World Bank’s latest report suggests that with sustained economic reforms, Pakistan can become a two-trillion-dollar economy in the next 28 years i.e. when Pakistan is 100 years old.
While sharing the main findings of the report, World Bank (WB) Country Director Patchamuthu Illangovan, said that currently, the country’s economy stands at $275 billion; but it may jack up to $2000 billion if Pakistan manages steadfast reforms in the coming decades with control on its birthrate.
“The $2 trillion economy means an upper middle-income country where per capita income will be $5,702, but it will have to halve its population growth rate to 1.2% by 2047,” he added.
WB country director also maintained that with the usual business, the size of Pakistan’s economy will be only $1 trillion ($2110 per capita income). The country’s population will also rise to 376 million at the current growth rate by 2047, he added.
Following are the factors that, according to the World Bank report titled ‘[email protected]: Shaping the Future,’ may put Pakistan among the Upper-Middle-Income Countries by 2047, when it turns 100 years old.
A $2 Trillion Economy?
The international lending bank has articulated the reforms Pakistan requires to accelerate and sustain growth, and boost shared prosperity for all.
Invest in Human Capital
The WB argues that Pakistan’s greatest asset is its young and growing population of 208 million. The report highlights that the country can invest in its young generations, especially in the children by giving them, medical attention, an improved education system, and higher wages to increase their productivity.
Pakistan is currently the second fastest growing country in Asia, after Afghanistan, with a birthrate of 3.7 which poses a threat to overwhelm education and health services that are already overstressed. To implement the recommended reforms, it needs to drop down to 1.2 by 2047.
Child Development Program:
The country needs to improve its health facilities, especially for pregnant women, newborn and infants including immunizations, deworming and malnutrition treatment.
Country’s economy heavily depends upon the investment from both the private and public sectors. The direct foreign investment is also a critical factor in the economic growth of any country.
Ease of Doing Business:
Currently, investors in Pakistan go through 10 procedures to start a business, which is why Pakistan ranks at 136th in Doing Business Rankings. According to the WB report, it needs to come down to 25th place in the next three decades to meet the target.
For this purpose, Pakistan needs to simplify the regulatory procedure by introducing a paperless online approval and web-based regulatory governance.
Moreover, the country needs to provide a level playing field for all enterprises (small and large) to get the maximum benefits. A friendly business environment for SMEs (small and medium enterprises) is necessary to boost the middle and upper middle-class.
Pakistan’s trade only contributes 26 percent to the country’s GDP. This is in contrast to an average of 47 percent among the Upper-Middle-Income Countries.
As the country’s trade stood only at $18 billion in 2017, it has to grow more than three folds to $58 billion by 2047.
To achieve this target, Pakistan needs to liberalize the trade. It may adopt a transparent and straightforward tariff structure to start with and introduce duty exemption schemes to facilitate the traders.
The country also needs normalized relations with the South Asian countries including India.
Physical Capital Accumulation
History divulges that four influential factors have controlled the country’s policies. The industrialists and landowners are the ones who have always used their influence to oppose reforms that could have enhanced tax-revenue collection from agriculture and the private sector.
To make Pakistan a trillion-dollar economy, the tax net needs to broaden significantly. As of now, the country’s tax revenue is the only 13 percent of its GDP. It needs to touch the 20 percent mark to bring Pakistan among the Upper-Middle-Income Countries which average 21%.
To achieve this target, the government needs to broaden its tax net to agriculture and other tax-exempted sectors as well. It also requires an overhaul of the tax-collecting department and efficiently identify the non-filers, track & trace in high-risk sectors and improve the tax administration. The tax policies should also be revised to bring in better federal-provincial integration.
Protect the Environment
[email protected] strongly suggests a sustainable environment for a sustained economy. This is only possible when the natural resources like water are justly utilized.
The industrialists and the landowners use a lion’s share of water in the country. These influential factions use water for commercial purposes and control the policies for water pricing – the reason why Pakistan’s water productivity still reels at $1 per cubic meter in comparison to East Asian and Pacific countries average of $17.
The country needs to take steps to regulate water pricing for commercial usage and encourage the water saving by cautious usage and dams.
Good governance is one which has transparency in its affairs and is open for accountability.
In contradiction with the past, the future governments need to provide transparent access to the public towards the accessible information on budget documents, audit reports of State-Owned Enterprises and details of public spending, etc.
At first, the country demands a robust Local Government System to devolve the administrative autonomy, finances & expenditure responsibilities. When the power reaches to the masses (where it belongs), the service providers, the politicians, public officials, and the policymakers may be held responsible for not delivering to their promises and for not meeting the public expectations.
The incumbent PTI government and the governments to follow must follow the recommendations laid by the Washington-based lending agency to become a stable economic power- as the decisions over the next decade will determine the future of Pakistan in coming decades.
Via: World Bank