Riaz Haq writes this data-driven blog to provide information, express his opinions and make comments on many topics. Subjects include personal activities, education, South Asia, South Asian community, regional and international affairs and US politics to financial markets. For investors interested in South Asia, Riaz has another blog called South Asia Investor at http://www.southasiainvestor.com and a YouTube video channel https://www.youtube.com/channel/UCkrIDyFbC9N9evXYb9cA_gQ
There has been a slew of apparently racially-motivated attacks targeting Indians, resulting in the tragic stabbing death of a young Indian student Nitin Garg in Australia this week.
Last year also saw several vicious attacks on Indians, including the use of a petrol bomb thrown at an Indian young man sitting in his house, sending shock waves throughout the Indian community in Australia. Protest marches were organized in both Melbourne and Sydney. Spontaneous street rallies happened in Harris Park, a suburb of western Sydney with a large Indian population. The protests drew attention of the international media, with coverage in India especially widespread and critical of Australia. Representatives of the Indian government met with the Australian government officials to express concerns and demand that Indians be protected. The Prime Minister of Australia, Kevin Rudd, expressed regret and called for the attackers to be brought to justice. And yet, there seems to be no end in sight. Just yesterday, another student Jaspreet Singh was set on fire and he suffered 20 per cent burns including on his arms, chest and face. Indian students make up the second largest group, after the Chinese, of foreign students in Australia for their graduate education. From 2004 to 2009 the number of Indians studying in Australia rose from 30,000 to 97,000 with 45,000 of these living in Melbourne, 32,000 in Adelaide and the remainder in Sydney, Brisbane and Perth, according to a Wikipedia entry. Some come from the rural parts of India, with most coming to Australia to seek permanent residency. The cost of living in Australian cities has made it necessary for many of these students to live in cheaper and more distant suburbs, where there is an increased risk of encountering violent crime.
In spite of the regularity of brutal attacks singling out Indian immigrants, the Australian authorities continue to downplay, even deny the racial angle. Unless such crimes are treated as hate crimes and seriously prosecuted and punished, it is likely that the crime wave will continue, and probably get worse.
These attacks are a reminder to all South Asians and others of foreign origins living in the West, including North America, Europe and Australia, that intolerance, racism and xenophobia are alive and well in many parts of the world. Xenophobia, in particular, continues to rear its ugly head in various forms, including antisemitism and Islamophobia. We must condemn it in all its various forms in our own best interest.
Let me conclude with a famous poem by Pastor Martin Niemoeller:
First they came for the communists, and I did not speak out— because I was not a communist; Then they came for the socialists, and I did not speak out— because I was not a socialist; Then they came for the trade unionists, and I did not speak out— because I was not a trade unionist; Then they came for the Jews, and I did not speak out— because I was not a Jew; Then they came for me— and there was no one left to speak out.
Pakistan's KSE-100 stock index surged 55% in 2009, a year that also saw the South Asian nation wracked by increased violence and its state institutions described by various media talking heads as being on the verge of collapse. Even more surprising is the whopping 825% increase in KSE-100 from 1999 to 2009, which makes it a significantly better performer than the BRIC nations. BRIC darling China has actually underperformed its peers, rising only 150 percent compared with energy-rich Brazil (520 percent) and Russia (326 percent) or well-regulated India (274 percent), which some investors see as a safer and more diverse bet compared with the Chinese equity market, which is dominated by bank stocks. This is the kind of performance that has got the attention of some of the top investors and investment firms around the world. Not only has Goldman Sachs reaffirmed Pakistan's place on the list of its top 15 emerging economies for 2010, smart international investment gurus are investing in Pakistan. For example, Mark Mobius of Franklin Templeton International Funds recently said he is "overweight compared with everyone else" in Pakistani stocks. Ron Rowland, a researcher at Weiss Research, believes that the world is going to hear a lot more about the "Next 11", a group of 11 nations beyond the four "BRIC" nations of Brazil, Russia, India and China. Goldman Sachs "Next 11" group includes Mexico, Nigeria, Egypt, Turkey, Iran, Pakistan, Bangladesh, Indonesia, Vietnam, South Korea and Philippines. Like BRICs, the rationale for the selection of N-11 is a good-size and growing population with a modern industrial base for a critical mass: The ability to produce consumer goods, and the consumers who can afford to buy them. Having natural resources, such as oil, in your back yard helps too. All of this creates the potential for major consumer and business growth. And the investment opportunities — for those who are patient and do their homework — could be enormous!
However, except for population and good economic potential, the N-11 are a diverse group in terms of their level of economic and market development as well as integration in the world economy. As in the case of BRICs, the authors of the concept, Goldman Sachs Consulting Group, have used variables grouped under Macroeconomic stability, Macroeconomic conditions, Technological capabilities, Human capital and Political conditions to determine the speed with which N-11 will be able to converge or catch up with the developed economies. Indonesia, Mexico and Turkey are three of the N 11 nations are already members of the Group of 20 (G20) nations. The rest of the N11 have the potential to join the group of the twenty largest economies of the world in the next few decades. Comparing Pakistan with other N-11 countries in 2009, we find that it is only second to Indonesia in terms of population. However, in terms of the size of GDP, it is in the middle of pack, ahead of Bangladesh, Egypt, Nigeria, Philippines and Vietnam. All of this points to the potential Pakistan has to become a major economy based on its population size and demographics in the years to come. Goldman Sachs report on "Next 11" projects Pakistan's rank moving up from the 26th largest now to the 18th largest economy in the world by 2025. In this context of Pakistan's tremendous economic potential as outlined in the report, there is considerable interest among individual US investors looking for opportunities to invest in Pakistan stocks. Unfortunately, there are no pure-play mutual funds investing exclusively in Pakistan. However, in addition to Franklin Templeton Funds, there are at least two other companies specializing in Asian economies that invest part of the portfolio in Pakistan along with India, Sri Lanka and other countries in Asia. These companies are Matthews Funds and Eaton Vance Funds.
