms of digitalisation because that is a slow, natural process. There is no way that an emerging economy like India, with more than half the population still living in the informal sector, can leapfrog advanced economies and get there by a simple policy intervention. The main damage of demonetisation is to India’s reputation as a professionally run economy, since it was an uncalled-for jolt to the market.

You have been a consistent supporter of the other major reform, the GST. Is the current multi-tiered GST design optimal, considering that much of the voiced distress comes from small businesses? The textile sector, for example.
The GST was needed and I am glad that the government managed the political process to get it through. But it has been poorly implemented. For such a large policy shift, the planning and implementation design should have been much better. Also, it should not be too multi-tiered, which is both inconvenient and makes one wonder if this is a sign of sector-specific cronyism. Once we go past these teething troubles, the GST should aid efficiency and growth.

Has the Narendra Modi government leveraged the historic mandate it received, in terms of economic policy? Is there scope for further reform, which could possibly be seen in the Union Budget to be presented soon?
The broad policy continuity that we have seen in India — the GST, the effort to manage fiscal policy in ways similar to what happened before 2014 — is India’s strength. Yes, as always, a lot depends on the Budget, and we are all waiting to see what new initiatives are announced. But in fairness to the Ministry of Finance, India’s challenge is not a matter of fiscal policy alone. India’s economy is doing poorly on several fronts. Consider exports — they have dragged, with India’s trade deficit with China growing rapidly. Exports did seem to grow well from April to November last year, with an annual growth of 12.3%. But it was a time when several emerging economies did well and India’s performance fell short of many other nations, like Indonesia and Vietnam whose exports grew by 16% and 24%, respectively. I believe that India’s long-term prospects are very good, but to get out of the current morass, it needs a professionally designed combination of fiscal, monetary and international trade policy initiatives.
Riaz Haq said…
Pakistan’s Quest for Inclusive Growth
Feb 18, 2019 VAQAR AHMED

https://www.project-syndicate.org/commentary/pakistan-government-sustainable-inclusive-growth-plan-by-vaqar-ahmed-2019-02

Pakistan’s new government is understandably preoccupied with short-term economic problems, but it must also lay the foundations for a more inclusive long-term growth model. If it succeeds, the Pakistani economy might finally start to meet the rising aspirations of the country's young population.

For starters, the authorities need to attract the best people to work for the public sector. At present, Pakistan’s civil servants lack the strategic guidance and motivation to implement economic revival plans. Performance-based incentives are weak, and multiple layers of accountability add to the institutional sclerosis.

Pakistan also needs a bold vision for growth to replace the current incoherent mix of five-year federal development plans and provincial growth strategies. The Center for International Private Enterprise has made a strong case for a credible bottom-up economic plan to boost agricultural productivity, improve manufacturing competitiveness, and support startups in the services sector.

A third priority is to ensure that growth is inclusive, just, and sustainable. The “Economy of Tomorrow” project, conducted by the Pakistan-based Sustainable Development Policy Institute – where I work – and the Friedrich-Ebert-Stiftung, has highlighted several key requirements in this regard.

Fiscal policy should be progressive, promoting equitable growth and economic participation by all segments of society. Furthermore, trade policy should be resistant to elite capture and take consumer welfare into account. And energy, water, and urban-management policies should respect natural resources and the environment. The latter is especially important because Pakistan already suffers from the effects of climate change in the form of recurrent, environment-degrading droughts.

Fourth, the state must create room for entrepreneurship. With over 60% of Pakistan’s population under the age of 25, the public sector clearly cannot absorb all new entrants to the labor force. The solution may instead lie with startups and small and medium-size enterprises. An earlier report by the British Council Pakistan, for example, indicated a surge in startups in diverse sectors.

The number of young Pakistani entrepreneurs is rising significantly, and not only because of the country’s youthful population. Rural-to-urban migration, new public-sector universities, incubators, and accelerator initiatives have also helped. Government policy should now aim to reduce the failure rate of startups and help them to grow. It must also ensure that startups are an option for young people – including women – from all regions and economic backgrounds, including by removing barriers to market information and credit.

