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.
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.
This blog highlights the findings from the recent South Asia Economic Focus: Exports Wanted
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.
, 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, .
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.
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?
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.
, 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.
In a tiny hamlet called Shinglab in Gazipur district, around 2 hours from Dhaka, you can see a cluster of homes made of varying materials depending on the household income.
Shamela Hakeem, 40, lives in a functional mud hut with a tin roof. A widow with no children, she makes around BDT 300 ($3.50) daily as a sweeper at a local factory.
Last year, . She is due to pay off her final installment within the next month.
But why did she decide to invest in a toilet?
A three-way street
, which can be harmful to the environment and the user.
Only 32 percent of the rural population have access to a safely managed sanitation service. The government is helping rural households shift to better sanitation. However, many poor rural households are often discouraged by the upfront cost.
The country also has a history of micro-finance institutions (MFIs) who have effectively worked with rural households. But MFIs have had little experience in investing in non-productive assets such as toilets.
In 2016, a $3 million World Bank grant helped scale up MFIs lending for improved rural sanitation in Bangladesh. An additional $23.7 million in seed money was mobilized from MFIs for the installation of latrines.
Small-scale sanitation entrepreneurs received technical assistance to build good quality, affordable models of hygienic latrines for low-income households. Finally, an agreement was reached with the Palli Karma-Sahayak Foundation (PKSF) to work with retail MFIs and local entrepreneurs (LEs).
Interest-free loans were extended to households using their own capital ($22) of PKSF and their MFI partners plus business loans to entrepreneurs with market rate interest. . Another arrangement was reached between MFIs, LEs, and customers who accessed the sanitation loan from MFIs and placed an order with LEs to construct the latrine.
. “We started off with 143 latrines in 2017, but now the market is more developed, and entrepreneurs are motivated,” said Gazi Md. Salahuddin, general manager of Resource Integration Centre, an MFI based in Narayanganj district.
Her story is an inspiration to youth (male and female) and women who are afraid of failure and taking risks.
Starting from a modest home-based business, 50 years ago, today Aban is a household brand name that is island wide in Sri Lanka.
Will diversifying its economy help Bhutan address its youth unemployment, let alone its macroeconomic volatility and vulnerability?
With the right approach, yes.
And to that end, the latest World Bank Bhutan Development Report: A Path to Inclusive and Sustainable Development proposes solutions relevant to Bhutan’s context.
as described in the 10th and 11th five-year plans.
Diversifying the economy is touted as a standard prescription to cure such development ailments as joblessness, low productivity, and macroeconomic volatility.
However, international experience shows that this prescription does not always work.
Case in point: A World Bank’s analysis Diversified Development concludes that in resource-rich countries, investing in physical capital, human capital and economic institution are the best ways to sustain growth in the private sector.
Further to that, the development of specific sectors, which is often a common ingredient of diversification strategies in certain countries, is neither necessary nor sufficient for private-sector-led growth.
- Jobs and Development; Skills; Human Capital
- Human Capital Project
- Human Capital Index
- human capital accumulation
- Human Capital
- Social Development
- Public Sector and Governance
- Private Sector Development
- Law and Regulation
- Financial Sector
- Climate Change
- South Asia
“Sí, sabes que ya llevo un rato mirándote
Tengo que bailar contigo hoy”
The Despacito tune blared in the bus, and my fellow riders kept tempo to the rhythm.
I was recently on mission in the Punjab province, Pakistan, on my way to the Shalimar Gardens for some sightseeing on my day off.
The last thing I expected to hear was the top song of 2017 on a bus in Lahore but in hindsight, this shouldn’t have surprised me.
We live in a global community, and across the world, individuals are getting more connected every day. Music perfectly exemplifies this – a universal language which we can all understand. With this increased connection comes higher expectations.
In addition to roads and clean water, citizens now demand that their government provide reliable digital connectivity. And when taxes and other revenues are not sufficient to cover this and other public services, governments must borrow to pay for it.
Managing public debt was precisely my reason to be in Lahore where I introduced a cash flow tool the World Bank helped design.
If, like me, you’re a firm believer in New Year’s resolutions, early January ushers in the prospect of renewed energy and exciting opportunities. And as tradition has it, it’s also a time to enter the prediction game.
To sum up:
Notably, and despite increasing conflicts and growing fragility, Afghanistan is expected to increase its growth to 2.7 percent rate this year.
In this otherwise positive outlook, Pakistan’s growth is projected to slow to 3.7 percent in fiscal year 2018-19 as the country is tightening its financial conditions to help counter rising inflation and external vulnerabilities.
However, activity is projected to rebound and average 4.6 percent over the medium term.
It’s a dusty September morning, and Kiran Devi is finishing her chores at lightning speed.
“Wouldn’t it be nice to keep 5,000 women waiting, especially when it’s a celebration,” she says with a touch of gushing pride and makes her way to the annual general meeting of the women-owned Aaranyak Agri producer company.
Located in Purnea district in Bihar—one of India’s poorest states—the company is made up of small local women small farmers and producers and lies in the most fertile corn regions in eastern India.
But until recently, small farmers did not fully reap the benefits of this productive land.
Local traders and intermediaries dominated the unregulated market. Archaic and unfair trading practices like manual weighing, unscientific quality testing, and irregular payments made it difficult for small farmers to get the best value for their produce.
“The trader would come, put some grains under his teeth and pronounce the quality and pricing. For every quintal of maize [corn], 5-10 kilos additional grains were taken, sometimes through faulty scales and sometimes simply by brazenly asking for it,” says Lal Devi, one member of the company. “We had the choice between getting less or getting nothing.”
Such practices stirred local women farmers into action, and they formed the Aaranyak Agri Producer Company Limited (AAPC) to access markets directly and improve their bargaining power.
The company established a farmer-centric model and received funding and technical assistance through JEEViKA (livelihoods in Hindi), a World Bank program that supports the Government of Bihar and has achieved life-changing results for Bihar’s rural communities.
Joining forces helped lower costs and boost production. Together, the groups saved $120 million and leveraged more than $800 million in bank loans.
Further, digital technologies have been introduced as an innovative way to improve the production, marketing, and sale of small-farmers’ produce.
For example, women farmers receive regular periodic updates on their mobile phones to learn best practices to grow corn as well as weather information to inform farming decisions.
During harvest season, farmers receive daily pricing information from major nearby markets to help them stay abreast of the latest variations in prices.
Its annual average economic growth of 7.6 percent between 2007 and 2017 far exceeds the average global growth rate of 3.2 percent.
This high growth has contributed to reducing poverty: Extreme poverty was mostly eradicated and dwindled from 8 percent in 2007 to 1.5 percent in 2017, based on the international poverty line of $1.90 a day (at purchasing power parity).
Access to basic services such as health, education and asset ownership has also improved significantly.
The country has a total of 32 hospitals and 208 basic health units, with each district hospital including almost always three doctors.
The current national literacy rate is 71 percent and the youth literacy rate is 93 percent.
The recent statistics on lending, inflation, exchange rates and international reserves (Sources: RMA, NSB) confirm that
Gross foreign reserves have been increasing since 2012 when the country experienced an Indian rupee shortage.
Reserves exceeded $1.1 billion, equivalent to 11 months of imports of goods and services, which makes the country more resilient to potential shocks.
The nominal exchange rate has been depreciating since early 2018 (with ngultrum reaching Nu. 73 against the US dollar in early November).