This blog is part of the series #OneSouthAsia exploring how South Asia can become a more integrated, thus more economically dynamic region.The blog series is a lead up to the South Asia Economic Conclave, an event dedicated todeepening existing economic links through policy and investments in regional businesses.
Imagine a South Asia without borders. People, industries, goods and services flow freely in the most profitable way for all. Imagine that necessities sorely needed in one area are freely available from areas where there is plenty. South Asia’s story of poverty amidst plenty would begin to change.
Urbanization provides South Asian countries with the potential to transform their economies to join the ranks of richer nations in both prosperity and livability. And, indeed the region has made strides in the early part of the century when its urban population grew by 130 million. Average GDP per capita is up and absolute poverty is down.
South Asia’s urban population grew by 130 million – more than the population of Japan – between 2001 and 2011, and is expected to rise by almost 250 million people by 2030. If recent history is any guide, this trend could propel the region toward greater growth and prosperity.
A key characteristic of urbanization is that the coming together of people and enterprises in towns and cities -- a process known as agglomeration – improves productivity and spurs job creation. That’s particularly the case in manufacturing and services. Over the long term, successful urbanization is accompanied by a convergence of living standards between urban and rural areas as economic and social benefits spill beyond urban boundaries.
So how is South Asia doing in realizing the potential of its cities for prosperity and livability? What are the challenges facing the region’s countries as their urban populations grow? Are they meeting those challenges or are policy reforms needed? And, if so, what type of reforms?
On September 24, the World Bank will release a new report titled, “Leveraging Urbanization in South Asia: Managing Spatial Transformation for Prosperity and Livability.”
This blog is part of the series #OneSouthAsia exploring how South Asia can become a more integrated, thus more economically dynamic region.The blog series is a lead up to the South Asia Economic Conclave, an event dedicated todeepen existing economic links through policy and investments in regional businesses.
Which South Asia do you live in? The one which offers world-class metros and malls, super-specialty hospitals, gourmet eateries and designer homes where servants make your meals, drive your car or clean your mess?
Or do you live in the South Asia where sanitation, water and electricity are a luxury, where filth, ignorance and violence means death comes early and more frequently from illness, poverty and natural disasters? Statistically, the latter is more likely.
Having lived in Southeast Asia, where the emergence of the Tigers has transformed the lives of millions of poor through investment in human development, infrastructure and exports producing high growth rates, the visible poverty and chaotic streets of South Asia are troubling. So, too, is the contrast provided by India's dollar billionaires -- the third-largest rich man's club in the world.
Economic and social development should not be left to economists and specialists only.
This message is manifested in “Window of Opportunity,” a video highlighting the ambitions and goals of the World Bank’s 2015-19 Country Partnership Strategy in Pakistan.
Truck drivers, entrepreneurs, doctors, teachers and thousands of other citizens from Pakistan shared their ideas and helped identify opportunities and challenges to guide future policies and action areas.
These individuals come from a myriad different backgrounds but are united by a common drive to open up windows of opportunities for Pakistan.
As Pakistan readies to celebrate its independence day, we can all feel satisfied about progress in restoring macroeconomic stability, but should also realise that the country can and should do much better. Pakistan has many assets, of which it can make better use — from its vast water and river endowment, to its coastline and cities, to its natural resources. And there are upsides: a growing middle class, a lively informal economy and a strong influx of remittances. Pakistan can also be proud of the first peaceful transfer of power between two civilian governments. But to reach its full potential, Pakistan needs to focus on two critical areas, both obvious and urgent. It needs to ensure that its people have the means to fully participate in and contribute to the economy. And it needs to integrate itself more, globally and regionally.
The first challenge is demographic. As a result of rapid population growth, 1.5 million youngsters reach the working age each year. The question is, will the private sector be able to provide the jobs they need and want? And will the youth have the skills to get good jobs? Pakistan must do far better in education. Primary school net enrollment is about 57 per cent, well below other South Asian countries. Enrollment drops by half in middle school, with much lower levels for girls and children from poor families. This is not a good foundation to build on.
It is not surprising then that Pakistan also struggles to give all its citizens the opportunity to participate in building better lives for themselves. Only 25 per cent of women participate in the labour force, compared to 50 and 80 per cent in most developing countries. Women and girls deserve better. Research shows that girls with little or no education are far more likely to be married as children, suffer domestic violence, and live in poverty. This harms not only them, but also their children, their communities and the economy. Greater gender equality can enhance productivity and improve development outcomes for the next generation. It is smart economics.