Finally, the government should help prepare Pakistan to embrace the emerging technologies of the Fourth Industrial Revolution. Future developments in artificial intelligence, robotics, 3D printing, cloud computing, blockchain, biotechnology, and augmented reality will have a huge economic impact. Adapting to these technologies will require new government initiatives and updated curricula in Pakistani universities.
Riaz Haq said…
PML-N govt lifted 6.2% population out of poverty
By Shahbaz Rana

https://tribune.com.pk/story/2011528/1-pml-n-govt-lifted-6-2-population-poverty/

Pakistan has lifted 6.2% of its population out of acute poverty during five-year term of Pakistan Muslim League-Nawaz (PML-N), as the number of people living in multidimensional poverty stood at 38.3% in 2018, states a new report of the United Nations Development Programme (UNDP).

The incidence of multidimensional poverty in Pakistan is 38.3% but the intensity is considerably higher at 51.7%, according to the new Multidimensional Poverty Index (MPI) that is based on data of up to fiscal year 2017-18. The report was released on Wednesday.

Jointly developed by the UNDP and the Oxford Poverty and Human Development Initiative (OPHI) at the University of Oxford, the 2019 global MPI offers data for 101 countries, covering 76 per cent of the global population.

The report shows that over one-third of children in Pakistan under the age of 5 years were malnourished and suffering from intra-household inequality. The UNDP has defined the intra household inequality as deprivation in nutrition where one child in the household is malnourished and other is not.

Overall, in South Asia 22.7% of children under age 5 experience intra household inequalities in deprivation in nutrition, says the report.

The 38.3% of the people living in multidimensional poverty by end of 2017-18 suggests the previous government managed to reduce acute poverty in the country. The UNDP report shows that in 2012-13, 44.5% of the population lived in acute multidimensional poverty.

The intensity of poverty also reduced from 52.3% in 2013 to 51.7% in 2018.

The PML-N government had achieved average 4.8% economic growth rate during its five years term, although it missed the annual targets. Rather than income and wealth alone, the MPI uses broader measures to determine poverty based on access to healthcare, education and the overall standard of living, thus giving a more detailed understanding of poverty.

The report notes that Kenya and Pakistan have a similar incidence of multidimensional poverty but inequality in education in Pakistan is twice that of Kenya. The 41.3% of the population was deprived of education – a startling figure that underscores the need to heavily invest in humans.

In order to ensure that Pakistan does not cut the spending on health and education, the International Monetary Fund (IMF) has introduced an indicative target in the programme.

The UNDP notes that Pakistan reduced deprivations in six out of ten indicators. About 27.6% of the total population still lacked access to health related facilities. Nearly one-third of the population did not have access to better standards of living.

Out of the total population, about 21.5% was suffering from severe multidimensional poverty. In addition to 38.3% of the population that lived in multidimensional poverty, another nearly 13% were vulnerable to the poverty.

Nearly one out of every three citizens did not have access to cooking fuel – a ratio that was 38.2% in 2013. About one-fifth did not have access to sanitation, which was less than 29.4% ratio in 2013. Nearly 8% population lacked access to clean drinking water –better than 9.1% in 2013.

The indicators on school attendance and child mortality were also improved but these were still not very impressive. 27% of the population lacked access to nutrition, which was 32.4% five years ago. The child mortality rate went down from 8.7% to 5.9%.


Riaz Haq said…
How ‘Good Governance’ in 38 Countries Affects Living Standards

https://www.bloomberg.com/graphics/2019-quality-of-government-and-life/

If you believe that vibrant democracies guarantee good government or that robust economic output ensures a better quality of life for a nation’s citizens, think again.

All over the world, stable economies are facing restive moments. U.S. President Donald Trump was impeached in the House on Wednesday over charges of obstruction and abuse of power. U.K. Prime Minister Boris Johnson could be on the verge of delivering Brexit—three years after voters first chose to leave the European Union—after his Conservative Party won a resounding majority in last week’s general election. In local elections last month, Hong Kong overwhelmingly elected pro-Democracy council members as China seeks to clamp down on protests that have gripped the city for most of the year.

While there is a general correlation between a strong democracy and economic expansion and a better quality of life, research by the Los Angeles-based Berggruen Institute into 38 countries that make up 95% of global gross domestic product shows that’s not always the case. In several of the largest economies in the world—including mature democracies and developing countries—actual government performance is often the decisive factor.

China, which scores low on democracy, has undoubtedly been an economic success story, lifting hundreds of millions of people out of poverty and helping spur the global economy. But it faces a massive debt problem, and is perhaps approaching a ceiling and may need to allow more public participation in running government if it wants to guarantee a better quality of life for its people in the future.

In contrast, the U.S. hasn’t excelled at translating its high gross domestic product growth rate into increases in the quality of life, which has, in fact, decreased slightly over the past 14 years, the Institute said. This is particularly notable in health and education, where the problem isn’t quality, but affordability.

