Pakistan Translates GDP Growth to People's Welfare Better Than India

Pakistan does better than India and China in translating GDP growth to citizens' well-being, according to a 2016 Boston Consulting Group (BCG) report titled "From Wealth to Well Being".

One particular metric BCG uses is growth-to-well-being coefficient on which Pakistan scores 0.87, higher than India's 0.77 and China's 0.75. Among South Asian nations, Bangladesh scores much higher at 1.03. The top ten countries in “current well-being” remain in Western Europe.



The BCG report quotes American economist Simon Kuznets, the creator of the concept of GDP in 1934, who said: "The welfare of a nation can scarcely be inferred from  measurement of national income".  It uses SEDA (sustainable economic development assessment) to score and rank countries.

The report uses 5 years worth of GDP growth data up to  2014 and compares it with improvements in citizens' well-being in the same period.

On the question of the ability to translate GDP growth to citizens' well-being,  Colin Hunter, Center for Research on Globalization, has written the following:

"India is home to over 340 million destitute people and is the second poorest country in South Asia after war-torn Afghanistan...In South Asia, Afghanistan has the highest level of destitution at 38%. This is followed by India at 28.5%. Bangladesh (17.2%) and Pakistan (20.7%) have much lower levels"

GDP growth and increases in per capita income and human development index are often used as indicators to represent improvements in the lives of ordinary people in developing nations in Asia, Africa and Latin America. Both of these have significant limitations which are addressed by Oxford Poverty and Human Development Initiative (OPHI)'s MPI, multi-dimensional poverty index.

The MPI brings together 10 indicators, with equal weighting for education, health and living standards (see table). If you tick a third or more of the boxes, you are counted as poor.

Source: Oxford Poverty and Human Development Initiative


Eradicating poverty in South Asia requires every person having access to safe drinking water, sanitation, housing, nutrition, health and education.

According to the MPI, out of its 1.2 billion-plus population, India alone is home to over 340 million destitute people and is the second poorest country in South Asia after war-torn Afghanistan, according to Colin Hunter of Canada-based Global Research.

Some 640 million poor people live in India (40% of the world’s poor), mostly in rural areas, meaning an individual is deprived in one-third or more of the ten indicators mentioned above (malnutrition, child deaths, defecating in the open).

 In South Asia, Afghanistan has the highest level of destitution at 38%. This is followed by India at 28.5%. Bangladesh and Pakistan have much lower levels. The study placed Afghanistan as the poorest country in South Asia, followed by India, Bangladesh, Pakistan and Nepal, according to Hunter.

Afghanistan is the poorest country in South Asia in terms of multi-dimensional poverty with 66% of its people being poor, followed by India with 54%, Bangladesh with 51%, Pakistan and Nepal at 44%, Bhutan at 27%, and Sri Lanka and the Maldives at 5%, according to Oxford researchers. Among 104 countries ranked by OPHI,  Nepal ranks 82, India 74, Bangladesh 73,  Pakistan 70, Sri Lanka 32 in MPI poverty.

Why has India lagged  behind its neighbors in spite of rapid economic growth in recent years? Here's how Hunter explains it: "The ratio between the top and bottom 10% of wage distribution has doubled since the early 1990s, when India opened up it economy. According to the 2011 Organization for Cooperation and Economic Development report ‘Divided we stand’, this has made India one of the worst performers in the category of emerging economies. The poverty alleviation rate is no higher than it was 25 years ago. Up to 300,000 farmers have committed suicide since 1997 due to economic distress and many more have quit farming."

What Colin Hunter hasn't clearly articulated is the fact that India remains home to the world's largest population of poor, hungry and illiterates who lack even basic sanitation 67 years after the nation's independence from British colonial rule.

As the new Hindu Nationalist government under Narendra Modi begins its anti-Muslim and anti-Pakistan campaigns so soon after inauguration, an Indian journalist  Pankaj Mishra reminds Indians  in a recent New York Times Op Ed that that "India’s reputation as a “golden bird” flourished during the long centuries when it was allegedly enslaved by Muslims. A range of esteemed scholars — from Sheldon Pollock to Jonardon Ganeri — have demonstrated beyond doubt that this period before British rule witnessed some of the greatest achievements in Indian philosophy, literature, music, painting and architecture".

It's time for Mr. Modi to shun his bellicose rhetoric (boli nahee goli--India's guns will do the talking) against Pakistan and focus on much more important issues of deep deprivation of his people.

