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April 2019

Improving Pakistan’s public and private investment

Muhammad Waheed's picture
Pakistan is not investing enough and its share of investment to GDP is one of the lowest in the world at 15 percent almost half of the South Asian average at 30 percent. This translates into inadequate infrastructure, lack of access to sufficient levels of energy and water, poor quality of schools and hospitals. Photo: World Bank

This blog is part of a series that discusses findings from the [email protected]: Shaping the Future report, which identifies the changes necessary for Pakistan to become a strong upper middle-income country by the time it turns 100 years old in 2047. 

Pakistan’s economy is unable to sustain high growth rates for extended periods. Every few years, the economy is faced with a balance of payments crisis as it tries to grow fast.

This is unlike many other successful peer countries that are growing at higher rates for a longer time.

This inability to sustain growth momentum has dented Pakistan’s ambitions to become a middle-income country. What is the reason for this boom and bust cycle that Pakistan experiences so often?
The fundamental cause for these short-lived growth cycles in Pakistan is that these are propelled by private and government consumption, not by higher investment.

Resultantly, the country’s demand increases at a much higher pace than its supply of goods and services, prompting a need for higher imports which becomes unsustainable.

Successive governments have tried to notch up growth in this way, but all of them have ended with a balance of payments crisis.
Pakistan is not investing enough and its share of investment to GDP is one of the lowest in the world at 15 percent , almost half of the South Asian average at 30 percent. This translates into inadequate infrastructure, lack of access to sufficient levels of energy and water, poor quality of schools and hospitals.
More worryingly, private investment as a share of GDP has been declining and stands at less than 10pc in FY18. This low investment trap and declining labor productivity have reduced Pakistan’s growth potential.
The decline in the economy’s growth potential is particularly concerning because it suggests that the country will not be able to grow at higher rates required for job creation. To correct this Pakistan needs to undertake several reforms in multiple areas to increase labor productivity and capital formation.
The foremost priority is that Pakistan must maintain macroeconomic stability. Persistent macroeconomic instability has discouraged savings and private investment in the country resulting in low-aggregate investment and fluctuating output levels.

Equitable investment in human capital is vital for Thailand’s future

Birgit Hansl's picture

Thailand has transitioned from a low-income to an upper middle-income country in a single generation. Poverty has declined to 7.1 percent in 2015 – as measured by the international upper-middle income class poverty line – and access to basic education and health has become nearly universal. Despite all these historic achievements, inequality remains a key concern for Thai people.

Paving the way to sustainable heating in Mongolia

Yun Wu's picture
Credit: UBDHC, Erbar Agarjav
Air pollution in Ulaanbaatar’s ger areas. Credit: UBDHC, Erbar Agarjav

In Ulaanbaatar (UB), the coldest capital city in the world, and one with the highest recorded levels of air pollution—surpassing even the megacities of Beijing and New Delhi—access to reliable and clean heating services is essential for survival.

Driven by population growth, urbanization, and economic development in UB, the demand for heating has been increasing rapidly. But the current district heating (DH) infrastructure that  serves most urban buildings is insufficient, unreliable and deteriorating due to the lack of funds for investments and maintenance. System losses are high, and more than half of transmission pipelines are in urgent need of repair. To make matters worse, the fragmented institutional structure limits incentives to make the system more efficient and constrains long-term investment planning. Meanwhile, on the demand side, the poor thermal insulation of buildings means significant heat losses, adding to the sector’s struggle to meet the increasing demand.

Standing for women’s land and property rights in Kosovo

Albena Reshitaj's picture

Women’s property rights are an important development issue, not only for women’s empowerment but to also improve human capital outcomes for families – for example, improved children’s health and higher education outcomes.

In Kosovo, the World Bank-financed Real Estate Cadastre and Registration Project (RECAP) took on the issue of women’s property rights head on. Under the project, the implementing entity – the Kosovo Cadastre Agency (KCA) – reprogrammed the country’s land information system to produce gender-disaggregated property ownership data. The data revealed that women’s ownership was close to 12% in 2010 and increased to just under 17% by 2018. Together, the KCA and the Agency for Gender Equality created a program to register joint ownership of marital property between spouses free of charge.

Several public awareness activities helped raise the profile of the issue and advance the agenda of women’s property rights in Kosovo. The KCA continues its work on promoting women’s property rights, and such activities will be supported in the World Bank’s Real Estate Cadastre and Geospatial Information Project (REGIP).

Watch a video with Albena Reshitaj, Political Advisor to the Prime Minister of Kosovo, and Aanchal Anand, Land Administration Specialist to learn more about Kosovo’s commitment to empowering women in decision-making and its efforts to promote women’s property rights nationwide.

