Monday, May 24, 2010

Cable TV Empowers Women in India and Pakistan?

Freakonomics is a series of books by authors Steven D Levitt and Stephen J Dubner who find data points, patterns, correlations and trends that are often missed by mainstream economists and researchers. For example, the authors see how legalization of abortion may have caused significant crime rates decline in the United States in recent decades. They argue with various statistics to reject other possible explanations like gun control, strong economy, three-strikes laws etc. Authors say that the termination of unwanted pregnancies has led to fewer criminals on the streets of America.

In their latest book of the Freakonomics series, Superfreakonomics, the authors cite the findings of two American economists Robert Jensen and Emily Oster that cable TV in 2700 households empowered Indian women to be more autonomous. Cable TV households had lower birthrates, less domestic abuse and kept more girls in school. Here are some highlights from the book about India:

1. If women could choose their birthplace, India might not be a wise choice of a place for any of them to be born.

2. In spite of recent economic success and euphoria about India, the people of India remain excruciatingly poor.

3. Literacy is low, and corruption is high in India.

4. Only half the Indian households have electricity, and fewer have running water.

5. Only one in 4 Indian homes has a toilet.

6. 40% of families with girls want to have more children, but families with boys do not want a baby girl.

7. It's especially unlucky to be born female, baby boy is like a 401 K retirement plan, baby girl requires a dowry fund.

8. Smile Train in Chennai did cleft repair surgery at no cost for poor children. A man was asked how many children he had. He said he had 1, a boy. It turned out that he also had 5 daughters which he did not mention.

9. Indian midwives in Tamil Nadu are paid $2.50 to kill girls with cleft deformity.

10. Girls are highly undervalued, there are 35 million fewer females than males, presumed dead, killed by midwife or parent or starved to death. Unltrasound are used mainly to find and destroy female fetuses. Ultrasound and abortion are available even in the smallest villages with no electricity or clean water.

11. If lucky enough not to be aborted, girls face inequality and cruelty at every turn because of low social status of Indian women.

12. 51% of Indian men say wife beating is justified, 54% women agree, especially when dinner is burned or they leave home without husband's permission.

13. High number of unwanted pregnancies, STDs, HIV infections happen to Indian women when 15% of the condoms fail. Indian Council of Medical Research found that 60% of Indian men's genitalia are too small to fit the condoms manufactured to international standard sizes.

14. Indian laws to protect women are widely ignored. The government has tried monetary rewards to keep baby girls and supported microfinance for women. NGO programs, smaller condoms, and other projects have had limited success.

15. People had little interest in State run TV channel due to poor reception or boring programs. But cable television has helped women, as 150 million people between 2001-2006 got cable TV which gave them exposure to wider world.

16. American economists found that the effect of TV in 2700 households empowered women to be more autonomous. Cable TV households had lower birthrates, less domestic abuse and kept daughters in schools.

Freakonomics series authors Steven D Levitt and Stephen J Dubner use the above facts to prove what they call the "Law of Unintended Consequences".

They argue that access to cable TV, not originally intended to help liberate women, has done more to improve the lives of Indian women than the many laws and government programs designed to help them.

Cable television is present in over 16 million Pakistani households accounting for 68% of the population in 2009. I am not aware of any studies done on the impact of cable TV on rural women in Pakistan, but my guess is that trends similar to India's are empowering women in Pakistan's rural households with growing cable TV access.

Related Links:

Media Boom in Pakistan

Gender Inequality Worst in South Asia

Grinding Poverty in Resurgent India

Women's Status in Pakistan

WEF Global Gender Gap Rankings 2009

India, Pakistan Contrasted 2010

Female Literacy Through Mobile Phones

Pakistan's Woman Speaker: Another Token or Real Change

Female Literacy Lags Far Behind in India and Pakistan

Female Genocide Unfolding in India

Thursday, May 20, 2010

Is Pakistani Economy Recovering?

Guest Post by Dr. Ashfaque H. Khan, Dean of NUST Business School, Islamabad.

