Sunday, November 25, 2012

Pakistan Offers Higher Economic Mobility Than US, China

A 2012 study of 22 nations conducted by Prof Miles Corak for the Organization for Economic Cooperation and Development (OECD) has found income heritability to be greater in the United States, the United Kingdom, Italy, China and 5 other countries than in Pakistan.

The study's findings, presented by the author in testimony to the US Senate Finance Committee on July 6, 2012, rely on the computation of "inter-generational earnings elasticity" which the author explains as follows:


"(It) is the percentage difference in earnings in the child’s generation associated with the percentage difference in the parental generation. For example, an intergenerational elasticity in earnings of 0.6 tells us that if one father makes 100% more than another then the son of the high income father will, as an adult, earn 60% more than the son of the relatively lower income father. An elasticity of 0.2 says this 100% difference between the fathers would only lead to a 20% difference between the sons. A lower elasticity means a society with more mobility."

Intergenerational Mobility in Pakistan:

Corak calculates that the intergenerational earnings elasticity in Pakistan is 0.46, the same as in Switzerland. It means that a difference of 100%  between the incomes of a rich father and a poor father is reduced to 46% difference between their sons' incomes. Among the 22 countries studied, Peru, China and Brazil have the lowest economic mobility with inter-generational elasticity of 0.67, 0.60 and 0.58 respectively. The highest economic mobility is offered by Denmark (0.15), Norway (0.17) and Finland (0.18).


The author also looked at Gini coefficient of each country and found reasonably good correlation between Gini and intergenerational income elasticity.

 In addition to Corak, there are other reports which confirm that Pakistan has continued to offer  significant upward economic and social mobility to its citizens over the last two decades. Since 1990, Pakistan's middle class had expanded by 36.5% and India's by only 12.8%, according to an ADB report titled "Asia's Emerging Middle Class: Past, Present And Future".

 More evidence of upward mobility is offered by recent Euromonitor market research indicating that Pakistanis are seeing rising disposable incomes. It says that there were 1.8 million Pakistani households (7.55% of all households) and 7.9 million Indian households (3.61% of all households) in 2009 with disposable incomes of $10,001 or more. This translates into 282% increase (vs 232% in India) from 1995-2009 in households with disposable incomes of $10,001 or more. Consumer spending in Pakistan has increased at a 26 percent average pace the past three years, compared with 7.7 percent for Asia, according to Bloomberg.

Mobility Drivers:

The study identified three key drivers of inter-generational mobility: Family, Labor Market and State.

The biggest difference the family makes is in terms of education and training of the children. Growing labor market is important for the availability of better paying jobs, and the state matters because its policies influence access to education and growth of economic opportunities. For Pakistanis, the weakest link here has been the state which has failed to adequately fund education and facilitate economic growth through infrastructure investments. The private sector, the civil society and the international community have, however, stepped in to at least partially compensate for some of the most serious shortcomings of the state.   

Education:

Pakistani parents are taking education more and more seriously and enrolling their children at all levels. According to Harvard University researchers Robert Barro and Jhong-Wa Lee, Pakistan has been increasing enrollment of students in schools at a faster rate since 1990 than India. In 1990, there were 66.2% of Pakistanis vs 51.6% of Indians age 15 and above who had no schooling. In 2000, there were 60.2% Pakistanis vs 43% Indians with no schooling. In 2010, Pakistan reduced it to 38% vs India's 32.7%.




As of 2010, there are 380 (vs 327 Indians) out of every 1000 Pakistanis age 15 and above who have never had any formal schooling. Of the remaining 620 (vs 673 Indians) who enrolled in school, 22 (vs 20 Indians) dropped out before finishing primary school, and the remaining 598 (vs 653 Indians) completed it. There are 401 (vs 465 Indians) out of every 1000 Pakistanis who made it to secondary school. 290 (vs 69 Indians) completed secondary school  while 111 (vs. 394 Indians) dropped out. Only 55 (vs 58 Indians)  made it to college out of which 39 (vs 31 Indians) graduated with a degree.

Labor Market:

Pakistan's employment growth has been the highest in South Asia region since 2000, followed by Nepal, Bangladesh, India, and Sri Lanka in that order, according to a recent World Bank report titled "More and Better Jobs in South Asia".



Total employment in South Asia (excluding Afghanistan and Bhutan) rose from 473 million in 2000 to 568 million in 2010, creating an average of just under 800,000 new jobs a month. In all countries except Maldives and Sri Lanka, the largest share of the employed are the low‐end self-employed.



The report says that nearly a third of workers in India and a fifth of workers in Bangladesh and Pakistan are casual laborers. Regular wage and salaried workers represent a fifth or less of total employment.

Analysis of the labor productivity data indicates that growth in TFP (total factor productivity) made a larger relative contribution to the growth of aggregate labor productivity in South Asia during 1980–2008 than did physical and human capital accumulation. In fact, the contribution of TFP growth was higher than in the high‐performing East Asian economies excluding China.

Summary: 

The experience of OECD nations shows that construction of a large and vibrant middle class is an absolutely essential pre-requisite for a prosperous and democratic society.  In spite of all of its current difficulties, Pakistan's middle class is growing as evident from data coming from a variety of sources ranging from ADB and the World Bank to University researchers and Euromonitor consumer research firm.  More enlightened leadership in Islamabad can help accelerate this process by focusing greater attention to raising more revenue and increasing public investment in education, health care and infrastructure.

Related Links:

Haq's Musings

Economic Mobility Across Generations

Upward Social and Economic Mobility in Pakistan

Pakistan GDP Grossly Underestimated, Shares Highly Undervalued

Investment Analysts Bullish on Pakistan

Precise Estimates of Pakistan's Informal Economy

Pak Consumer Boom  Fuels Underground Economy

Rural Consumption Boom in Pakistan

Pakistan's Tax Evasion Fosters Aid Dependence

Poll Finds Pakistanis Happier Than Neighbors

Pakistan's Rural Economy Booming

Pakistan Car Sales Up 61%

Resilient Pakistan Defies Doomsayers

Land For Landless Women in Pakistan

Pakistan's Circular Debt and Load-shedding

Hypermart Pakistan

64 comments:

Mayraj said...

Something is wrong about China, since it was largely resposnible for reduction in poverty amongst developing countries.

"Between 1981 and 2004, the fraction of the population
consuming below this poverty line fell from 65% to 10%, and the absolute number of poor
fell from 652 million to 135 million, a decline of over half a billion people (Figure 0.1). A
fall in the number of poor of this magnitude over such a short period is without historical
precedent. To put this in perspective, the absolute number of poor in the developing world
as a whole declined from 1.5 to 1.0 billion over the same period (World Bank, 2007); in
other words, but for China there would have been no decline in the numbers of poor in the
developing world over the last two decades of the 20th century."
http://siteresources.worldbank.org/CHINAEXTN/Resources/318949-1239096143906/China_PA_Report_March_2009_eng.pdf

Riaz Haq said...

Mayraj: "Something is wrong about China, since it was largely resposnible for reduction in poverty amongst developing countries"

Poverty reduction can happen even as rich-poor disparities grow. Gini coefficient for China remains significantly higher than for Pakistan, and even higher than for US.

Corak calculates that the intergenerational earnings elasticity for China is 0.60, higher than Pakistan's 0.46. It means that a difference of 100% between the incomes of a rich Chinese father and a poor Chinese father is reduced to 60% difference between their sons' incomes.

Riaz Haq said...

Here's an interesting excerpt from a recent paper Viktoria Hnatkovska on Breaking Caste Barriers to Inter-generational Mobility in India:

We fi…nd that intergenerational mobility of SC/STs was lower than that of non-SC/STs at the
beginning of our sample in 1983, but has risen faster than that of non-SC/ST households in both
education attainment rates and wages. The probability of an SC/ST child changing his level of
education attainment relative to the parent was just 42 percent in 1983 but rose sharply to 67
percent by 2004-05. The corresponding probabilities of a change in education attainment for a
non-SC/ST child were 57 percent and 67 percent. Hence, there has been a clear convergence of
intergenerational education mobility rates between SC/STs and non-SC/STs. Moreover, we fi…nd
that the majority of the switches are improvements in education attainments. Correspondingly,
the elasticity of wages of children with respect to the wages of their parent has declined from 0.90
to 0.55 for SC/ST households and from 0.73 to 0.61 for non-SC/ST households, indicating a clear
trend towards convergence in intergenerational income mobility rates.


http://faculty.arts.ubc.ca/vhnatkovska/Research/Intergen_revrev2.pdf

Vishesh said...

Well your title as USUAL is a thorough misfit!

For, this doesn't give you the economic mobility of people as a whole but within the rich poor gap of a country.

Its as if saying that there are 2 people, one earns $10 and the other earns $1, In pak-they both have children and the richer one's child earns earns $7 and the poor one's child earns $2.

In china, The rich one's child earns $50 and the poor ones child earns $15.

Hence according to you, the pak one is glorified when the fact of the matter is pak as a whole has remained poor but in china even though there is a greater relative disparity then poor one still earns 5 times the poor one earns in pak and the rich one earns more than 7 times what the similar one earns in pak.

The fact of the matter is that pak has remained poor and due to that disparity has reduced, not because of its progress! On the contrary it is because it has regressed on a comparable term to other countries.

Hence, there is nothing to be proud of!

Riaz Haq said...

Vishesh: "Hence according to you, the pak one is glorified when the fact of the matter is pak as a whole has remained poor but in china even though there is a greater relative disparity then poor one still earns 5 times the poor one earns in pak and the rich one earns more than 7 times what the similar one earns in pak."

It would be correct if the data supported your assertion.

But the data shows otherwise. Here's an excerpt from my post:

"More evidence of upward mobility is offered by recent Euromonitor market research indicating that Pakistanis are seeing rising disposable incomes. It says that there were 1.8 million Pakistani households (7.55% of all households) and 7.9 million Indian households (3.61% of all households) in 2009 with disposable incomes of $10,001 or more. This translates into 282% increase (vs 232% in India) from 1995-2009 in households with disposable incomes of $10,001 or more.

