Research and Development Department Lahore Chamber of Commerce and Industry
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Research and Development Department Lahore Chamber of Commerce and Industry THE SIZE AND GROWTH OF LAHORE Copyright© by Lahore Chamber of Commerce and Industry No part of this report may be published without permission Published by Lahore Chamber of Commerce and Industry Printed by Cross Media [email protected] | www.crossmediasite.com +92 (42) 3668 6606 | +92 (333) 450 1684 THE SIZE AND GROWTH OF LAHORE President’s Message The Size and Growth of the Economy of Lahore It is a matter of immense pride for me to present before you the much awaited report “The Size and Growth of the Economy of Lahore”. Lahore holds paramount importance for the economy of Pakistan and it is the main contributor of economic growth. The GDP growth of Lahore Mr. Abdul Basit contributes to the GDP growth of Punjab which in-turn being the largest province contributes to the GDP growth of Pakistan. These facts can be corroborated by looking at the average annual GDP growth rate of Lahore from 2010-11 to 2014-15 i.e. 6.7%. This was higher than the growth rate of Punjab (5.0%) which was in turn higher than the growth of Pakistan (3.9%). Since the Government statistical agencies that are responsible for the compilation of income accounts do not produce city-wise data, there was a dire need to assess the economic contribution of the city of Lahore. The calculation of the GDP of Lahore and other dynamics about the structure of the city’s economy in this report would help the Government to transform the city into an engine of economic growth. It would help the Government in managing the city’s infrastructure, consumption, services, investment and environment. I sincerely hope that this commendable effort of the Director Research and Development Department of LCCI would go a long way in promoting trade, investment and tourism in this magnificent city. Furthermore, I hope that it would encourage other Chambers of Commerce in the country to undertake similar studies about the economy of their cities, paving the way for economic development of the country. 2 THE SIZE AND GROWTH OF LAHORE Message from Senior Vice President This publica�on on the “Size and Growth of the Economy of Lahore” by the Director Research and Development Department of Lahore Chamber of Commerce and Industry is a commendable effort to apprise the worthy members about the structure of Lahore’s economy and dynamics of its growth. The calculation of Lahore’s GDP is impera�ve as the city is included in the emerging 400 middle weight ci�es that will contribute 35% of the global GDP Amjad Ali Jawa growth by 2025. I hope this publica�on will pave the way for the members of LCCI to reap economic benefits from the emerging trends in the economy of the city Vice President’s Message Although the economy of Pakistan is growing at a steady rate but a lot of progress s�ll needs to be made in enhancing the exports and a�rac�ng sizeable foreign investment in the country. Lahore can be an effec�ve catalyst in s�mula�ng exports and investment in the country as the share of Lahore in Pakistan’s Electricity, Gas Distribu�on and Water Supply Value Added was 8.3% in 2014-15 as compared to 15% in 2010-11. Although a considerable amount of Muhammad Nasir Hameed Khan economic data is available at the country level, there is a need to dissect the economy and analyze the city-wise contribu�ons to the income accounts. This report is an important step in this regard as it would help the policy makers in iden�fying the areas in Lahore’s economy that are lagging behind and plugging the loopholes in the structure of the city’s economy and enhance its contribu�on to the na�onal economy in terms of exports and investment. 3 THE SIZE AND GROWTH OF LAHORE Convener’s Message Standing Commi�ee (Research and Development) This research report whose main objec�ve is to ascertain Lahore’s contribu�on in the na�onal economy is the first of its kind and helps to answer some key Almas Hyder ques�ons regarding the city’s economy. The foremost contribu�on of this report is that in addi�on to the calcula�on of GDP, it will help to iden�fy the sectors of Lahore’s economy that have performed be�er than the na�onal economy and the ones which are lagging behind. As a result it will help to determine if Lahore is leading the provincial economy in the growth process. The report highlights that the commodity producing sector of manufacturing has shown low average annual growth rate (5.4%) from 2010- 11 to 2014-15 as most of the growth in Lahore in this period has been driven by the services sector (7.7%). It is a cause of concern as Lahore’s Industrial sector depends mostly on