Pakistan's economy has grown at an average annual rate of 5.0 per cent over the last 62 years despite numerous impediments to its growth. By any standard, this has been a major achievement in terms of raising real incomes and alleviating poverty. The economic growth, however, remained uneven and interrupted by a variety of factors for a prolonged period. It was during 2000-07 that Pakistan's economy experienced the longest spell of strongest growth due to sound economic policies, structural reforms and a benign international economic environment.



Economic growth has slowed considerably in Pakistan over the last two to three years owing to a variety of domestic and external factors. What is worrisome is the new development where the growth number is being manipulated to paint a rosy picture. There was a story about the manipulation of growth number for 2009-10 in The News on May 16, 2010. The usual methodology to post a higher economic growth for the current year is to reduce the growth of the previous year. In other words, reduce the base to get a higher growth for the current year.



The growth number for 2007-08 was provisionally reported to be 5.8 per cent. The year 2008-09 was the most difficult year for the world economy as global financial meltdown triggered a full-fledged economic crisis. Strong economies like Hong Kong, Malaysia, Singapore, Taiwan and Thailand witnessed negative growth. Pakistan, on the other hand, posted a positive growth of 2.0 per cent and outshined the strongest economies of the region in 2008-09.

How was this positive 2.0 per cent growth achieved? The 5.8 per cent provisional growth of 2007-08 was drastically revised downward to 4.1 per cent and as such the base was reduced to arrive at a higher number of 2.0 per cent for 2008-09. Some methodology for the calculation of value-added for some sectors was also changed without bringing to the notice of the National Accounts Committee.

The same process has been repeated according to the newspaper story for the year 2009-10. The Federal Bureau of Statistics (FBS) – the institution responsible for compiling the country's national income accounts, has revised the last year's (2008-09) growth of 2.0 per cent to 1.1 per cent and that too, by further trimming the growth of 2007-08 from 4.1 per cent to 3.7 per cent. Since the base of 2008-09 was trimmed to 1.1 per cent, the growth for the current fiscal year (2009-10) has risen to 4.1 per cent.

Not only the growth of last year was reduced but also growth of some components of the GDP was outlandishly jacked up in 2009-10. As reported in the news item, the growth of the construction sector was pushed up to an unbelievable level of 15 per cent. Only a lunatic would expect the construction sector to grow by 15 per cent in 2009-10 when the public sector development programme of the federal government has been slashed to one-half and the private sector construction activities are at near standstill. The production of cement adjusted for exports and that of iron and steel has been used as a proxy for calculating growth in value-added in construction.

The interesting paradox here is that while cement production unadjusted for exports, grew by 11.2 per cent and iron and steel registered a high negative double digit growth, the construction industry seems to have thrived and grew by 15 per cent. This is simply unbelievable. Furthermore, the growth of the livestock sector, which accounts for over 11 per cent of the GDP, has been jacked up as well according to the news item.

Though the FBS' staffers are technically weak, they are surely honest. My appeal to them is to do their job professionally as they have been doing in the past. The revision in growth numbers is common in every part of the world but unfortunately the extent of revision has grown significantly in Pakistan over the last few years. The provisional growth of 5.8 per cent in 2007-08 has been revised downward to 4.1 per cent and further to 3.7 per cent – a downward revision of 2.0 percentage points is simply unacceptable and has perhaps never happened before.

Should anyone accept that the economy has grown by 4.1 per cent in 2009-10 in the midst of deteriorating security environment, crippling impact of power shortages and mismanagement, persisting double-digit inflation and a higher interest rate environment? If the growth is really 4.1 per cent in 2009-10 – up from 1.1 per cent in the previous year, then the government and its economic managers will have to answer the following questions. Should we believe that the spate of suicide bombing and heightened political tension have had no impact on economic growth? Should we believe that the long hours of power outages have had no adverse impact on the economy? Should we also believe that the higher double-digit inflation and the higher interest rate environment have had no adverse effect on the economy? Should we re-write our own economic theory?

