2 e DEVELOPMENT ADVOCATE u s s I , 5 e m u l PAKISTAN o V Inclusive Growth in Pakistan DEVELOPMENT ADVOCATE PAKISTAN © UNDP Pakistan Development Advocate Pakistan provides a platform for the exchange of ideas on key development issues DEVELOPMENT ADVOCATE and challenges in Pakistan. Focusing on a specific development theme in each edition, this quarterly publication fosters public discourse and presents varying perspectives from civil society, academia, PAKISTAN government and development partners. The publication makes an explicit effort to include the voices of women and youth in the ongoing discourse. A combination of analysis and public opinion articles Disclaimer promote and inform debate on development ideas The views expressed here by external contributors or the members of the while presenting up-to-date information. editorial board do not necessarily reflect the official views of the Editorial Board organizations they work for and that of UNDP’s. Mr. Ignacio Artaza Country Director, UNDP Pakistan Editorial Team Maheen Hassan Mr. Hamid Raza Afridi Umer Akhlaq Malik Policy Advisor Embassy of Switzerland Design Hasnat Ahmed Mr. Shakeel Ahmad Assistant Country Director/Chief Printed by: Development Policy Unit, UNDP Pakistan Al-Noor Printers, Islamabad Mr. Aadil Mansoor United Nations Development Programme Pakistan Assistant Country Director/Chief Crisis Prevention and Recovery Unit, UNDP Pakistan 4th Floor, Serena Business Complex, Khayaban-e-Suharwardy, Sector G-5/1, Mr. Kaiser Ishaque P. O. Box 1051, Assistant Country Director/Chief Islamabad, Pakistan Democratic Governance Unit, UNDP Pakistan Mr. Amanullah Khan For contributions and feedback, please write to us at: Assistant Country Director/Chief [email protected] Environment and Climate Change Unit, UNDP Pakistan Ms. Fatimah Inayet ISBN: 978-969-8736-22-7 Communications Analyst, UNDP Pakistan March 2018 CONTENTS 26 Nadeem Javaid Analysis Former Chief Economist Ministry of Planning, Development and Reform 02 Drivers of Inclusive Growth 28 Tahira Raza in Pakistan Former President Dr. Abdul Saboor Et al. and Danish Khan First Women Bank Opinion Youth Voices 12 Economic Corridor Development and 29 Faridun Gogal Multidimensional Poverty in Pakistan Diyar Khan Guntur Sugiyarto & Dewan Mushtaq Imran Khan Aghala Asfand Hiba Qazi Entrepreneurship, Technology and 14 Haider Shahzad Innovation: The State as an Agent of Change Salman Arif Dr. Shaukat Hameed Khan Saima Yousaf Roushen Sabzal 18 Agriculture and the Role of Rural Haybat Ullah Economy for Inclusive Growth Obeida Saniha Nuzhat Ahmad Jaffar Jahangir Safia Sanaullah Aleena Taqee Industrial Policy: 20 Maaman Qadir Challenges and an Opportunity to Promote Inclusive Growth Khyreed Zabeeh Shahid Javed Burki Interviews 23 Dr. Shahbaz Khan Managing Director Khyber Pakhtunkhwa Information Technology Board /undppakistan (KPITB) w us www.twitter.com/undp_pakistan Shandana Humayun Khan Saleem Mandviwalla 25 ollo www wwwPr.pkovincial.undp nominee.org for NFC - Sindh Chief Executive Officer F Rural Support Programmes Network (RSPN) © UNDP Pakistan Editorial Inclusive Growth and Human Development The Pakistan National Human Development Report 2017 points For inclusion, CPEC should make special efforts to connect the towards large disparities in human development across districts and poorest regions / districts to markets. Projects which generate cities of Pakistan. The Human Development Index (HDI) of 0.877 for higher social impact should be prioritized under CPEC. Lahore is on average equal to that for France and Spain. It is higher Supplementary projects such as skills development, infrastructure than the average HDI for Saudi Arabia, United Arab Emirates and connecting poor regions to the main CPEC route, special initiatives many other countries. Lahore and ve other cities of Pakistan fall in to promote women participation in economic activities etc, would the Very High Development Category. make CPEC more inclusive and participatory. On the contrary, 14 districts of Pakistan, mostly in Balochistan, are Besides its economic impact, CPEC’s benets should also be worse than the poorest countries such as Nigeria, South Sudan and evaluated and measured using sustainability indicators. We know others in terms of their HDI values. Similarly, according to the that a large segment of the population, around 60 percent, still rely Pakistan National Human Development Report, the HDI for women on agriculture directly or indirectly. Climate change directly impacts is 25 percent lower than for men. Women labor force participation of agriculture and with it, the lives of around 40 percent of the labor 24.9 percent is the lowest when compared to India, Bangladesh and force who are employed in the agriculture sector. Pakistan is the Sri Lanka. Factoring inequality in human development across seventh most vulnerable country to climate change effects. CPEC regions and using gender as a measure, shows that growth in projects should therefore fully embed environment and climate Pakistan has been less inclusive. change concerns to make the growth process both inclusive and sustainable. There are however huge opportunities for inclusive growth in the country. The burgeoning youth population, if provided skills and Recent research concludes that inequality constraints long-term capacities, will not only drive growth, but their participation will also economic growth. It also suggests that higher the initial level of make it more inclusive for two reasons. First, they constitute the inequality, both income and non-income, the smaller the poverty largest population segment. Second, like women, they have not fully reduction effect of per capita income growth. Economic growth beneted from the growth process thus far. Youth unemployment is which provides opportunities for the inclusion of all segments of higher than the overall unemployment rate in the country. society including poor, women, youth, minorities and other disadvantaged groups as stakeholders, tend to be sustainable in the Innovation in technology and other sectors is creating new avenues long-term. In the context of Pakistan, engaging youth, addressing for growth and livelihoods. Federal and provincial governments regional disparities and capitalizing CPEC are the key opportunities have set up funding windows and incubation facilities to promote for inclusive growth. innovation and entrepreneurship. Some of the startups by young entrepreneurs have generated promising results. Technological It is encouraging to note that human development is high on the innovation if sustained and expanded, can play an important role in government agenda. Regions and districts within Pakistan which are inclusive growth. They will contribute to diversication of the low on human development are also the ones which are poor economy and in creating a knowledge-driven services sector. economically. Connecting them to markets and vitalizing economic growth in these regions will not only make the growth process The China Pakistan Economic Corridor (CPEC) offers another inclusive, but will also accelerate the pace of human development. opportunity for inclusive growth. CPEC projects will undoubtedly help overcome some of the structural bottlenecks to growth in energy and infrastructure sectors. However, CPEC will have a higher balancing impact if it properly integrates inclusion and sustainability concerns. 01 Analysis Drivers of Inclusive Growth in Pakistan Note: Main Analysis has been written in collaboration with Dr. Abdul Saboor (Dean, Faculty of Social Sciences) and his team (Saira Saeed, Sidra Nazir, Hassan Shehzad, Imran Ahmed Rao, Khawar Hassan and Qasim Raza) at the PMAS Arid Agriculture University, Rawalpindi, and Danish Khan (Ph.D. candidate, Economics-University of Massachusetts). Introduction to raise productivity.” inequality is not favorable to either economic growth or reducing poverty. The Pakistan is confronting the formidable The United Nations Development goal of SDGs by 2030 is zero poverty.⁴ This challenge of economic growth, which is Programme (UNDP) denes inclusive goal will be extremely difficult to achieve neither sustainable nor inclusive. This is in growth as both an outcome and a process. owing to perpetuating income inequality. part due to the skewed pattern of It ensures that everyone can participate in resources, particularly land, and in part due the growth process and equitably share the to the lack of distributive public policies. benets. Likewise, the Organization for Poverty, Growth and Despite being the 26th largest economy in Economic Co-operation and Development Inequality Nexus the world, Pakistan ranks at 147 on the (OECD) denes it as, “…sharing of the Economic growth in Pakistan has been Human Development Index (HDI). This income but also equal distribution of the quite erratic and so has been its implica- discrepancy in terms of Pakistan’s size of income generating from economic tions on poverty and inequality. Over the economy and its performance on the HDI is growth.” period of time, the services sector (from 38 revealing. Its performance on important percent in 1960 to 53.09 percent in 2017) social indicators is signicantly below as There may be a variety of drivers for has replaced agriculture (from 44 percent in compared to its income level. The HDI catalyzing the ongoing growth and 1960 to 22.88 percent in 2017) as the key illustrates that contemporary economic ensuring that it is pro-poor. These drivers driver of economic growth. Table 1 depicts development in