Consumer spending in Pakistan has increased at a 26 percent average pace the past three years, compared with 7.7 percent for Asia, according to Bloomberg."


HopeWins Junior said...

^^RH: "More evidence of upward mobility is offered by recent Euromonitor market research indicating that Pakistanis are seeing rising disposable incomes. It says that there were 1.8 million Pakistani households (7.55% of all households) and 7.9 million Indian households (3.61% of all households) in 2009 with disposable incomes of $10,001 or more. This translates into 282% increase (vs 232% in India) from 1995-2009 in households with disposable incomes of $10,001 or more...."

----

Dr. Haq,

Please try to be more objective.

The same Euromonitor report shows on Page 66 that the growth in Gross Earnings Per Capita between 1990 to 2009 was as follows:

Pakistan = 81.5%
India = 177.2%
China = 421.2%

What do you make of that? Please explain.

Thank you.

Riaz Haq said...

HWJ: "The same Euromonitor report shows on Page 66 that the growth in Gross Earnings Per Capita ...What do you make of that? Please explain."

Per capita income growth doesn't increase economic mobility if only the rich and upper middle class mainly benefit from it...which appears to be the case in India ad China.

China's IGEE (inter generational earnings elasticity) is 0.60, according to Corak.

India's IGEL is 0.61 for non-SC/ST households, according to Viktoria Hnatkovska.

http://faculty.arts.ubc.ca/vhnatkovska/Research/Intergen_revrev2.pdf

Anonymous said...

Extending the same example of difference in 2 fathers' earnings of $ 100 getting reduced to a difference of only $ 46 between the earnings of their sons, is there a breakup of this reduction of $64 between the sons' earnings..?? How much of this reduction is driven by the increase in poorer son's income and how much by the decrease in the richer son's income.

Riaz Haq said...

Anon: "Extending the same example of difference in 2 fathers' earnings of $ 100 getting reduced to a difference of only $ 46 between the earnings of their sons, is there a breakup of this reduction of $64 between the sons' earnings..?? How much of this reduction is driven by the increase in poorer son's income and how much by the decrease in the richer son's income."

Corak sees correlation between inter-generational income elasticity and Gini coefficient.

Rising incomes should help both the rich and the poor but the extent of such help depends on how equal the society is in terms of Gini coefficient.

Riaz Haq said...

New York Times' Sabrina Tavernise described the rise of Pakistan's middle class in a story from Pakistani town of Muzaffargarh in the following words:

For years, feudal lords reigned supreme, serving as the police, the judge and the political leader. Plantations had jails, and political seats were practically owned by families.

Instead of midwifing democracy, these aristocrats obstructed it, ignoring the needs of rural Pakistanis, half of whom are still landless and desperately poor more than 60 years after Pakistan became a state.

But changes began to erode the aristocrats’ power. Cities sprouted, with jobs in construction and industry. Large-scale farms eclipsed old-fashioned plantations. Vast hereditary lands splintered among generations of sons, and many aristocratic families left the country for cities, living beyond their means off sales of their remaining lands. Mobile labor has also reduced dependence on aristocratic families.

In Punjab, the country’s most populous province, and its most economically advanced, the number of national lawmakers from feudal families shrank to 25 percent in 2008 from 42 percent in 1970, according to a count conducted by Mubashir Hassan, a former finance minister, and The New York Times.

“Feudals are a dying breed,” said S. Akbar Zaidi, a Karachi-based fellow with the Carnegie Foundation. “They have no power outside the walls of their castles.”


http://www.nytimes.com/2010/08/29/world/asia/29feudal.html?_r=1

Noor said...

Ground realities are just the opposite. Before you trust these figures, graphs, pie charts, etc. I suggest you read a small 'must read' book titled; 'How to Lie with Statistics' by Darrel Huff. You'll learn how we are fed lies and fake and distorted data by governments, corporations and just about everyone.

Also, Check out URL: http://faculty.washington.edu/chudler/stat3.html

Riaz Haq said...

Noor: "Ground realities are just the opposite."

Ground realities show that restaurants and shopping malls in Pakistan are packed and more and more are popping up every day in response to growing demand.

Undeterred by violence and power outages, Pakistanis are buying more of everything from cars and motorcycles and cement to dairy and meat as evident from record sales and profits of companies selling such products.

Farmers are buying tractors as rural areas see a consumption boom. Companies like Nestle, Unilever, Colgate-Palmolive are reporting growing sales in small towns and villages across Pakistan.

It's this reality of the undocumented economy that is not reflected in dismal economic data from govt. Many economists now believe that the govt stats significantly understate Pakistan's GDP.

I suggest you read this piece in Businessweek to get a sense of reality.

http://www.businessweek.com/articles/2012-04-05/the-secret-strength-of-pakistans-economy

Riaz Haq said...

Here's a BR report on new US Ambassador's thoughts about Pakistan:

In the brief few weeks that the new US ambassador Richard Olson has been in Pakistan, he is said to have been struck by the tremendous economic potential Pakistan possesses and by the industriousness and vitality of its people.

According to him, he has also been pleased to see the many ways in which the United States is working with Pakistan to harness this potential to create a brighter economic future for the people of Pakistan. Here are a few examples:

Boosting agricultural output: To generate jobs and higher incomes among the 45 percent of the population employed in agriculture, the United States helped train 14,000 Pakistani farmers to better protect their livestock from disease, improve the quality of their products, and achieve profitable growth. We're also helping to build new irrigation canals that will expand arable land by more than 200,000 acres.

Building roads for greater trade: To connect communities and facilitate trade, the United States is helping to build more than 1,000-km of roads in Fata, Khyber-Pakhtunkhwa, and Balochistan. The Peshawar-Torkham Highway reconstruction is also underway and it will connect Jamrud and Landikotal tehsils in Khyber Agency with the city of Peshawar to foster regional trade for years to come.

Helping businesses bloom: The United States is uniquely placed to support entrepreneurship in Pakistan because, as President Obama said, "innovation is what America has always been about." In September, we launched the Pakistan Private Investment Initiative, a private equity offering designed to help Pakistan's talented entrepreneurs access the capital they need to expand their businesses and create jobs. In October, we organised the "US-Pakistan Business Opportunities Conference" in London to bring together Pakistani and American businesses and bankers to identify new business opportunities.

Promoting trade and investment: The United States is Pakistan's largest export market. Two-way trade between our countries amounted to almost S6 billion in 2011. The US government wants to expand our trade and investment relationship with Pakistan and so do US investors who are attracted to this country's market of 180 million people.


http://www.brecorder.com/business-a-economy/189/1261765/

Shams said...

Pakistan GDP growth - Musharraf era showed 100% end to end, but Zardari still managed a decent 25% end to end between 2009 and 2012

http://www.tradingeconomics.com/pakistan/gdp

HopeWins Junior said...

Dr. Haq,

Your predictions seem to be coming true-- India is now heading inexorably towards a meltdown!

BREAKING NEWS: India facing downgrade to Junk Status....
http://alturl.com/5vtmc

Is this meltdown what you were predicting when you wrote the following?
http://alturl.com/4vrtv
http://alturl.com/gooyg
http://alturl.com/8zfvv
http://alturl.com/ttqr9
http://alturl.com/8o35k

Please comment.

Thank you.

HopeWins Junior said...

@Shams: "Pakistan GDP growth - Musharraf era showed 100% end to end, but Zardari still managed a decent 25% end to end between 2009 and 2012"
http://www.tradingeconomics.com/pakistan/gdp

------

This is not a correct way of looking at things.

Using Nominal GDP in Current US Dollars includes 3 confounding factors:
1) Variable US-Dollar Inflation
2) Changing Differential between PKR Inflation and USD Inflation
3) Fluctuating PKR v/s USD Exchange-rates depending on Reserves

To really compare Musharraf's 1998-2008 reign to Zardari's 2008-Present performance, we must either look at:

(A)GDP in Constant PKR (Local Currency Unit/LCU)-
http://www.tradingeconomics.com/pakistan/gdp-constant-lcu-wb-data.html
http://www.tradingeconomics.com/pakistan/gdp-per-capita-constant-lcu-wb-data.html

--OR--

(B) GDP in PPP-terms in Constant USD-
http://www.tradingeconomics.com/pakistan/gdp-ppp-constant-2005-international-dollar-wb-data.html
http://www.tradingeconomics.com/pakistan/gdp-per-capita-ppp-constant-2005-international-dollar-wb-data.html

From what I am see, both methods show us the same (as expected) 50% REAL GDP growth during Musharraf's 10-year spell from 1998-2008.

As for Zardari, again, both methods show us the same (as expected) 10% REAL GDP growth during the 3 years from 2008-2011.

I will leave you to draw your own conclusions.

Shams said...

@ HWJ I will leave you to draw your own conclusions.


Your calcs re. dollar / rupee parity are wrong. PKR vs. USD was 60 throughout most of Musharraf's time, while it went from 60 to nearly 96 since Zardari took over. In terms of uSD, Pakistan's Real GDP still went up from USD 168B to USD 211B.

Thus, in spite of the over 50% loss of PKR value, the Real GDP still went up 25% in USD. That is remarkable.

Therefore, I think you should check the battery in your calculator. Sometimes calculators do make mistakes when batteries get old.

HopeWins Junior said...

@Shams

As I said, you can believe whatever you want to.

And that includes holding on to the belief that calculators "make mistakes" when their batteries get old.

But here are the data from PPP-GOP itself:
http://www.finance.gov.pk/survey/chapter_12/01-GrowthAndStabilization.pdf

See Fig 1.1 on Page 2 for REAL GDP growth-rates--

Zardari Year 1: 1.7%
Zardari Yeas 2: 3.1%
Zardari Year 3: 3.0%
Zardari Year 4: 3.7%

Even after compounding that adds up to about 11% over 4 years.

But, if you feel very deeply that the REAL GDP has indeed grown by 25% under Zardari-- I will leave you with your beliefs.

Noor said...

