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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.

Making Pakistan more equitable for all

Silvia Redaelli's picture
Between 2001 and 2015, approximately 32 million people were lifted out of poverty
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. 

In recent years, Pakistan has made remarkable progress in reducing poverty. Estimates based on the national poverty line, which was set at Rs3,030.3 per adult equivalent per month based on 2013-14 prices, show a consistent decline over the past two decades.
 
Between 2001 and 2015, approximately 32 million people were lifted out of poverty and the poverty rate was more than halved, going from 64 percent in 2001 to 24pc in 2015. However, a lot is yet to be done.

Not only because 2015 estimates show that approximately one in four Pakistani still does not have enough money to satisfy basic needs, but – even more alarming – progress has been far from equal when looking across the provinces, districts, cities, and rural areas.
 
While poverty declined at a fast pace in Khyber Pakhtunkhwa and, to a lesser extent, in Punjab, progress was less positive in Sindh and Balochistan.
 
Within provinces, poverty has remained stubbornly high in Southern Punjab and Northern Sindh. Similarly, the pace of poverty reduction has been slower in rural areas compared to cities, where the risk of poverty is less than half compared to rural areas.

Inequalities in poverty levels and poverty reduction performance are compounded by substantial inequalities in access to and quality of basic services such as health, education, electricity, water, and sanitation.
 
Being born in one of the country’s lagging areas and/or in a poor family largely predetermines a child’s chances of escaping deprivation and realizing his or her full human capital potential in life.

The dos and don’ts of boosting Pakistan’s human capital

Tazeen Fasih's picture
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. 

My parents’ gardener has six children – all aged 8 or younger. While his wife is busy taking care of the youngest ones, barely 15 months and 2 months old, he brings the other kids along with him so they don’t wander in the streets.

As I look at the supposedly 8-year-old girl with a dupatta wrapped around her head, looking tiny, probably stunted, suddenly I realize how pervasive all the statistics Yoon and I have been working are – right there, staring at us in our face.

The 38 percent stunting rate for the population, the fertility rate of 3.6 births per woman, the 22.6 million children out of school, the dismal learning outcomes for students, these are all here manifested in this family and its future.

What kind of future is awaiting these children? Will they be able to reach their full productive potential? According to the World Bank’s Human Capital Project, Pakistan’s children born today can achieve only 39 percent of their full potential – productivity they could have achieved if they were able to enjoy complete education and full health.

With over 60 percent of Pakistan’s national wealth (measured as the sum of produced capital such as factories and infrastructure; 19 types of natural capital such as oil, minerals, land, and forests; human capital; and net foreign assets) estimated to be coming from Human Capital Wealth, a failure to nurture and utilize this wealth to its full potential can be fatal.

Nonetheless, successive governments have failed to address the human capital challenge. A careful review of policies in Pakistan on human development reveals a myriad of policies over the 70 years of the country – many strategies appearing sound and well-intentioned, some, of course, appearing to be prompted by geopolitical situations of specific eras of the country.

In this context, we highlight some principles in human capital policies.

Ways for Sri Lanka to fix its healthcare

Deepika Attygalle's picture
Ways for Sri Lanka to fix its healthcare
Nurses in Sri Lanka. Photo: World Bank

Today on World Health Day, we can say with confidence that Sri Lanka’s healthcare system has delivered on many of its promises.

This year’s focus on universal health care is a timely reminder that Sri Lanka is still reaping the benefits of far-thinking health policies implemented as early as the 1800s.  

Many of these measures were designed to address what were then considered the key challenges of previous centuries, such as high maternal and child mortality rates and infectious diseases that claimed the health and lives of thousands.
 
Successes in lowering maternal and child mortality rates and introducing effective vaccination programs have made Sri Lanka’s low-cost model one worth emulating in the rest of South Asia.  
 
Sri Lanka’s healthcare faces new challenges
 
However, we can no longer afford to rest on our laurels. Our policies and systems must now evolve to address the country’s urgent concerns.
 
The island must also now contend with a worrying rise in non-communicable diseases such as cardiovascular diseases (CVD), ischemic heart disease and stroke, cancers, diabetes, and respiratory conditions such as asthma.
 
Fertility decline and increasing longevity have resulted in a demographic transition in Sri Lanka and this is taking place while the country is aspiring to become an upper middle-income country. 