Eaton Vance has Eaton Vance Greater India A Fund(ETGIX) that describes itself as follows: The investment seeks long-term capital appreciation. The fund normally invests at least 80% of net assets in equity securities of companies in India and surrounding countries of the Indian subcontinent. At least 50% of total assets will be invested in equity securities of Indian companies, and no more than 5% of total assets will be invested in companies located in countries other than India, Pakistan or Sri Lanka. The fund invests in companies with a broad range of market capitalizations, including smaller companies.
Matthews Asia Funds has Matthews Asia Pacific Equity Income Fund (MAPIX) which describes its geographic focus as follows: The Asia Pacific Region, which includes Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Pakistan, Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.
It is heartening to see that top international investment professionals and firms continue to have faith in Pakistan's growth potential. To sustain and increase investor interest, it is absolutely essential that Pakistanis strive for a measure of peace and stability. The nation must also continue to increase the necessary investments in developing its human capital and infrastructure to support continued expansion of the economy and to realize the full potential of the country.
Dr. Ishrat Husain, a former World Bank senior official and an ex governor of the State Bank of Pakistan, wrote an article captioned "India, Pakistan: a comparison" at the end of the first five decades of two nations' existence as independent states. To my knowledge, Dr. Hussain has not done an update of his article since it was first published. Although about three years too late, this post is my attempt to present a comparison of the two South Asian nations after sixty years of independence.
Here is the opening paragraph from Dr. Husain's article from the late 1990s, which I believe still stands true today:
"India and Pakistan are completing five decades of their independence. Since the partition, the relationship between the two countries has been uneasy and characterized by a set of paradoxes. There is a mixture of love and hate, a tinge of envy and admiration, bouts of paranoia and longing for cooperation, and a fierce rivalry but a sense of proximity, too. The heavy emotional overtones have made it difficult to sift the facts from the myths and make an objective assessment. There are in fact only two extreme types of reactions on each side. Either there are those who always find that the grass is greener on the other side of the pasture or those who are totally dismissive of the accomplishments of the other side."
Not much has changed in the last ten years as far as the above paragraph is concerned. The relationship between the two nations remains as emotionally charged as ever.
Then Dr. Husain's essay talked about what he saw as the common successes of the two nations in the first fifty years:
1. Despite the prophets of gloom and doom on both sides of the fence, both India and Pakistan have succeeded in more than doubling their per capita incomes. This is a remarkable feat considering that the population has increased fourfold in case of Pakistan and threefold in India. Leaving aside the countries in East Asia and China, very few large countries have been able to reach this milestone.
2. The incidence of poverty (defined as $1 per day) has also been reduced significantly although the number of absolute poor remains astoundingly high. However, the level of poverty is lower in Pakistan.
3. Food production has not only kept pace with the rise in population but has surpassed it. Both countries, leaving aside annual fluctuations due to weather conditions, are self-sufficient in food. (Pakistan exports its surplus rice but imports small volumes of wheat).
4. Food self-sufficiency has been accompanied by improved nutritional status. Daily caloric and protein intake per capita has risen by almost one-third but malnourishment among children is still high.
5. The cracks in the dualistic nature of the economy -- a well-developed modern sector and a backward traditional sector -- are appearing fast in both the countries. A buoyant middle class is emerging. The use of modern inputs and mechanization of agriculture has been a leveling influence in this direction. But public policies have not always been consistent or supportive.
Here is the update to the above assessment:
1. Per capita incomes in both nations have more than doubled in the last ten years, in spite of significant increases in population. The most recent and detailed real per capita income data was calculated and reported by Asian Development Bank based on a detailed study of a list of around 800 household and nonhousehold products in 2005 and early 2006 to compare real purchasing power for ADB's trans-national income comparison program (ICP). The ABD ICP concluded that Pakistan had the highest per capita income at HK$ 13,528 (US $1,745) among the largest nations in South Asia. ADB reported India’s per capita as HK $12,090 (US $1,560). Nominal per capita GDP estimates for Pakistan range from US $1000 to US $1022, while the range for India is from US $ 1017 to US $ 1100. Purchasing power parity (PPP) per capita GDP estimates for Pakistan from various sources range from $2500 to $2644, while the same sources put the range for India's per capita GDP from $2780 to $2972. 2. The incidence of poverty (defined as $1.25 per day) has also come down in both nations, although the number of poor in South Asia still remains very high. According to the 2009 UN Human and Income Poverty Report, the people living under $1.25 a day in India is 41.6 percent, about twice as much as Pakistan's 22.6 percent. The most recent estimates by UNDP in Pakistan for 2007-2008 indicate poverty level at 17.2%. 3. Food production has barely kept pace with the rise of population, particularly in Pakistan. There have been higher food prices and shortages of various commodities such as wheat and sugar. There is widespread hunger and malnutrition in all parts of India. India ranks 66th on the 2008 Global Hunger Index of 88 countries while Pakistan is slightly better at 61 and Bangladesh slightly worse at 70. The first India State Hunger Index (Ishi) report in 2008 found that Madhya Pradesh had the most severe level of hunger in India, comparable to Chad and Ethiopia. Four states — Punjab, Kerala, Haryana and Assam — fell in the 'serious' category. "Affluent" Gujarat, 13th on the Indian list is below Haiti, ranked 69. The authors said India's poor performance was primarily due to its relatively high levels of child malnutrition and under-nourishment resulting from calorie deficient diets.
4. Though the nutritional status has improved in both nations, there are still very high levels of malnutrition, particularly among children. In spite of the fact that there is about 22% malnutrition in Pakistan and the child malnutrition being much higher at 40% (versus India's 46%), the average per capita calorie intake of about 2500 calories is within normal range. But the nutritional balance necessary for good health appears to be lacking in Pakistanis' dietary habits. Senior Indian official Syeda Hameed has acknowledged that Pakistan and Bangladesh have done better than India in meeting the nutritional needs of their populations.
