Haq's Musings

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

Showing posts with label North America. Show all posts

Thursday, August 15, 2024

Exodus From Pakistan: 1.62 Million Emigrated in 2023

Pakistan had a net negative migration of 1.6 million people, the highest of all countries in 2023, according to the World Population Prospects 2024 report released by the United Nations. Other Asian nations like India (-980,000), China (-570,000), and Bangladesh (-550,000) are also far up the ranking. Pakistan's figure of 1.62 million includes 541,000 Afghans who were expelled from the country last year. Net migration is the net total of migrants during the period, that is, the number of immigrants minus the number of emigrants, including both citizens and noncitizens.

Top Countries Losing People to Emigration. Source: Visual Capitalist

Pakistan Bureau of Emigration and Overseas Employment data shows that 862,625 Pakistanis went to work overseas, mostly to Gulf Arab nations, in 2023. The US government granted 16,320 immigrant visas to Pakistani nationals. Another 11,861 immigrant visas were given to Pakistanis by the Canadian government in the same period. The total number of new Pakistani immigrants admitted as permanent residents in North America in 2023 was 28,181. It is likely that a similar number of Pakistani migrants arrived in Europe last year. Altogether, the total number of Pakistanis emigrants adds up to about a million. The remaining 600,000 are most likely non-citizens deported from Pakistan.

With a growing share of the working age and insufficient job opportunities, South Asian nations of India, Pakistan and Bangladesh are among the largest labor exporters in the world.

Dependency ratio, defined as the percentage of children and retirees to the working age population, is rapidly declining in Pakistan (current dependency ratio is 69.03%) and the rest of the developing nations of Asia and Africa. This demographic shift means that the world's richest and most powerful nations with the largest share of working populations will no longer be in Europe and North America by 2050. Among South Asian nations, Bangladesh has already joined the list of top 10 nations in terms of the largest share of the working age population. India and Pakistan are expected to join it by 2050. Increasingly better educated working age population is expected to significantly enhance their productivity and increase their incomes.

Shift in Share of Working Age Populations. Source: NY Times

The total dependency ratio reported for Pakistan in 2022 is 69.03%, much higher than Bangladesh's 47.09% and India's 47.5%, according to the World Bank. Dependency ratio for China is 44.96% but it is rapidly increasing. China's share of the working age population will no longer be in the top 10 by 2050 due to its aging population, according to the UN projections.

Declining Dependency Ratio in Pakistan. Source: Trading Economics/World Bank

Global Age Dependency Ratio Map. Source: World Population Review

New York Times' visual journalist Lauren Leatherby recently described this major demographic and economic shift in the following words: "The richest most powerful countries today have long had these really large working-age populations. And economists agree that that’s been a huge, huge advantage economically and geopolitically. And meanwhile, a lot of developing nations have had quite high dependency ratios having a high number of children compared to working-age people. And so, I think we know a lot of these storylines one by one, but putting it all together, it’s just like the world is going to shift really dramatically".

Current Share of Working Age Populations. Source: NY Times

"And then I think what we see (rapidly aging population) in Japan today is only the tip of the iceberg. A lot of East Asia, China, Europe, South Korea will be much older than Japan is today, in just you know, 20 or 30 years. Some countries will have upwards of 40% of their population that are 65 or older in just two or three decades. And meanwhile, on the other end, you have a lot of these other countries that have long been, you know, hindered economically by their age structures. And suddenly a lot of them will start to enjoy the exact same age structures that Europe and East Asia, the U.S., that a lot of those countries have historically enjoyed", Leatherby added.

Prijected Share of Working Age Populations in 2050. Source: NY Times

It is based on this demographic shift that Goldman Sachs analysts Kevin Daly and Tadas Gedminas are projecting Pakistan's economy to grow to become the world's sixth largest by 2075. In a research paper titled "The Path to 2075", the authors forecast Pakistan's GDP to rise to $12.7 trillion with per capita income of $27,100. India’s GDP in 2075 is projected at $52.5 trillion and per capita GDP at $31,300. Bangladesh is projected to be a $6.3 trillion economy with per capita income of $31,000. By 2075, China will be the top global economy, followed by India 2nd, US 3rd, Indonesia 4th, Nigeria 5th and Pakistan 6th. The forecast is based primarily on changes in the size of working age populations over the next 50 years.

