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Public Sector and Governance

Four critical ingredients that Pakistan needs to rev up its economy and realize its potential

Muhammad Waheed's picture



Economic Growth in Pakistan is expected to accelerate from 4.0% in 2014 to 4.5% in 2016. What are some reasons for this moderate improvement and how could it unlock its potential to grow even faster in the future so that more of its people can benefit from and contribute to greater prosperity?

How is Pakistan doing? There has been an improvement in Pakistan’s economic environment due to lower domestic and external risks. Foreign exchange reserves have increased to an appropriate level given the size of Pakistan’s imports. Pakistanis working abroad sent home about $18.5 billion in FY2014/15 which contributed to financing the trade deficit. Government efforts to stabilize the economy have been greatly aided by the decline in international oil prices which has significantly reduced the import bill. Fiscal policy has also become more prudent, although further efforts will be needed to safeguard the hard-earned stability.

Pakistan needs to invest more to address the country’s challenges. The positive economic environment provides Pakistan with an opportunity to address structural bottle necks that are holding Pakistan back from realizing its immense potential, which is bolstered by a large, young and growing population. However, the country’s development outcomes have not kept up with its income growth and significant public and private investments are critical to realize the aspirations of its population and improve the country’s competitiveness.

The share of investment to GDP remains minimal at 15%, about half of the South Asian average at 30% and one of the lowest in the world. This means not that enough infrastructure is being built, people don’t have access to sufficient levels of energy and water, the quality of schools and hospitals are not optimal.  More worryingly, private investment as a share of GDP has been declining and stood at less than 10% in FY2014/15. Several factors are contributing to this low investment level.  

Competitive Cities: Bucaramanga, Colombia – An Andean Achiever

Z. Joe Kulenovic's picture


Modern business facilities, tourist attractions, and an expanding skyline: Bucaramanga, Colombia. 

When the World Bank’s Competitive Cities team set out to analyze what some of the world’s most successful cities have done to spur economic growth and job creation, the first one we visited was Bucaramanga, capital of Colombia’s Santander Department. Nestled in the country’s rugged Eastern Cordillera, landlocked and without railroad links, this metropolitan area of just over 1 million people has consistently had one of Latin America’s best-performing economies. Bucaramanga, with Colombia’s lowest unemployment rate and with per capita income at 170 percent of the national average, is on the threshold of attaining high-income status as defined by the World Bank.  

Bucaramanga and its surrounding region are rife with contrasts. On the one hand, it has a relatively less export-intensive economy and higher rates of informal business establishments and workers than Colombia as a whole. Indeed, informality has often been cited as a key constraint to firms’ ability to access support programs and to scale up. On the other, Santander’s rates of poverty and income inequality, and its gender gap in labor-force participation, are all better than the national average, and it has consistently led the country on a number of measures of economic growth, including aggregate output, job creation and consumption.   
 
But the numbers tell only part of the story. A qualitative transformation of Bucaramanga’s economy is under way. Once dominated by lower-value-added industries like clothing, footwear and poultry production, the city is now home to knowledge-intensive activities such as precision manufacturing, logistics, biomedical, R&D labs and business process outsourcing, as well as an ascendant tourism sector. Meanwhile, Santander’s oil industry, long a major employer in the region, has been a catalyst for developing and commercializing innovative technologies, rather than just drilling for, refining and shipping petroleum.

All these achievements are neither random nor accidental: They are the result of local stakeholders successfully working together to respond to the challenges of globalization and external competitive pressures.

Transforming Sri Lanka’s Cities to be More Livable and Prosperous

Ede Ijjasz-Vasquez's picture

Sri Lanka night lights
 
Sri Lanka is in many ways a development success story.

Growth of income per person in Sri Lanka has averaged a little more than 7 percent a year over the past five years. That follows average growth of just over 5 percent a year in the preceding nine years. Among the six largest South Asian countries, Sri Lanka has the highest level of economic output per person. With sustained high growth, Sri Lanka has largely eradicated extreme poverty.

All this success has helped propel the country towards middle-income status. Going forward, how successfully Sri Lanka manages its cities will determine how quickly and efficiently the country moves to higher middle-income status and beyond. Every high-income economy has achieved this status through urbanization.

More voices mean smarter cities

Stephen Davenport's picture
Urban cityscape.  Photo: © Curt Carnemark / World Bank


With the ink barely dry on the Sustainable Development Goals, naturally the just-completed Open Government Partnership annual summit focused on how greater openness can accelerate progress toward the goals.
 
The open government agenda is most closely linked to the ambitious Goal 16 on Peace, Justice and Strong Institutions, which among other targets includes the objective of ensuring “responsive, inclusive, participatory and representative decision-making at all levels.” Though progress in this area is maddeningly difficult to quantify, evidence increasingly shows that participation, the next transparency frontier, matters to development outcomes. Making the target explicit, it is hoped, will galvanize efforts in the right direction.
 
There are many issues one could propose to tackle with citizen engagement strategies, but to narrow the topic of discussion, let’s consider just one: enabling smart growth in the world’s exploding cities and megacities.  Estimates suggest that by 2035 most of the world’s extreme poor will live in urban areas.