Economic theory armed with extensive empirical evidence suggests that the declining rate of investment, high inflation and interest rate, large fiscal deficit, armed conflicts, wars, political instability, corruption, absence of rule of law, high poverty rates, rising debt burden, and weak infrastructure will have negative effects on economic growth. How come economic growth accelerated from 1.1 per cent in 2008-09 to 4.1 per cent in 2009-10 in the midst of all the above-listed factors? Economic managers will have to answer these questions.

Related Links:

Pakistan's Economic Performance 2008-2010

Incompetence Worse Than Corruption in Pakistan

Pakistan's Circular Debt and Load Shedding

US Fears Aid Will Feed Graft in Pakistan

Pakistan Swallows IMF's Bitter Medicine

Shaukat Aziz's Economic Legacy

Pakistan's Energy Crisis

Karachi Tops Mumbai in Stock Performance

India Pakistan Contrasted 2010

Pakistan's Foreign Visitors Pleasantly Surprised

After Partition: India, Pakistan and Bangladesh

The "Poor" Neighbor by William Dalrymple

Pakistan's Modern Infrastructure

Video: Who Says Pakistan Is a Failed State?

India Worse Than Pakistan, Bangladesh on Nutrition

UNDP Reports Pakistan Poverty Declined to 17 Percent

Pakistan's Choice: Talibanization or Globalization

Pakistan's Financial Services Sector

Pakistan's Decade 1999-2009

South Asia Slipping in Human Development

Asia Gains in Top Asian Universities

BSE-Key Statistics

Pakistan's Multi-Billion Dollar IT Industry

India-Pakistan Military Comparison

Food, Clothing and Shelter in India and Pakistan

Pakistan Energy Crisis

IMF-Pakistan Memorandum of Economic and Financial Policies

Wednesday, May 12, 2010

Growing Chinese Imports Fuel Indian Paranoia

India is continuing to run large current account and trade deficits. India's trade deficit was an estimated $86.6 billion in April- January 2009-2010, according to media reports. The Reserve Bank of India said the nation's current account deficit widened to $29.8 billion in fiscal 2009, compared with a deficit of $17 billion in prior year.



The nation’s capital account continued to be negative for the second quarter in a row. The gauge of investment flows into and out of the country showed a shortfall of $4.44 billion in the three months to 31 March, compared with a net inflow of $26.5 billion a year earlier, RBI said.

India's government has sent letters to the country's telecom companies ordering them not to buy equipment from Huawei, ZTE, and several other Chinese companies due to security risks, according to a report in Businessweek. A few weeks ago, the Wall Street Journal reported that there was a similar move by Delhi to limit China's growing role in building India's power sector.

Growing Chinese Imports:
India's imports from China expanded 19 per cent and stood at US$ 32.49 billion in 2008-09, while exports were at US$ 9.35 billion. India's trade deficit with China is expected to grow larger this year, a trend India considers alarming given the nature of imports that go into India's essential infrastructure of power generation and telecommunications networks.

Power Sector:

Chinese are now supplying equipment for about 25% of the new generating capacity India is adding to its national grid, up from almost nothing a few years ago. There are thousands of skilled Chinese expatriates at Indian plant sites, along with Chinese chefs, Chinese television and ping pong.

Telecom Sector:
India is already the biggest export market for China's two leading telecom equipment manufacturers, Huawei Technologies and ZTE, as both companies have focused on India in recent years. As India has grown to the world's No. 2 mobile phone market in recent years, its imports of Chinese handsets have soared.



Unlike China, India lacks the necessary industrial and manufacturing base for greater self reliance in infrastructure equipment and defense armaments. India also runs large current account deficits while China is enjoying large surpluses strengthening its economic position in the world.

Defense Equipment:
India is overwhelmingly dependent on foreign imports, mainly Russian and Israeli, for about 70 per cent of its defense requirement, especially for critical military products and high-end defense technology, according to an Indian defense analyst Dinesh Kumar. Kumar adds that "India’s defense ministry officially admits to attaining only 30 to 35 per cent self-reliance capability for its defense requirement. But even this figure is suspect given that India’s self-reliance mostly accrues from transfer of technology, license production and foreign consultancy despite considerable investment in time and money".