Could all this be due to inflation? What crowds at restaurants? May be invisible crowds or may be I need to change my glasses. Even if some are crowded, that's a insignificantly miniscule percentage of the population. Most of the cement is being exported. The stock market is fake and manipulated for the purpose of whitening the black wealth. I keep a day to day tab on the market. The country is going through worst of the poverty since its existence, particularly in Sindh and Baluchistan. Your reference to Business Week only confirms my doubts about the fanciful projection, as most of what I see in the foreign media one has to swallow with a large block of salt.
Government must be very happy with your analysis. I hope I'm wrong but sometimes your blog appears to be the government's mouthpiece.

Riaz Haq said...

Noor: "Could all this be due to inflation? What crowds at restaurants? May be invisible crowds or may be I need to change my glasses. Even if some are crowded, that's a insignificantly miniscule percentage of the population. Most of the cement is being exported. The stock market is fake and manipulated for the purpose of whitening the black wealth...."


Thank you for your comments.

I will humbly suggest that you calmly reflect on the following questions:

1. If the restaurants in Pakistan were not doing brisk business, why would there be so may more of them opening up? And Why would Coke decide to invest another $250 million this year in Pakistan? To lose more money?

2. If the shopping malls and retailers were losing money, why would they be opening more and more of them?

3. Why would Euromonitor, an international market research firm, report that consumer spending in US dollar terms in Pakistan has increased at a 26 percent average pace the past three years, compared with 7.7 percent for Asia?

4. Why would Euromonitor report that Pakistanis are seeing rising disposable incomes?

Why would it say that there were 1.8 million Pakistani households (7.55% of all households) and 7.9 million Indian households (3.61% of all households) in 2009 with disposable incomes of $10,001 or more? (This translates into 282% increase (vs 232% in India) from 1995-2009 in households with disposable incomes of $10,001 or more).

5. Do you know that Pak cement exports are declining and domestic consumption growth is making up for it, according to industry (not government) data?

6. Do you know that it is KSE-100 companies' strong earnings that are driving the market? Ad in spite of the run-up, the shares are still selling at a historic low of just 7 times earnings?

7. Is anyone who says anything positive about Pakistan a government mouthpiece?

8. Do you think it's possible for a significant population of the people to do well in spite of bad government?

9. Do you think Businessweek, an international publication that is very critical of Pak govt performance, is also Pak govt's mouthpiece?

HopeWins Junior said...

Dr. Haq,

I would like to suggest a topic for your next blog article:

"Pakistan Needs to Restructure its Import Mix"

Why? Take a look at Table 8.5 in the appendix of this GOP report:
http://www.finance.gov.pk/survey/chapter_12/08-TradeAndPayments.pdf

At the boom peak in 2005, the proportion of CAPITAL goods was 45% (i.e. 37% + 8%) of total imports, while the proportion of CONSUMER goods was 55% (i.e. 45% + 10%) of total imports.

Since then, however, the proportion of CAPITAL goods has collapse to a meager 30% (i.e. 23% + 7%) of total imports, while the proportion of CONSUMER goods has exploded to a staggering 70% (i.e. 56% + 14%) of total imports in 2012.

As you can see in the tabulated data for all the years between 2005and 2012, this is not a one-time fluctuation. There is a CLEAR TREND towards collapsing proportion of CAPITAL goods and exploding proportion of CONSUMER goods in the import mix.

This is not sustainable. A poor pre-industrial country like ours that hopes to industrialize quickly MUST have a much HIGHER Capital-goods proportion and much LOWER Consumer-goods proportion in our import mix. Otherwise, as I have so often said, we will just keeping eating our seed-corn and there will not be much to harvest in the future. High-mobility will mean nothing if the lack of capital goods traps us in a form of egalitarian perpetual-poverty.

Something to think about.

Thank you.

Anonymous said...

As you can see in the tabulated data for all the years between 2005and 2012, this is not a one-time fluctuation. There is a CLEAR TREND towards collapsing proportion of CAPITAL goods and exploding proportion of CONSUMER goods in the import mix.


depends...

India is more a service export oriented country unless you classify desktop PC s as capital goods...

In addition India is also a net exporter of capital goods it exports massive amounts of equipment to South America and Africa.

HopeWins Junior said...

@Anonymous: "depends...India is more a service export oriented country unless you classify desktop PC s as capital goods...In addition India is also a net exporter of capital goods it exports massive amounts of equipment to South America and Africa."

----

And yet, an average Pakistani eats and dresses better and lives in less crowded and healthier situation than an average Indian.

Unhygenic Open defecation:

India leads the world in open defecation. India(638m) is followed by Indonesia (58m), China (50m), Ethiopia (49m), Pakistan (48m), Nigeria (33m) and Sudan (17m). In terms of percentage of each country's population resorting to the unhygienic practice, Ethiopia tops the list with 60%, followed by India 54%, Nepal 50%, Pakistan 28%, Indonesia 26%, and China 4%.

http://www.riazhaq.com/2011/10/india-leads-world-in-open-defecation.html

Food:

Pakistanis' diet is superior to Indians' diet in terms of nutriti9onal value putting an avg Pakistani in healthy BMI category.

In terms of average BMI (Body Mass Index), Pakistanis and Chinese are at 23, Indians 21 and Bangladeshis 20.5, all within normal range of 18.5 to 24.9. The average values of BMI for Europe, Middle East and North and South America are much higher.

http://www.riazhaq.com/2012/07/world-population-america-significantly.html

At 223 Kg of milk consumption per person in Pakistan which is about the same as the developed world's per capita milk consumption , it is more than twice that of neighboring India's 96 kg per capita

Indians consume only 3.2 Kg of meat per capita, less than one-fifth of Pakistan's 18 Kg. Daal (legumes or pulses) are popular in South Asia as a protein source. Indians consume 11.68 Kg of daal per capita, about twice as much as Pakistan's 6.57 Kg.

Edible oil consumption soars during the holidays as hundreds of millions of people eat sweets and fried foods during the September-December festive season. Pakistanis use about 20 Kg of oil, the per capita amount recommended by the World Health Organization, while Indians consume about 13 Kg per capita.

http://www.riazhaq.com/2012/10/pakistan-among-top-meat-consuming.html

Clothing:

According to The Fiber Report 2009/10, Indians consumed 4.18 million tons of textile fiber while Pakistanis consumed 2.558 million tons.

Assuming a population of 1.2 billion for India and 180 million for Pakistan, the per capita cotton consumption works out to 3.48 Kg in India and 14.2 Kg in Pakistan. If you add polyester fiber, India's per capita consumption of all textile fibers is still 7.5 Kg, less than half of Pakistan's.

http://www.alokind.com/Downloads/Indian%20Textile%20Trade%20-Golden%20Period-%20March%202012.pdf

http://www.oerlikontextile.com/desktopdefault.aspx/tabid-1763/

HopeWins Junior said...

RH: "4. Why would Euromonitor report that Pakistanis are seeing rising disposable incomes?

Why would it say that there were 1.8 million Pakistani households (7.55% of all households) and 7.9 million Indian households (3.61% of all households) in 2009 with disposable incomes of $10,001 or more? (This translates into 282% increase (vs 232% in India) from 1995-2009 in households with disposable incomes of $10,001 or more)."
----

Let us be open. Let us be objective. Let us build a sustainable foundation for our arguments.

According to you, 1.8 Million Pakistani households are 7.55% of all households in our country.
Therefore, there are 13.25 million households in Pakistan.
We know that the population of Pakistan is 185 Million.
Therefore, there are 13 people per household in Pakistan.

Again, according to you, 7.9 Million Indian households are 3.61% of all households in India.
Therefore, there are 219 million households in India.
We know that the population of India is 1210 Million.
Therefore, there are 5.5 people per household in India.

If we use a threshold of 10,000$ for a household of 13 members in Pakistan, then we should adjust it for household size and use a 10,000 X 5.5/13 = 4,250$ threshold for households in India because they have only 5.5 members. Only then we will be able to compare real consumption potential.

So how many Indian households had disposable incomes of $4,251 or more in 2009? Do you have that number? What is the increase in this number over the last 10 or 20 years?

Riaz Haq said...

HWJ: "If we use a threshold of 10,000$ for a household of 13 members in Pakistan, then we should adjust it for household size and use a 10,000 X 5.5/13 = 4,250$ threshold for households in India because they have only 5.5 members."

Nonsense!

I admire your persistence but you are wrong more often than not.

Do the math again.

Pakistan's 1.8 million households being 7.55% works out to about 24 million households in 2009 when Pak population was about 170 million, or a average of 7 persons per household.

For $10,001+ households, this disposable income would be divided among fewer persons, probably 5, since we are talking about higher income households here.

http://www.pbs.gov.pk/sites/default/files/pslm/publications/hies10_11/tables/table01.pdf

Riaz Haq said...

Here's a Bloomberg story titled "Pakistan, Land of Entrepreneurs":

On a warm Sunday morning in November, Arif Habib leaves his posh home near the seafront in southern Karachi and drives across town in a silver Toyota Prado SUV. About half an hour later, he arrives to check up on his latest project: a 2,100-acre residential development at the northern tip of this city of 20 million. He hops out, shakes hands with young company call-center workers who are dressed for a cricket match, and joins them at the edge of the playing field for a traditional Pakistani breakfast of curried chickpeas and semolina pudding. After a quick tour of the construction site, he straps on his leg pads, grabs his bat, and heads onto the field. “The principles of cricket are very effective in business,” says Habib, 59. “The goal is to stay at the wicket, hit the right balls, leave the balls that don’t quite work, and keep an eye on the scoreboard. I feel that my childhood association with cricket has contributed to my success.”

Habib, who started as a stockbroker more than four decades ago, has expanded his Arif Habib Group into a 13-company business that has invested $2 billion in financial services, cement, fertilizer, and steel factories since 2004. His group and a clutch of others have become conglomerates of a kind that went out of fashion in the West but seem suited to the often chaotic conditions in Pakistan. Engro (ENGRO), a maker of fertilizer, has moved into packaged foods and coal mining. Billionaire Mian Muhammad Mansha, one of Pakistan’s richest men, is importing 2,500 milk cows from Australia to start a dairy business after running MCB Bank, Nishat Mills, and D.G. Khan Cement.