5. India's economy has grown more rapidly than Pakistan's in the last ten years. However, both nations have accepted and implemented significant economic reforms that have opened up their economies and brought about rapid growth, more than doubling the size of each economy in the last ten years.
Dr. Husain's paper went on to talk about the common failures of the two countries in their first fifty years as follows:
The relatively inward-looking economic policies and high protection to domestic industry did not allow them to reap the benefits of integration with the fast-expanding and much larger world economy. This has changed particularly since 1991 but the control mind-set of the politicians and the bureaucrats has not changed. The centrally planned allocation of resources and "license raj" has given rise to an inefficient private sector that thrive more on contacts, bribes, loans from public financial institutions, lobbying, tax evasion and rent-seeking rather than on competitive behavior. Unless both the control mind-set of the government and the parasitic behavior of the private industrial entrepreneurs do not change drastically, the potential of an efficient economy would be hard to achieve. This can be accomplished by promoting domestic and international competition, reducing tariff and non-tariff barriers and removing constraints to entry for newcomers.
The weaknesses in governance in the legal and judicial system, poor enforcement of private property rights and contracts, preponderance of discretionary government rules and regulations and lack of transparency in decision making act as brakes on broad-based participation and sharing of benefits by the majority of the population.
In terms of fiscal management, the record of both the countries is less than stellar. Higher fiscal deficits averaging 7-8 percent of GDP have persisted for fairly long periods of time and crowded out private capital formation through large domestic borrowing. Defense expenditures and internal debt servicing continue to pre-empt large proportion of tax revenues with adverse consequences for maintenance and expansion of physical infrastructure, basic social services and other essential services that only the government can provide. The congested urban services such as water, electricity, transport in both countries are a potential source of social upheaval.
The state of financial sector in both countries is plagued with serious ills. The nationalization of commercial banking services, the neglect of credit quality in allocation decisions, lack of competition and inadequate prudential regulations and supervision have put the system under severe pressure and increased the share of non-performing assets in the banks’ portfolio. The financial intermediation role in mobilizing and efficiently allocating domestic savings has been seriously compromised and the banking system is fragile. Both countries are now taking steps to liberalize the financial sector and open it up to competition from foreign banks as well as private banks.
Here is the update on the areas of common failures of India and Pakistan:
Though the level of globalization of the two nations remains well below China's, both India and Pakistan have made significant strides in this direction. In Pakistan, exports account for less than 15% of gross domestic product, compared with about 25% in India and 40% in China, according former Musharraf economic adviser Salman Shah. The policy changes in both nations have also opened up greater FDI inflows, though Pakistan's FDI has declined in the last two years due to security perceptions, after several years of strong FDI inflows, particularly in banking, telecommunications, real estate and oil and gas sectors.
Both countries continue to run large budget deficits. India's fiscal deficit for 2008-2009 stood at 6.5 percent of gdp and it is rising, according to Bloomberg. Pakistan has said its fiscal deficit will widen to as much as 4.9% of gross domestic product in 2009-2010, according to the Wall Street Journal.
The banking sectors in both nations have seen major improvements in delivery of new services. India and Pakistan have ranked 31 and 34 respectively, out of 52 countries in the World Economic Forum's first Financial Development Report. Both nations are ranked ahead of the Russian Federation (35), Indonesia (38), Turkey (39), Poland (41), Brazil (40), Philippines (48) and Kazakhstan (45).
Consumer and commercial credit availability and retail services have improved in the last ten years. Microfinance sectors are now well established in South Asia, helping fight poverty, and empowering women economically.
Both nations are suffering from poor governance resulting in lack of responsiveness to the basic needs of the vast majority of their people. In fact, the latest Human Development Report for 2009 shows that both major South Asian nations have slipped further down relative to other regions of the world. Pakistan's HDI ranking dropped 3 places from 138 last year to 141 this year, and India slipped six places from 128 in 2008 to 134 this year.
The level of urbanization in Pakistan is now the highest in South Asia, and its urban population is likely to equal its rural population by 2030, according to a report titled ‘Life in the City: Pakistan in Focus’, released by the United Nations Population Fund. Pakistan ranks 163 and India at 174 on a list of over 200 countries compiled by Nationmaster. The urban population now contributes about three quarters of Pakistan's gross domestic product and almost all of the government revenue. The industrial sector contributes over 27% of the GDP, higher than the 19% contributed by agriculture, with services accounting for the rest of the GDP.
The increasing urbanization has had the effect of defusing the "population bomb" in Pakistan. With increasing urbanization, Pakistan's population growth rate has declined from 2.17% in 2000 to 1.9% in 2008. Based on PAI Research Commentary by Karen Hardee and Elizabeth Leahy, the total fertility rate (TFR) in Pakistan is still the highest in South Asia at 4.1 children per woman. Women in urban areas have an average of 3.3 children compared to their rural counterparts, who have an average of 4.5 children. The overall fertility rate has been cut in half from about 8 children per woman in 1960s to about 4 this decade, according to a study published in 2009.
Third, Dr. Husain turned his attention to the areas where India surpassed Pakistan:
There is little doubt that the scientific and technological manpower and research and development institutions in India are far superior and can match those of the western institutions. The real breakthrough in the Indian export of software after the opening up of the economy in 1991 attests to the validity of the proposition that human capital formation accompanied by market-friendly economic policies can lift the developing countries out of low-level equilibrium trap.
Indian scientists working in India excel in the areas of defense technology, space research, electronics and avionics, genetics, telecommunications, etc. The number of Ph.Ds produced by India in science and engineering every year -- about 5,000 -- is higher than the entire stock of Ph.Ds in Pakistan. The premier research institutions in Pakistan started about the same time as India have become hotbed of internal bickerings and rivalries rather than generator of ideas, processes and products.