On the same theme, Russian newspaper Kommersant reported that "India has had little success with military equipment production, and has had problems producing Russian Su-30MKI fighter jets and T-90S tanks, English Hawk training jets and French Scorpene submarines."

On India's perennial dependence on imports, here's how blogger Vijainder Thakur sees India's loose meaning of "indigenous" Smerch and other imports:

"The Russians will come here set up the plant for us and supply the critical manufacturing machinery. Indian labor and technical management will run the plant which will simply assemble the system. Critical components and the solid propellant rocket motor fuel will still come from Perm Powder Mill. However, bureaucrats in New Delhi and the nation as a whole will be happy. The Smerch system will be proudly paraded on Rajpath every republic day as an indigenous weapon system.

A decade or so down the line, Smerch will get outdated and India will negotiate a new deal with Russia for the license production of a new multiple rocket system for the Indian Army.

China will by then have developed its own follow up system besides having used the solid propellant motors to develop other weapon systems and assist its space research program."


India does export some armaments but its modest record of producing and exporting weapon systems is evident from the fact that India’s defense annual exports averaged only US$ 88 million between 2006-07 and 2008-09. By contrast, Pakistan exported $300 million worth of military hardware and munitions last year.

Alternatives:

India is looking for alternative sources for critical imports to reduce its dependence on the Chinese and Russians. But it faces an uphill task with Chinese imports in particular. China has become the biggest and the most efficient factory for the world's largest American, European and Japanese companies. Even if it does manage to find non-Chinese sources, India will have to pay much higher prices for such imports. And these imports may still contain crucial Chinese components which dominate the international supply chain for most non-Chinese companies, continuing its dependence on the Chinese.

On the defense side, India has begun to diversify away from Russia. Israelis have become major suppliers to India, and the US and Europeans are now bidding to sell military hardware to India. Both Israeli and Western equipment carries significantly higher price tags than imports from Russia.

Summary:

In spite of Gandhi's Swadeshi movement and Indian policy of developing self-reliance, the nation remains heavily dependent on imports from China for its critical infrastructure, and its growing appetite for weapons systems on Russia and Israel. These growing imports are fueling India's current account deficits, and adding to its paranoia with regard to the rise of China. In response, Indian government is acting to reduce dependence on Chinese imports, a move that will likely to add further to its trade imbalance because of the higher costs of imports from non-Chinese and non-Russian sources.

Related Links:

India-Israel Military Relations

Pakistan's Military Production

BRIC, Chindia, and the "Indian Miracle"

India's "Indigenous" Weapons

Pakistan's Telecom Boom

India's Growing Defense Budget

Sunday, May 9, 2010

Sizing Urban Middle Class in India and Pakistan

The simplest definition of the middle class is a group of people in a society who are neither rich nor poor. The middle class has always been considered vital to a country's stability and growth. The rich and the poor simply distrust each other too much to let the other govern. Nations with large middle class populations find it easier to sustain good, democratic governance.

Unfortunately for Pakistan, the size of the middle class was very small when it came into existence, and the country was dominated by a small powerful feudal elite created by the British rulers to sustain their colonial rule. And the urban middle class remained small for decades. The situation has, however, finally begun to change in the the last decade of 1999-2009 with a combination of increasing urbanization and faster economic expansion that fueled significant job creation in the industrial and services sectors to enable middle class growth.

Pakistan is now more urbanized with a larger middle class than India as percentage of the population. In 2007, Standard Chartered Bank analysts and State Bank governor Dr. Ishrat Husain estimated there were 30 to 35 million Pakistanis earning an average of $10,000 a year. Of these, about 17 million are in the upper and upper middle class, according to a recent report.