Population projections show that the proportion of Sri Lankans above the age of 60 years will increase from 14 percent in 2017 to 22 percent by the year 2037.
 
With such a rapidly aging population in Sri Lanka, it is imperative for policymakers to ensure that social and economic institutions in the country are ready to face the health challenges and social consequences ahead.
 
In response, Sri Lanka is undertaking an ambitious agenda that will strengthen and expand primary healthcare services from the ground up. Documented in Re-Organizing Primary Healthcare in Sri Lanka, preserving our progress preparing our future”   this approach is backed by strong evidence.

The report captures the findings of wide-ranging conversations among hundreds of stakeholders from every level of the country’s healthcare system.

Facilitated by the Ministry of Health, Nutrition and Indigenous Medicine, and supported by the World Bank, the report makes a case for why, and how, Sri Lanka must re-imagine its primary healthcare systems in order to attain the goals of universal healthcare. 

What’s behind South Asia’s low exports?

Hans Timmer's picture
South Asian countries’ exports are only one-third of what they should be, had they mirrored the experience of economies with similar characteristics. Without further integration into global markets, South Asia will not sustain its growth. Photo: Shutterstock 

This blog highlights the findings from the recent South Asia Economic Focus: Exports Wanted

Bela Balassa worked for the World Bank from 1966 till his death in 1991. Luckily, his insights on international integration, revealed comparative advantages, trade diversion, and natural progress toward political integration have outlived him.

And what Bela is best-known for—and rightfully so—is the Balassa-Samuelson effect.

Put simply, this effect explains why a haircut or a restaurant meal is much cheaper in poor countries than in rich countries whereas the price tag for a car or a television is almost the same everywhere.

What’s behind this phenomenon is simple and can be summed up in three parts.

First, international competition equalizes the price of tradable goods like televisions across countries.

Second, the prices of non-tradable goods like haircuts can differ.

And third, the difference in productivity across countries is much more significant in tradable goods than in non-tradable goods. For example, a barber in Dhaka needs roughly the same amount of time as a barber in New York to cut my hair.

But manufacturers or farmers in Nepal need more labor to produce the same output than their counterparts in Germany.

Countries tend to be poor because their level of productivity in tradable goods is low.  

Visualizing Nepal's health progress

Ravi Kumar's picture
Photo: World Bank

Over the last few decades, Nepal has considerably improved the health and wellbeing of its people.

As we mark World Health Day today, here’s an overview of how much health progress Nepal has made in its efforts to meet the Sustainable Development Goals (SDGs), especially the SDG 3 indicators, which focus on healthy lives and wellbeing for all at all ages.

Should women get a job? “Yes...but” say Pakistani men

Saman Amir's picture
A large number of Pakistani women waiting to get relief money for her own business work at Lahore, Pakistan.
Pakistani women in Lahore, Pakistan. Photo: A M Syed, Shutterstock

 
This blog is part of a series examining women’s economic empowerment in South Asia.

In patriarchal societies—as in most of Pakistan—men exert much influence over the lives of their female relatives and almost always have exclusive control over household income.
 
Having a supportive father or husband is therefore critical for women and determines their choices and work opportunities, especially outside the home.

Conversely, men reluctant to see women in the workplace can derail progress toward greater participation of women in the labor force.
 
As part of the Women in the Workforce study, we interviewed a purposively selected group of men in Karachi, Lahore, Quetta, and Peshawar on their thoughts on women’s work outside the home.[1]
 
Despite the constraints of a purposive sampling technique, a few broad themes emerged from these interviews that can be relevant to anyone advocating for women’s economic empowerment.
 
As anywhere in the world, men’s attitudes toward women’s work were varied. 
 
Some men we spoke to expressed support for women’s work for economic gain.
 
The most common reason was the urgent need for a double income to maintain the household’s living standards in a fast-changing economy.

Shaping a brighter future for Pakistan

Illango Patchamuthu's picture
Pakistan needs to think big on investing in its people
Pakistani girls attending a primary school. 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. 
 
In 28 years, Pakistan will turn 100 years old. The children born this year will be adults then.

I wonder what they will see when they look around. Will they see a country teeming with opportunity? Or will they be in a country that does not offer enough jobs and does not provide the needed skills to compete?

Some of them may well be new parents at 28. Will they be able to look at their own children, and see a brighter future for them?

