Pakistan becomes the 5th Fastest growing economy in the world

[Mo12]

We need 8-10% of growth every year for the next 15-20 years. Whether that puts us as fastest growing economy or not doesn't matter. Achieving developed world status should be the end-goal.

All developing nations want that, but what is stopping them to getting it?

 

[Water Car Engineer]

I remember couple of years ago, members were saying India needed to be kicked out of the BRICs, because it was achieving the lowest growth for a year(4.5%?), but no one want to talk now when members are going negative.

Good job, India. Wish all the other members well from the slump.

 

[AlyxMS]

This is an interesting time because the second industrial revolution, maybe the 1.5th, is on the verge of happening.

Pakistan may start now for a head start, or wait for technology to revolutionize manufacturing and take advantage of starting late while other countries (like China) would have many legacy production facilities and would need a total transformation.

About concerns of China taking over Pakistani market and out competeing local firms. You can look at China to see how they prevented it: Massive import taxes and trade barriers. If the price or availability of Chinese products can be made uncompetitive, there's no reason why Pakistan's industry can't take off, even just from the domestic demand.

 

[Indus Pakistan]

"There's no such thing as a free lunch"

Poppycock. That is such a cliche. Okay so there is no 'free lunch'. Right lemme give you a list.

Poland.
Latvia
Slovakia
Romania
Bulgaria

Since early 2003 these basket cases are not only having free lunches but they are eating cakes as well. Do you know the amount of subsidy that EU has pumped into theses countries? It runs into $100s of billions. In adddition the citizens of these countries have been allowed without any visa or entry restrictions to get millions of jobs inside EU at full EU rates.

The general idea is to lift these underdeveloped Eastern European states to the same level as Western Europe with Germany, France and UK foting the bill. Why did they do this? One South Asian migrant arrives and they have cops searching for him. The reason is strategic. Western Europe needs to bring Eastern Europe within it's orbit and wider NATO bulwark.

Going back to post WW2 United States launched the massive Marshall PLan to lift Western Europe up from the bootstraps. Again $10s of billions was transferred to get Western Europe up after the destruction of WW2. So countries do employ economic devices as part of their strategic objectives.

And talking of free lunches even the rich get lunches on the house with cakes thrown in. Which country is the largest recipient of US aid every year? Some poor African country maybe? Nah, Israel. Go figure. Geopolitics at play?


Talking of lunches- - do you like Greek food? Well here have a look at cost of free Greek lunch. Yes, $206 billion., think about that. That easily four times more then CPEC and iven to a country - Greece that has smaller population than New Delhi. The fact is if you have rich and powerful friends then 'free lunches' do happen.

@Genesis

 

[Śakra]

Bangladesh with a 7.1% growth rate isn't there

You're an LDC. Some African LDCs are growing at 20% no one cares.

 

[Tiger Genie]

Concern over repayment is over blown. Whether Pakistan can repay or not is not the issue. The issue is people forget why China and Pakistan are such good allies in the first place. India.

It is true, China cannot dominate the China seas yet, nor can China effectively project power into the IO yet. But this day will come, and it sure as hell will come a lot faster than India will. So that means at that point Pakistan will be the most important ally China can have.

At that point in time, there isn't much Pakistan couldn't demand out of this relationship. Geopolitics concerns has always been more important than economic ones, even when it doesn't make sense.


What I will say about Industrialization is that it takes time, but more importantly, it's done at a time when competition is far greater than at any point during China's time. This is for a few reasons, the chief among them is that the service first model of India and ASEAN has proven defective and China, Japan, Korea, US, Britain's model of industrialization has once again reign supreme. Also, it is 2017, robotics isn't big yet, but it will be, that also never existed during China's earlier years.

All in all, I say do what Deng said, one step at a time, improvise as you move. No one can have a perfect plan.

The concern OUGHT to be sovereignty and avoiding Chinese blackmail. As the Srilanka expose has proved, China is not one that cares too much about things like 'friendship' - they blackmailed Srilanka into selling 80% control of the port when SL got into high debt situation.

And Pakistan is getting into just such a high debt situation and you are telling them not to worry about it?
Pakistan is like the baby oyster that the walrus is looking at!

 

[Thəorətic Muslim]

The concern OUGHT to be sovereignty and avoiding Chinese blackmail. As the Srilanka expose has proved, China is not one that cares too much about things like 'friendship' - they blackmailed Srilanka into selling 80% control of the port when SL got into high debt situation.

Sri Lankans made mistakes with their investments. Their forecasts were wrong. Not China's Fault.

You don't blame the World Bank or IMF when the Mexico defaulted on their loans.

People who have money want to make more money. And they have the power to get that money back, even if they have to hire some guys to break a few knee caps.

 

[supun1]

You're an LDC. Some African LDCs are growing at 20% no one cares.

So is India.

 

[艹艹艹]

Congratulations to Pakistan！
A strong Pakistan is conducive to peace and stability in south Asia.

 

[Finer]

Concern over repayment is over blown. Whether Pakistan can repay or not is not the issue. The issue is people forget why China and Pakistan are such good allies in the first place. India.

It is true, China cannot dominate the China seas yet, nor can China effectively project power into the IO yet. But this day will come, and it sure as hell will come a lot faster than India will. So that means at that point Pakistan will be the most important ally China can have.

At that point in time, there isn't much Pakistan couldn't demand out of this relationship. Geopolitics concerns has always been more important than economic ones, even when it doesn't make sense.


What I will say about Industrialization is that it takes time, but more importantly, it's done at a time when competition is far greater than at any point during China's time. This is for a few reasons, the chief among them is that the service first model of India and ASEAN has proven defective and China, Japan, Korea, US, Britain's model of industrialization has once again reign supreme. Also, it is 2017, robotics isn't big yet, but it will be, that also never existed during China's earlier years.

All in all, I say do what Deng said, one step at a time, improvise as you move. No one can have a perfect plan.

Thank you for the such insightful post. It probably means a lot coming from you being neutral since anyone who try to explain the supporters of certain political party fall in deaf ears unfortunately.

Rome was not built in a day. The way Pakistan made recovery from 2007-2013 is itself miracle, and can only go forward with CPEC, billion-dollars invested on energy sectors and metro projects including expansions all the way to the end of Pakistan. Within 15 years, Pakistan would be in better position economically while debt will seem like small change of pocket. A patience is what Pakistan needs at this moment since under present government Pakistan is heading on the right track.

 

[艹艹艹]

Most of PAK members are now become blind and they cant see other then China lead project as haven

A) Why china is investing in Road?
Answer:- China want to export its material from West country side to African / Gulf Countries at competitive rate by reducing transportation cost . Land route is safest / fastest then sea lanes

B) What other Advantage of Road project to China.
Answer:- In case of war / hostility if Sea lane is closed or difficult to approach, Land route is alternative.

C) What is 2nd Advantage of China
Answer:- China will get easy entry into PAK market and it can get 100% share of PAK market. It will open a new market for china .In slow economic times , it can pump its products into PAK / African market more rapidly.

D) What 3rd Advantage of China:-
Answer :- If PAK failed to replay / default etc, then China can get HK/ Macau like deal from PAK. like City/ Area for 100 yrs lease to china with total control.

F) Why PAK is so blind?
Answer:- PAK No 1 Enemy is India, right now PAK do not have any ally or friend, China which want to contain India. Both come closed , but for PAK , India is paramount so it can goto any level.

D) What effect of PAK economy on Road?
Answer:- cheap Chinese product will make sure no PAK industry will survive and PAK will become dependent on China. All PAK industry etc will be taken over by china slowly and all profit will find it way to china thus increase the $ deficit to unending level.

"Win-win" you will never understand！

 

[Shorisrip]

You're an LDC. Some African LDCs are growing at 20% no one cares.

Well, technically it should've graduated since it already passed global threshold income. But, I guess we'll have to wait till like 2020 for its "official graduation". Btw, a lot of states in India are even more underdeveloped compared to Bangladesh, including all the states surrounded by Bangladesh, and I'm not gonna' even mention BIMAROU states. India as a whole only does better because of its developed South, as well as the northern states of greater Punjab region, Gujarat and Maharasthra. Not sure why people think they're better off, even though their country is equally poor

 

[Gandh brandi]

So is India.

Yeah, I always wondered why. But then again LDC has its advantages.

Bangladesh in LDC status — an economic analysis


A TV journalist called a few weeks ago to say that he will like to interview me about the graduation of Bangladesh from the list of least developed country (LDC) status by 2024. Just a day or so before that I was in a meeting with the Finance Minister who expressed optimism that Bangladesh will likely cross the threshold of the World Bank defined upper middle income (UMIC) ahead of the official target date of 2030. I could not simply reconcile the two conversations.

I did a little bit of digging into the facts, methodologies and approaches to the measurement of development performance of countries. As a professional economist I am acutely aware of the shortcomings of statistical approaches economists use to support their point of view. The most striking example of this is the story of two Nobel Prize-winning economists: Milton Friedman of the University of Chicago and James Tobin of the University of Yale. Friedman was a monetarist who believed that only money supply matters for economic activity; Tobin was a Keynesian who argued that only fiscal policy matters. The monetarists versus Keynesian philosophies have prevailed over decades. Proponents of each school have used sophisticated quantitative methods to prove their points and declare victory.

The LDC approach developed by the United Nations Economic and Social Council (ECOSOC) uses three criteria to identify an LDC: (1) per capita income, (2) human assets, and (3) economic vulnerability. The human assets and economic vulnerability are calculated as a composite index of a number of variables in each category. Thresholds are defined for each category to identify countries to be added or graduated from the list. The World Bank's income group classification uses only income criteria defined on the basis of what it calls the Atlas Method.
There is now a growing industry of other global indicators of economic and social progress of a country, including the Human Development Index (HDI) of the United Nations Development Programme (UNDP) and the Social Progress Index (SPI) of the Social Progress Imperative. The World Economic Forum (WEF) also publishes a useful composite index of progress with economic and social policies and institutions, known as the Global Competitiveness Index (GCI) that in many respects is a good representation of the development maturity of a country.

I do not wish to go into the micro details of each of these measures of a country's prosperity and performance; nor do I want to take side with any of the measures. The point I wish to examine is how best to assess and classify the development performance of Bangladesh within the limits of the two extreme views: a) the UN's ECOSOC thinks Bangladesh is still an LDC and will likely graduate officially only in 2024, and b) the country's Finance Minister thinks Bangladesh is well set on the course to achieving UMIC status around that time.
A review of the current list of 48 LDCs immediately makes one wonder if Bangladesh really belongs there in view of the solid development performance of the past 15-20 years. The list is shown in Table 1. Some 33 countries belong to Africa; eight to East Asia and Pacific; three to the Middle East and four to South Asia. Bangladesh is the largest country in the group. Within South Asia, Bangladesh is accompanied by Afghanistan, Bhutan and Nepal.
The listing also raises the question of the realism and policy relevance of putting the performance of a country like Bangladesh with 160 million people in the same group as small economies with population of less than 5.0 million (Bhutan, Central African Republic, Comoros, Congo, Djibouti, Gambia, Equatorial Guinea, Guinea Bissau, Kiribati, Lesotho, Liberia, Mauritania, Solomon Islands, Timor-Leste, Tuvalu and Vanuatu). These constitute a third of the total LDCs. Of this, more than 50 per cent have a population of below one million.

A second issue is comparison of performance with other listings. The closest summary indicator is the HDI developed by the UNDP, which is also a composite index of income and well-being. The latest available data is for 2014. Bangladesh is ranked 142 out of 188 countries and grouped under "Medium Human Development". Whereas countries like Kenya (146), Pakistan (147), Nigeria (152), Cameroon (153), Zimbabwe (155) and Cote'd' Ivore (172) all belong to the "Low Human Development" (LHD) category of the UNDP but are not a part of the LDC group.

How meaningful is it to consider Bangladesh as an LDC when it out-performs these six countries in a substantial and meaningful way based on an indicator that includes both income and human assets (which also are the two major components of the LDC classification). Furthermore, in terms of manufactured exports and foreign reserve holdings, Bangladesh's export performance substantially out-performs all these countries. So, external economic vulnerability is far lower in Bangladesh than in these non-LDC countries. Clearly, there is a methodological problem in categorizing Bangladesh as an LDC in comparison to these six non-LDC countries.