Related to this superior performance in the field of scientific research and technological development is the better record of investment in education by India. The adult literacy rate, female literacy rate, gross enrollment ratios at all levels, and education index of India have moved way ahead of Pakistan. Rapid decline in total fertility rates in India has reduced population growth rate to 1.8 percent compared to 3.0 percent for Pakistan.
Health access to the population and infant mortality rates are also better in India and thus the overall picture of social indicators, although not very impressive by international standards, emerges more favorable. The two most important determinants of Pakistan’s dismal performance in social development are its inability to control population growth and the lack of willingness to educate girls in the rural areas.
Here's the update on areas where India was ahead of Pakistan ten years ago:
In response to the growing concerns about the nation lagging in higher education achievement, Pakistan launched Higher Education Reform led by Dr. Ata ur Rahman, adviser to President Musharraf in 2002. This reform resulted in over fivefold increase in public funding for universities, with a special emphasis on science, technology and engineering. The reform supported initiatives such as a free national digital library and high-speed Internet access for universities as well as new scholarships enabling more than 2,000 students to study abroad for PhDs — with incentives to return to Pakistan afterward. The years of reform have coincided with increases in the number of Pakistani authors publishing in research journals, especially in mathematics and engineering, as well as boosting the impact of their research outside Pakistan.
Although India has about 270 million illiterate adults, India's overall literacy rate is better than Pakistan's. Pakistan's population of illiterate adults is estimated at 47 million, fourth largest after India's 270 million, China's 71 million, Bangladesh's 49 million, according to the latest UNESCO Education For All report for 2010.
But India remains significantly ahead of Pakistan in higher education, with six universities, mostly IITs, ranked among the top 400 universities of the world versus only one from Pakistan, National University of Science and Technology(NUST) ranked at 350, up from 375 last year. Replication of NUST campuses, like the IIT campuses in India, can help spawn more highly rated institutions of higher learning near major cities in Pakistan.
Pakistan's information technology industry is quite young. It is in very early stages of development compared to the much older and bigger Indian IT industry, which had a significant headstart of at least a decade over Pakistan. During the lost decade of the 1990s under Bhutto and Sharif governments, Pakistani economy stagnated and its IT industry did not make any headway. However, the industry has grown at 40% CAGR during the 2001-2007, and it is estimated at $2.8 billion as of last year, with about half of it coming from exports. This pales in comparison to over $5 billion revenue a year reported by India's Tata Consulting alone.
India's literacy rate of 61% is well ahead of Pakistan's 50% rate. In higher education, six Indian universities have made the list of the top 400 universities published by Times Higher Education Supplement this year. Only one Pakistani university was considered worthy of such honor.
Pakistan has consistently scored lower on the HDI sub-index on education than its overall HDI index. It is obvious from the UNDP report and other sources that Pakistan's dismal record in enrolling and educating its young people, particularly girls, stands in the way of any significant positive development in the nation. The recent announcement of a new education policy that calls for more than doubling the education spending from about 3% to 7% of GDP is a step in the right direction. However, money alone will not solve the deep-seated problems of poor access to education, rampant corruption and the ghost schools that only exist on paper, that have simply lined the pockets of corrupt politicians and officials. Any additional money allocated must be part of a broader push for transparent and effective delivery of useful education to save the people from the curses of poverty, ignorance and extremism which are seriously hurting the nation.
A basic indicator of healthcare is access to physicians. There are 80 doctors per 100,000 population in Pakistan versus 60 in India, according to the World Health Organization. For comparison with the developed world, the US and Europe have over 250 physicians per 100,000 people. UNDP recently reported that life expectancy at birth in Pakistan is 66.2 years versus India's 63.4 years.
Access to healhcare in South Asia, particularly due to the wide gender gap, presents a huge challenge, and it requires greater focus to ensure improvement in human resources. Though the life expectancy has increased to 66.2 years in Pakistan and 63.4 years in India, it is still low relative to the rest of the world. The infant mortality rate remains stubbornly high, particular in Pakistan, though it has come down down from 76 per 1000 live births in 2003 to 65 in 2009. With 320 mothers dying per 100,000 live births in Pakistan and 450 in India, the maternal mortality rate in South Asia is very high, according to UNICEF.
Finally, Dr. Hussain addressed areas where he thought Pakistan was ahead of India fifty years after independence as follows:
The economic growth rate of Pakistan has been consistently higher than India. Starting from almost the same level or slightly lower level in 1947, Pakistan’s per capita income today in US nominal dollar terms is one-third higher (430 versus 320) and in purchasing parity dollar terms is two-third higher (2,310 versus 1,280). The latter suggests that the average Pakistani has enjoyed better living standards and consumption levels in the past but the gap may be narrowing since early 1990s. Had the population growth rate in Pakistan been slower and equaled that of India, this gap would have been much wider and the per capita income in Pakistan today would have been twice as high and the incidence of poverty further down.
Although both India and Pakistan have pursued inward-looking strategies, the anti-export bias in case of Pakistan has been comparably lower and the integration with the world market faster. The trade-GDP ratio in PPP terms is twice that of all South Asian countries. Pakistan’s export growth has been stronger and the composition of exports has shifted from primary to manufactured goods; albeit the dominance of cotton-based products has enhanced its vulnerability.
Domestic investment rates in Pakistan have remained much below those of India over the entire span primarily due to the relatively higher domestic savings rates in the latter. But the efficiency of investment as measured by the aggregate incremental capital-output ratio or total factor productivity has been higher in case of Pakistan and, to some extent, compensated the lower quantity of investment.
Here's the update on the above assessment:
Although Pakistan's economy has more than doubled in the last decade, the nation's economic growth has been slower than India's since the 1990s. Since 2008, Pakistan's economy has, in the words of the Economist, returned to the "bad old days" of the lost decade of 1990s. According to Economic Survey 2008-09, presented by Finance Minister Shaukat Tarin, Pakistan's economy grew by a mere 2.0 percent, barely keeping pace with population growth. The growth fell significantly short of the 4.5 percent target for the year, which was already very modest compared with an average of 7% economic growth witnessed from 2001-2008.