These companies have prospered in a country that, since joining the U.S. in the war on terror after Sept. 11, has lost more than 40,000 people to retaliatory bombings by the Taliban. Political violence in Karachi has killed 2,000 Pakistanis this year, and an energy crisis—power outages last as long as 18 hours a day—has led to social unrest. Foreign direct investment declined 24 percent to $244 million in the four months ended Oct. 31, according to the central bank.

At the same time, some 70 million Pakistanis—40 percent of the population—have become middle-class, says Sakib Sherani, chief executive of Macro Economic Insights, a research firm in Islamabad. A boom in agriculture and residential property, as well as jobs in hot sectors such as telecom and media, have helped Pakistanis prosper. “Just go to the malls and see the number of customers who are actually buying in upscale stores and that shows you how robust the demand is,” says Azfer Naseem, head of research for Elixir Securities in Karachi. “Despite the energy crisis, we have growth of 3 percent.”

Sherani of Macro Economic Insights estimates the middle class doubled in size between 2002 and 2012. “Those who understand the difference between the perception of Pakistan and the reality have made a killing,” Habib says. “Foreigners don’t come here, so the field is wide open.” The KSE100, the benchmark index of the Karachi Exchange, has risen elevenfold since mid-2001. Shares in the index are up 43 percent this year alone. Over the past decade, stocks have been buoyed by corporate earnings, which were bolstered in turn by rising consumer spending.
---------
Today, Habib has 11,000 employees and annual revenue of 100 billion rupees. He plans to expand into commodities trading and warehousing. “I’ve created all my wealth in Pakistan and reinvested all of it here,” says Habib, who drives himself to his cricket matches and is never accompanied by security guards. In 1998, when Pakistan’s share index fell to a record low after the government tested nuclear weapons, Habib bought shares even though “people thought I was mad.”...


http://www.businessweek.com/articles/2012-11-29/pakistan-land-of-entrepreneurs

Riaz Haq said...

Here's Daily Times on Mobilink's planned $1 Billion expansion:

A delegation of VimpelCom informed Prime Minister Raja Pervez Ashraf of plans for further investment of $1 billion in Pakistan for the enhancement of Mobilink’s nationwide mobile network. A delegation comprising senior management from VimpelCom, the parent company of Mobilink, called on the prime minister at the Prime Minister House, on Thursday. The delegation was headed by VimpelCom Group CEO Jo Lunder who apprised the prime minister on VimpelCom’s global operations and the significance of the Pakistani market for VimpelCom’s growth strategy. The prime minister also discussed VimpelCom’s outlook on current operating conditions within Pakistan, and was apprised of Mobilink’s existing investment of over $3.9 billion towards consolidating its position in Pakistan’s telecom sector.

http://www.dailytimes.com.pk/default.asp?page=2012\11\30\story_30-11-2012_pg5_2

Mahesh said...

Some other stats from Euromonitor.

Tourism receipts in India in 2011 was $13billion whereas in Pakistan was $250 million - a 52 fold difference!

New car registrations were 2 million for India whereas for Pakistan it was 0.13 million - a 15 fold difference!

Two wheeler production in 2010-2011 for India was 13 million and Pakistan 0.9 million - a 14 fold difference and a good indicator of middle class spending!

Of all the talk, how come you seem not to repeat and state the mother of all figures the HDI - which Pakistan has consistently lag behind India!

Now if it makes Pakistan better by beating India down with your selective stats - then all the power to you!

HopeWins Junior said...

^^^^@Mahesh
Some other stats from Euromonitor.

Tourism receipts in India...
New car registrations...
Two wheeler production...
HDI....

-------

AND YET, the fact remains:

An average Pakistani eats and dresses better and lives in less crowded and healthier situation than an average Indian.

Unhygenic Open defecation:

India leads the world in open defecation. India(638m) is followed by Indonesia (58m), China (50m), Ethiopia (49m), Pakistan (48m), Nigeria (33m) and Sudan (17m). In terms of percentage of each country's population resorting to the unhygienic practice, Ethiopia tops the list with 60%, followed by India 54%, Nepal 50%, Pakistan 28%, Indonesia 26%, and China 4%.

http://www.riazhaq.com/2011/10/india-leads-world-in-open-defecation.html

Food:

Pakistanis' diet is superior to Indians' diet in terms of nutritional value.

At 223 Kg of milk consumption per person in Pakistan which is about the same as the developed world's per capita milk consumption , it is more than twice that of neighboring India's 96 kg per capita. Indians consume only 3.2 Kg of meat per capita, less than one-fifth of Pakistan's 18 Kg. Edible oil consumption soars during the holidays as hundreds of millions of people eat sweets and fried foods during the September-December festive season. Pakistanis use about 20 Kg of oil, the per capita amount recommended by the World Health Organization, while Indians consume about 13 Kg per capita.

http://www.riazhaq.com/2012/10/pakistan-among-top-meat-consuming.html

Clothing:

According to The Fiber Report 2009/10, Indians consumed 4.18 million tons of textile fiber while Pakistanis consumed 2.558 million tons. Assuming a population of 1.2 billion for India and 180 million for Pakistan, the per capita cotton consumption works out to 3.48 Kg in India and 14.2 Kg in Pakistan.

http://www.alokind.com/Downloads/Indian%20Textile%20Trade%20-Golden%20Period-%20March%202012.pdf

HopeWins Junior said...

^^^RH: "Why would Euromonitor, an international market research firm, report that consumer spending in US dollar terms in Pakistan has increased at a 26 percent average pace the past three years, compared with 7.7 percent for Asia?"
----

Dr. Haq,

Here is the Euromonitor data-table that you are so often quoting:
http://www.euromonitor.com/pakistan/country-factfile

And here is their equivalent table for India:
http://www.euromonitor.com/india/country-factfile

Look at the INTERNET-USERS tabulated rows for both neighbors.

A) We went from 12 million to 20 million internet-users from 2008 to 2012 with a CAGR of 12%.

B) India went from 50 million to 150 million internet-users from 2008 to 2012 with a CAGR of 32%

C) The India/Pak ratio of internet-users went from 4.1 in 2008 to 7.6 in 2012.

This cannot be a good trend. It is certainly cause for worry.

What are your views?

Thank you.

HopeWins Junior said...

^^^HWJ: "Food: Pakistanis' diet is superior to Indians' diet in terms of nutritional value"
---

Dr. Haq,

I think I may have found one of the underlying reasons for this.

Here are the Euromonitor data for Pakistan and India that you have been quoting recently:

http://www.euromonitor.com/pakistan/country-factfile
http://www.euromonitor.com/india/country-factfile

Look at the "Consumer Expenditure on Food" Row and then compare that to the "Consumer Expenditure" and "Annual Gross Incomes" rows.

Pakistan in 2012:
(i) We spend 46% of all Consumer Expenditure on Food.
(ii) We spend 40% of our Gross Annual Income on Food.

India in 2012:
(i) They spend 24% of all Consumer Expenditure on Food.
(ii) They spend 17% of their Gross Annual Income on Food.

Do you think this explains why we are so much better fed than the Indians? Because we spend more of our consumer-budgets on Food and also save less, while the Indians eat less and prefer to either spend their money on other things or to save?

What are your views on this?

Thank you.

HopeWins Junior said...

^^RH: "And Why would Coke decide to invest another $250 million this year in Pakistan? To lose more money?"
-----

Dr. Haq,

This is what DAWN is reporting:
http://alturl.com/azipf

I know that journalism standards are quite poor in South Asia and I first thought it might be a mistake.

So I checked with the Finance Ministry to make sure. It appears that the Dawn story is confirmed by GOP's own data. See Table 8.1 in the APPENDIX of this report-
http://www.finance.gov.pk/survey/chapter_12/08-TradeAndPayments.pdf

2007-08: 5,335 Million$ FDI Net
2008-09: 3,695 Million$ FDI Net
2009-10: 2,075 Million$ FDI Net
2010-11: 1,591 Million$ FDI Net
2011-12: 780 Million$ FDI Net

Does this 780 Million$ total FDI we received in FY12 include this 250 Million$ COCA-COLA investment you mention?

Or is this 250 Million$ COCA-COLA investment going to appear in the FY13 data?

Are you sure it is 250 Million$ and not 244.4 Million$? Because if it is the latter figure, I think I located it on the Board of Investment's data-list for FY13 (Jul-Oct):
http://alturl.com/ttw3y

What are your thoughts?

Thank you.

Mahesh said...

This is misleading:

"According to The Fiber Report 2009/10, Indians consumed 4.18 million tons of textile fiber while Pakistanis consumed 2.558 million tons. Assuming a population of 1.2 billion for India and 180 million for Pakistan, the per capita cotton consumption works out to 3.48 Kg in India and 14.2 Kg in Pakistan. "

Based on the above you are claiming Pakistan dresses better than India!!

1. In that case Japan only consumes 70000 tonnes or 0.55kg cotton per capita consumption or China at 7.8kg and host of other countries whose cotton data is lower according to your faulty analysis!

2. The big hole in your "dress better" argument is that you leave out man-made fiber, spun yarn, silk and wool consumption data that is in the same report that you cite. Please read it again.

------------------------------------------
Another incomplete analysis :

"Pakistanis' diet is superior to Indians' diet in terms of nutritional value"

WHAT ABOUT FISH - A SUPERIOR SOURCE OF PROTEIN AND OTHER NUTRIENTS?

Fish catch per capita for India is 5.2kg similar to Bulgaria or Serbia which is almost 3 X that of Pakistan at 1.8 kg


HopeWins Junior said...

@Mahesh: "According to The Fiber Report 2009/10, Indians consumed 4.18 million tons of textile fiber while Pakistanis consumed 2.558 million tons"

---

This is not correct.

The Fiber reports says that in 2009 Pakistan consumed 2.558 million tons of COTTON (Page 66) and that India consumed 4.18 millions tons of COTTON (Page 59).

Note that this does not refer to consumption of cotton for ONLY domestic use. It refers to TOTAL consumption of cotton, which includes domestic use AND processed EXPORTS as yarn, cloth and readymades.

