Embed Size (px)
DESCRIPTION
Economic Development and Entrepreneurship in Pakistan
Citation preview
Economic Growth & Entrepreneurship in Pakistan
Dr. Vaqar AhmedSustainable Development Policy Institute
30th January 2012 1
2
• Revisiting Growth in Context of Pakistan
• Growth Experience of Pakistan
• What is the Current Growth Strategy?
• Why Move Towards a New Growth Strategy?
• What is the Proposed Growth Strategy?
• Themes in Growth Strategy
Outline
State of Workforce
Availability of Capital
Entrepreneurial Streak
How Economy Grows?
Physical Capital
Human CapitalSocial Capital
How Economy Grows?
5
Consensus-building
Governance plan
Security plan
Pakistan’s strategic potential
Development Approach
6
Identity Language Social fabric Common goals
Consensus-building – Social Capital
7
Accountability
Civil Service ReformsRegulation
Governance Plan
8
Security for assets and
profits
Internal and external threats
Security Plan
9
Transit and Logistics to China and
India
Energy Corridor
Link with Central
Asia
Pakistan’s Strategic Potential
10
-20-15-10
-505
1015
1961
1965
1969
1973
1977
1981
1985
1989
1993
1997
2001
2005
2009
Bangladesh
-10
-5
0
5
10
15
20
25
1961
1965
1969
1973
1977
1981
1985
1989
1993
1997
2001
2005
2009
India
02468
1012
1961
1965
1969
1973
1977
1981
1985
1989
1993
1997
2001
2005
2009
Pakistan
-4
-2
0
2
4
6
8
10
1961
1965
1969
1973
1977
1981
1985
1989
1993
1997
2001
2005
2009
Sri Lanka
Growth Experiences Across South Asia
11
Investment & Savings Performance (1979 – 2010)
Country GDP Growth %
Fixed Investment to
GDP (%)
Domestic Savings to GDP (%)
ICOR
China 9.1 32.2 37.9 3.5
India 5.3 23.9 22.0 4.5
Malaysia 6.4 27.4 35.0 4.3
Indonesia 6.0 25.9 29.2 4.3
Thailand 5.9 29.5 28.8 5.0
Pakistan 4.9 16.6 11.9 3.4
12
Structural Transformation 1970 - 2010
0
2
4
6
8
10
1970s 1980s 1990s 2000-10
Sectoral Growth Rates (%)
Agriculture Manufacturing Services
0
10
20
30
40
50
60
1970 2010
Sectoral Shares in GDP (%)
Agriculture Industry Service Sector
Agriculture growth rate declining. Decade average slightly above population growth rate. Issues for food security, unemployment and poverty.
13
Exports, Imports and Current Account 1980s – 2000s
0
5
10
15
20
Exports % of GDP
Imports % of GDP
Current Account
Deficit / GDP
1980s
1990s
2000s
Food Group, 17
Textile Manufactures, 53
Petroleum Group, 5
Other Manufactures, 19
Other Items, 6
PercentageShares in Total Exports (2010)
Since 1990s openness decreased in terms of both exports and imports. Export to GDP ratio low. Highly concentrated, lacking diversification and prone to ToT shocks.
14
Infrastructure – Hardware of Economic Growth
Global Competitiveness Index (out of 139 countries)
Quality of Electricity
Supply
ICT Usage Quality of Roads
Quality of Railroad
Quality of Port
Infrastructure
Quality of Air
Transport
Malaysia 26 40 50 21 20 19 29
Thailand 38 42 79 36 57 43 28
China 27 52 78 53 27 67 79Indonesia 44 97 103 84 56 96 69
Vietnam 59 98 70 117 59 97 88
Philippines 85 101 106 114 97 131 112
India 51 110 118 90 23 83 71
Pakistan 123 128 109 72 55 73 81
15
Management & Organization – Software of Growth
Property Rights
Corruption Education &
Training
Goods Market
Efficiency
Labour Market
Efficiency
Financial Market
Technological Readiness
Malaysia 37 44 49 27 35 7 40
Thailand 87 71 59 41 24 51 68
China 43 47 60 43 38 57 78
Indonesia 74 65 66 49 84 62 91
Vietnam 88 61 93 60 30 65 65
Philippines 102 135 73 97 111 75 95
India 61 80 85 71 92 17 86
Pakistan 99 108 123 91 131 73 109
16
Losses of 22 State owned enterprises now over Rs. 300 billion annually
Government borrowed from banking sector (crowding – out private investment)
Untargeted subsidies still in place
Due to low growth, tax revenue and domestic savings expected to be low.
Fiscal Pressures on the Economy
17
• Growth policy by default• Public Sector Investment• Sector Picking and Regulated Markets
• Result• Sporadic growth usually created by external resources• Preoccupation with crises and stabilization
• Lack of structural reform
What is the Current Growth Strategy?
No Long Term Thinking on Growth Strategy
18
Why Move Towards a New Growth Strategy?
• Expected long run labor force growth 3.6 % annually• Absorbing incremental labor requires GDP growth in excess of 8 %
annually
2001 2002 2003 2004 2005 2006 2007 2008 20090
1
2
3
4
5
6
-2
0
2
4
6
8
10
12
14
Une
mpl
oyed
Lab
our F
orce
(mil-
lions
)
Real
Per
Cap
ita In
com
e G
row
th
(%)
Falling Per Capita
Incomes
Rising Unemployment
19
New Economic Growth Strategy
Economic Discipline
Responsible Fiscal & Monetary Policies
Restructuring of PSEs
Rationalization of PSDP
Productivity
Governance & Institutions
Market Reforms
Urban Management
Youth & Community
New Economic Growth Strategy
20
Potential Governance Agenda
21
Civil Service Reform
Structure and Incentives to Attract Talent
Monetized Salaries, Merit based Promotion, and Easy Entry & Exit
Markets & Entrepreneurship
22
Modernize Laws & Regulations for Markets
Agriculture Market Committees
Investment in New Sectors
Bankruptcy Law (legislation drafted)
Cities as Hubs of Commerce
23
Modernize Laws & Regulations for Cities
Reform Zoning & Building Regulations
Reforms for Connectivity
Revisiting ‘PPP’
Adding ‘PPP Option analysis’ in
PC-1
Reviewing ‘procurement law & processes’
Bringing land acquisition laws in-line with
international norms
Aviation
Increasing profitability through 6th freedom rights
Reducing CAA’s role to regulating
Auctioning of routes against preferred allocation to PIA
Youth & Community Engagement
25
Youth Engagement
Empowerment through Voice and Citizenship
Service Learning
Planning with Line Ministries and Provinces
26
Strategic Level Planning
Review of Key Socio-Economic Challenges
Developing Vision & Mission
Helping Provinces and Line Ministries Formulate Execution Plan
27
New Role of Government
Policy
Regulation
Production & Management
Financing of Assets
Ownership of Assets
Markets Government
29
Revival of Growth
Productivity ReformsPoverty
Intervention
Socio-economic Plan