While it lags behind China, India now exports a larger percentage of its GDP than Pakistan. In Pakistan, exports account for less than 15% of gross domestic product, compared with about 25% in India and 40% in China, according former Musharraf economic adviser Salman Shah.
At 30% of GDP, Indians continue to save twice as much as Pakistanis who save about 15%. Indians' private savings provide a much larger pool for domestic investments than the much smaller private savings in Pakistan.
Let me conclude with an excerpt from a British writer William Dalrymple's article, published on 14 August, 2007 in The Guardian:
"On the ground, of course, the reality is different and first-time visitors to Pakistan are almost always surprised by the country's visible prosperity. There is far less poverty on show in Pakistan than in India, fewer beggars, and much less desperation. In many ways the infrastructure of Pakistan is much more advanced: there are better roads and airports, and more reliable electricity. Middle-class Pakistani houses are often bigger and better appointed than their equivalents in India.
Moreover, the Pakistani economy is undergoing a construction and consumer boom similar to India's, with growth rates of 7%, and what is currently the fastest-rising stock market in Asia. You can see the effects everywhere: in new shopping centers and restaurant complexes, in the hoardings for the latest laptops and iPods, in the cranes and building sites, in the endless stores selling mobile phones: in 2003 the country had fewer than three million cellphone users; today there are almost 50 million."
A familiar yardstick often used to measure progress of a nation is its energy consumption. Per capita energy consumption in Pakistan is estimated at 14.2 million Btu, which is much higher than Bangladesh's 5 million BTUs per capita but slightly less than India's 15.9 million BTU per capita energy consumption. However, South Asia's per capita energy consumption is only a fraction of other industrializing economies in Asia region such as China (56.2 million BTU), Thailand (58 million BTU) and Malaysia (104 million BTU), according to the US Dept of Energy 2006 report. To put it in perspective, the world average per capita energy use is about 65 million BTUs and the average American consumes 352 million BTUs. With 40% of the Pakistani households that have yet to receive electricity, and only 18% of the households that have access to pipeline gas, the energy sector is expected to play a critical role in economic and social development. With this growth comes higher energy consumption and stronger pressures on the country’s energy resources. At present, natural gas and oil supply the bulk (80 percent) of Pakistan’s energy needs. However, the consumption of those energy sources vastly exceeds the supply. For instance, Pakistan currently produces only 18.3 percent of the oil it consumes, fostering a dependency on imports that places considerable strain on the country’s financial position. On the other hand, hydro and coal are perhaps underutilized today, as Pakistan has ample potential supplies of both.
Pakistan's KSE-100 stock index surged 55% in 2009, a year that also saw the South Asian nation wracked by increased violence and its state institutions described by various media talking heads as being on the verge of collapse. Even more surprising is the whopping 825% increase in KSE-100 from 1999 to 2009, which makes it a significantly better performer than the BRIC nations. BRIC darling China has actually underperformed its peers, rising only 150 percent compared with energy-rich Brazil (520 percent) and Russia (326 percent) or well-regulated India (274 percent), which some investors see as a safer and more diverse bet compared with the Chinese equity market, which is dominated by bank stocks.
Summary:
Goldman Sachs report on "BRIC" and "Next 11" projects that India will be the fourth largest economy in the world by 2025. Goldman also forecasts Pakistan's rank moving up from the 26th largest now to the 18th largest economy in the world by 2025. If the deteriorating security situation and current economic slump in Pakistan are not contained and managed properly, there is a strong chance that Pakistan would be left significantly behind India at the time of the next update of this comparison in 2020. However, Pakistan is just too big to fail. In spite of all of the serious problems it faces today, I remain optimistic that country will not only survive but thrive in the coming decades. With a fairly large educated urban middle class, vibrant media, active civil society, assertive judiciary, many philanthropic organizations, and a spirit of entrepreneurship, the nation has the necessary ingredients to overcome its current difficulties to build a strong economy with a democratic government accountable to its people.
Here are some more recent comparative indicators:
One out of every three illiterate adults in the world is an Indian, according to UNESCO. Pakistan stands fourth in the world in terms of illiterate adult population, after India, China and Bangladesh.
One out of very two hungry persons in the world is an Indian, according to World Food Program. Pakistan fares significantly better than India on the hunger front.
Poverty:
Population living under $1.25 a day - India: 41.6% Pakistan: 22.6% Source: UNDP
The reason for higher levels of poverty in India in spite of its rapid economic growth is the growing rich-poor disparity. Gini index measuring rich-poor gap for India is at 36, higher than Pakistan's 30. Gini index is defined as a ratio with values between 0 and 100: A low Gini index indicates more equal income or wealth distribution, while a high Gini index indicates more unequal distribution. Zero corresponds to perfect equality (everyone having exactly the same income) and 100 corresponds to perfect inequality (where one person has all the income, while everyone else has zero income).
Nutrition:
Underweight Children Under Five (in percent) Pakistan 38% India 46% Source: UNICEF
Health:
Life expectancy at birth (years), 2007 India: 63.4 Pakistan: 66.2 Source: HDR2009
Pakistan has created more jobs, graduated more people from schools and colleges, built a larger middle class and lifted more people out of poverty as percentage of its population than India in the last decade. And Pakistan has done so in spite of the huge challenges posed by the war in Afghanistan and a very violent insurgency at home.
The above summary is based on volumes of recently released reports and data on job creation, education, middle class size, public hygiene, poverty and hunger over the last decade that offer new surprising insights into the lives of ordinary people in two South Asian countries. It adds to my previous post on this blog titled "India and Pakistan Contrasted in 2010".