To understand this, look at the cotton PRODUCTION figures on the same pages-
Pakistan 2.057 Million Tonnes.
India 5.117 Million Tonnes.

So India is an net exporter of Cotton and Pakistan is an net importer of Cotton. But remember that Pakistan imports this extra cotton to feed its yarn, textile and readymades >>EXPORT<< industry. Pakistan does not import cotton to clothe its own naked people.

So this report really does not compare personal or household or domestic END-consumption. It merely shows production & import/export of raw cotton, regardless of whether the cotton will be consumed by local people themselves or whether it will be re-exported in the form of value-added products to other countries.

I hope that helps clarify the point on the issue of Cotton "consumption".

However, we must keep in mind that regardless of who consumes how much cotton and for what, one basic fact still remains:

India leads the world in open defecation. India(638m) is followed by Indonesia (58m), China (50m), Ethiopia (49m), Pakistan (48m), Nigeria (33m) and Sudan (17m). In terms of percentage of each country's population resorting to the unhygienic practice, Ethiopia tops the list with 60%, followed by India 54%, Nepal 50%, Pakistan 28%, Indonesia 26%, and China 4%.


Riaz Haq said...

HWJ: "Or is this 250 Million$ COCA-COLA investment going to appear in the FY13 data?....What are your thoughts?"

I don't know and I don't care when and where it shows up.

The bottom line is that Pakistan is beginning to see an upturn in FDI in the first 4 months of in 2012-12. Here's a News story:

Pakistan’s foreign direct investment (FDI) climbed sharply to $125.4 million during October, providing some relief to the deteriorating balance of payments position, according to the data released by the State Bank of Pakistan (SBP) on Thursday.



The FDI inflows increased to $125.4 million just in the single month of October as compared to $59.6 million during the same month last year, depicting a significant jump of $71.2 million, or 131 percent, it said.



The increase in FDI inflows was evident from the fact that foreign companies invested $187.1 million in various sectors of the economy during October as compared to $186.4 million during the corresponding month last year.



Nonetheless, the FDI outflows, including divestments and repatriation from the foreign investors stood at $61.7 million as against the outflows of $126.8 million during October 2011.



Oil and gas exploration, trade, electrical machinery and transport were the main sectors, which attracted a significant amount of foreign direct investment in the country during the last month.



Economic experts say that improvement in the FDI inflows is a positive sign for the economy, showing revival in investors’ confidence in Pakistan.



The inflows of FDI in Pakistan plummeted by 24.2 percent to $244.4 million during the first four months of the current fiscal year as against $322.7 million during the same period last year.



The fall in FDI inflows during July-October FY13 amounted to $638.5 million as compared to $766.6 million a year ago.



The provisional figures released by the Satate Bank of Pakistan showed that foreign private investment attracted $370.8 million during July-October FY13.



The net inflows of foreign investment in Pakistan stood at $365.2 million as compared to $221.2 million a year ago, showing a growth of 65.1percent.



The portfolio investment at the Karachi Stock Exchange stood at $126.4 million as against the outflow of $74.9 million during the corresponding period last year.



During October, the portfolio investment was recorded at $30.1 million as against the outflow of $28 million last month.



Of the total FDI of $244.4 million, major investment was made in the oil and gas exploration sector followed by IT services and information technology, and the transport sectors.


http://www.thenews.com.pk/Todays-News-3-143063-FDI-rises-to-$1254m-in-October



Anonymous said...

HopeWins Junior said.........
India leads the world in open defecation. India(638m) is followed by Indonesia (58m), China (50m), Ethiopia (49m), Pakistan (48m), Nigeria (33m) and Sudan (17m). In terms of percentage of each country's population resorting to the unhygienic practice, Ethiopia tops the list with 60%, followed by India 54%, Nepal 50%, Pakistan 28%, Indonesia 26%, and China 4%......

And here's traveler-blogger Sean-Paul Kelly talking about lack of sanitation in India:

In my opinion the filth, squalor and all around pollution indicates a marked lack of respect for India by Indians. I don't know how cultural the filth is, but it's really beyond anything I have ever encountered. At times the smells, trash, refuse and excrement are like a garbage dump. Right next door to the Taj Mahal was a pile of trash that smelled so bad, was so foul as to almost ruin the entire Taj experience. Delhi, Bangalore and Chennai to a lesser degree were so very polluted as to make me physically ill. Sinus infections, ear infection, bowels churning was an all to common experience in India. Dung, be it goat, cow or human fecal matter was common on the streets. In major tourist areas filth was everywhere, littering the sidewalks, the roadways, you name it. Toilets in the middle of the road, men urinating and defecating anywhere, in broad daylight. Whole villages are plastic bag wastelands. Roadsides are choked by it. Air quality that can hardly be called quality. Far too much coal and far to few unleaded vehicles on the road. The measure should be how dangerous the air is for one's health, not how good it is. People casually throw trash in the streets, on the roads. The only two cities that could be considered sanitary in my journey were Trivandrum--the capital of Kerala--and Calicut. I don't know why this is. But I can assure you that at some point this pollution will cut into India's productivity, if it already hasn't. The pollution will hobble India's growth path, if that indeed is what the country wants. (Which I personally doubt, as India is far too conservative a country, in the small 'c' sense.)

HopeWins Junior said...

^^^RH: "I don't know and I don't care when and where it shows up. The bottom line is that Pakistan is beginning to see an upturn in FDI in the first 4 months of in 2012-12. Here's a News story..."
----

Dr. Haq,

You seem to agree that there has been a persistent decline in FDI from FY 08 through to FY 12. However, you claim that we have bucked that downward trend, because we are now(QUOTE) "beginning to see an upturn in FDI in the first 4 months of in 2012-13". To support your claim, you offer a newspaper article. However, as you can methodically verify, here is what the newspaper article actually says:

1) Fiscal Year 2013: Single Month
FDI Inflows October 2012 (FY13): $187.1 million
FDI Withdrawals October 2012 (FY13): $61.7 million
>>NET<< FDI Received October 2012 (FY13): $125.4 million

2) Fiscal Year 2012: Single Month
FDI Inflows October 2011 (FY12): $186.4 million
FDI Withdrawals October 2011 (FY13): $126.8 million
>>NET<< FDI Received October 2011 (FY12): $59.6 million

A) Fiscal Year 2013: First 4 Months
FDI Inflows Jul-Oct 2012 (FY13): $638.5 million
FDI Withdrawals Jul-Oct 2012 (FY13): $394.1 million
>>NET<< FDI Received Jul-Oct 2012 (FY13): $244.4 million

B) Fiscal Year 2012: First 4 Months
FDI Inflows Jul-Oct 2011 (FY12): $766.6 million
FDI Withdrawals Jul-Oct 2011 (FY12): $443.9 million
>>NET<< FDI Received Jul-Oct 2011 (FY12): $322.7 million

QUOTE from the Article you cited: "The inflows of FDI in Pakistan *PLUMMETED* by 24.2 percent to $244.4 million during the first four months of the current fiscal year as against $322.7 million during the same period last year".

I find it strange that you are claiming that we are "beginning to see an upturn in FDI in the first 4 months of in 2012-13" and offering as evidence a newspaper article that is, in fact, saying EXACTLY the OPPOSITE.

Please be more careful.

Thank you.

Riaz Khan said...

As a Pakistani businessman in UAE and dealerships in Pakistan, I would prefer ease of trade with India especially commercial trucks from TATA as they are sturdier and easy to maintain in dusty hot conditions.

Riazjee, politically are we making any progress in this area as far as open trade

Hanif said...

""The Survey estimates India's PPP correction factor at 2.9, meaning the stuff available here for $100 will cost $290 in the US. That corresponds to an exchange rate of roughly Rs 15.5 to the dollar. But the interesting bit is about the linkage with GDP. Countries with per capita GDP of $1,000-1,400 in 2009 – which include India, Pakistan and Vietnam — have an average PPP adjustment factor of 2.3."

I'm reading 'The World in 2013' by The Economist and it gives this figures: $nominal & $ppp per capita

Pakistan $1410 & $2960
India $1770 & $4270
China $6890 & $10410

The PPP factor is derived by their Economist Intelligence Unit.

Does the IMF and World bank use these figures or do they calculate their own?

Riaz Haq said...

Hanif: "The PPP factor is derived by their Economist Intelligence Unit.
Does the IMF and World bank use these figures or do they calculate their own?"

IMF and WB use lower PPP correction factor for higher income ranges, the reverse of what these EIU calcs show (2.09 for Pakistan and 2.41 for India).

Assuming that EIU is right about Pak real GDP forecast of just $1410 (up from $1372 in 2012), using 2.41 PPP factor for Pakistan would make Pak PPP GDP $3401.52.

It's more than likely that Pak real per capita GDP in 2013 will be up about 10% from 2012 to about $1509 rather than the $1410 predicted by EIU.

And $1509X2.4 = $3621 per capita PPP for Pakistan.



HopeWins Junior said...

IMF and WB use lower PPP correction factor for higher income ranges, the reverse of what these EIU calcs show (2.09 for Pakistan and 2.41 for India).

Assuming that EIU is right about Pak real GDP forecast of just $1,410 (up from $1,372 in 2012), using 2.41 PPP factor for Pakistan would make Pak PPP GDP $3401.

It's more than likely that Pak real per capita GDP in 2013 will be up about 10% from 2012 to about $1,509 rather than the $1,410 predicted by EIU.

And $1509 X 2.4 = $3,621 per capita PPP for Pakistan
---

But since you say that India and Pakistan PPP conversion factors are inverted, this gives us an Indian PPP conversion factor of 2.09.

Assuming that EIU is right about India's real GDP forecast of just $1,770, using 2.09 PPP factor for India would make India's PPP GDP $3,699 in 2013.

So you are effectively saying that in 2013 India (3,699$) and Pakistan (3,621$) will be approximately at the same level of PPP GDP per capita.

This is a somewhat surprising conclusion. Especially since our REAL GDP growth has barely exceeded population growth in the last 4 years (1.7%,3.1%,3.0%,3.7%), while India and Bangladesh have made continued to make enormous progress (averaging 7-8%).