Helping cities finance sustainable urban development

Ede Ijjasz-Vasquez's picture
Building low-carbon, climate-resilient cities requires large infrastructure investment that often exceeds the financial capacity of cities in the developing world. In this video, Roland White, World Bank Global Lead for City Management, Finance and Governance, elaborates on some of the practical steps cities can take to put their financial house in order and mobilize the funds they need to finance greener urban development.
 

How we made #OpenIndia

Ankur N's picture

Cross posted from the End Poverty in South Asia blog

open india

It has been a season ripe with new ideas and shifts in the open data conversation. At the Cartagena Data Festival in April, the call for a country-led data revolution was loud and clear. Later in June at the 3rd International Open Data Conference in Ottawa there was an emphasis on the use of open data-beyond mere publishing.

Mulling on these takeaways, a logical question to ask may be: what would a country-focused data project that aims to put data to use look like?

More than dust in Delhi

Mark Roberts's picture
smog in delhi
The smog over Delhi. Photo credit: Jean-Etienne Minh-Duy Poirrier / Creative Commons

Urbanization provides the countries of South Asia with the opportunity to transform their economies to join the ranks of richer nations. But to reap the benefits of urbanization, nations must address the challenges it poses. Growing urban populations put pressure on a city’s infrastructure; they increase the demand for basic services, land and housing, and they add stress to the environment.
 
Of all these congestion forces, one of the most serious for health and human welfare is ambient air pollution from vehicle emissions and the burning of fossil fuels by industry and households, according to the World Bank report, Leveraging Urbanization in South Asia: Managing Spatial Transformation for Prosperity and Livability.”
 
Particularly harmful are high concentrations of fine particulate matter, especially that of 2.5 microns or less in diameter (PM2.5). They can penetrate deep into the lungs, increasing the likelihood of asthma, lung cancer, severe respiratory illness, and heart disease.
 
Data released by the World Health Organization (WHO) in May 2014 shows Delhi to have the most polluted air of any city in the world, with an annual mean concentration of PM2.5 of 152.6 μg/m3 . That is more than 15 times greater than the WHO’s guideline value and high enough to make Beijing’s air—known for its bad quality—look comparatively clean.

But Delhi is far from unique among South Asia’s cities.

How can Russia grow out of recession?

Birgit Hansl's picture

Russia’s economic woes continue: the recession deepened in the first half of 2015, severely impacting households, while the economy continued to adjust to the 2014 terms-of-trade shock, which saw oil prices being halved within a few months. In addition, investment demand has contracted for a third consecutive year.

Economic policy uncertainty, arising from an unpredictable geopolitical situation and the ongoing sanctions, caused private investment to decline rapidly as capital costs rose and consumer demand evaporated.

The record drop in consumer demand was driven by a sharp contraction in real wages, which fell by an average of 8.5% in the first six months of 2015 - illustrating the severity of the recession. The erosion of real incomes significantly increased the poverty rate and exacerbated the vulnerability of households in the lower 40% of the income distribution.

So, if oil prices remain low, how can Russia grow out of its recession?

A conference to improve public finance management in Francophone Africa

Samia Msadek's picture

Also available in: French

Photo © Dominic Chavez/World Bank.


This week, officials from finance ministries and leaders of the accounting profession from across Francophone Africa will gather in Dakar, Senegal from Oct 28 to 30 to chart a path forward in their countries’ development. They will focus on an area that is often ignored, but is vital to national success and prosperity: public financial management. They will focus on financial reporting, which is also known as “the way governments keep track of your money.”

This topic is important to you, citizens of the world, of the African continent. How governments manage their taxes, their borrowing, their spending, and the ways they account for these forms of transactions – income, borrowing and expenditure – are essential to economic growth, to poverty-reduction, and to ensuring that the region’s poorest can improve their lives.

In many parts of Francophone Africa, accounting practices have a lot of room to improve. In particular, financial reporting and auditing need reforms, according to ongoing research by the World Bank and others. Policy-makers do not always have accurate information about the money available to provide vital and quality public services, such as school-teachers or the construction of health clinics or roads.

How to accelerate the process and reduce costs for public-private partnerships? Recommended PPP contractual provisions

Mark Moseley's picture

All of the parties involved in public-private partnership (PPP) transactions – including both governments and project developers – frequently express concern over the time and expense involved in creating the legal agreements that are at the center of every PPP project. Everyone recognizes the importance of PPP contracts, since they are the documents that set out how the partnership will work – but there are constant calls for making the contractual drafting process quicker and less expensive.

In response, World Bank Group (WBG)’s PPP Group has launched the Recommended PPP Contractual Provisions Initiative, with the aim of developing recommended language on certain key provisions found in virtually every PPP contract. Under this initiative, the WBG’s PPP Group has produced the Report on Recommended PPP Contractual Provisions, 2015 Edition (the 2015 Report).  The 2015 Report was recently submitted to, and endorsed by, the G20 Infrastructure and Investment Working Group – the committee established by the G20 Group of major economies that focuses on the financing of infrastructure projects.


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