Please read more at http://www.riazhaq.com/2011/10/india-and-pakistan-comparison-update.html
Here's a video clip of British Writer William Dalrymple comparing in India and Pakistan:
Here's another video clip from Intelligence Squared debate about Pakistan:
Here's recent video of Prof Jayati Ghosh of Nehru University debunking the myth of the "Indian Miracle":
Making predictions is hazardous business. After all, who would have forecast with any accuracy the Soviet defeat in Afghanistan and the fall of the Berlin wall in late 1980s, or the terrorists attacks of September 11, 2001, or the near-collapse of the US financial markets in 2008, the kind of events that fundamentally changed the world. This new decade of 2010-2020 could also bring long-lasting but hard to predict events that are described by Nassim Taleb as rare but high-impact Black Swan Events. However, I do think this new decade is likely to be defined by the fundamental issues of access to food and water, in addition to the continuing concerns about terrorism and security. Each of these challenges has the potential to precipitate major events that could bring about fundamental yet unpredictable changes in the world order.
Food:
A combination of population explosion, water scarcity, and climate change are causing serious concerns about access to affordable and reliable food supply in many nations. Climate change in parts of India has resulted in multiple crop failures after seven or eight bad years in a row, putting local people deeper and deeper in debt. An estimated 200,000 Indian farmers have ended their lives since 1997.
There has been a rush by some of the rich but food-poor nations to buy up farmland to grow food in poor nations, raising concerns about the potential for food riots. New ideas and technologies are required to bring about a new "Green Revolution" to feed the growing population of the world.
In June, news agency Reuters reported that the government of Pakistan had offered 404,700 hectares (ha) of farmland for sale or lease to foreign investors. It is the usual suspects of the Gulf states and South Korea who are the likely targets of the government's drive for investment. Oil rich, food poor states from the Middle East and food deficit prone South Korea have been spurred by the high food prices of 2007 and 2008 to increase their food security by investing in agricultural land abroad.
Also in June 2009, Swedish multi-national food company Tetra Pak announced the signing of an memorandum of understanding with local company Engro Foods to create a dairy hub in the Sahiwal district of the Punjab. The hub will serve 15 villages in the district and aims to promote more efficient production and bring smallholders into the formal dairy market chain.
In July, the Pakistani minister for investment said that the country would be happy to provide land for Korean companies to build food and dairy processing facilities, according to Pakistan Agribusiness Report. Also in July, the chief minister of the Punjab said that there was a large amount of interest in investing in the province's agriculture from Qatar.
Water:
The year began with an ominous warning by Sardar Aseff Ali, Deputy Chairman of the Planning Commission, about the potential for a water war between India and Pakistan. Such warnings clearly reinforce the gravity of the water situation, requiring creative solutions.
Water is becoming more scarce, and water wars are likely to erupt in several regions of the world. Among the 25 most populous countries in 2009, South Africa, Egypt and Pakistan are the most water-limited nations. India and China, however, are not far behind with per capita renewable water resources of only 1600 and 2100 cubic meters per person per year. Major European countries have up to twice as much renewable water resources per capita, ranging from 2300 (Germany) to 3000 (France) cubic meters per person per year. The United States of America, on the other hand, has far greater renewable water resources than China, India or major European countries: 9800 cubic meters per person per year. By far the largest renewable water resources are reported from Brazil and the Russian Federation - with 31900 and 42500 cubic meters per person per year.
According to the United Nations' World Water Development Report, the total actual renewable water resources in Pakistan decreased from 2,961 cubic meters per capita in 2000 to 1,420 cubic meters in 2005. A more recent study indicates an available supply of water of little more than 1,000 cubic meters per person, which puts Pakistan in the category of a high stress country. Using data from the Pakistan's federal government's Planning and Development Division, the overall water availability has decreased from 1,299 cubic meters per capita in 1996-97 to 1,101 cubic meters in 2004-05. In view of growing population, urbanization and increased industrialization, the situation is likely to get worse. If the current trends continue, it could go as lows as 550-cubic meters by 2025. Nevertheless, excessive mining of groundwater goes on. Despite a lowering water table, the annual growth rate of electric tubewells has been indicated to 6.7% and for diesel tubewells to about 7.4%. In addition, increasing pollution and saltwater intrusion threaten the country's water resources. About 36% of the groundwater is classified as highly saline.
The solution to the water crisis lies in better management of water resources to conserve water and new technologies to economically recycle or produce fresh water from sea water. For example, about 98% of the water in Pakistan is used in farming through a very inefficient flood irrigation method, leaving only two percent for other consumers and commercial-industrial users. A California study recently found that water use efficiency ranged from 60%-85% for surface irrigation to 70%-90% for sprinkler irrigation and 88%-90% for drip irrigation. Potential savings would be even higher if the technology switch were combined with more precise irrigation scheduling and a partial shift from lower-value, water-intensive crops to higher-value, more water-efficient crops. Rather than flood irrigation used in Pakistani agriculture, there is a need to explore the use of drip or spray irrigation to make better use of nation's scarce water resources before it is too late. As a first step toward improving efficiency, Pakistan government has launched a 1.3 billion U.S. dollar drip irrigation program that could help reduce water waste over the next five years. Early results are encouraging. "We installed a model drip irrigation system here that was used to irrigate cotton and the experiment was highly successful. The cotton yield with drip irrigation ranged 1,520 kg to 1,680 kg per acre compared to 960 kg from the traditional flood irrigation method," according to Wajid Ishaq, a junior scientist at the Nuclear Institute for Agriculture and Biology (NIAB).
Low-Cost Housing:
Housing construction by traditional methods has failed to keep pace with the rising demand, particularly in the developing countries like India and Pakistan experiencing rapid urbanization. New, cheaper and faster construction methods are needed to address the basic shelter needs of the people. There are a number of modular, pre-fabrication and rapid on-site assembly methods are being explored in developing nations.