“Growing economic inequality and wealth disparity could be key factors, particularly after the 2007–2008 financial crisis,” according to the report. “Although the economy rebounded after the crisis, the gains were disproportionately concentrated in the top tier of the U.S. population, with 95% of growth going to the top 1% of the households.”

Even in established democracies, actual government performance can trump other factors in determining quality of life. Italy, for example, has a lively democracy, but the responsiveness of successive governments has been poor, and as a result living standards are stagnant at best.

“Italy ranks surprisingly high with respect to quality of democracy scores,” according to the report. “Yet the availability of feedback mechanisms and other democratic processes seems to have no additional impact on the quality of government.”

Social movements that target reform in local and national bureaucracies could help the country escape stagnation, the report found.

A failure of good governance also undermines progress in two middle-income BRICs countries—South Africa and Brazil.

South Africa suffers from world-beating unemployment, high crime and a poor education system that remains skewed along racial lines, some of which can be attributed to the legacy of apartheid. And while it scores relatively well on democracy, its poor performance in addressing inequality—which is higher than at the end of white-minority rule—and corruption may be more a result of the lack of political will than the state’s capacity, according to the report.

Riaz Haq said…
New index says #India is more #corrupt than #Pakistan . Sponsored by Los Angeles-based research organisation Berggruen Institute, the governance index ranked performance on 3 key indices — Quality of #Democracy, Quality of #Government and Quality of #Life.

https://theprint.in/india/overachiever-in-democracy-india-trails-pakistan-in-corruption-on-governance-index/368568/

On the “existence and perception” of corruption in a country, China was considered the most corrupt with a score of 39 points and India came next at 28 points. Pakistan was considered the least corrupt with just 13 points.


India ranked poorly on business regulation, public health and civil justice, according to the recently released Berggruen Governance Index 2019.

The report looked at data over 14 years (2004-2018) from 38 countries and covered 95 per cent of the global GDP and 75 per cent of the global population.

India versus China versus Pakistan
Based on the sub-index Judicial Impartiality, which refers to “a citizen’s treatment in the course of judicial procedures”, India scored the most with 28 data points, Pakistan scored 14 and China 5.

With regard to Quality of Education, China took the lead at 80 points while India and Pakistan scored 30.

On the “existence and perception” of corruption in a country, China was considered the most corrupt with a score of 39 points and India came next at 28 points. Pakistan was considered the least corrupt with just 13 points.

On ‘politicised bureaucracy’, which is the influence of political connections and ideology in the “hiring and firing practices” of bureaucracy, India ranked highest of the three countries with 59 points, China came next with 23 and then Pakistan at 13.

With regards to Shadow Economy — the ability of the government to prevent economic activity from escaping its reach — China scored the highest (91 points), followed by India (57 points) and Pakistan (14 points).

Of the 38 countries, Sweden was the “overachiever” with the highest score in all three indices. UK achieved “more than expected in light of its GDP” overall, while the US performed “just above expectations” on Quality of Democracy, and just below in the remaining two indices.
----------------

If you believe that vibrant democracies guarantee good government or that robust economic output ensures a better quality of life for a nation’s citizens, think again.


China, which scores low on democracy, has undoubtedly been an economic success story, lifting hundreds of millions of people out of poverty and helping spur the global economy. But it faces a massive debt problem, and is perhaps approaching a ceiling and may need to allow more public participation in running government if it wants to guarantee a better quality of life for its people in the future.


In contrast, the U.S. hasn’t excelled at translating its high gross domestic product growth rate into increases in the quality of life, which has, in fact, decreased slightly over the past 14 years, the Institute said. This is particularly notable in health and education, where the problem isn’t quality, but affordability.

“Growing economic inequality and wealth disparity could be key factors, particularly after the 2007–2008 financial crisis,” according to the report. “Although the economy rebounded after the crisis, the gains were disproportionately concentrated in the top tier of the U.S. population, with 95% of growth going to the top 1% of the households.”

Even in established democracies, actual government performance can trump other factors in determining quality of life. Italy, for example, has a lively democracy, but the responsiveness of successive governments has been poor, and as a result living standards are stagnant at best.

“Italy ranks surprisingly high with respect to quality of democracy scores,” according to the report. “Yet the availability of feedback mechanisms and other democratic processes seems to have no additional impact on the quality of government.”

https://www.bloomberg.com/graphics/2019-quality-of-government-and-life/

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