Tuesday, March 13, 2018

Globalization Index: How Connected is Pakistan?

Pakistan ranks 32nd in breadth and 99th overall among 140 countries in terms of globalization, according to DHL Global Connectedness Index compiled by professors at NYU Stern School of Business and IESE Business School. Pakistan ranks 137 on depth and 32 on breadth among 140 countries as measured in 2015.  Pakistan's neighbor India ranks 133 on depth and 21 on breadth. The report blames relatively higher breadth than depth on poor levels of regional integration, depressed in particular by the animosity between South Asia’s two largest economies, India and Pakistan.

Four Pillars of Globalization: 

The index is based on international flows of trade, capital, information and people. The index measures the parameters on depth and breadth. Depth evaluates the extent to which countries' international flows are distributed globally or more narrowly focused, while breadth compares countries' international flows to the sizes of their domestic economies.

Pakistan Globalization Ranking. Source: DHL/NYU Report 
Pakistan ranks 137 on depth and 32 on breadth among 140 countries as measured in 2015.  Pakistan's neighbor India ranks 133 on depth and 21 on breadth. The lowest ranked countries on the depth dimension are Iran, Bangladesh, Burundi, Pakistan, Nepal, Myanmar, Ethiopia, India, Indonesia, and Egypt.

South Asia Lags in Globalization:

The DHL report says that South and Central Asia region lags across nearly all aspects of global connectedness. This region ranks last on depth and third from last on breadth. Furthermore, its relatively higher breadth than depth is a reflection of the poor levels of integration within the region, depressed in particular by the animosity between South Asia’s two largest economies, India and Pakistan.

SAARC or CAREC Regional Integration: 

Pakistan sits between two economically very dynamic regions: Central Asia (and Western China) and South Asia. Which region is better suited for its economic connectivity and integration? Should Islamabad focus on CAREC (Central Asia Regional Economic Cooperation) rather than SAARC (South Asian Association of Regional Cooperation)?

Ideally, Pakistan should be a major player in both vibrant regions. However, Indian Prime Minister Narendra Modi's policy of attempting to isolate Pakistan has essentially forced it to choose.

First, Mr. Modi decided to boycott last year's SAARC summit that was scheduled to take place in Islamabad, Pakistan. Then, he unsuccessfully attempted to hijack the BRICS economic summit in India to use it as a political platform to attack and isolate Pakistan.  The signal to Pakistan was unmistakable: Forget about SAARC.

Central Asia Regional Economic Cooperation (CAREC):

CAREC is a growing group of nations that is currently made up of 11 members, including China and a list of STANs.   The current membership includes Afghanistan (joined CAREC in 2005), Azerbaijan (2003), People's Republic of China (1997), Georgia (2016), Kazakhstan (1997), Kyrgyz Republic (1997), Mongolia (2003, Pakistan (2010), Tajikistan (1998), Turkmenistan (2010) and Uzbekistan (1997).



The 2016 ministerial meeting of CAREC nations was held in Islamabad. The conference theme was “Linking connectivity with economic transformation".

Welcoming fellow ministers, Pakistan's then Finance Minister Ishaq Dar talked about the importance of the China-Pakistan Economic Corridor (CPEC) to improve trade flow within the region and with the rest the rest of the world.

Dar said CPEC offered a massive opportunity for connectivity between Central Asia, Middle East and Africa and was bound to play a defining role in economic development of the regions. Dar said improving the transport corridor was not an end in itself but it was an investment in establishing sound infrastructure and complementary frameworks for shared prosperity of the present and future generations in the region, according to a report in Pakistani media.

CAREC Corridors:

CAREC region is building six economic corridors to link Central Asian nations. Six multi-national institutions support the CAREC infrastructure development, including the Asian Development Bank (ADB), United Nations Development Program (UNDP), International Monetary Fund (IMF), World Bank,  Jeddah-based Islamic Development Bank and European Bank for Reconstruction & Development, according to Khaleej Times.

Out of the total $27.7 billion CAREC infrastructure investment so for, $9.9 billion or 36 per cent was financed by ADB, a senior officer of the Manila-based multinational bank told Khaleeej Times.

He said other donors had invested $10.9 billion while $6.9 billion was contributed by CAREC governments. Of these investments, transport got the major share with $8 billion or 78 per cent. Asian Development Bank Vice President Wencai Zhang said: "There are huge financing requirements in Carec for transport and trade facilitation, for which 108 projects have been identified at an investment cost of $38.8 billion for the period 2012-2020. Investment for the priority energy sector projects will be $45 billion in this period."