Mass Literacy:
Literacy has become as fundamental a need as food and water in this day and age. And yet, UNESCO data indicates that 770 million adults around the world remain illiterate, over 35% of them in India. New focus and methods are needed to reach out to the illiterate masses of the world as part of a worldwide mass literacy campaigns.
Low levels of literacy continue to hobble many developing nations, limiting the productivity and economic opportunities for the growing young populations, and causing concerns about social and political instability and growth of international terrorism.
Health Care:
Access to healhcare in South Asia, particularly due to the wide gender gap, presents a huge challenge, and it requires greater focus to ensure improvement in human resources. Though the life expectancy has increased to 66 years in Pakistan and 63 years in India, it is still very low relative to the rest of the world. The infant rate remains stubbornly high, particular in Pakistan, though it has come down down from 76 per 1000 live births in 2003 to 65 in 2009. With 320 mothers dying per 100,000 live births in Pakistan and 450 in India, the maternal mortality rate in South Asia is very high, according to UNICEF.
International Terrorism:
The threat of global terrorism is likely to gain strength and spread with new bases in new geographies. A new and more creative and comprehensive strategy will be necessary to counter this growing threat in the realm of ideas and policies. Any new strategy must take into account the following facts to be effective:
1. Al Qaeda was an organization with central leadership, command and control located in Afghanistan prior to 911. But that is no longer true. According to former State Department official Mathew Hoh who served in Afghanistan, al Qaeda is an elastic, amorphous entity, one based not on geography but ideology. “Al Qaeda is a collection of ideas, of independent, autonomous cells,” Hoh says. “They don’t need a lot of funding. They need an apartment with an Internet connection.”
2. Even the 911 hijackers were not all recruited and trained in any one country. They came from different nations and were educated and trained mostly in the United States and Western Europe. What they shared in common was an ideology rather than a geography.
3. Hundreds of al Qaeda members, including many top leaders, have been captured or killed by Pakistani and US military in the region since 911. And yet, the violence is worse than ever before.
4. There have been multiple reports of al Qaeda popping up in several countries around the world such as Yemen and Somalia, confirming Mathew Hoh's arguments that al Qaeda is not confined to a particular geography in central or south Asia.
Security:
With increasing carnage in several countries, including Pakistan, and growing fears of terrorism, there is an urgent need to develop and use new tools, technologies and methodologies to anticipate and prevent acts of terror resulting in mass casualties.
Counter-insurgency:
There are many insurgencies growing around the world, including South Asia, in response to real or perceived injustices. In addition to the Afghan Taliban insurgency against foreign forces, other examples include Taliban and Baloch insurgencies in Pakistan, and Maoists and Kashmir insurgencies in India.
In addition to the political dialog to understand and address genuine grievances of the insurgents, there is a great need to develop techniques and training for counterinsurgency.
Green Energy:
Clearly, conservation alone will not suffice when it comes to the world's growing energy needs. There will continue to be significant research and development into exploiting energy from water, wind and sun, as well as innovation in safer and greener nuclear technology such as thorium nuclear reactors.
Extreme Affordability:
The incredible success of relatively inexpensive mobile telephones in poor nations, such as Bangladesh, India and Pakistan, has created the awareness among the big corporations and the entrepreneurs that the poor can be a very lucrative market.
Understanding the need to design for extreme affordability with scarce resources is giving birth to a new generation of entrepreneurs. These are entrepreneurs with a social conscience who are motivated by the desire to do good and do well at the same time. They are finding new ways to empower the poor by satisfying their basic needs, such as water, electricity and telephones.
Conclusion:
Regardless of any forecasts of the future, it is extremely important for all nations of the world, particularly the United States, China, the United Kingdom, Israel, Iran, India, North Korea and Pakistan to learn from the mistakes of the last decade to try and make the new decade a better stretch of ten years for the entire humanity. This will require sincere efforts and creative energies of the people from the aforementioned countries and the help of the rest of the world.
There is a lot of talk about the "clash of civilizations" in the Western media in the context of the US "war on terror", but little is reported about the fierce clash of ideas going on within the Islamic civilization. The polls continue to show distrust of the United States in the Islamic World, mostly based on the US policies that are perceived as unjust by the majority of the world's Muslims. The list of Muslim grievances against the United States is long, stretching from its support of the brutal Israeli occupation of Palestine to its role in Iraq, Afghanistan and Pakistan. In addition to the increasing drone attacks and rising suspicions about the role of the CIA, there are new and explosive revelations about the role and the strength of Blackwater contractors in the region. A former Blackwater employee and an ex-US Marine have alleged that Blackwater chief Erik Prince "views himself as a Christian crusader tasked with eliminating Muslims and the Islamic faith from the globe," and that Prince's companies "encouraged and rewarded the destruction of Iraqi life." The number of US contractors working for the US military and the CIA in the region exceeds the total strength of the US troops and CIA personnel, according to estimates by Jimmy Scahill who has researched and written extensively about Blackwater. The presence of over 80,000 US military and intelligence contractors in Afghanistan and Pakistan makes the level of privatization of war unprecedented.
However, it would be wrong to conclude from such reports that any more than a tiny minority of the followers of the Islamic faith support the terrorists inspired by al Qaeda's ideology of hate. In a recent International Republican Institute (IRI) poll, eighty percent of Pakistanis oppose Pakistan's cooperation with the United States on the "war on terror," a figure that shot up 19 points since March. At the same time, 86 percent agreed that Taliban and Al-Qaeda militants posed a problem for Pakistan and more than two-thirds supported a recent Pakistani army offensive on extremists.
