Last week, the Asian Development Bank released the Asian Development Outlook 2007 report.
The report mentions the buoyant growth, improved macroeconomic fundamentals, and strengthened international credit rations as Pakistan economy’s hallmarks.
…in recent years, the Government’s strong macroeconomic policies, high growth rates, increases in pro-poor spending, and burgeoning workers’ remittances have all contributed to a steep decline in the incidence of poverty and the unemployment rate.
Further,
according to official statistics, the proportion of the population living below the poverty line fell sharply from 34.5% in FY2001 to 23.9% in FY2005; in absolute terms, the number of poor people fell from 49 million to 37 million. The unemployment rate declined from 7.7% in FY2004 to 6.2% in FY2006.
Nontheless, the issue of human capital development, due to high population growth, remains a major structural challenge facing Pakistan in light these economic gains.
…despite the recent rise in pro-poor spending, historical underinvestment in human capital has critical implications for growth and competitiveness. Public spending on education was only 2.0% of GDP in 2004, compared with 6.0% in Malaysia, 4.0% in Thailand, and 3.0% in the People Republic of China and India. Unsurprisingly, the human development index rating was the lowest among these countries as well. The Government has, however, announced its commitment to increasing education expenditures to 4.0% of GDP.
The authors note that the government is tackling some of these structural problems, ” by committing to reform, by strengthening the enabling environment for investment, and by prioritizing resource allocation for infrastructure development and the social sectors.”
Published Date: March 28, 2007