Urbanization is not just a side effect of economic growth; it is an integral part of the process, according to the World Bank. With the robust economic growth averaging 7 percent and availability of millions of new jobs created between 2000 and 2008, there has been increased rural to urban migration in Pakistan to fill the jobs in growing manufacturing and service sectors. The level of urbanization in Pakistan is now the highest in South Asia, and its urban population is likely to equal its rural population by 2030, according to a report titled ‘Life in the City: Pakistan in Focus’, released by the United Nations Population Fund. Pakistan ranks 163 and India at 174 on a list of over 200 countries compiled by Nationmaster.

Pakistan has and continues to urbanize at a faster pace than India. From 1975-1995, Pakistan grew 10% from 25% to 35% urbanized, while India grew 6% from 20% to 26%. From 1995-2025, the UN forecast says Pakistan urbanizing from 35% to 60%, while India's forecast is 26% to 45%. For this year, a little over 40% of Pakistan's population lives in the cities.

The urban population now contributes about three quarters of Pakistan's gross domestic product and almost all of the government revenue. The industrial sector contributes over 27% of the GDP, higher than the 19% contributed by agriculture, with services accounting for the rest of the GDP.



A 2008 report by UN Population Fund says the share of the urban population in Pakistan almost doubled from 17.4 percent in 1951 to 32.5 percent in 1998. The estimated data for 2005 shows the level of urbanization as 35 per cent, and CIA Factbook puts it at 36% in 2008, and it is increasing with 3% of the nation's population migrating to cities every year. With over 5 million rural migrants each year, the population of Pakistani cities in exploding, and Karachi has now become the world's largest city, according to Citymayors.com.

India's urban residents in 2008 residents accounts for 29% of its population, and the CIA Fact Book estimates it growing at 2.4% of the total population every year.

As to India's much hyped middle class, a new report by Nancy Birdsall of Center for Global Development says it is a myth. She has proposed a new definition of the middle class for developing countries in a forthcoming World Bank publication, Equity in a Globalizing World. Birdsall defines the middle class in the developing world to include people with an income above $10 day or $3,650 a year, but excluding the top 5% of that country. By this definition, India, even urban India alone, has no middle class; everyone at over $10 a day is in the top 5% of the country.

Unlike poverty which is defined by the World Bank as people living on less than $1.25 or $2 a day, there is no widely accepted definition of who counts as a member of the middle class in the developing world.

In India, for example, a scooter company aims ads at a schoolteacher who earns $2,500 a year and lives in a tiny brick house with no running water. Why? Because that teacher is counted as middle class by Indian marketers, according to MSN Money.

Economist Nancy Birdsall of the Center for Global Development (CDG) is attempting to establish a $10 a day minimum limit in terms of purchasing power parity (PPP) as the low end of the middle class, while excluding the top 5% of the population in a country from the middle class. "An upper limit of the 95th percentile, while on the high side, is just about sufficient to exclude the country's richest," Birdsall adds.

In India's case, everyone who makes $3,650 a year is in the top 5% (about 55 million people) of the nation's population. It is on this basis that economist Birdsall concludes that India has no middle class. Over 75% of India's population (versus 60% in Pakistan) lives on less than $2 a day, or $750 a year, according to Human Development Report 2009. The rest of about 20% of India's people falls between $2 and $10 a day.

It is interesting to note, however, that India has been much more successful in sustaining democracy than Pakistan. Perhaps it is attributable to early land reform in India that significantly tamed the power of the feudal class.

Using Birdsall's proposed definition, Pakistan now does have a middle class of tens of millions (at least 10% of the population), as its 30 to 35 million people earning an average of $10,000 a year (well above Birdsall's lower limit of $3,650.00 a year) account for about 17% of Pakistan's population. Another 60% of Pakistanis (vs 75% of Indians) live on less than $2 a day, according to UN Human Development Report 2009. The rest of 23% of the people have incomes between $730 a year ($2 a day) and $10,000 a year, and a significant percentage of them could be classified as lower middle class.

According to development economist Lant Pritchett, fewer than 25% of the people in the richest quintile in India complete 9 grades of school.