To get a sense of the intensity of the debate raging among influential Muslim scholars and opinion makers, I think it is quite instructive to read the recent exchange between Dr. Shahid Alam and Dr. Pervez Hoodbhoy. Accusing Dr. Hoodbhoy and several others by name of being "native orientalists", Dr. Alam begins his recent Counterpunch article with a quote from Karl Marx, a strange choice giving Dr. Alam's well-established right-wing credentials. Here is the Karl Marx quote: "The more a ruling class is able to assimilate the foremost minds of the ruled class, the more stable and dangerous becomes its rule”. Dr. Hoodbhoy of Islamabad University begins his response with the following quote from "The Confessions of a Pakistani Native Orientalist" written by Dr. Shahid Alam, a professor of Pakistani origin who teaches at Northeastern University in Boston, Massachusetts:
"The victory of Native Orientalists - the ones which the late Edward Said had warned us about - is nearly complete in Pakistan. It has been led by "the minions of Western embassies and Western-financed NGOs and includes the likes of "Ahmad Rashid, Pervez Hoodbhoy, Najam Sethi, Khaled Ahmad, Irfan Hussain, Husain Haqqani, and P.J.Mir".
In his response to Alam, Hoodbhoy takes umbrage with the invocation by Dr. Alam of the name of Edward Said, who "was my mentor and hero, the man who wrote a highly positive blurb displayed prominently on the backside of my book on Islam and science". Hoodbhoy goes on to recount the unspeakable horrors and daily atrocities committed by the Taliban in Pakistan, and takes Alam to task for his adulation of the perpetrators of such inhuman acts as "the sons and daughters of the mountains, yet uncontaminated by western civilisation, firm in their faith, clear in their conviction, proud of their heritage, and ready to fight for their dignity".
Here is the full text of Dr. Hoodbhoy's response:
I ought to be thrilled. Now that I am a certified foreign-funded agent/orientalist/NGO-operator who "manages US-Zionist interests", a nice fat cheque must surely be in the mail. Thirty six years of teaching and social activism at a public university in Pakistan - where salaries are less than spectacular - means that additions to one's bank balance are always welcome.
But what did I do to deserve this kindness? My sole interaction with the good professor was in mid-2008, when we shared the speaker's podium at the International Islamic University in Islamabad. Sadly, it was not terribly pleasant.
But then these are not pleasant times. There is carnage in the streets. Blood flows down the gutters and body parts are strewn in bazaars and markets. Suicide bombers have also targeted mosques, funerals, and hospitals. The internet is filled with videos of Pakistan army soldiers being decapitated, pictures of separated heaps of limbs and heads of Shiites, and women writhing under the blows of heavy whips and chains.
The Taliban, mostly from the mountains of Waziristan and other tribal areas of Pakistan, are not particularly shy to broadcast such achievements. For example, their decapitation movies - culminating in heads being stuck upon poles and paraded around town - are watched for free by kids. On 15 February 2009, the Tehreek-i-Taliban Pakistan announced a ban on all female education and, at last count, 362 schools have been blown up in Pakistan's tribal areas.
Curiously, these very people also happen to be the heroes of Professor Alam. This self-described "anti-imperialist" and "anti-Zionist" migrant to the heart of imperialism tends to become breathless in his celebration of the brave Taliban "resistance fighters". At the meeting I mentioned above, he received ecstatic approbation from a leader of the Jamaat-e-Islami, Khurshid Ahmad, who chaired the meeting. This praise is also apparent in what the professor writes:
"Yet, in one corner of Pakistan, resistance comes from the sons and daughters of the mountains, yet uncontaminated by western civilisation, firm in their faith, clear in their conviction, proud of their heritage, and ready to fight for their dignity. They stood up against the Soviet marauders: and defeated them. Today, they are standing up again, now against the American marauders and their allies." [Pakistan's Mercenary Elites, by M. Shahid Alam]
Unless the professor is physically infirm, may I suggest that he head for the mountains of Waziristan to help the Pakistani Taliban movement? Or give a helping hand to Al-Qaida, an organization also known for its benevolence? To be sure, he may miss the free lunches the American taxpayer provides to him, but surely there must be satisfaction to be had in strapping a madrassa lad with explosives aimed at a Pakistani bazaar - especially one frequented by unveiled women and brides-to-be.
Politeness aside, I do take serious personal offence on just one matter in his outbursts against the opponents of Al-Qaida and the Taliban. This is when the good professor invokes the name and authority of Edward Said, author of "Orientalism", in condemning me and my colleagues in Pakistan.
Edward was my mentor and hero, the man who wrote a highly positive blurb displayed prominently on the backside of my book on Islam and science. He was also the closest friend of Eqbal Ahmad - my guru and dearest friend. With Eqbal, many were the pleasant evenings that we spent at Edward's apartment on Riverside Drive, New York. When Eqbal died, Edward and I were both lost in grief. When Edward died in 2003, I defended him against a poisonous article published the next day in the Wall Street Journal by a notorious Islamophobe, Ibn Warraq.
So cut it out, professor! Edward Said does not belong to the jihadists and their declared supporters - like you. He and Eqbal loathed their primitivism and utter ruthlessness, as well as their desecration of Islam. Please do not press him into your service.
On the contrary, Edward belongs to those of us on the Left who have worked for the Palestinians and their right to the lands on which they once lived, who keep fighting for justice and democracy in Pakistan, and who fervently opposed America's immoral invasion of Iraq in the streets of Islamabad and elsewhere. Edward was a supreme secular humanist who would have no truck with fanatics of any faith.
I do not know all the "native orientalists" and "brown sahibs" that the professor lists. Perhaps he secretly hopes that they shall receive appropriate attention from jihadist groups. But I do know some of these "traitors" - and they are among the finest people around. A couple, in their youth, had fought against the Pakistan Army in the mountains of Baluchistan. Others have stoutly defended religious minorities and worked to protect civil rights, democracy, and human values.
Professor Alam: be assured that once the expected cheque arrives, I shall be happy to send you a one-way ticket from Boston to Peshawar, from where you will easily find your way to Waziristan with help from your friends there. It shall be no less than business class, in appreciation of the services you render to your cause.
Here's a documentary on Islam narrated by Benazir Bhutto:
