Pakistan's Focus on Infrastructure (Hardware) at the Expense of Human Development (Software)

[RiazHaq]

http://www.riazhaq.com/2017/02/pakistans-focus-on-infrastructure.html

American theologian and author James Freeman Clarke (1810-1888) is reported to have explained the distinction between a politician and a statesman as follows: "A politician thinks of the next election. A statesman, of the next generation."

How does this apply to the current crop of Pakistani leaders in charge of running the country? Are they statesmen or mere politicians?

I think the answer to this question can be found in how they invest available national resources, particularly their longer term investments in education, training, nutrition and health care sectors which do not show results as quickly as building roads, ports and other physical infrastructure.

China Pakistan Economic Corridor:

Pakistani politicians, particularly PMLN and Nawaz Sharif, love to highlight China-Pakistan Economic Corridor (CPEC) projects and their accomplishments in terms of motorways and ring roads and airports rather education and health care. And the reason they do it is because such projects can be completed before the next elections.


Pakistan's M2 Motorway

In a recent piece titled "Pakistan's misguided obsession with infrastructure", The Economist magazine said Chinese diplomat assigned to work with Pakistan on China-Pakistan Economic Corridor acknowledged this problem. Here's an excerpt from The Economist:

"Lijian Zhao, a Chinese diplomat, says China is all too aware that Pakistan needs more than just big-ticket infrastructure if it is to flourish. Disarmingly, he praises the efforts of Britain and other countries to improve Pakistan’s “software”, such as education and the rule of law. “But China’s expertise is hardware,” says Mr Zhao."

Education and Literacy Rates:

Pakistan's net primary enrollment rose from 42% in 2001-2002 to 57% in 2008-9 during Musharraf years. It has been essentially flat at 57% since 2009 under PPP and PML(N) governments.


Source: Economic Survey of Pakistan 2015-16

Similarly, the literacy rate for Pakistan 10 years or older rose from 45% in 2001-2002 to 56% in 2007-2008 during Musharraf years. It has increased just 4% to 60% since 2009-2010 under PPP and PML(N) governments.


Source: Economic Survey of Pakistan 2015-16

Pakistan's Human Development:

Human development index reports on Pakistan released by UNDP confirm the ESP 2015 human development trends.Pakistan’s HDI value for 2013 is 0.537— which is in the low human development category—positioning the country at 146 out of 187 countries and territories. Between 1980 and 2013, Pakistan’s HDI value increased from 0.356 to 0.537, an increase of 50.7 percent or an average annual increase of about 1.25.



Pakistan HDI Components Trend 1980-2013 Source: Human Development Report 2014


Overall, Pakistan's human development score rose by 18.9% during Musharraf years and increased just 3.4% under elected leadership since 2008. The news on the human development front got even worse in the last three years, with HDI growth slowing down as low as 0.59% — a paltry average annual increase of under 0.20 per cent.

Going further back to the decade of 1990s when the civilian leadership of the country alternated between PML (N) and PPP, the increase in Pakistan's HDI was 9.3% from 1990 to 2000, less than half of the HDI gain of 18.9% on Musharraf's watch from 2000 to 2007.

Summary:

The history of the industrialized world tells us that democracy, peace and prosperity can not be sustained in the long run without a solid foundation of a healthy and well-educated society. Pakistani leaders must learn from history and pay more attention to accelerate human development along with building the necessary infrastructure such CPEC projects. They must allocate greater resources and maintain sharp focus to improve education and health of the people of Pakistan.

Related Links:

Haq's Musings

Pakistani Democracy's Disappointing Record on Human Development

China-Pakistan Economic Corridor

Pakistan's Infrastructure and M2 Motorway

Pakistan's Lost Decades

Saving Pakistan's Education, Airline and Railway

Asian Tigers Brought Prosperity; Democracy Followed

Pakistan Democracy: Neither Democracy Nor Development

Challenges of Indian Democracy

Pakistan's Economic History

Comparing Bangladesh with Pakistan

Economic and Human Development in Musharraf Years

India's Share of World;s Poor Up from 22% to 33%

Why is Democracy Failing in Pakistan?

