By Imran Khan
In my previous article "BRICs and World Economic Map in 2050", I talked about the economic potential of Brazil, Russia, India and China (BRICs). I also mentioned that the authors of the concept, Goldman Sachs Consulting Group, have developed a typology of Next Eleven (N-11) countries, which do not have the potential to be BRICs, but at least have a strong probability to be lightweights in the global economy. Pakistan is also included in the list along with Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Philippines, South Korea, Turkey and Vietnam. In this article, I compare Pakistan with other N-11 countries.
Like BRICs, the common ground for the selection of N-11 is their large population size. However, except for population and good economic potential, the N-11 are a diverse group in terms of their level of economic and market development as well as integration in the world economy. As in the case of BRICs, the authors have used variables grouped under Macroeconomic stability, Macroeconomic conditions, Technological capabilities, Human capital and Political conditions to determine the speed with which N-11 will be able to converge or catch up with the developed economies.
If we compare Pakistan with other N-11 countries in 2005, we find that it is only second to Indonesia in terms of population. However, in terms of the size of GDP, it is 6th in the league table, ahead of Bangladesh, Egypt, Nigeria, Philippines and Vietnam. The distressing part is that by the magic year of 2050, Pakistan will slide down to be the 9th largest economy in N-11, only Iran and Bangladesh being smaller to her. However, in terms of Income per capita, Iran with a smaller population will race ahead of Pakistan, placing it at lowly number 10, ahead of only Bangladesh.
In terms of overall Global Environment Score (GES), signifying the probability of catching up with G-7 countries, Pakistan is amongst the low performing bottom three countries; bracketed with Bangladesh and Nigeria. South Korea is a clear leader in N-11, followed by Mexico, Vietnam, Iran, Egypt, Philippines, Turkey and Indonesia in respective order. If we look at individual indices, on which GES has been based, we understand why Pakistan does not make even to the middle of the list.
In terms of Macroeconomic Stability variables, Pakistan performs very poorly and has 1st, 4th and 6th place for high inflation, high government deficit and high external debt respectively.
In terms of Macroeconomic Condition variables, Pakistan is at the very bottom for investment and comes at second last (above Bangladesh) for openness.
In terms of Technological Capabilities variables, Pakistan is placed at 10 (above Bangladesh) for use of computers and third from the bottom (above Nigeria and Bangladesh) for the number of telephone lines and the use of internet.
In terms of Human Capital variables, Pakistan is placed at 9th place for schooling and life expectancy above Nigeria, and Bangladesh.
In terms of Political Conditions variables, Pakistan is better than only Nigeria for political stability; is ranked at 7th for rule of law (above Iran, Bangladesh, Indonesia and Nigeria); and is placed at 8th for corruption (above Indonesia, Bangladesh and Nigeria).
In all these variables, Pakistan has been indexed below the developing country mean.
The good news is that these results are based on the 2000-05 period and do not take into account the recent political and economic developments in the country. Pakistan's excellent macroeconomic performance in the last two/three years has not found a place here. Similarly, excellent work done in the areas of higher education and telecommunications is also not included in the index. The authors also concede that trade openness in Vietnam, Egypt, Turkey and Pakistan has increased significantly over the past several years. The latter three countries, along with Indonesia, have also seen a pronounced rise in FDI shares.
Countries like Egypt, Indonesia, Philippines, Bangladesh, Nigeria and Pakistan face significant structural weaknesses, and are much more likely to fail in meeting the projections than those whose political and economic conditions are more stable today. A common feature of these countries is their marked weaknesses in political conditions. Fiscal management is another general area of concern. Nigeria's life expectancy, levels of education in Bangladesh, and investment rates in the Philippines, Indonesia, Pakistan and Egypt also stand out as important issues.
In the social sector too, there is a need for significant improvement. To take the example of health care, Pakistan, Bangladesh and Nigeria spent less than $25 per head on health each year in 2005. Pakistan is a marked under-performer, spending just $13 per person on health care in 2003, a figure that has fallen 13% since 1998.
Some of these countries are already aware of these problems and are trying to solve them. Nigeria has set a goal of cracking down on corruption, Turkey is trying to reform with a focus to integrate with the European Union, Vietnam has joined the WTO, and the government in Pakistan has undertaken important reform measures in the banking, tax and corporate governance areas which aim at boosting growth over the next few years.
The story of BRICs and N-11 is not just about growth; rather it denotes a seismic shift in the pattern of global economic activity. The way things are in the country, Pakistan will have to really perform really well on political, social, technological and economic fronts to catch up with other countries. A large but illiterate and sick population will hardly accredit her to be an economic lightweight on the world map.
not bad considering our lame position at like 45th or something currently
