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World Bank lauds Pakistan’s poverty reduction efforts

October 19, 2006

WASHINGTON, Oct 18: Preliminary estimates released on Wednesday by the World Bank show that Pakistan’s poverty rate declined by 5 percentage points in the first half of this decade.

The bank’s World Development Report for 2007 also praises Pakistan as “one of the top 10 global reformers” last year.

In a separate report titled, “Can South Asia End Poverty in a Generation?, the bank notes that due to recent economic growth, there’s more political will and extra money available to tackle key obstacles to eradicating poverty in Pakistan and other South Asian countries.

The bank points out that South Asia has an estimated 400 million young people aged 12 to 24, or about 30 per cent of all youth in developing countries. The expected increase in working age population offers a tremendous opportunity for economic growth in South Asia, provided the greater labour supply is productively employed, and that saving and investment increase.

Economic growth has made it possible for South Asian countries, including Pakistan, to pursue “second-generation” reforms, such as the privatisation of public enterprises, deregulation of industries and financial sector reforms.

While they are politically much more sensitive, these reforms are also more feasible when GDP is growing at 6 per cent a year. First, some of the growth is the result of partial progress on these reforms.

Pakistan, for example, has privatised most of its banking sector, “with impressive early results.”

Thanks to economic reforms, especially trade reforms, South Asian countries have improved the efficiency of their economies … all these countries experienced an increase in TFP (total factory productivity) growth, and in TFP’s contribution to overall growth in the decade following reform.

Between 1968 and 2001, manufacturing value added increased by a factor of 6 and 7 in India and Pakistan, respectively.

The ratio of exports to GDP in Pakistan, Bangladesh and India, however, remain considerably lower than in Malaysia, Thailand and Korea; in fact they are lower than these East Asian countries’ ratios in the 1960s.

Thirdly, a significant feature of the leading East Asian economies such as China, Malaysia and Thailand is the speed with which they have moved up the technological frontier. Increasingly, their exports consist of products embodying high technology. In India and Pakistan, on the other hand, high technology intensity products are still a small share of manufactured exports.