How do you account for this?





HopeWins Junior said...

^^^RH: "IMF and WB use lower PPP correction factor for higher income ranges.."

---

This does not seem to be true.

The managed valuation of the currency (i.e. strong v/s weak currency policy) seems to be dominant factor determining the conversion rates.

By way of proof, here is the comparison between Indonesia (poorer) and China (richer)-

2011 China Nom pcGDP: 5,429$
2011 China PPP pcGDP: 8,442$
2011 Conversion Factor: 1.55
http://www.tradingeconomics.com/china/indicators-wb

2011 Indonesia Nom pcGDP: 3,694$
2011 Indonesia PPP pcGDP: 4,668$
2011 Conversion Factor: 1.26
http://www.tradingeconomics.com/indonesia/indicators-wb

Riaz Haq said...

HWJ: "By way of proof, here is the comparison between Indonesia (poorer) and China (richer)-"

China is a special case.

IMF has, at US urging, talked about Chinese Yuan being artificially and significantly undervalued.

The US accuses China of being a "currency manipulator" which benefits its export oriented economy.

But the broader point that developing nations with higher income ranges have lower PPP correction still holds.

Riaz Haq said...

HWJ: "This is a somewhat surprising conclusion. Especially since our REAL GDP growth has barely exceeded population growth in the last 4 years (1.7%,3.1%,3.0%,3.7%), while India and Bangladesh have made continued to make enormous progress (averaging 7-8%)."

First, these GDP calculation variations have only limited bearing on the standards of living of average people.

Second, the growth figures in dollar terms are misleading in countries like India where inflation has been high but the value of Indian rupee has been relatively stable because of India currency reserves. As the Hindu put it: " the rupee has, over the years, emerged as a ‘lamb' at home and a ‘tiger' abroad."

http://www.thehindubusinessline.com/opinion/columns/harish-damodaran/article1540678.ece

Vishesh said...

haq- "Second, the growth figures in dollar terms are misleading in countries like India where inflation has been high but the value of Indian rupee has been relatively stable because of India currency reserves. As the Hindu put it: " the rupee has, over the years, emerged as a ‘lamb' at home and a ‘tiger' abroad."

Well, If India was manipulating its currency and keeping it stable. Its foreign exchange would've come down drastically in the past past few months. The fact of the matter is pakistan forex which had artificially gone up due to a bailout by the IMF and aid from western countries has fallen to $13.5bn and its exchange rate is continuously falling reaching 96.5 for $1 whereas Indias exchange rate has been stable at Rs.55 for $1 without any fall in exchange rate since the decline in the value of INR. So don't give your stupid quotes by some unknown wannabe economists. Look at the reality!

Riaz Haq said...

Vishesh: "Well, If India was manipulating its currency and keeping it stable. Its foreign exchange.,."

The point I made is that the exchange rate of Indian rupee vs US dollar has more to do with the size of India's forex reserves than the actual purchasing power of the Indian rupee at home where domestic inflation running 8-9%.

So the Indian GDP is overstated when reported in terms of US dollars.

Anonymous said...

Blogger Riaz Haq said...

HWJ: "The same Euromonitor report shows on Page 66 that the growth in Gross Earnings Per Capita ...What do you make of that? Please explain."

Per capita income growth doesn't increase economic mobility if only the rich and upper middle class mainly benefit from it...which appears to be the case in India ad China.....

To a layman what you say sounds correct. Various quarters in India have called for a massive infusion of funds into the economy to prevent a 1990 situation of stagnation from recurring. Well these past 20 years must have seen a huge infusion of cash into the economy as figures bandied about in the media are sometimes in lacs of crores. Apart, as you say, from the rich and the upper middle class, most struggle to get by. A new round of cash infusion will mean more for the same.

HopeWins Junior said...

Dr. Haq,

Some good news today!

Transparency International has just released its 2012 report.

We are now 1 rank ABOVE Bangladesh!

http://www.transparency.org/cpi2012/results

Please make people aware of this via the internet.

Thank you.

Riaz Haq said...

Here's a Dawn story on growing retail sector in Pakistan:

Karachi’s Dolmen City Mall is a large, plush building that would not be out of place in Dubai. Heavily fortified with security guards, the interior is impressive, with its cavernous corridors and gleaming marble floor – a far cry from the hustle and bustle of the city’s other shopping areas.

Newly arrived from London earlier this year, Karachi residents were insistent that I must see this wonderful new addition to the city. When I did, it was something of a home from home. In addition to high end local clothing brands were a whole plethora of foreign stores, from Mango, to Next, to the Body Shop. Many (though not all) of these are British imports.

The latest to open its doors was Debenhams, stalwart of the British high street, which this year became the first international department store in Pakistan with its branch in Dolmen. It joins other UK brands such as Next, Early Learning Centre, Accessorize and Monsoon.

So what is behind the influx of foreign stores to Karachi’s high streets? Internationally, Pakistan is not viewed as an obvious market for retail brands due to security concerns – both real and perceived – and the attendant difficulties of doing business.

However, the numbers tell a different story. The retail sector is one of the fastest-growing in Pakistan, and is expected to grow at a rate of 7 per cent per year until 2015. To give some indication of the growth it has already seen in recent years, compare the market value in 2006 – £19124.1 million – with 2010, when it had increased to £26541.2 million.

Yasin Paracha runs Team A Ventures, the company which holds the franchises for UK brands Debenhams, Next, Early Learning Centre, Accessorize, and Mothercare. He explains that the historic ties between the two countries means that British brands have instant recognition in Pakistan.

“People in our target market are used to travelling to London frequently,” he says – many people will have visited the UK as tourists, students, or on family or business visits.

Indeed, the growth of this target market – young, urban, and with significant disposable income – is crucial to increased retail operations in Pakistan. The urbanized middle classes are a steadily growing group.

Of Pakistan’s 180-million strong population, around 55 million live in cities such as Karachi, Lahore, and Faisalabad. Consumerism is on the up, fuelled by a recent boom in consumer banking and the media industry, and encouraged by ever-increasing investment from both local and foreign chains. Traditionally, many people in this target market have preferred to do much of their shopping abroad, meaning that they are already predisposed to foreign brands.

But what about the security risks for new businesses? Karachi, in particular, is home to outbreaks of sectarian and ethnic violence, terrorist attacks, and a high instance of crime including extortion rackets.

“Of course it’s a concern for new investors,” says Paracha. “On the surface of it, a lot of brands are hesitant, but when they first make the trip to Pakistan, they are reassured because they realise that the things on the ground are very different from what they see in the media.”

However, the situation cannot be ignored. “One has to be cautious,” Paracha continues. “You can’t go into a very aggressive expansion because you can’t deny the security issue, especially in some cities. But so far we have not had a major negative impact on our operations.”

The visible success of household names like Debenhams and Next in Pakistan is likely t encourage other British brands to see the country as a potentially viable market. In addition to this, there is a concerted drive from the UK government to encourage British investment in Pakistan, due to a bilateral trade agreement between the two countries....


http://dawn.com/2012/12/05/banking-on-history-british-brands-thrive-in-pakistan/

HopeWins Junior said...

Here is a new article (Dec 8, 2012) on our country from The Economist:
http://alturl.com/rat8v

Quote: "But Pakistan’s ruling elites assume that such a crisis will always be averted with help from international donors. And, says Mr Ahmad, “they are probably right.”

Riaz Haq said...

In an Express Tribune article titled "Pakistan's tarred reputation", Pak economist Javed Burki paints a grim picture of Pakistani economy and references media stories of violence published in The Economist and The New York Times as a deterrent to foreign investors, governments and IFIs like IMF and World Bank.

http://tribune.com.pk/story/477347/pakistans-tarred-reputation/

What Brurki doesn't say (or maybe he doesn't understand?) is that governments, investors and corporations who do their own research know that Pakistan is too big and important a country which they can not afford to ignore for long.

Pakistan has a large and growing consumer base as well as a growing stockpile of sophisticated nuclear weapons. It can be highly profitable or highly dangerous depending how the world chooses to deal with it.

That's why the total foreign currency inflows into Pakistan have continued to grow for over a decade. Decline in FDI has been more than made up by growing remittances, grants and loans as well as significant increase in exports.

HopeWins Junior said...

Dr. Haq,

Here is an excellent article by a Pakistani Journalist in a Nepal-based South-Asian periodical:

http://alturl.com/ipxni

The article is about the DECLINE of feudalism in Pakistan and the rising socioeconomic mobility that this decline affords the common people.

I thought it might be a good fit with this article of yours on Mobility.

Thank you.

PS: As a curious side-note, please take a very close look at the photograph of a Pakistani TRACTOR that the author has used. Does that remind you of one of our older discussions?
http://alturl.com/3wxv5

Why do you think this obviously educated and intelligent author from pakistan has chosen to use a picture of this particular tractor? Any ideas?

Riaz Haq said...

Here's a News Op Ed by Dr. Javaid Laghari of Pakistan's Higher Education Commission:

Universities in Pakistan have rapidly morphed into their new role as producers of knowledge and research that lead to innovation and entrepreneurship, create employment, and be prime builders of a knowledge economy.
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As per the Education Policy 2008, the HEC targets to increase accessibility to higher education from the current 8 percent to 15 percent by 2020, which translates into an increase in university enrolment from 1m to 2.3m. This is a major challenge tied to the funding situation. However, to achieve the best results effectively, in addition to establishing new campuses, the HEC is focusing on the use of educational technologies and through the recently established directorates of distance education.


---

Faculty development programmes are the mainstay of the HEC. With over 7500 scholars currently pursuing their PhD degrees both within and outside the country, and an additional 2,200 having graduated and placed at universities and other organisations, it is estimated that with the projected growth in universities, at least 16,000 ‘additional’ PhD faculty will be required by 2020.



This will raise the percentage of the PhD faculty from the current 22 percent to 40 percent. Simultaneously, the standards for faculty appointment will become stringent. Starting in 2014, all lecturer appointments will require a MPhil/MS degree, and from 2016, all assistant professors and above will require a PhD degree.



