COMPARITIVE ECONOMIC DEVELOPMENT

 Output per worker in United States is 10 times higher than it is in India.

 Real income per capita in Pakistan is 4,623.
 Life expectancy in United State is 78 and in Pakistan it is 67.27

1. CLASSIFICATION OF THE WORLDS ECONOMY

The most common way to identify and to define the developing world is by its per capita income.
Which is basically the per person income that is generated by dividing the national income with
the total population of that country?

Several international agencies, including the organization for economic cooperation and
development (OECD) (which includes 38 countries for example Germany, France, North
America and japan.They are developed countries that follow capitalism) and the United Nations
offer classifications of countries by their economic status, but the best known system is that of
the international bank for reconstruction and development (IBRD), more known as the world
bank.

The World Bank assigns the world’s economy into four groups:

low income, lower middle income, upper middle income, and higher income countries. These
classifications are updated by the world bank each year on the 1st of July and are based on Gross
National Income (GNI) per capita in the current US$.

The Gross national income (GNI) per capita is the main and the commonly used indicator to
know how well off a country is and where it lands in the four categories.

The 2020 GNI per Capita thresholds are:

 Low income: less than $1,036

 Lower middle income: between $1036 and $4045
 Upper middle income: between $4046 and $12,535
 Higher income: greater than $12,535

There are the World Bank says, two reasons for an economy to be moved between the classified
classifications:

1. One is the change within a country, such as increased or decreased economic growth,
marked shifts in domestic inflation or the exchange rates. The data can also be
influenced by the changes in population, which will change the GNI ratios
 2. Second is the likely cause of a country moving between categories is adjustments to the
thresholds.
3. The bank also takes into account the geography, lending eligibility and fragility of an
economy.

TRANSITION ECONOMY:

A transition economy is one that is changing from central planning to free markets (LAISES
FAIR). Since the collapse of communism in the late 1980s, countries of the former Soviet
Union, and its satellite states, including Poland, Hungary, and Bulgaria, sought to embrace
market capitalism and abandon central planning. E:g Georgia, Tajikistan.

2. CLASSIFICATION OF NATIONS BY INDEBTEDNESS

Indebtedness means the state of owing MONEY from international agencies such as World
Bank.

World bank classified countries in three categories:

 Severely indebted
 Moderately indebted
 Less indebted

Pakistan has already entered a sovereign debt "danger zone" with total liabilities and debts
of $294 billion representing 109 per cent as a percentage of GDP as of 30 December 2020 With
the fresh addition from fiscal year 2018-19 to 2020-21, the total public debt as of June 30, 2021
increased to Rs39. 9 trillion or 83.5% of the gross domestic product (GDP), the central bank
reported. However, in terms of the size of economy, the ratio was 4.1% less than the preceding
fiscal year 2019-20. One of the main reasons of indebtedness is political instability i.e weak
institutions.

3. CLASSIFICATION IF LEAST DEVELEPED CONTRIES BY

UNITED NATION:
 Low income
 Low human capital
 High economic vulnerability
PAKISTAN:

 In-equality in PAKISTAN:
The NHDR 2020 divides income distribution into four periods. A value of 0 percent represents perfect
equality, while 100 percent represents the total concentration of income. Pakistan has a Gini coefficient of
30 percent, signalling low inequality overall.

The three Ps of inequality: Power, People, and Policy

The Pakistan NHDR 2020 is titled ‘The three Ps of inequality: Power, People, and Policy’.
These foundational concepts are strongly intertwined with the theme of inequality, and form
the main thrust of the NHDR 2020.

·       Power refers to privileged groups that make use of loopholes, networks, and policies
for their benefit.

·       People refers to the deeply embedded belief systems that encourage bias against

social identities like race, gender, religion, or caste, among others.

·       Policy speaks to the systems and strategies that are either ineffective, or at odds with
the principles of social justice.

The report focuses not only on inequality of income, but also on inequality of opportunity in
terms of access to services, work with dignity, accessibility, and more. The report has
undertaken exhaustive statistical analysis at national and provincial levels, and includes new
inequality indices for child development, youth, labour and gender. Qualitative research,
through focus groups with marginalized communities, has also been undertaken, and the
NHDR 2020 Inequality Perception Survey conducted. The NHDR 2020 has been guided by a
diverse panel of Advisory Council members, including policy makers, development
practitioners, academics, and UN representatives.

What are the negative effects of inequality?