Here's a video on Grinding Poverty in Resurgent India:

Haq's Musings Grinding Poverty in Resurgent India by faizanmaqsood1010
http://youtu.be/84-Qz4vFVHs



Related Links:

Haq's Musings

Pakistan Sees Robust Growth in Energy, Autos, Cement and Steel

Depth of Deprivation in India

India Home to World's Largest Population of Poor, Hungry and Illiterates

Grinding Poverty in Resurgent India

An Indian Farmer Commits Suicide Every 30 Minutes

India's Israel Envy: What if Modi Attacks Pakistan?

India Teaching Young Students Akhand Bharat 

Pakistan Army at the Gates of Delhi

Comments

Riaz Haq said…
#BMI Research puts #Pakistan in top "10 emerging markets". Key Growth Drivers: #Auto & #Textiles #Manufacturing Hub http://read.bi/29mmYQT


"Pakistan will develop as manufacturing hub over the coming years, with the textile and automotive sectors posting the fastest growth at the beginning of our forecast period. Domestic manufacturing investment will be boosted by the windfall from lower energy prices compared to the last decade, and improved domestic energy supply."

A new report from BMI Research has identified the "10 emerging markets of the future" — the countries that are set to become new drivers of economic growth over the next 10 years.

BMI estimates that these countries will cumulatively add $4.3 trillion to global GDP by 2025 — roughly the equivalent of Japan's current economy.

In general, manufacturing and construction are the sectors that will drive the economies. BMI reports that new manufacturing hubs are set to emerge in Bangladesh, Myanmar, and Pakistan, and that these countries will see particularly strong growth in exporting manufacturing industries. And construction growth is going to be widespread throughout all the countries — partly to facilitate increases in urban populations and partly to help develop the manufacturing sector.

On the other hand, extractive industries — like mining, oil, and gas — are going to play a far smaller role in driving growth than they have the past 15 years.

While it might provide bright spots for some countries, the report states, "the ubiquitous commodity-driven growth model that was derailed by the 2012-2015 collapse in commodity prices is not coming back."
Riaz Haq said…
Spotlight: Construction of great corridor catapults #Pakistan into fast track - Xinhua | #China #CPEC http://news.xinhuanet.com/english/2016-08/01/c_135553346.htm …

With an investment of 46 billion U.S. dollars and scores of infrastructure projects, the ongoing construction of the China-Pakistan Economic Corridor (CPEC) is undoubtedly one of the largest endeavors now taking place on the planet.

Roads, energy projects, industrial parks and the Gwadar port are all included in the basket, satisfying Pakistan's immediate needs as well as helping the south Asian country get back on its feet after years of anti-terror campaigns wrecked its economy.

Three years after the initiative on the construction of CPEC was jointly announced by China and Pakistan, Xinhua has learned that the project is yielding its early fruits as new roads and power plants have put Pakistan's growth in the first gear.

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Located 20 km east of Pakistan's largest city of Karachi, the Bin Qasim power plant is one of the pioneer and flagship projects of CPEC planned to begin operating at the end of next year.

For the coal-fired plant built by PowerChina, the Chinese construction company commissioned to undertake the construction of the project, two 660-megawatt generator units will be installed, which would generate 1,320 megawatts of electricity per year, more than a quarter of the 4,500-5,000 megawatts of power shortage estimated for the year 2012.

"With three more plants like this one, Pakistan would have no more energy woes," said Chen Enping, a manager at PowerChina.

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For Sher Afzart, a shop owner in northern Pakistan's Hunza Valley, the Karakorum Highway is what he owes his livelihood to.

The two-lane highway, originally built by the Chinese in the 1970s and recently renovated by China Road and Bridge Corporation, connects Kashgar, a commercial hub in northwest China's Xinjiang Uigur Autonomous Region, and Pakistan.

Afzart can save days on trips to Kashgar to buy goods as the road cuts through the Karakorum mountains. There is a steady flow of business as thousands of Chinese workers labor around Hunza.

Following the completion of the Karakorum Highway renovation project, more business opportunities are created, Afzart said.

"With the convenience of road traffic, I'm thinking of opening branches in Islamabad and even in cities farther south," he said.

The Karakorum Highway is just one of the roads that falls under CPEC. The M-4 National Motorway, a strategic artery in central Pakistan, is also being paved by the Chinese.