Another broad-based composite index of development performance is the SPI developed by the Social Progress Imperative led by Professor Michael Porter of the Harvard Business School. The Index defines social progress as "the capacity of a society to meet basic human needs of its citizens, establish the building blocks that allow citizens and communities to enhance and sustain the quality of their lives, and create the conditions for all individuals to reach their full potential" (List of Countries by Social Progress Index, Wikipedia, accessed December 20, 2016).

The ranking for 2016 puts Bangladesh at 100 out of 134 countries that were ranked, ahead of India (101), Kenya (104), Cameroon (114), Pakistan (122), and Nigeria (125). These later countries are non-LDCs by the UN ECOSOC classification. Interestingly, in terms of meeting Basic Human Needs (BHN) and Foundations of Well-being (FW) indicators, Bangladesh performs even better (97 and 95, respectively). Once again the rating of Bangladesh as an LDC in relation to these non-LDC countries makes it a clear outlier in the context of any meaningful policy perspective.
A final point, emphasized by Nobel Laureate Amartya Sen, is the meaning and relevance of development. He emphasizes the importance of longevity or life expectancy as a more fundamental indicator of development performance than per capita income. In this regard, at the estimated life expectancy of 71.8 years, Bangladesh is ranked 102 out of 183 countries in the rankings. It substantially out-performs many non-LDCs including Indonesia (120), Philippines (124), India (125), Pakistan (130), Kenya (149), South Africa (151), Zimbabwe (160) and Nigeria (177).

In the context of the progress with economic and social policies and institutions, the GCI provides an indication of the maturity of an economy and its capability to address its development challenges. The 2016-17 GCI rankings put Bangladesh at 106 out of 138 countries included in the list. This ranking is relatively low but still exceeds the performance of such non-LDCs as Ghana (114), Cameroon (119), Pakistan (122), Zimbabwe (126) and Nigeria (127).
The evidence cited here using the many alternative measures of development performance, including those done by the UNDP, suggests that based on development performance Bangladesh does not belong to the LDC group. Simply because being in the list provides some favourable trade concessions is not a convincing reason to under-state the true development performance of Bangladesh. In many respects, such as high income growth, poverty reduction, human development and gender empowerment. Bangladesh has set a positive example for LDCs to emulate and get out of that dubious distinction. By putting Bangladesh in the same category it not only undermines the true development performance of Bangladesh but also weakens the show-casing of this global good practice example.
In the area of trade, Bangladesh has made solid progress in expanding manufacturing exports. With sustained policy progress Bangladesh can easily surmount the loss of a few trade concessions. Research shows that export growth of Bangladesh is hampered much more by domestic supply constraints than market access on concessional terms. Bangladesh policy making should focus on addressing those supply constraints through proper policy and institutional reforms rather than seeking trade concessions through the LDC route.

While there is solid evidence that Bangladesh is not an LDC, whether it can achieve UMIC status on or before 2030 is still an open question. In terms of potential, Bangladesh can be optimistic. But realizing this potential is no easy task. Major policy and institutional reforms will be needed. A particular challenge will be to increase the investment rate to the 34 per cent of gross domestic product (GDP) range from the present 28 per cent level, with emphasis on infrastructure and manufacturing. Export diversification through trade policy reforms will be necessary. Institutional reforms relating to taxation, financial sector, land market, cost of doing business, climate change and urbanization will be essential.

Dr Sadiq Ahmed is Vice Chairman of Policy Research Institute of Bangladesh. sadidiqahmed1952@gmail.com

 

[Sliver]

I never said China hate money, just that at some point in the future, in South Asia, a Pakistani friendship will mean so much more than money.

let me reiterate what he just said:
at some point in the future (not now)
in south asia (not compared to the world)
a pakistani friendship will mean so much more than money (future tense)

 

[supun1]

Well, technically it should've graduated since it already passed global threshold income. But, I guess we'll have to wait till like 2020 for its "official graduation". Btw, a lot of states in India are even more underdeveloped compared to Bangladesh, including all the states surrounded by Bangladesh, and I'm not gonna' even mention BIMAROU states. India as a whole only does better because of its developed South, as well as the northern states of greater Punjab region and Maharasthra. Not sure why people think they're better off, even though their country is equally poor

India has low human development too.

Yeah, I always wondered why. But then again LDC has its advantages.

Bangladesh in LDC status — an economic analysis


A TV journalist called a few weeks ago to say that he will like to interview me about the graduation of Bangladesh from the list of least developed country (LDC) status by 2024. Just a day or so before that I was in a meeting with the Finance Minister who expressed optimism that Bangladesh will likely cross the threshold of the World Bank defined upper middle income (UMIC) ahead of the official target date of 2030. I could not simply reconcile the two conversations.

I did a little bit of digging into the facts, methodologies and approaches to the measurement of development performance of countries. As a professional economist I am acutely aware of the shortcomings of statistical approaches economists use to support their point of view. The most striking example of this is the story of two Nobel Prize-winning economists: Milton Friedman of the University of Chicago and James Tobin of the University of Yale. Friedman was a monetarist who believed that only money supply matters for economic activity; Tobin was a Keynesian who argued that only fiscal policy matters. The monetarists versus Keynesian philosophies have prevailed over decades. Proponents of each school have used sophisticated quantitative methods to prove their points and declare victory.

The LDC approach developed by the United Nations Economic and Social Council (ECOSOC) uses three criteria to identify an LDC: (1) per capita income, (2) human assets, and (3) economic vulnerability. The human assets and economic vulnerability are calculated as a composite index of a number of variables in each category. Thresholds are defined for each category to identify countries to be added or graduated from the list. The World Bank's income group classification uses only income criteria defined on the basis of what it calls the Atlas Method.
There is now a growing industry of other global indicators of economic and social progress of a country, including the Human Development Index (HDI) of the United Nations Development Programme (UNDP) and the Social Progress Index (SPI) of the Social Progress Imperative. The World Economic Forum (WEF) also publishes a useful composite index of progress with economic and social policies and institutions, known as the Global Competitiveness Index (GCI) that in many respects is a good representation of the development maturity of a country.

I do not wish to go into the micro details of each of these measures of a country's prosperity and performance; nor do I want to take side with any of the measures. The point I wish to examine is how best to assess and classify the development performance of Bangladesh within the limits of the two extreme views: a) the UN's ECOSOC thinks Bangladesh is still an LDC and will likely graduate officially only in 2024, and b) the country's Finance Minister thinks Bangladesh is well set on the course to achieving UMIC status around that time.
A review of the current list of 48 LDCs immediately makes one wonder if Bangladesh really belongs there in view of the solid development performance of the past 15-20 years. The list is shown in Table 1. Some 33 countries belong to Africa; eight to East Asia and Pacific; three to the Middle East and four to South Asia. Bangladesh is the largest country in the group. Within South Asia, Bangladesh is accompanied by Afghanistan, Bhutan and Nepal.
The listing also raises the question of the realism and policy relevance of putting the performance of a country like Bangladesh with 160 million people in the same group as small economies with population of less than 5.0 million (Bhutan, Central African Republic, Comoros, Congo, Djibouti, Gambia, Equatorial Guinea, Guinea Bissau, Kiribati, Lesotho, Liberia, Mauritania, Solomon Islands, Timor-Leste, Tuvalu and Vanuatu). These constitute a third of the total LDCs. Of this, more than 50 per cent have a population of below one million.

A second issue is comparison of performance with other listings. The closest summary indicator is the HDI developed by the UNDP, which is also a composite index of income and well-being. The latest available data is for 2014. Bangladesh is ranked 142 out of 188 countries and grouped under "Medium Human Development". Whereas countries like Kenya (146), Pakistan (147), Nigeria (152), Cameroon (153), Zimbabwe (155) and Cote'd' Ivore (172) all belong to the "Low Human Development" (LHD) category of the UNDP but are not a part of the LDC group.