What have we learned from reviewing 75 studies about interventions to reduce inequality in higher education?

Koen Geven's picture

Graduating from college remains one of the best routes out of poverty. Recent research shows that returns to higher education are now larger than the returns to any other education sector, and they are particularly large for low-income countries. In low- and middle-income countries, the private (wage) returns to accessing higher education are 26.8 percent and 20.2 percent, respectively, relative to obtaining a high school degree. Women tend to have higher rates of return than men, and there is even some evidence (from the United States) that children from poor families benefit the most from higher education.

Challenges faced by women in entrepreneurship

Charlotte Horore Bebga's picture
Charlotte Horore Bebga, IT professional and entrepreneur, leads a coding workshop for children at the U.S. Embassy in Cameroon.

Sub-Saharan Africa is the only region in the world where women are more likely than men to be entrepreneurs, according to a new World Bank report. Women are thus key stakeholders in the economic development of the continent, which is replete with boundless opportunities. Although there are increasing numbers of women involved in and benefiting from these opportunities, they still face many different kinds of problems and restrictions. I myself have experienced this in my career as a female entrepreneur.

Accelerating Pakistan’s structural transformation

Siddharth Sharma's picture
Pakistanat100 Shaping the Future report
Photo: World Bank

This blog is part of a series that discusses findings from the [email protected]: Shaping the Future report, which identifies the changes necessary for Pakistan to become a strong upper middle-income country by the time it turns 100 years old in 2047. 

Structural transformation is central to how countries grow rich.

The movement of jobs from agriculture to manufacturing and service industries is the first stage of that transformation.

Then, within industries, a process of creative destruction helps weed out unproductive firms and gives rise to more efficient and innovative ones.

Of course, no two countries have the same growth path. But those that succeed at sustaining growth do so by moving resources to more productive areas and building firm capabilities.

Pakistan’s economy is shifting toward more highly skilled, modern and productive industries but the path is uneven and slow relative to global norms.

The economy is less agricultural, more urban and services-oriented than before. Traditional industrial clusters have started exporting new products, while new industries such as information, communications and technology (ICT) are emerging.

Relative to the historical norm for countries at similar levels of per capita GDP, while Pakistan’s agricultural sector is of typical size, its manufacturing sector is small, and the services sector large.

GovTech: Putting people first with simple, efficient and transparent government

Nicholas Nam's picture

Rapid technological change and growing expectations of citizens are elevating the importance of digital innovation for governments around the world. The World Bank Group, working together with other stakeholders, has a role to play in ensuring client countries have access to knowledge, the solutions, and the expertise required to bring about digital transformation of government services.

On April 13, the World Bank Group hosted a Spring Meetings event, GovTech: Putting People First with Simple, Efficient and Transparent Government.

El Salvador: small country, giant steps to control tobacco use

Patricio V. Marquez's picture

In a recent visit to El Salvador, the smallest, yet beautiful most densely populated country in Central America, I attended an international event organized by the Secretariat of the Framework Convention on Tobacco Control (FCTC) for the FCTC 2030 project.  During this event, I had the opportunity to learn from government officials and the Solidarity Fund for Health (FOSALUD) team about the significant tobacco control steps taken by the country.  

According to data presented at the event, 1 in 10 adults in El Salvador smoke; the prevalence of current cigarette consumption is 17 percent among men, 2 percent among women, and 10 percent among young people.  Data from the IHME Global Burden of Disease study indicate that, in 2016, of the more than 1,600 tobacco-attributable deaths in El Salvador, almost half of them were premature deaths (before the age of 70 years). This contributed to an estimated 34,000 years of life lost due to tobacco-related premature mortality and disability. Besides these impacts, an assessment done by FOSALUD with the support of the FCTC Secretariat, UNDP and PAHO/WHO, estimates that tobacco use causes significant economic losses, including both health care costs (US$115.6 million) and loss of productivity (US$148 million), amounting to US$264 million or 1 percent of El Salvador’s GDP.

Rebuilding communities after disasters – four and a half lessons learned

Abhas Jha's picture

Rebuilding after Cyclone Idai. (Photo: Denis Onyodi / IFRC/DRK/Climate Centre via Flickr CC)

The death toll from Cyclone Idai that ripped into Mozambique, Zimbabwe, and Malawi in March 2019 is now above 1,000, with damages estimated at $2 billion. In 2018, more than 10,000 people lost their lives in disasters (with $225 billion of economic losses). Approximately 79 percent of fatalities occurred in the Asia Pacific region, including the catastrophic earthquake and tsunami in Indonesia’s Sulawesi Island. In fact, 2017 and 2018 have been estimated as the most expensive back-to-back years for weather disasters, totaling $653 billion of losses.