At a microeconomic level, inequality increases ill health and health spending and reduces the
educational performance of the poor. These two factors lead to a reduction in the productive
potential of the work force. At a macroeconomic level, inequality can be a brake on growth and
can lead to instability.
Is economic inequality among the key domestic challenges of Pakistan? What are
the most prominent manifestations of inequality and their historical context?

Yes, economic inequality and its reduction is one of the major challenges of Pakistan. The
widening gap between the rich and poor has largely excluded the poor from the benefit of
growth. The most prominent manifestation of inequality in Pakistan, a country where the share of
rural population is as high 64 per cent, is in the distribution of farm land among rural households.

The top one per cent of farmers own as much as 20 per cent of the farm area. The top 20 per cent
own 69 per cent. At the bottom end, a small farmer has only 0.3 hectare on average. The
allocation of land dates back to the days of British Raj when large tracts of land were given to
the feudal class so that they could aid in the recruitment of sepoys for the colonial army in India
and for collection of land revenues. Post-independence land reform efforts have largely been
foiled.

The main factor behind the rising gap between the rich and the poor is the state capture by the
elites. The powerful groups are the feudal lords, the military establishment, urban property
owners and real estate developers, large domestic traders, share holders of large corporations etc.
The vested interests have obtained wide-ranging tax exemptions and concessions, privileged
access to public resources, service and bank credits, and minimal control by regulatory agencies.

In your opinion, how is disparity of income affecting the socio-political situation

in the country? 

The large and growing disparity in income is affecting the socio-political situation in a number
of ways. First, Pakistan is undergoing a youth bulge, but the economy is unable to create enough
jobs for the large number of youth entering the labor force annually. Over one-third of the male
youth is either unemployed or idle. These youth are vulnerable to the appeal of religious
extremism, crime and violence.

Second, there are large disparities at the regional level in Pakistan. The least developed province
is Balochistan. There is a sense of deprivation and alienation among the people of Balochistan,
leading to insurgent and separatist tendencies from the Federation of Pakistan, despite recent
efforts at fiscal equalization.

What is your take on the current debates on global inequality across and within
countries and its relevance to Pakistan?

There is need to focus on the role and emergence of the middle class in Pakistan, which can play
an affective role in promoting social and political change, as has been the case in many countries.
It can also act as a counter to elite capture of state resources.

Unfortunately, the middle class is shrinking in Pakistan. Based on the standard definition, the
share of the population in the middle class has fallen from 43 per cent to 32 per cent in the last
two decades. One of the major reasons for this is the rising unemployment among educated
workers, partly due to a decline in value added exports of Pakistan caused by the increasing
competitive pressures in a rapid process of globalization.

 Poverty line in PAKISTAN:

The World Bank (WB) has estimated that poverty in Pakistan has increased from 4.4 per cent
to 5.4 per cent in 2020, as over 2 million people have fallen below the poverty line. Using the
lower-middle-income poverty rate, the WB estimated that the poverty ratio in Pakistan stood at
39.3 per cent in 2020-21 and is projected to remain at 39.2 per cent in 2021-22 and might come
down to 37.9 per cent by 2022-23, reported The News. Pakistan's economy has been growing
slowly over the past two decades. The annual per capita growth has averaged only two per cent,
less than half of the South Asia average, partly due to inconsistent macroeconomic policies and
an under-reliance on investment and exports to drive economic growth, reported the Pakistani
daily.

The sectors in Pakistan that employ the poorest, such as agriculture, are expected to remain
weak, and therefore poverty is likely to remain high, said the WB. The current account deficit is
also projected to narrow to 0.8 per cent of GDP in FY21, as a wider trade deficit is offset by
stronger remittances inflows.

Pakistan’s poverty rate has decreased in recent years. However, the country’s current economic
crisis, mixed with its fight against the COVID-19 pandemic, has put many Pakistani citizens out
of jobs. This has further increased the poverty rate. The government of Pakistan is doing its best
to fight both the COVID-19 pandemic and poverty in Pakistan. So far the government has
provided many social welfare programs at a scale that they have never done in history until now.
There is much more to do in order for the country to defeat poverty.

 Population growth in Pakistan:

Pakistan is sixth largest country with respect to population. According to survey of 1994, it is
estimated that Pakistan will be the 3rd largest country with respect to population by the year
2050. Pakistan, with an estimated increase of 2% a year, is seeing its population growing at a rate
twice as high as those of Bangladesh and India. These numbers mean that for Pakistan such a
large and young population could become either a burden or an asset. To be the latter, public
policy must be designed in a way that the youth could add to the country’s economic strength.