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The Gwadar port, located in the southern coast of Pakistan, is where CPEC meets the Indian ocean. From here resources can commence their journey onto the hinterlands of Pakistan and western China, and Chinese and Pakistani products can be shipped out to every corner of the world.

Viewed from above, the port is like an anchor protruding into the emerald waters, forming two natural bays that are as deep as 14.5 m, making them perfect harbors.

After the CPEC cooperation program was launched in 2013, a plan was developed in the following years to comprehensively transform the fishing town into a modern metropolis complete with industrial zones, a harbor and recreational zones.

Gwadar Port Authority Chairman Dostain Jamaldini has big ambitions for the port, eyeing Dubai, which is just across the Arabian Sea, as a model.

Near future plans for the port area include the construction of a Free Trade Zone, a Special Economic Zone, a coastal expressway, an international airport and a pipeline linking Iran, which are all part of the CPEC plan remodelling the town which will be the hinge of the corridor.

"Pakistan is ready to offer the most generous terms for companies investing in the port," Jamaldini said, "We believe the favorable policies and the superb location of the port will soon attract the interest of investors worldwide."
Riaz Haq said…
Excerpts of World Bank Report "Making Growth Matter" released November, 2016:

http://documents.worldbank.org/curated/en/935241478612633044/pdf/109961-WP-PUBLIC-disclosed-11-9-16-5-pm-Pakistan-Development-Update-Fall-2016-with-compressed-pics.pdf

The government recently set a new national poverty line that identifies 29.5 percent
of Pakistanis as poor (using the latest available data from FY14). By back casting
this line, the poverty rate in FY02 would have been about 64.3 percent. This means
that poverty has more than halved between FY02 and FY14, even according to this
new and higher metric. The new poverty line was introduced in April 2016 precisely
because of Pakistan's success in reducing poverty over the last decade and a half.
Using the old national poverty line, set in 2001, the percentage of people living in
poverty fell from 34.7 percent in FY02 to 9.3 percent in FY14—a fall of more than
75 percent. Other sources of data corroborate this decline—ownership of assets and
dietary diversity also increased over this period. For example, in the bottom income
quintile, motorcycle ownership increased from 2 to 18 percent between FY02 and
FY14. See Section C1.

When poverty declines, it usually coincides with other gains in household welfare.
Throughout the period under review, Pakistan saw substantial gains in welfare,
including the ownership of assets, the quality of housing and an increase in school
enrollment, particularly for girls. First, the ownership of relatively more expensive
assets increased even among the poorest. In the bottom quintile, the ownership of
motorcycles increased from 2 to 18 percent, televisions from 20 to 36 percent and
refrigerators from 5 to 14 percent (see Figure 29). In contrast, there was a decline
in the ownership of cheaper assets like bicycles and radios. Housing quality in the
bottom quintile also showed an improvement. The number of homes constructed
with bricks or blocks increased while mud (katcha) homes decreased. Homes with a
flushing toilet almost doubled in the bottom quintile, from about 24 percent in
FY02 to 49 percent in FY14 (see Figure 30).

Changes in consumption patterns over time were also consistent with the poverty
decline. It is well-known that increases in income are strongly associated with
households spending less of their budget on food, and more on non-food items
(Engel’s law). In Pakistan, the 25 percentage point decline in poverty between FY02
and FY14 was associated with a 10 percentage point reduction in the share of
expenditure devoted to food (see Figure 31).

In Pakistan, the reduction in poverty led to an increase in dietary diversity for all
income groups. For the poorest, the share of expenditure devoted to milk and milk
products, chicken, eggs and fish rose, as did the share devoted to vegetables and
fruits. In contrast, the share of cereals and pulses, which provide the cheapest

calories, declined steadily between FY02 and FY14. Because foods like chicken,
eggs, vegetables, fruits, and milk and milk products are more expensive than cereals
and pulses, and have lower caloric content, this shift in consumption also increased
the amount that people spent per calorie over time (see Table 12). For the poorest
quintile, expenditure per calorie increased by over 18 percent between FY02 and
FY14.

Overall, this analysis confirms that the decline in poverty exhibited by the 2001
poverty line is quite credible, and that Pakistan has done remarkably well overall in
reducing monetary poverty based on the metric it set some 15 years ago.
------

... there is now a considerable body of
research suggesting that the link between food availability and nutritional status is
weak, and is mediated by the ambient disease environment and the quality of water
and sanitation.

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