How meaningful is it to consider Bangladesh as an LDC when it out-performs these six countries in a substantial and meaningful way based on an indicator that includes both income and human assets (which also are the two major components of the LDC classification). Furthermore, in terms of manufactured exports and foreign reserve holdings, Bangladesh's export performance substantially out-performs all these countries. So, external economic vulnerability is far lower in Bangladesh than in these non-LDC countries. Clearly, there is a methodological problem in categorizing Bangladesh as an LDC in comparison to these six non-LDC countries.

Another broad-based composite index of development performance is the SPI developed by the Social Progress Imperative led by Professor Michael Porter of the Harvard Business School. The Index defines social progress as "the capacity of a society to meet basic human needs of its citizens, establish the building blocks that allow citizens and communities to enhance and sustain the quality of their lives, and create the conditions for all individuals to reach their full potential" (List of Countries by Social Progress Index, Wikipedia, accessed December 20, 2016).

The ranking for 2016 puts Bangladesh at 100 out of 134 countries that were ranked, ahead of India (101), Kenya (104), Cameroon (114), Pakistan (122), and Nigeria (125). These later countries are non-LDCs by the UN ECOSOC classification. Interestingly, in terms of meeting Basic Human Needs (BHN) and Foundations of Well-being (FW) indicators, Bangladesh performs even better (97 and 95, respectively). Once again the rating of Bangladesh as an LDC in relation to these non-LDC countries makes it a clear outlier in the context of any meaningful policy perspective.
A final point, emphasized by Nobel Laureate Amartya Sen, is the meaning and relevance of development. He emphasizes the importance of longevity or life expectancy as a more fundamental indicator of development performance than per capita income. In this regard, at the estimated life expectancy of 71.8 years, Bangladesh is ranked 102 out of 183 countries in the rankings. It substantially out-performs many non-LDCs including Indonesia (120), Philippines (124), India (125), Pakistan (130), Kenya (149), South Africa (151), Zimbabwe (160) and Nigeria (177).

In the context of the progress with economic and social policies and institutions, the GCI provides an indication of the maturity of an economy and its capability to address its development challenges. The 2016-17 GCI rankings put Bangladesh at 106 out of 138 countries included in the list. This ranking is relatively low but still exceeds the performance of such non-LDCs as Ghana (114), Cameroon (119), Pakistan (122), Zimbabwe (126) and Nigeria (127).
The evidence cited here using the many alternative measures of development performance, including those done by the UNDP, suggests that based on development performance Bangladesh does not belong to the LDC group. Simply because being in the list provides some favourable trade concessions is not a convincing reason to under-state the true development performance of Bangladesh. In many respects, such as high income growth, poverty reduction, human development and gender empowerment. Bangladesh has set a positive example for LDCs to emulate and get out of that dubious distinction. By putting Bangladesh in the same category it not only undermines the true development performance of Bangladesh but also weakens the show-casing of this global good practice example.
In the area of trade, Bangladesh has made solid progress in expanding manufacturing exports. With sustained policy progress Bangladesh can easily surmount the loss of a few trade concessions. Research shows that export growth of Bangladesh is hampered much more by domestic supply constraints than market access on concessional terms. Bangladesh policy making should focus on addressing those supply constraints through proper policy and institutional reforms rather than seeking trade concessions through the LDC route.

While there is solid evidence that Bangladesh is not an LDC, whether it can achieve UMIC status on or before 2030 is still an open question. In terms of potential, Bangladesh can be optimistic. But realizing this potential is no easy task. Major policy and institutional reforms will be needed. A particular challenge will be to increase the investment rate to the 34 per cent of gross domestic product (GDP) range from the present 28 per cent level, with emphasis on infrastructure and manufacturing. Export diversification through trade policy reforms will be necessary. Institutional reforms relating to taxation, financial sector, land market, cost of doing business, climate change and urbanization will be essential.

Dr Sadiq Ahmed is Vice Chairman of Policy Research Institute of Bangladesh. sadidiqahmed1952@gmail.com

Sri lanka will qualify as an upper middle-income country this year, and if all projections go well as a high-income country by 2023.