Another Problem which Pakistan is facing is the high fertility rates. There is a huge difference
between the birth rate and the death rate in Pakistan. The resources in Pakistan are inadequate to
meet the needs of the people which include health services, education and employment. There is
a high unemployment rate in Pakistan due to shortage of jobs.. Labor force is continuously
growing. According to a study by Rashid Amjad, Pakistan need to create 2.3 jobs every minute
to provide employment opportunities to the people of Pakistan.

The education level of Females in Pakistan is very low. We need to improve the status of
women in our society to decrease the population growth. 20% of the Pakistan
Population are females. If women are educated and skilled, they can help in increasing
the household income and will therefore increase the living standard of the people. In
Pakistan, Women are married in the age of 15-19 which is also the cause of increase
Population growth. These women should be educated and aware of the fact that
marriage at the early age decreases the economic development of the country.

Pakistan should focus on Population control in order to provide basic resources to the
people. Huge Population is always a burden on the economy of developing countries.
Decrease in Population growth will cause increase in economic development and will
bring economic prosperity in Pakistan.

Reasons of Population growth in Pakistan

There are many reasons for the growth of Population in Pakistan. They are:

 High Fertility Rate

 High Mortality Rate
 Lack of Birth Control
 Illiteracy and Lack of Awareness
 Migration from other countries
 Inadequate Government Policy to control growth of Population
 Poor Family Planning Program
 Early Marriage of Females
 Cultural and Religious Factor

Among many reasons, high fertility rate is one of the most major and important cause which
contribute to high population growth of Pakistan. High fertility of 6.7 % causes increase in birth
rate. In 1980’s, there were 6-7 children per women at an average but declined to 4-5 children in
1990’s. Pakistan is in a very temperate zone which causes the people to be more fertile. Another
reason of increase in Population growth is the high mortality rate. There was a decline in death
rate of people of Pakistan. This is due to advancement in medical field. Highly advance hospitals
have been opened for increasing the health of a common man. However, such facilities are not
available in rural areas of Pakistan. The difference between the birth rate and death rate has been
widened in past years which are a major contributor in Population growth rate. People are not
taking positive steps for birth control. This is due to lack of awareness among people especially
in rural areas. People are not aware of the consequences of over population in a country.
Illiteracy is also the major contributor of population growth in Pakistan. Illiteracy rate of
Pakistan is 45 % out which 33% is contributed by women. Government should promote
education especially in rural areas of Pakistan. Education will make the women of rural areas to
learn the negative effects of over population.

Effects of Population Growth

 Population growth has many effects to the economy of Pakistan. They are as
follows:
 When the population increases, it directly effects the consumption of that
particular country this effect decreases the GDP and GNP of that particular
country and also increases the imports. All these effects are negative
symptoms for the economy and economic development.
 More population guarantees more consumption. This leads to misuse or
overuse of natural resources.
 Increase in population growth leads to decrease in man to land ratio. In the
result, land become inelastic and one cannot increase the amount or supply
of land
 Excessive population has a negative impact on the per capita income as the
population growth does not matches the labor force.
 The population and employment have a direct relationship. So due to this
unemployment occur when increase in population because of shortage of
jobs. Labor supply increases and labor demand decreases.

It is important for any developing country to control its population growth in order to grow
and prosper. The resources of the developing country are very scarce and it is difficult to
meet the needs of every individual living in developing countries. There are many problems
which may occur if population is not controlled by the respective Government.

 Life expectancy in Pakistan:

In 2020, life expectancy at birth for Pakistan was 67.43 years. Life expectancy at birth of
Pakistan increased from 53.19 years in 1971 to 67.43 years in 2020 growing at an average
annual rate of 0.49%.
Why life expectancy is low in Pakistan?
The five main causes of premature death in the country are coronary artery disease,
neonatal encephalopathy (among infants), diarrheal diseases, infections of the lower
respiratory tract, and premature birth.

 HDI ranking of Pakistan:

 Pakistan's ranking on Human Development Index (HDI) fell two notches and stood at 154th
position in accordance with the 2020 report out of total 189 countries.

Pakistan's HDI value for 2019 is 0.557— which put the country in the medium human
development category—positioning it at 154 out of 189 countries and territories.