Musharraf Era Higher Education Reforms in Pakistan

Comparing 30-Year Dictatorships in Indonesia and Pakistan

Democracy vs. Dictatorship in Pakistan

http://www.riazhaq.com/2017/02/pakistans-focus-on-infrastructure.html

 

[RiazHaq]

Pakistan is moving towards development, economic growth: World Bank CEO Kristalina Georgieva

http://www.pakistantoday.com.pk/201...s-development-economic-growth-world-bank-ceo/

She highlighted following opportunities and challenges for Pakistan:

In my discussions with the government in Pakistan we focused on three areas of opportunity and challenge: the first is higher growth and jobs. The government wants annual economic growth of 6 to 7 per cent compared to 4.7 per cent achieved in fiscal year 2016. But this will only happen if investment doubles to 30 per cent of Gross Domestic Product (GDP). Investments in energy, such as Tarbela, to end constant power cuts, as well as improvements in the business environment, so that companies hire more people, will be critical to success. A more favorable environment for private investment would open up opportunities for women, youth, and the underserved.

A second area is one of the best investments Pakistan can make: investing in its own people. Pakistan’s population of 200 million is expected under current projections to double by 2050 and so these investments cannot wait. Currently Pakistan spends only three per cent of its GDP on health, nutrition, and education. This needs to double if it is to make a significant impact. Pakistan will need to raise more tax revenue to pay for these services and improve on the way that the money is spent.

A third area that I discussed with Pakistan’s leaders is the intertwined challenges of water, energy and security. Tarbela was completed in 1974 as part of the Indus Basin Project following the Indus Waters Treaty between India and Pakistan in 1960. This Treaty, to which the World Bank is a signatory, has survived frequent tensions between India and Pakistan, including conflict, and provided a framework for irrigation and hydropower development in both countries for more than half a century.

The need for a regional integrated water resources management approach

Since the Treaty was agreed, population has multiplied, use has boomed, and now we also have climate change. In the first 45 years Treaty disagreements were resolved by the Indus Waters Commission. In the past 12 years these have been elevated to a Neutral Expert and a Court of Arbitration.

 

[RiazHaq]

#PWC’s ‘brave’ report predicts #Egypt and #Pakistan will surpass #Canada’s #economy by 2050. #GDP http://business.financialpost.com/n...pakistan-will-surpass-canadas-economy-by-2050 … via @financialpost

The economies of emerging market minnows Egypt and Pakistan could surpass the Canadian economy by 2050, according to a “brave” new report by management consultancy PricewaterhouseCoopers.

“By 2050, emerging economies such as Mexico and Indonesia are likely to be larger than the UK and France, while Pakistan and Egypt could overtake Italy and Canada,” PWC said in a report published Tuesday.

The findings — based on gross domestic product purchasing power parity (PPP) terms — also forecasts India will replace the United States as the world’s second largest economy after China by 2050.

 

[RiazHaq]

 

[RiazHaq]

Forget #India, Its Neighbors #Pakistan, #Bangladesh & #SriLanka Are the Next Big Thing. #Economy http://www.barrons.com/articles/forget-india-its-neighbors-are-the-next-big-thing-1486517309 … via @barronsonline

Forget India. Investors looking for the next big thing should look to its South Asia neighbors instead – Pakistan, Bangladesh and Sri Lanka.

With a combined 390 million people, the three countries represent what Morgan Stanley chief global strategist Ruchir Sharma calls “the quiet rise of South Asia” as opposed to India which has been “flattered by spasms of hype for years”. While overshadowed by their larger neighbor, the trio is enjoying fast-paced growth, embracing much needed reforms, and look set to enjoy a demographic dividend over the long term. “A substantially higher economic growth rate than in many other economies globally, coupled with fantastic demographics that will continue supporting growth for many years ahead”, East Capital fund manager Adrian Pop tells Barron’s Asia. The Stockholm-based firm manages nearly EUR3 billion in frontier markets.

Pakistan is the flag bearer of the positive changes taking place in the South Asian nations. Since coming to power five years ago, Prime Minister Nawaz Sharif has got inflation under control, cut the budget deficit and reined in the current account deficit. But more importantly, terrorism finally appears to be on the back-foot given more assertive action by the army. Chinese investment has also poured in: $50 billion will be spent on new roads, transport links and energy projects. “More power capacity is key for Pakistan to move to an even higher economic growth rate,” says Pop. That will benefit stocks in materials and energy. In December, the Pakistan Stock Exchange sold 40% of itself to consortium of Chinese investors.

The Karachi stock index is up by about 50% since the start of last year, propelled by index compiler MSCI’s decision to bump up the country to emerging markets status. That will bring in hundreds of millions of dollars from passive funds into the Pakistani benchmark. The rally in stocks has arguably left the market looking a little pricey as the KSE 100 index trades at over 12 times earnings, its heftiest valuation since late 2009. That’s still about a 15% discount to the MSCI emerging markets index, however, plus Pakistani stocks yield an attractive 4%-plus dividend.