Tuesday, January 16, 2007
VIEW: Where will we be in 2050?
By Syed Mohammad Ali
The demographic profile of Pakistan is a major reason why it was selected to be amongst the eleven BRIC-like countries. However, having a youthful population also implies a major challenge. Unless the youth is provided good education and gainful employment opportunities, its productive potential cannot be adequately realised
If one tries to think what the future holds in store for Pakistan, an array of serious challenges spring immediately to mind. Fifty years from now, our country could be desperately struggling to cope with the unmet needs of a much larger population. We could also be facing an insurmountable debt burden, accumulated due to a century of irresponsible borrowing. But then again, the future of Pakistan could become much brighter as well.
After floundering about for the first half century of independence, the next fifty years could perhaps enable Pakistan to overcome the deprivations of under-development. Lest this latter scenario is deemed only a fervent aspiration, let it be known that the source of this prediction is none other than a reputable international investment bank.
Before focusing on the future of Pakistan itself, let us consider the broader context of this prediction, known as the BRIC thesis. The acronym BRIC refers to Brazil, Russia, India, and China. The term BRIC was first used in a paper published by Goldman Sachs in 2003. This paper proposed that the BRIC economies were developing so rapidly that, by the year 2050, they will eclipse most of the current richest countries of the world. The author of this paper was no anonymous researcher, but Jim O’Neill, the renowned global economist.
Moreover, O’Neill did not limit his thesis with the BRIC economies but went on to identify eleven other countries (Bangladesh, Egypt, Indonesia, Iran, South Korea, Mexico, Nigeria, Pakistan, the Philippines, Turkey and Vietnam), which will constitute the next generation of BRICs. However, the BRIC or BRIC-like countries should not begin counting their chickens before they hatch, for there are many uncertainties and assumptions concerning this thesis.
Goldman Sachs has released a follow-up report to elaborate on the BRIC thesis. The BRIC economies’ share of world growth is estimated to rise from 20% in 2003 to more than 40% in 2025. Correspondingly, their total weight in the world economy would rise from approximately 10% in 2004 to more than 20% in 2025. As a result, between 2005 and 2015, over 800 million people in the four BRIC countries would cross the annual income threshold of $3,000. By 2025, approximately 200 million people in these countries would be earning above $15,000 annually.
Nonetheless, life for an average person in the BRIC and BRIC-like countries will still not improve as radically as their overall economies. Even with the balance of growth swinging decisively in favour of the newly emergent economies, the average wealth level of individuals in the industrialised countries would continue to outstrip the BRIC economy average. By 2025, the income per person in the highly industrialised G6 countries would have exceeded $35,000, while merely 24 million people in the BRIC economies would be able to boast of similar income levels. Despite their much lower average incomes, however, the sheer number of people living in the BRIC countries would enable their aggregate wealth to eclipse that of the industrialised countries.
It is interesting to note that India is singled out for its potential to grow the fastest among the BRIC countries primarily because its working age population decline will occur later than the other BRIC countries. In fact, the demographic profile of Pakistan is a major reason why it was selected to be amongst the eleven BRIC-like countries. However, having a youthful population also implies a major challenge. Unless the youth is provided good education and gainful employment opportunities, its productive potential cannot be adequately realised.
It is interesting that the countries identified by the BRIC thesis have not yet formed any sort of political alliance, like the European Union. Nor do these countries have any formal trading association, like ASEAN. The BRIC countries mainly undertake political cooperation as a way of influencing the US position on major trade accords like the WTO. Some BRIC countries are also using the implicit threat of political cooperation as a means of extracting political concessions, such as the posture adopted by India to secure nuclear cooperation with the US. There is need for increasing collective action if the BRIC and BRIC-like countries want to secure their position amongst the leading economies of the world.
Unfortunately, there are various factors which cast shadows of doubt over these optimistic predictions. The economic emergence of the BRIC countries could have unpredictable consequences for the global environment. In fact, environmentalists are already arguing that there is a finite limit to how much developing countries can grow before exceeding the ability of the global economy to supply them, and of the natural environment to support them. Besides this inevitable influence of the natural environment, the political environment could also jeopardise the bright future of the BRIC and BRIC-like countries. In fact, Brazil’s economic potential had been anticipated for decades, but it has so far consistently failed to achieve investor expectations due to problems of widespread disparity and the consequent political unrest. China’s and Russia’s disregard for human rights and democracy may also hinder their future growth potential. Conflict over Taiwan, in particular, could seriously jeopardise China’s current growth trajectory.
There are also other factors which could exert significant influence over the prospects of the BRIC and BRIC-like countries. Outbreaks of disease or climate change are difficult to predict, but they would certainly have important effects. While such factors lie beyond the direct control of any country, governments can do certain things to optimise the chances of future success. For example, they can show political maturity, they can aim to secure increasing mutual cooperation and effectively address internal disparities to assure domestic stability.
It is encouraging that Pakistan is included amongst the BRIC-like economies. But instead of merely trying to obtain maximum political mileage out of this categorisation, our decision makers must begin focusing more on addressing the basic requirements of becoming a BRIC-like country. Besides striving towards greater stability and equity, investing in the younger generation is vital to help turn Pakistan’s evident potential into concrete reality.
http://www.dailytimes.com.pk/default.asp?page=2007\01\16\story_16-1-2007_pg3_5
VIEW: Where will we be in 2050?