manufacturing (73.4% share in Industrial Sector) followed by construc�on (share of 18.2% in Industrial Sector). This also has serious policy implica�ons for the Government as it needs to devise an industrial policy which can s�mulate growth in the manufacturing sector of the city. Similarly, as implied in the report, Government needs a strategy to address the issue of low growth in wholesale and retail sector of the city. Lastly, I would like to congratulate the Director Research and Development Department on this tremendous effort and hope that this report would be updated on regular basis 4 THE SIZE AND GROWTH OF LAHORE Preface In Pakistan, the size of the na�onal economy is officially measured by the Federal Bureau of Sta�s�cs. In today's fast changing world, ci�es compete with each other for a�rac�ng business. They are the level at which the ease of doing business is judged. This makes the measurement of the size of the economy of ci�es extremely important. In this document, the Lahore Chamber of Commerce and Industry has taken the lead to ascertain the GDP of Lahore. The just published results of Census 2017 suggest how important it has become to study city economies in their own right. Lahore remains, as it was in the Census 1998, the second largest city of Pakistan. More important, it is the only city of Pakistan whose popula�on has more than doubled in the intercensal period, from 5,143,495 to 11,126,285. With an urban popula�on growth of 4.02 per cent, the Lahore district is now 99 per cent urban. This, among other things, explains the predominance of the services sector shown in our study. During the exercise, we faced all the difficul�es that any pioneering research effort faces. a number of these difficul�es were sorted out with the valuable assistance provided by a young and buddying researcher Wasim Salem, a PhD candidate at the Pakistan Ins�tute of Development Economics, Islamabad. Discussions with Dr Pervez Tahir, former Chief Economist of Pakistan, were helpful in clarifying a number of kno�y issues of na�onal accoun�ng. The study was peer-reviewed by two eminent researchers, Dr Sarmad Kawaja and Dr Qaiser Bengali. The contribu�on by them is gratefully acknowledged. The original inspira�on for this research comes from the works of Dr Hafiz A. Pasha. We owe a debt of gra�tude to all of them. But for the encouragement provided by the leadership of the LCCI, this study would not have seen the light of the day. Needless to say, the responsibility for the views expressed here is en�rely that of the author. Nadia Tahir PhD (GCUL), Postdoc (Cambridge) Director Research and Development 5 THE SIZE AND GROWTH OF LAHORE Contents President’s Message 2 Message from Senior Vice President 3 Vice President’s Message 3 Convener’s Message 4 Preface 5 List of Acronyms 7 Overview 8 Chapter 1: Introduction 12 Chapter 2: The Size of the Economy of Lahore 18 Chapter 3: Economic Growth of Lahore and Punjab 32 References 37 Technical Annexure 40 Statistical Annexure 58 6 THE SIZE AND GROWTH OF LAHORE List of Abbreviations: ASYB: Agricultural Statistics Year Book ASYBD: Agricultural Statistics Year Book District level BP: Basic Prices CMID: Census of Manufacturing Industry District report FBR: Federal Board of Revenue FBRYB: Federal Board of Revenue Year Book GDP: Gross Domestic Product GRP: Gross Regional Product GVA: Gross Value Added HIES: Household Income and Expenditure Survey HSD: High Speed Diesel IPP: Institute of Public Policy IPR: Institute of Public Reforms LC: Livestock Census data LFS: Labour Force Survey LSM: Large Scale Manufacturing LTU: Large Tax Unit OCAC: Oil Companies Advisory Committee PBS: Pakistan Bureau of Statistics PDS: Pakistan Statistics Department PES: Pakistan Economic Survey POL: Pakistan Oilfield Limited PSLMS: Pakistan Social Living Standard measurement Survey PTA: Pakistan Telecommunication Authority RTO: Regional Tax Office SBP: State Bank of Pakistan SSM: Small Scale Manufacturing 7 THE SIZE AND GROWTH OF LAHORE Overview The size and growth of an economy is measured by estimating its Gross Domestic Product (GDP). This can be the global economy, national economy or sub-national economy. Provinces, regions and cities fall in the sub-national category. In Pakistan, the national GDP has been estimated officially since the 1950s by the Pakistan Bureau of Statistics. Since the 1990s, private researchers and donors have constructed provincial GDPs. Lahore is included in the emerging 440 middleweight cities that will contribute 35 per cent of global GDP growth by 2025.1 To transform from projected to real engines of growth, these cities will have to effectively manage their environment, infrastructure, investment, consumption and services to be able to compete and forge ahead.