------


There has been a significant growth in the number and quality of the PhDs awarded. The number of PhDs awarded per year has increased to over 850 in 2011, with significantly higher standards. It is estimated that over 2400 PhDs will be awarded in 2020, which will give Pakistan the same competitive advantage in research and innovation as is available to China, India, Turkey and Malaysia.



The number of research publications out of Pakistan has gone up by 50 percent in the last two years alone. Scimago, an independent database, has projected that Pakistan will have the second-highest growth in the Asiatic region, moving up 16 notches from the current worldwide ranking of 43 to 27.



Offices of innovation, research and commercialisation, centres of advanced study and research in energy, food security, and water resource, incubators and technology parks are being established to link research and innovation with industry.

----

This is already beginning to pay off, as today more than six Pakistani universities are ranked among the top 300 universities of the world, while there were none a few years ago. By 2015, we expect at least 10 universities to be in the top 300, with one in the top 100.



All HEC reforms are becoming the envy of other countries in the region. While Turkey already has a similar commission, Bangladesh and Sri Lanka are in the process of replicating the HEC model, and India is going a step further and establishing a supra-HEC with far-reaching consequences to position itself as a regional leader.



The World Economic Forum Global Competitiveness Report indicators on higher education and training, technology readiness and innovation are showing a consistent improvement over the last three years for Pakistan, much more than many other countries, which is clear proof that higher education reforms are paying off.



---

Pakistan has achieved critical mass and reached a point of take-off. For this phenomenal growth to continue, it is important for the government and other stakeholders to support and further strengthen the HEC as a national institution and protect its autonomy. If this momentum continues for another 10 years, Pakistan is certain to become a global player through a flourishing knowledge economy and a highly literate population.


http://www.thenews.com.pk/Todays-News-9-147565-HEC-the-next-10-years

HopeWins Junior said...

^^RH:"
(1) Pakistan has achieved critical mass and reached a point of take-off
(2) For this phenomenal growth to continue...
(3) If this momentum continues for another 10 years, Pakistan is certain to become.....
---

If only these three points were true of our ECONOMY.

I note that all three points are certainly true w.r.t the economies of Bangladesh & India.

HopeWins Junior said...

^^RH: In an Express Tribune article titled "Pakistan's tarred reputation", Pak economist Javed Burki paints a grim picture of Pakistani economy and references media stories of violence published in The Economist and The New York Times as a deterrent to foreign investors, governments and IFIs like IMF and World Bank..

http://tribune.com.pk/story/477347/pakistans-tarred-reputation/

-----

Here is an excellent TAKE-DOWN of Javed Burki and his article:

http://alturl.com/rd4au

Riaz Haq said...

Here's an excerpt of a recent Khatmandu speech by Pak social scientist Arif Hasan:

.. ...In my city, Karachi, anyone my age will similarly tell you how wonderful Karachi used to be...the calm that we enjoyed was really like the peace of the dead. It was a kind of peace made possible by the feudal system.
------------
I asked an elder from the taluka whom I had met in 1983, now much older, “Sahib, did you have honour killings before?”

He said, “Yes, we used to have one in perhaps ten years. It was a rare occurrence, and we would discuss one for ten years until another happened.”

“Then why it is happening now with such regularity?”

He said, “Now, everyone has become shameless, without honour, so honour killings are taking place.”

I asked, “Why is there no honour today?”

He responded, “The young people, they’ve gone to the city, and they’ve done all the wrong things. The girls have learned how to read and write, they’ve gone to school, some of them have gone to university as well. They have no morals left, so this is bound to happen.”

“You mean this is going to continue like this forever?”

“No, no, it will stop!”

“How and when will it stop?”

His reply was educative: “The honour killings will stop when everyone becomes shameless, then it will end.” Then he added, “But I hope that I die before that day.”

He was a man of the old, feudal rural culture, with its own pattern of behaviour and way of thinking. He was part of it, and it was dying, so he wished to die with it.

In 1992, the applications for court marriages in Karachi amounted to about 10 or 15, mainly applications from couples who were seeking the protection of the court for wedlock without familial consent. By 2006, we were seeing more than 250 applications for court marriages per day in Karachi. Significantly, more than half of the couples seeking court recognition of their betrothal came from rural areas of Sindh. This is yet another indication of how the entire feudal system and its values are in rapid collapse.

This collapse is also heralded by the advances in women’s education. According to 2006 figures, fully 72 percent of the University of Karachi student body is today female. Among medical students, 87 percent are women, and the figure for architecture and planning is as high as 92 percent. In fact, our vice chancellor was so concerned that he suggested a quota for men. I used to teach a class with one boy and 15 girls. That has changed a little now as we have tried to even it out. But the reason is simply that women do better on the entrance tests. There’s no other reason for it.

In 1971, I started working in low-income settlements in Karachi, and a decade later I joined the Orangi Pilot Project (OPP). The settlements that we worked in at that time were primarily working-class, and when we went over we were met by older men who were mostly illiterate. They spoke to us in very formal, feudal language – janaab, huzoor, sahib, miyan, “We are all your children and need your protection,” and all that. At that time, in the 1980s, the women hardly worked. Things are entirely different when you go to the OPP today; it’s not what you would call a shanty settlement. It’s mostly the younger generation who will meet you, and they will address you as ‘uncle’ rather than ‘sahib’. The people you meet are bank managers, school teachers, professionals working in the service sector of Karachi.
-----------
... The recent shooting of Malala Yusufzhai has shown what Pakistani society really feels and how it thinks on issues. For the first time the Pakistani establishment – the army as well as the three major political parties – have all condemned the Taliban for the shooting. The people have spoken in the huge rallies, in Karachi and elsewhere. ...


http://himalmag.com/component/content/article/5126-the-eclipse-of-feudalism-in-pakistan.html

Riaz Haq said...

The "peace of the dead" is ending with the "eclipse of feudalism" in Pakistan. What we are seeing now is an "unplanned revolution" in the words of a Pakistani sociologist, a revolution that is transforming Pakistan for the better in the long run.

http://books.google.com/books?id=EKHZAAAAMAAJ&q=feudalism#search_anchor

http://himalmag.com/component/content/article/5126-the-eclipse-of-feudalism-in-pakistan.html

http://himalmag.com/component/content/article/5126-the-eclipse-of-feudalism-in-pakistan.html

http://sai.columbia.edu/outreach_files/Social%20&%20Structural%20Transformations%20in%20Pakistan.pdf

HopeWins Junior said...

^^RH: "..a revolution that is transforming Pakistan for the better in the long run..."
----

What will happen to this "transformational revolution" when our economy collapses due to the lack of domestic savings?

Domestic Savings = Today's Sacrifice

Today's Sacrifice = Tomorrow's Prosperity

No Domestic Savings Today = No Prosperity Tomorrow

This is a very basic concept. It is not that hard to grasp.

Riaz Haq said...

HWJ: "What will happen to this "transformational revolution" when our economy collapses due to the lack of domestic savings?"

Growing numbers of middle class young men and women willing to work hard are a great asset that will more than make up for any shortfall in narrowly defined "domestic savings" rate.

Riaz Haq said...

Here's an Express Tribune list of Pakistani companies with over a billion in revenue:

The Billion Dollar Club

1. Pakistan State Oil Company

Revenues: $11.57 billion

Joined club: Before 1986

2. Pak-Arab Refinery

Revenues: $3.00 billion

Joined club: 2000

3. Sui Northern Gas Pipelines

Revenues: $2.52 billion

Joined club: 2004

4. Shell Pakistan

Revenues: $2.38 billion

Joined club: 2000


5. Oil & Gas Development Company

Revenues: $2.23 billion

Joined club: 2005

6. National Refinery

Revenues: $1.97 billion

Joined club: 2005

7. Hub Power Company

Revenues: $1.97 billion

Joined club: 2009



8. Karachi Electric Supply Company

Revenues: $1.84 billion

Joined club: 2008


9. Attock Refinery

Revenues: $1.74 billion

Joined club: 2008


10. Attock Petroleum

Revenues: $1.72 billion

Joined club: 2010


11. Lahore Electric Supply Company

Revenues: $1.49 billion

Joined club: 2006

12. Pakistan Refinery

Revenues: $1.44 billion

Joined club: 2011


13. Sui Southern Gas Company

Revenues: $1.38 billion

Joined club: 2005

14. Pakistan International Airlines

Revenues: $1.36 billion

Joined club: 2005

15. Engro Corporation

Revenues: $1.29 billion

Joined club: 2011


16. Pakistan Telecommunications Company

Revenues: $1.25 billion

Joined club: 2000

17. Kot Addu Power Company

Revenues: $1.14 billion

Joined club: 2012

18. Mobilink

Revenues: $1.11 billion

Joined club: 2006

19. Pakistan Petroleum

Revenues: $1.09 billion

Joined club: 2012

.


http://tribune.com.pk/story/483287/corporate-revenues-the-growth-of-the-billion-dollar-club-in-pakistan/

Riaz Haq said...

Here are some excerpts of a piece titled "How's India Doing (2012)?" as published in The Hindu:

One, the decline in poverty has not been uniform across regions and communities. If in 1982 your parents lived on the banks of the Cooum in Madras or in Dharavi in Bombay, it is likely that today your economic status is better than theirs. But if you are from a Dalit or adivasi family in Madhya Pradesh, Chhattisgarh, Bihar, or Uttar Pradesh, chances are that you are no better off now than your parents were in 1982. Two, the benefits of growth have indeed trickled down, but that is exactly what has happened: it has been just a trickle. The incidence of poverty has declined, but a quarter of the population or around 300-350 million people are still desperately poor. Three, if other basic necessities like shelter, access to clean drinking water and sanitation are included, the picture is much more dismal. Research by R. Jayraj and S. Subramanian shows that severe “multidimensional poverty” afflicted 470 million in 2005-06, not much lower than the estimate of 520 million in 1992-93. Four, in certain critical areas — for instance, malnourishment and maternal mortality — conditions remain terrible. Close to half our children suffer from malnutrition, much the same as 30 years ago.

