Nilgiri
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It's actually quite impressive, all you need is the proper context.
Well compared to India, it's nothing, but Pakistan's GDP is only 270 billion to India's $5 trillion(?). It's all a matter of context.
Besides, I didn't mention remittance in this case, I was talking about FDI, which has little to nothing to do with remittance.
Anywhere from half a billion to a billion a year, that is what I can guess. No one talks about it, as everyone seems to be focused solely on CSF for whatever reason, even though the CSF and reimbursement make up a fraction of US support to Pakistan.
The problem isn't that they've been spread out over a long time (they haven't), the problem is that the US originally invested in the wrong areas (more on military and less on economic front), and spread out their investments over a large number of ill conceived projects; this is changing. The US has realized it's mistakes, and is looking at the Chinese model (a vast majority on economic viable projects, and less on the military front, letting Pakistan handle the military front mainly on it's own terms).
Some reason my multiquote feature is having issues. So point by point:
1. Countries should not rely on remittances too much. They must come in addition to organised structured investment (FDI), especially greenfield. Thats just my view. If you have some resource or report that studies and documents the exact on the ground translation of remittances received by Pakistan, that will be welcome....specifically how much of this remittance turns to hard capital assets. I find that the roughly 2 billion Pakistan gets on FDI per year (till CPEC kicks in) is way too low compared to the 18 billion remittance amount. In a way the remittance shows you the potential where it really should be FDI. For comparison India received (in the latest yearly figures) about 70 billion on remittance and about 60 billion in FDI.
2. When I talk of GFCF (Gross fixed capital formation), i talk about a ratio of GDP spent each year on hard assets. Putting in canals, building houses, net increase in land value, infrastructure, factories, railways etc. For India its about 30%, down from a peak of around 35%. Pakistan has never been past 18%, and in most recent years around 13% (of GDP).
The total size of an economy should have no affect on GFCF. If a sizeable amount of the remittances are converted into hard assets, it would reflect in the GFCF. The problem I see with Pakistan is that its remittances increased from around 2 billion per year during the 80s to around 18 billion today. A growth of around 9 times. That is in line roughly with the amount the Pakistan GDP has grown in the same period (in nominal US dollars)....i.e remittances have always been around 7% of the GDP. But GFCF has actually fell from 19% of GDP in the early 80s to around 13% in 2014.
That means over time, progressively less remittance has been converted to GFCF in % terms (whatever that hypothetically may be if it was a large amount to begin with at all).
It is GFCF (and the closely related GCF) in my experience that provides the launchpad for future sustainable growth. Relying on remittance is not going to cut it unless a high conversion rate is established by some study...and even then it needs to increase several fold to grow the GFCF well past the 13% it is now. CPEC by the way in my estimate will only increase it to around 20% in the coming years (if everything goes to plan), Pakistan should really be targetting well past that.
3. FDI from UAE. How much did it total in the last fiscal year? It cant be projected to be a lot this year since the data so far suggests FDI from non-Chinese countries is actually declining (especially from the US) somewhat:
Pakistan receives $119.3 million in FDI, higher by 7.5% - The Express Tribune
I assume the figures refer to greenfield FDI since total FDI reported by UNCTAD was around 1.7 billion for 2014.
It might also maybe Pakistan has some really weird investment cycle in a given year (so the summer months are really lean and winter is juicier etc.)...so the first 2 months data of the fiscal year cannot be extrapolated to the remaining 10.
Anyways these are not large enough numbers for a 250+ billion dollar GDP from any country. Maybe this year will change with CPEC, but we have to wait and see for that.
4. What figures do you have for proposed US investment in Pakistan in the coming years along the lines of CPEC from China?
Links:
Gross fixed capital formation (% of GDP) | Data | Table
Personal remittances, received (current US$) | Data | Table
GDP at market prices (current US$) | Data | Table