By Syed Mohammad Ali
The demographic profile of Pakistan is a major reason why it was selected to be amongst the eleven BRIC-like countries. However, having a youthful population also implies a major challenge. Unless the youth is provided good education and gainful employment opportunities, its productive potential cannot be adequately realised
If one tries to think what the future holds in store for Pakistan, an array of serious challenges spring immediately to mind. Fifty years from now, our country could be desperately struggling to cope with the unmet needs of a much larger population. We could also be facing an insurmountable debt burden, accumulated due to a century of irresponsible borrowing. But then again, the future of Pakistan could become much brighter as well.
After floundering about for the first half century of independence, the next fifty years could perhaps enable Pakistan to overcome the deprivations of under-development. Lest this latter scenario is deemed only a fervent aspiration, let it be known that the source of this prediction is none other than a reputable international investment bank.
Before focusing on the future of Pakistan itself, let us consider the broader context of this prediction, known as the BRIC thesis. The acronym BRIC refers to Brazil, Russia, India, and China. The term BRIC was first used in a paper published by Goldman Sachs in 2003. This paper proposed that the BRIC economies were developing so rapidly that, by the year 2050, they will eclipse most of the current richest countries of the world. The author of this paper was no anonymous researcher, but Jim O’Neill, the renowned global economist.
Moreover, O’Neill did not limit his thesis with the BRIC economies but went on to identify eleven other countries (Bangladesh, Egypt, Indonesia, Iran, South Korea, Mexico, Nigeria, Pakistan, the Philippines, Turkey and Vietnam), which will constitute the next generation of BRICs. However, the BRIC or BRIC-like countries should not begin counting their chickens before they hatch, for there are many uncertainties and assumptions concerning this thesis.
Goldman Sachs has released a follow-up report to elaborate on the BRIC thesis. The BRIC economies’ share of world growth is estimated to rise from 20% in 2003 to more than 40% in 2025. Correspondingly, their total weight in the world economy would rise from approximately 10% in 2004 to more than 20% in 2025. As a result, between 2005 and 2015, over 800 million people in the four BRIC countries would cross the annual income threshold of $3,000. By 2025, approximately 200 million people in these countries would be earning above $15,000 annually.
Nonetheless, life for an average person in the BRIC and BRIC-like countries will still not improve as radically as their overall economies. Even with the balance of growth swinging decisively in favour of the newly emergent economies, the average wealth level of individuals in the industrialised countries would continue to outstrip the BRIC economy average. By 2025, the income per person in the highly industrialised G6 countries would have exceeded $35,000, while merely 24 million people in the BRIC economies would be able to boast of similar income levels. Despite their much lower average incomes, however, the sheer number of people living in the BRIC countries would enable their aggregate wealth to eclipse that of the industrialised countries.
It is interesting to note that India is singled out for its potential to grow the fastest among the BRIC countries primarily because its working age population decline will occur later than the other BRIC countries. In fact, the demographic profile of Pakistan is a major reason why it was selected to be amongst the eleven BRIC-like countries. However, having a youthful population also implies a major challenge. Unless the youth is provided good education and gainful employment opportunities, its productive potential cannot be adequately realised.
It is interesting that the countries identified by the BRIC thesis have not yet formed any sort of political alliance, like the European Union. Nor do these countries have any formal trading association, like ASEAN. The BRIC countries mainly undertake political cooperation as a way of influencing the US position on major trade accords like the WTO. Some BRIC countries are also using the implicit threat of political cooperation as a means of extracting political concessions, such as the posture adopted by India to secure nuclear cooperation with the US. There is need for increasing collective action if the BRIC and BRIC-like countries want to secure their position amongst the leading economies of the world.
Unfortunately, there are various factors which cast shadows of doubt over these optimistic predictions. The economic emergence of the BRIC countries could have unpredictable consequences for the global environment. In fact, environmentalists are already arguing that there is a finite limit to how much developing countries can grow before exceeding the ability of the global economy to supply them, and of the natural environment to support them. Besides this inevitable influence of the natural environment, the political environment could also jeopardise the bright future of the BRIC and BRIC-like countries. In fact, Brazil’s economic potential had been anticipated for decades, but it has so far consistently failed to achieve investor expectations due to problems of widespread disparity and the consequent political unrest. China’s and Russia’s disregard for human rights and democracy may also hinder their future growth potential. Conflict over Taiwan, in particular, could seriously jeopardise China’s current growth trajectory.
There are also other factors which could exert significant influence over the prospects of the BRIC and BRIC-like countries. Outbreaks of disease or climate change are difficult to predict, but they would certainly have important effects. While such factors lie beyond the direct control of any country, governments can do certain things to optimise the chances of future success. For example, they can show political maturity, they can aim to secure increasing mutual cooperation and effectively address internal disparities to assure domestic stability.
It is encouraging that Pakistan is included amongst the BRIC-like economies. But instead of merely trying to obtain maximum political mileage out of this categorisation, our decision makers must begin focusing more on addressing the basic requirements of becoming a BRIC-like country. Besides striving towards greater stability and equity, investing in the younger generation is vital to help turn Pakistan’s evident potential into concrete reality.
http://www.dailytimes.com.pk/default.asp?page=2007\01\16\story_16-1-2007_pg3_5