So if we paint a broader picture, the old sliver of the beneficiaries of India’s growth has only thickened a bit. For the large mass of India’s poor, daily life remains a struggle. There is no doubt India lost a major opportunity in the past three decades.

---

The sex ratio has at last begun to see some improvement, though only in the past decade. And the life expectancy of women is now, as it should be, longer than of men. But we are in a far worse situation than in 1982 with respect to the status of the girl child. The sex ratio at birth — the number of girls born for every 1,000 boys born — has declined in recent decades. And the sex ratio of children under six has also worsened. Whether the result of sex-selection at birth, female infanticide, or neglect of the girl child, India has become an awful place for girls.

---

The outcome, however, has not been any major improvement in the economic status of the deprived castes. It may be too early to express any definite opinion on the achievements of these parties, but the early optimism that they would position the demand for lower-caste rights as part of a larger movement for justice and equality has faded. These parties have at times turned into movements solely for the advancement of sectional interests, and, worse, have become vehicles of personal aggrandisement.

If these are the changes in four areas that Sen examined in 1982, one also has to recognise that major changes have taken place in other areas.
---------
For a country that became independent amid gruesome violence on religious lines, communalism has been no stranger. Soon after Sen’s essay, we had the anti-Sikh riots of November 1984. Mass murder was conducted over three days in the capital under the benign gaze of a new Prime Minister. The message was: if you mobilise yourself with force, you can get away with anything. The message was heard, and put into practice in Bhagalpur 1989, Bombay 1993, and Gujarat 2002.

Beyond such open violence, it is the routinisation of communalism in daily life that is new. Mobilisation on communal lines took new forms after the Vishwa Hindu Parishad/Bharatiya Janata Party decided to raise the issue of the Babri Masjid. The rath yatra of 1990, the Congress’s cynical attempt at soft Hindutva, and the destruction of the Babri Masjid completed the post-Independence transformation of India on communal lines. All this has contributed in no small measure to the growth of domestic terrorism. India is tragically now a less tolerant society than what it was in the early 1980s.


http://www.thehindu.com/opinion/op-ed/how-is-india-doing-2012/article4249630.ece

Riaz Haq said...

Here's bloomberg on fast food craze in Pakistan:

...Local and overseas business groups are queuing up to buy franchise rights in Pakistan for an array of popular food sold from Los Angeles to Kuala Lumpur, driven by rising demand from a booming middle class in South Asia’s second-biggest economy after India. Pakistanis increasingly flock to American food outlets even as ties between the two nations are strained by U.S. drone missile strikes in the northwest of the country.

Johnny Rockets Group Inc., another American fast-food group based in Aliso Viejo, California, that operates or franchises 68 hamburger restaurants in 16 countries, Second Cup Ltd., a coffee shop chain based in Missisauga, Canada, with over 360 cafes and Malaysia’s MammaRoti and PappaRoti are set to open their first stores in Pakistan this year.

----

Fatburger joins Hardee’s Food Systems Inc., headquartered in St. Louis, Atlanta-based cinnamon roll maker Cinnabon International Inc., The Noodle House of the United Arab Emirates, and five foreign frozen yoghurt chains that opened their first outlets in the world’s sixth-most populous nation since 2011. Consumer spending in Pakistan has increased at a 26 percent average pace the past three years, compared with 7.7 percent for Asia, according to data compiled by Euromonitor International, a consumer research firm.

...Pakistan’s middle class has doubled to 70 million people in the past decade as booms in agriculture and residential property, as well as jobs in telecom and media have helped people prosper, according to Sakib Sherani, chief executive officer at Macroeconomic Insights in Islamabad.

---
Franchising is also booming as businesses battling Pakistan’s record energy outages seek alternatives to factories that can’t run without adequate power, said Samiullah Mohabbat, chief executive officer of Fatburger Pakistan and the country representative for the World Franchise Association. Mohabbat received over 100 queries this year from entrepreneurs wanting to buy franchise rights for international food chains.
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The number of foreign food franchises in Pakistan will “easily double” in the next two years as more coffee houses and casual dining outlets enter the country, Mohabbat said. About two dozen foreign food franchises operate in Pakistan since Louisville, Kentucky-based Yum! Brands Inc.’s Pizza Hut opened two decades ago, followed by the same company’s KFC in 1997 and Oak Brook, Illinois-based McDonald’s Corp., the world’s largest restaurant chain, the following year.

KFC plans to open 40 more stores in Pakistan over the next five years to expand its network of 64 outlets in 18 cities, said Rafiq Rangoonwala, chief executive officer of Cupola, the company with the franchise rights for KFC, the biggest fast-food chain by outlets in Pakistan.
--
Salt Lake City-based Mrs Field’s Original Cookies Inc., that opened an outlet in Lahore in 2011, plans to start 15 more this year, said Rashed Siddiqui, franchise owner.

---
Second Cup will open its first outlet in Islamabad within the next six months and Red Mango Inc., a Dallas-based frozen yoghurt retailer, will enter Pakistan this year, Mohabbat said.

Fullerton, California-based Tutti Frutti Frozen Yoghurt, that has 20 outlets in Pakistan since opening in late 2011, plans to start 100 more this year, said Naeem Niazi, director for international business development at Wellspring Industry Inc., owner of Tutti Frutti.

Pakistanis spend 90 billion rupees ($924 million) a year on eating out at the 20,000 restaurants nationwide because of a paucity of other entertainment facilities, said Nauman Mirza, founder and chief executive officer of Food Connection Pakistan, an online restaurant guide.


http://mobile.bloomberg.com/news/2013-01-07/pakistan-loving-fatburger-as-fast-food-boom-ignores-u-s-drones.html

Riaz Haq said...

Talking about "doing a Reagan", here's NY Times' Op Ed about India-China race:

As recently as 2006, when I first visited India and China, the economic race was on, with heavy bets being placed on which one would win the developing world sweepstakes.

Many Westerners fervently hoped that a democratic country would triumph economically over an autocratic regime.

Now the contest is emphatically over. China has lunged into the 21st century, while India is still lurching toward it.

That’s evident not just in columns of dry statistics but in the rhythm and sensibility of each country. While China often seems to eradicate its past as it single-mindedly constructs its future, India nibbles more judiciously at its complex history.

Visits to crowded Indian urban centers unleash sensory assaults: colorful dress and lilting chatter provide a backdrop to every manner of commerce, from small shops to peddlers to beggars. That makes for engaging tourism, but not the fastest economic development. In contrast to China’s full-throated, monochromatic embrace of large-scale manufacturing, India more closely resembles a nation of shopkeepers.

To be sure, India has achieved enviable success in business services, like the glistening call centers in Bangalore and elsewhere. But in the global jousting for manufacturing jobs, India does not get its share.

Now, after years of rocketing growth, China’s gross domestic product per capita of $9,146 is more than twice India’s. And its economy grew by 7.7 percent in 2012, while India expanded at a (hardly shabby) 5.3 percent rate.
--------
India’s rigid social structure limits intergenerational economic mobility and fosters acceptance of vast wealth disparities. In Mumbai, where more than half the population lives in slums often devoid of electricity or running water, Mukesh Ambani spent a reported $1 billion to construct a 27-story home in a residential neighborhood.

Don’t get me wrong — I am hardly advocating totalitarian government. But we need to recognize that success for developing countries is about more than free elections.

While India may not have the same “eye on the prize” so evident in China, it should finish a respectable second in the developing world sweepstakes. It just won’t beat China.


http://opinionator.blogs.nytimes.com/2013/01/19/india-is-losing-the-race/

Riaz Haq said...

Here's a New York Times story on economic and income mobility in US:

This geography appears to play a major role in making Atlanta one of the metropolitan areas where it is most difficult for lower-income households to rise into the middle class and beyond, according to a new study that other researchers are calling the most detailed portrait yet of income mobility in the United States.

The study — based on millions of anonymous earnings records and being released this week by a team of top academic economists — is the first with enough data to compare upward mobility across metropolitan areas. These comparisons provide some of the most powerful evidence so far about the factors that seem to drive people’s chances of rising beyond the station of their birth, including education, family structure and the economic layout of metropolitan areas.

Climbing the income ladder occurs less often in the Southeast and industrial Midwest, the data shows, with the odds notably low in Atlanta, Charlotte, Memphis, Raleigh, Indianapolis, Cincinnati and Columbus. By contrast, some of the highest rates occur in the Northeast, Great Plains and West, including in New York, Boston, Salt Lake City, Pittsburgh, Seattle and large swaths of California and Minnesota.

“Where you grow up matters,” said Nathaniel Hendren, a Harvard economist and one of the study’s authors. “There is tremendous variation across the U.S. in the extent to which kids can rise out of poverty.”

That variation does not stem simply from the fact that some areas have higher average incomes: upward mobility rates, Mr. Hendren added, often differ sharply in areas where average income is similar, like Atlanta and Seattle.

The gaps can be stark. On average, fairly poor children in Seattle — those who grew up in the 25th percentile of the national income distribution — do as well financially when they grow up as middle-class children — those who grew up at the 50th percentile — from Atlanta.

Geography mattered much less for well-off children than for middle-class and poor children, according to the results. In an economic echo of Tolstoy’s line about happy families being alike, the chances that affluent children grow up to be affluent are broadly similar across metropolitan areas.
------------
What they found surprised them, said Raj Chetty, one of the authors and the most recent winner of the John Bates Clark Medal, which the American Economic Association awards to the country’s best academic economist under the age of 40. The researchers concluded that larger tax credits for the poor and higher taxes on the affluent seemed to improve income mobility only slightly. The economists also found only modest or no correlation between mobility and the number of local colleges and their tuition rates or between mobility and the amount of extreme wealth in a region.

But the researchers identified four broad factors that appeared to affect income mobility, including the size and dispersion of the local middle class. All else being equal, upward mobility tended to be higher in metropolitan areas where poor families were more dispersed among mixed-income neighborhoods.

Income mobility was also higher in areas with more two-parent households, better elementary schools and high schools, and more civic engagement, including membership in religious and community groups.


http://www.nytimes.com/2013/07/22/business/in-climbing-income-ladder-location-matters.html?pagewanted=all&_r=0