CPEC North-South Corridor:

China Pakistan Economic Corridor (CPEC) is a major part of the north-south corridor that will allow trade to flow among CAREC member countries, many of which are resource-rich but landlocked nations. The corridor will enable the group to access to the Pakistani seaports in Gwadar and Karachi as part of the new maritime silk route (MSR) as envisioned by China and Pakistan.

Pakistan's Finance Minister Dar says the CPEC would complement the regional connectivity initiatives of CAREC. "Once the six CAREC corridors and mega ports, now under construction, start operating, they will provide access to global markets. They will deliver services that will be important for national and regional competitiveness, productivity, employment, mobility and environmental sustainability. All of us should gear our national policies to achieve these targets."

CPEC consists of transport and communication infrastructure—roads, railways, cable, and oil and gas pipelines—that will stretch 2,700 kilometers from Gwadar on the Arabian Sea to the Khunjerab Pass at the China-Pakistan border in the Karakorams.

China and Pakistan are developing plans for an 1,800 kilometer international rail link from the city of Kashgar in the Xinjiang Uygur autonomous region in Western China to Pakistan's deep-sea Gwadar Port on the Arabian Sea, according to Zhang Chunlin, director of Xinjiang's regional development and reform commission.



 "The 1,800-kilometer China-Pakistan railway is planned to also pass through Pakistan's capital of Islamabad and Karachi," Zhang Chunlin said at the two-day International Seminar on the Silk Road Economic Belt in Urumqi, Xinjiang's capital, according to China Daily.

"Although the cost of constructing the railway is expected to be high due to the hostile environment and complicated geographic conditions, the study of the project has already started," Zhang said. "China and Pakistan will co-fund the railway construction. Building oil and gas pipelines between Gwadar Port and China is also on the agenda," Zhang added.

Afghan Instability:

Pakistan is making a serious effort to stabilize Afghanistan, a member of CAREC. Trilateral conferences of China, Russia and Pakistan support this effort. Afghan instability has prevented Pakistan from connecting with other STANs for commerce and trade. Now the development of CPEC will enable Pakistan to bypass Afghanistan, if necessary, to connect with Central Asia region through Western China.

Summary:

Pakistan ranks 32nd in breadth and 99th overall among 140 countries in terms of globalization, according to DHL Global Connectedness Index compiled by professors at NYU Stern School of Business and IESE Business School. Pakistan ranks 137 on depth and 32 on breadth among 140 countries as measured in 2015.  Pakistan's neighbor India ranks 133 on depth and 21 on breadth. The report blames relatively higher breadth than depth on poor levels of regional integration, depressed in particular by the animosity between South Asia’s two largest economies, India and Pakistan.

History shows that growth of regional and global trade in East Asia, Europe and North America regions has been a major driver of economic opportunity and prosperity.  Unfortunately, SAARC has been a huge disappointment for Pakistanis.  With the development of CPEC and CAREC, Pakistan can now begin to participate in the growth of regional and global trade that will benefit the people of Pakistan.  The path to Pakistan's participation in SAARC will open up if or when India-Pakistan relations improve.

Here's a National Geographic Documentary on CPEC:

https://youtu.be/q2lWYxbIBCs




Related Links:

Haq's Musings

1800 Km Pak-China Rail Link

China Pakistan Economic Corridor

CPEC to Create Over 2 Million Jobs

Modi's Covert War in Pakistan

ADB Raises Pakistan GDP Growth Forecast

Gwadar as Hong Kong West

China-Pakistan Industrial Corridor

Indian Spy Kulbhushan Yadav's Confession

Ex Indian Spy Documents RAW Successes Against Pakistan

Is Pakistan's Global Diplomacy Working?

2 comments:

Riaz Haq said...

From ADB Report “The Web of Transport Corridors in South Asia”

https://www.adb.org/sites/default/files/publication/162073/developing-economic-corridors.pdf

South Asia has been characterized as a region of low intraregional trade. In 1990,
intraregional trade was 2.91%, which increased to 5.3% in 2003.2
However, it came
down to 4.84% in 2008. The intraregional trade intensity index was 3.03% in 1990,
increasing to 6.21% in 2003, and falling to 2.53% in 20083
(De et al. 2012). The
distribution of intraregional trade in South Asia is very imbalanced. Figure 4.1 indicates
that India is the largest exporter in South Asia, accounting for 65% of intraregional
exports, whereas Bangladesh’s exports to the region in 2008 were only 3% of the total
regional exports. Bangladesh is the largest importer in South Asia, accounting for 26%
of the total intraregional imports in 2008.
Except Nepal and Bhutan, the major export destinations of all other South Asian
countries are outside the region. Regional exports constitute only 4.87% of the total
exports from Bangladesh. The corresponding figure for India is 5.23%. India is
the major export destination for Nepal (71%) and Bhutan (100%). Trade among
the South Asian countries is unequally distributed. Bangladesh trades very little
with Bhutan, Nepal, and Sri Lanka. India is the dominant import source for
Bhutan and Nepal, and a major import source for Bangladesh. But trade with India is
largely one-sided. The volume of imports from India to Bangladesh and Nepal is very
large, while the volume of exports from these countries to India is very low.

High tariff rates among the South Asian countries have long been pointed out as one of
the major reasons for low intraregional trade. South Asia, as a region, has higher average
tariff rates than in any other in the world. An important aspect of South Asian intraregional
trade is that there is a huge volume of informal border trade. Some studies have pointed
out that the informal and illegal trade between India and Bangladesh, India and Nepal,
and India and Sri Lanka could equal a significant proportion of the recorded trade
between them (Pohit and Taneja 2003, Taneja et al. 2004, Das and Pohit 2006, World
Bank 2006).

Riaz Haq said...

Pakistan prime minister inaugurates first deep-water container terminal

http://www.arabnews.com/node/1301411/world

Pakistan Prime Minister Shahid Khaqan Abbasi inaugurated the initial phase of the country’s $1.4 billion first high-tech deep-water container terminal on Friday.
Hutchison Ports Pakistan is a public-private partnership of Karachi Port Trust (KPT) and Hong Kong-based Hutchison Ports Holdings. The terminal is one of the most advanced in the region, having broken its own productivity record four times and serviced some of the largest container ships in the world since test operations began on December 9, 2016. Its high performance is expected to raise Pakistan’s global trade competitiveness and set a strong foundation for further economic growth.
“The state-of-the-art new container terminal at KPT will be a key component to become part of the overall CPEC system, assisting and facilitating CPEC development in Pakistan, which the government of both Pakistan and China are pursuing so vigorously,” Abbasi said. “The CPEC is the initiative of BRI, which is the project of not only regional but global connectivity.”
As the incumbent government of the Pakistan Muslim League (PML-N) is about to complete its five-year tenure, the prime minister highlighted the achievements of his government, claiming that it had undertaken major development projects that had not been done in the past 65 years.
“Turning the economy around, overcoming the energy crisis, combating extremism and terrorism and huge investment in human development sectors have remained our key priorities since the very first day of our government,” Abbasi said. “Our economic rebound is particularly remarkable because we achieved it while aggressively fighting terrorism throughout Pakistan, for which we had to allocate resources to our law enforcement agencies.”
He said that many projects in the energy sector were in the pipeline, including four LNG terminals, four power plants of 600 MW and a desalination plant of more than 50 million gallons. “I am confident that the new government after the elections will be more than willing to play its part to make it a success story,” Abbasi said.
Andy Tsoi, managing director of Hutchison Ports, Middle East Africa, said the port was being operated at international standards and applied the highest level of expertise to port operations. “The project is a glowing example of public-private partnership and the Pak- China friendship that will augment the economic environment of Pakistan while revitalizing the ports and shipping industry and strengthen the relationship between both countries,” Tsoi said.
Senator Mir Hasil Khan Bizenjo, minister for maritime affairs, said that 97 percent of Pakistan’s international trade was handled through seaports and the ministry was committed to integrating the country’s ports. “Hutchison Port Pakistan project is an example of the successes of a public-private partnership in which KPT has invested around $800 million and Hutchison Port Holdings will be investing over $600 million,” Bizenjo said.
He announced the start of cruise line services from Karachi port to Chahbahar port via Gwadar port, connecting Oman and Dubai as well. “The Pakistan National Shipping Corporation has completed formalities and is in the process of buying three vessels. Soon foreign and local vessels will be registered in Pakistan like in Panama,” he said.