This is a combination both of the depth of India's poverty and its inequality. China had no middle class in 1990, but by 2005, had a small urban middle class (3% of the population). South Africa (7%), Russia (30%) and Brazil (19%) all had sizable middle classes in 2005.

Contrary to popular myths about rich-poor gap often expressed in Pakistani and Western media, Pakistan is more egalitarian than most countries of the world, including nations of South Asia region. According to UNDP HDR report 2009, Pakistan's ratio of expenditures of the top and bottom 10% of the population is 6.7 versus India's 8.6 and China's 13.2. The resource consumption by the lowest 10% of the Pakistani population is 3.9% and highest 10% consumes 26.5%. This compares favorably with 3.6% consumption by the bottom 10% in India and 31.1% by the top 10%.

In spite of the recent growth in Pakistan's middle class, it is still not strong enough to seize power. However, with the recent growth of independent mass media and greater political activism, the Pakistani middle class has begun to exert more influence on how the nation is governed. And the power of the current ruling feudal zamindars' party, the Pakistan Peoples Party, appears to be waning in the face of the new assertive middle class.

Unlike the more urban and middle class voters of the Pakistan Muslim League (PML) and the Muttahida Qaumi Movement (MQM), the PPP's voter lives in a different world, a world that has been dominant for decades. It is a feudal world controlled by the rural elite that is much more rural, more deferential, more rooted in tradition. Its nationalism is less marked and its Islam less influenced by the international trends of the last 30 years and thus much less politicized and much more based in centuries-old Sufi traditions. Describing this situation, Jason Burke of the Guardian has argued that "This is a Pakistan that is disappearing". Burke has quoted an unnamed 2008 PPP electoral candidate in rural Punjab who recognized and reportedly said that his party needed to "re-invent itself".

While many rural residents in Sindh and Southern Punjab who voted for the PPP have remained relatively isolated from major developments in Pakistan in the last decade, the urban middle class has grown dramatically in numbers and influence during the military rule of President Musharraf. The New York Times reported on this expansion of Pakistani middle class in November 2007 in these words: "As he fights to hold on to power, General Musharraf finds himself opposed by the expanded middle class that is among his greatest achievements, and using his emergency powers to rein in another major advance he set in motion, a vibrant, independent news media". Acknowledging this fact, William Dalrymple, a British journalist/author considered knowledgeable about India and Pakistan, recently wrote as follows: "It was this newly enriched and empowered urban middle class that showed its political muscle for the first time with the organization of a lawyers' movement, whose protests against the dismissal of the chief justice soon swelled into a full-scale pro-democracy campaign, despite Musharraf's harassment and arrest of many lawyers. The movement represented a huge shift in Pakistani civil society's participation in politics. The middle class were at last moving from their living rooms onto the streets, from dinner parties into political parties."

The future of Pakistan clearly belongs to its urban middle class. The behavior of the members of this rising urban middle class will largely determine if and when Pakistan grows out of the current crises to face the future with greater confidence.

Related Links:

Comparing India and Pakistan in 2010

Indian poverty

Pakistan Wage Structure 1990-2007

Middle Class Clout Rising in Pakistan

Urbanization in Pakistan

The Rise of Mehran Man

Industr ial Sector of Pakistan

India Has No Middle Class

Pakistan's Foreign Visitors Pleasantly Surprised

Escape From India

Reflections on India

After Partition: India, Pakistan and Bangladesh

The "Poor" Neighbor by William Dalrymple

Pakistan's Modern Infrastructure

Video: Who Says Pakistan Is a Failed State?

India Worse Than Pakistan, Bangladesh on Nutrition

UNDP Reports Pakistan Poverty Declined to 17 Percent

Pakistan's Choice: Talibanization or Globalization

Pakistan's Financial Services Sector

Pakistan's Industrial Sector

Pakistan's Decade 1999-2009

South Asia Slipping in Human Development

Asia Gains in Top Asian Universities

Pakistan's Multi-Billion Dollar IT Industry

India -Pakistan Military Comparison

Food, Clothing and Shelter in India and Pakistan

Pakistan Energy Crisis