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http://asia.nikkei.com/Politics-Economy/Economy/Pakistan-Asia-s-next-growth-engine
Pakistan: Asia's next growth engine
MASATO HORIE
The Pakistan Stock Exchange's building in Karachi © Reuters
With a gross domestic product per capita of 1,500 dollars, roughly half that of the Philippines and Indonesia, Pakistan ranks as a poor country by many standards. However, with a young and growing population coupled with increased stability, the South Asian country has remarkable potential for growth.
The country's land forces rank fourth in the world in terms of personnel numbers, while its air force has a total of 456 combat aircraft. Its fleet includes highly advanced craft such as U.S. fighter F-16 Fighting Falcon. And that is without even touching on the country's nuclear arsenal.
Pakistan's military strength is in part a result of hostile relations with neighboring India, with whom conflict has erupted on numerous occasions since the two achieved independence.
Another factor is Pakistan's geopolitical position. The country gained huge strategic importance after developments in surrounding countries altered the regional landscape in the latter half of the 20th century. The Soviet Union's 1979 invasion of Afghanistan and the Iranian Revolution the same year saw Pakistan's military benefit from U.S. financial support.
Islamabad in recent years has been no less important in terms of the fight against the Taliban in Afghanistan -- although Pakistan itself has seen a rise in terrorist activities.
Insurgents based in Khyber Pakhtunkhwa along the Afghan border are believed to be behind many of the attacks, but political and religious tensions elsewhere in the country have also contributed to security concerns.
Domestic problems have not helped Pakistan's reputation on the international arena, and were damaged further when nuclear expertise, including uranium enrichment technology, was found to have been leaked to North Korea, Libya and Iran.
Yet despite its troubled image, Pakistan is gradually emerging as an economy with significant growth potential.
It is one of the "Next 11" countries identified as the next emerging forces after BRICS -- Brazil, Russia, India, China and South Africa. Pakistan's inclusion is predicated on a population of 190 million, making it the sixth most populous country in the world.
In addition, Pakistan's young population is growing, meaning that it is likely to enter a period of "demographic dividend," in which the percentage of the workforce against total population rises to high levels for the next four to five decades, helping to accelerate economic growth.
In recent years, Pakistan has maintained a civilian government, going some way to projecting an image of greater political stability.
Thanks to positive developments, there are also signs that international financial players are turning their attention to Islamabad's way.
MSCI, a prominent provider of stock indices, announced in June that it will reclassify Pakistan into its Emerging Markets Index from the Frontier Markets Index, having downgraded it in December 2008
Apparently MSCI has a renewed positive view on the country now that it has maintained solid economic growth on the back of continued loans from the International Monetary Fund and falling oil prices, and that its stock market has been on a steady rise.
Provided safety concerns continue to be addressed, Pakistan has the potential to become one of Asia's growth engines.
Masato Horie is senior economist at Mitsubishi UFJ Research and Consulting.
@A-Team @Nilgiri
Pakistan: Asia's next growth engine
MASATO HORIE
The Pakistan Stock Exchange's building in Karachi © Reuters
With a gross domestic product per capita of 1,500 dollars, roughly half that of the Philippines and Indonesia, Pakistan ranks as a poor country by many standards. However, with a young and growing population coupled with increased stability, the South Asian country has remarkable potential for growth.
The country's land forces rank fourth in the world in terms of personnel numbers, while its air force has a total of 456 combat aircraft. Its fleet includes highly advanced craft such as U.S. fighter F-16 Fighting Falcon. And that is without even touching on the country's nuclear arsenal.
Pakistan's military strength is in part a result of hostile relations with neighboring India, with whom conflict has erupted on numerous occasions since the two achieved independence.
Another factor is Pakistan's geopolitical position. The country gained huge strategic importance after developments in surrounding countries altered the regional landscape in the latter half of the 20th century. The Soviet Union's 1979 invasion of Afghanistan and the Iranian Revolution the same year saw Pakistan's military benefit from U.S. financial support.
Islamabad in recent years has been no less important in terms of the fight against the Taliban in Afghanistan -- although Pakistan itself has seen a rise in terrorist activities.
Insurgents based in Khyber Pakhtunkhwa along the Afghan border are believed to be behind many of the attacks, but political and religious tensions elsewhere in the country have also contributed to security concerns.
Domestic problems have not helped Pakistan's reputation on the international arena, and were damaged further when nuclear expertise, including uranium enrichment technology, was found to have been leaked to North Korea, Libya and Iran.
Yet despite its troubled image, Pakistan is gradually emerging as an economy with significant growth potential.
It is one of the "Next 11" countries identified as the next emerging forces after BRICS -- Brazil, Russia, India, China and South Africa. Pakistan's inclusion is predicated on a population of 190 million, making it the sixth most populous country in the world.
In addition, Pakistan's young population is growing, meaning that it is likely to enter a period of "demographic dividend," in which the percentage of the workforce against total population rises to high levels for the next four to five decades, helping to accelerate economic growth.
In recent years, Pakistan has maintained a civilian government, going some way to projecting an image of greater political stability.
Thanks to positive developments, there are also signs that international financial players are turning their attention to Islamabad's way.
MSCI, a prominent provider of stock indices, announced in June that it will reclassify Pakistan into its Emerging Markets Index from the Frontier Markets Index, having downgraded it in December 2008
Apparently MSCI has a renewed positive view on the country now that it has maintained solid economic growth on the back of continued loans from the International Monetary Fund and falling oil prices, and that its stock market has been on a steady rise.
Provided safety concerns continue to be addressed, Pakistan has the potential to become one of Asia's growth engines.
Masato Horie is senior economist at Mitsubishi UFJ Research and Consulting.
@A-Team @Nilgiri