Pakistan has taken steps to empower women. The Benazir Income Support Program, supported by the World Bank, has provided millions of women with national ID cards and makes direct payments to them, strengthening their ability to take decisions and move out of poverty.
More than 50% of today’s international trade goes through regional trading arrangements. While trade is a critical component of regional integration, integration has several other dimensions including energy cooperation and intra-regional investment, to name a few. After carefully examining cases of regional integration in Southeast Asia, the Americas and Africa, we present five lessons for South Asia.
Lesson 1: Facilitate trade in goods and services
Despite falling tariffs, there is still a large gap between the price of the exported good and the price paid by the importer, largely arising from high costs of moving goods, especially in South and Central Asia. On a percentage basis, the potential gains to trade facilitation in South and Central Asia, at 8 percent of GDP, are almost twice as large as the global average. High trade costs have contributed to South Asia being the least integrated region in the world.
FIGURE 1: Intra-regional trade share (percent of total trade), 2012
In the ASEAN region, most countries have established either Trade Information Portals or Single Windows that have enhanced trade facilitation, reduced trade costs and enhanced intra-regional trade. A Trade Information Portal allows traders to electronically access all the documents they need to obtain approvals from the government. A Single Window (a system that enables international traders to submit regulatory documents at a single location and/or single entity) allows for the electronic submission of such documents. These single windows, using international open communication standards, facilitate trade both within the region and with other countries using similar standards.
In services, one barrier to trade involves the movement of skilled workers, accountants, engineers and consultants who may move from one country to another on a temporary basis. The Southern Common Market (Mercosur)’s Residence Agreement allows workers to reside and work for up to two years in a host country. This residence permit can be made permanent if the worker proves that they can support themselves and their family.
On a sunny Thursday last week in Peshawar, capital of Khyber Pakhtunkhwa (KP) province and the fifth largest city in Pakistan, the energy at the venue of the Digital Youth Summit 2015 was palpable from the beginning.
Young people were lined up to access what has become the largest tech conference of Pakistan, while others were working as volunteers to help manage the event. A coalition of prestigious sponsors joined the World Bank, the KP IT Board and Peshawar 2.0 to put on a two and half-day summit to inspire the next generation of digital innovators in Pakistan.
Arsalan Ahmed Jaraal, a student at the Institute of Management Sciences, who is volunteering at the event, said friends are persuading each other to attend the Summit. It saw the participation of 3000+ youth and 80+ speakers, over 30+ sessions and breakout events.
With energetic, social media savvy youth presence, it wasn’t surprising that the Summit trended on Twitter in Pakistan and more than 1.2 million people were reached on social media.
While this is the second such summit, there were also several firsts this year. This year saw many more international and national speakers flock to Peshawar to take part in the event. Two Pakistani American entrepreneurs, who met for the first time at the summit, announced that they would be launching a fund targeting high net worth Pakistani Americans as seed funding for Pakistani tech startups. This is perhaps the beginning of an angel investment network that leverages to expatriate community.
In addition, the Summit saw the first investment in a Peshawar based startup. Ebtihaj, Haroon Baig, Zahid Ali Khan, and Mubassir Hayat—all of them in their early 20s-- founded Messiah, an app that allows users to easily connect with loved ones and first responders in case of an emergency. At the summit, they were offered investment in their startup, by two angels—Shubber Ali and Kash Rehman—as well as from Oasis 500, a Jordan based investment company. The team will be attending a 100 day acceleration program in Amman later this year.
Home to Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka, South Asia is one of the fastest growing regions in the world and yet one of the least integrated. Intra-regional trade accounts for only 5% of South Asia’s GDP, compared to 25% of East Asia’s. Meanwhile, with a population of 1.6 billion, South Asia hosts one of the largest untapped talent pools.
To encourage young researchers in the region who aspire to use their research to inform policy making, the World Bank Group calls for research proposals on South Asia regional integration. Proposals will be carefully reviewed and the most suitable proposals (no more than five overall) will be awarded with a grant based on criteria listed below. An experienced researcher from the World Bank’s research department or an external academic will mentor and guide the young researcher in the implementation of the research.