Pakistan has some important decisions to make if it wants to give its children the future they deserve.

If the country can make the right decisions now, Pakistan can accelerate and sustain growth to become a confident upper middle-income by the time it turns 100. It’s ambitious but possible.

Other countries –South Korea, China, and Malaysia – have transformed their economies within a generation, and there is no reason why Pakistan cannot achieve the same.

The alternative is not inspiring. If the country fails to accelerate and sustain growth as well as control population growth, by 2047 income levels will be close to where they are today and with challenges similar to what they are today.

I like to imagine another Pakistan, in which stunting and malnutrition are gone, in which family background does not determine what job you can get, women compete equally with men, businesses thrive, and Pakistan competes with the likes of Shanghai or Singapore as a trading hub.

Last month we launched a report, [email protected]: Shaping the Future, which looks at some of the reforms needed to accelerate and sustain growth and transform Pakistan’s economy.

Now is the time to come together and see what needs to be done to achieve this goal. A growth narrative for Pakistan needs to rest on these four elements: investing in people; using resources more efficiently; caring for the environment; and finally, improving how Pakistan is run to support growth and the implementation of difficult reforms.

Pakistan needs to think big on investing in its people.

In Pakistan, tech-savvy youth reinvent government

Emcet O. Tas's picture
Fellows of the KP Government Innovation Fellowship Program
Digital fellows visiting historic sites in Peshawar, Pakistan. Credit: KPITB.


Khyber Pakhtunkhwa (KP), one of Pakistan’s most underserved provinces, is emerging from decades of conflict and has turned to the digital economy to boost economic growth and provide jobs to its youth.
 
Since 2013, the World Bank and its partners have helped the Khyber Pakhtunkhwa Information Technology Board (KPITB) build a strategy to bring the province into the digital age and improve technology-related skills and governance.

These early efforts later morphed into an even closer partnership that aims to foster hundreds of digital jobs for youth and kickstart infrastructure projects to attract technology investments across the province.
 
One outcome of this partnership is the successful KP Government Innovation Fellowship Program which is co-sponsored by Code for Pakistan.

Since 2014, the program has linked up highly talented technologists with government agencies to help these institutions become more user-centric and transparent, as well as deliver better services to citizens. Twenty fellows divided into five teams join each cycle of the program.

Based on their host agency’s needs, each group may bring expertise in web or mobile app development, graphic design, content, user experience, or networks.
 
During the first month, fellows learn how government works as they interact with department staff and stakeholders to understand their problems. Next, they propose solutions and develop prototypes, which they then test and deploy in the final two months.

During their tenure, fellows actively collaborate and train government staff to ensure their solutions are properly used and sustained.
 
To date, four fellowship cycles have produced 70 graduates, who earned great experience within the government.

Undernutrition in South Asia: Persistent and emerging challenges

Ashi Kathuria's picture
Indian Bengali tribal mother is feeding her baby on her lap in a rural background. Indian rural lifestyle
Indian Bengali tribal mother is feeding her baby on her lap in a rural background. Credit: Abir Bhattacharya/ Shutterstock

Childhood stunting—or being too short for one’s age—is one of the most significant barriers to human development and affects about 162 million children under five across the world.

The good news is that several countries in the region, Nepal, India and Sri Lanka, are progressing towards meeting the 2025 World Health Assembly target of reducing the number of stunted children.

But overall, South Asia remains home to about 62 million stunted children.

In this context, it’s critical to confront failures that impede progress toward better health and nutrition in the region. Even more so since some undernutrition challenges persist, and new ones are emerging.

One persistent challenge is the inadequate diets young children receive, especially in their first two years.

This starts early in a child’s life as breastfeeding rates remain low. Though early initiation of breastfeeding has more than doubled to 40 percent between 2000 and 2016, more than 20 million infants are still not being breastfed within the first hour of birth.

Progress is also uneven across the region: breastfeeding initiation ranges from 18 percent in Pakistan to about 90 percent in Sri Lanka.

Also worrisome is that exclusive breastfeeding in the first six months of life has improved by a mere five percentage points to 52 percent across South Asia.

Further to that, the diets of infants over six months continue to be one of South Asia’s biggest and most persistent challenges.  

Only 12 percent of South Asian children receive the minimally acceptable diet they need to grow healthy.

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