GDP Ranking Changes Till 2075. Source: Goldman Sachs Investment Research

Economic Growth Rate Till 2075. Source: Goldman Sachs Investment Research

Economic Impact of Slower Population Growth:

Daly and Gedminas argue that slowing population growth in the developed world is causing their economic growth to decelerate. At the same time, the economies of the developing countries are driven by their rising populations. Here are four key points made in the report:

1) Slower global potential growth, led by weaker population growth.

2) EM convergence remains intact, led by Asia’s powerhouses. Although real GDP growth has slowed in both developed and emerging economies, in relative terms EM growth continues to outstrip DM growth.

3) A decade of US exceptionalism that is unlikely to be repeated.

4) Less global inequality, more local inequality.

Goldman Sachs' Revised GDP Projections. Source: The Path to 2075

Demographic Dividend:

With rapidly aging populations and declining number of working age people in North America, Europe and East Asia, the demand for workers will increasingly be met by major labor exporting nations like Bangladesh, China, India, Mexico, Pakistan, Russia and Vietnam. Among these nations, Pakistan is the only major labor exporting country where the working age population is still rising faster than the birth rate.

Pakistan Population Youngest Among Major Asian Nations. Source: Nikkei Asia

World Population 2022. Source: Visual Capitalist

World Population 2050. Source: Visual Capitalist

Over a million Pakistani university students are currently enrolled in STEM courses. Over 10 million Pakistanis are currently working/living overseas, according to the Bureau of Emigration. Before the COVID19 pandemic hit in 2020, more than 600,000 Pakistanis left the country to work overseas in 2019. Nearly 700,000 Pakistanis have already migrated in this calendar year as of October, 2022. The average yearly outflow of Pakistani workers to OECD countries (mainly UK and US) and the Middle East was over half a million in the last decade.

Consumer Markets in 2030. Source: WEF

World's 7th Largest Consumer Market:

Pakistan's share of the working age population (15-64 years) is growing as the country's birth rate declines, a phenomenon called demographic dividend. With its rising population of this working age group, Pakistan is projected by the World Economic Forum to become the world's 7th largest consumer market by 2030. Nearly 60 million Pakistanis will join the consumer class (consumers spending more than $11 per day) to raise the country's consumer market rank from 15 to 7 by 2030. WEF forecasts the world's top 10 consumer markets of 2030 to be as follows: China, India, the United States, Indonesia, Russia, Brazil, Pakistan, Japan, Egypt and Mexico. Global investors chasing bigger returns will almost certainly shift more of their attention and money to the biggest movers among the top 10 consumer markets, including Pakistan. Already, the year 2021 has been a banner year for investments in Pakistani technology startups.

Record Remittances From Overseas Pakistanis:

Pakistan is already seeing high levels of labor export and record remittances of over $30 billion pouring into the country. Saudi Arabia and the United Arab Emirates(UAE) are the top two sources of remittances but the biggest increase (58%) in remittances is seen this year from Pakistanis in the next two sources: the United Kingdom and the United States.

Remittances from the European Union (EU) to Pakistan soared 49.7% in FY 21 and 28.3% in FY22, according to the State Bank of Pakistan. With $2.5 billion remittances in the first 9 months (July-March) of the current fiscal year, the EU ($2.5 billion) has now surpassed North America ($2.2 billion) to become the third largest source of inflows to Pakistan after the Middle East and the United Kingdom. Remittances from the US have grown 21%, second fastest after the EU (28.3%) in the first 9 months of the current fiscal year.

Worker Remittances as Percentage of Pakistan GDP. Source: World Bank

Pakistan ranks 6th among the top worker remittance recipient countries in the world. India and China rank first and second, followed by Mexico 3rd, the Philippines 4th, Egypt 5th and Pakistan 6th.

Pakistan Demographics

About two million Pakistanis are entering the workforce every year. The share of the working age population in Pakistan is increasing while the birth rate is declining. This phenomenon, known as demographic dividend, is coinciding with declines in working age populations in developed countries. It is creating an opportunity for over half a million Pakistani workers to migrate and work overseas, and send home record remittances.

Pakistan Among World's Largest Food Producing Countries

Riaz Haq's Youtube Channel

PakAlumni: Pakistani Social Network

Thursday, June 27, 2024

Growing Pakistani Diaspora in North America

The US government granted 16,320 immigrant visas to Pakistani nationals. Another 11,861 immigrant visas were given to Pakistanis by the Canadian government in the same period. The total number of new Pakistani immigrants admitted as permanent residents in North America in 2023 was 28,181.

There are currently over a million Pakistanis living in North America. These include 687,942 Pakistanis in America as of 2020, according to the US Census. And 303,260 Pakistanis residing in Canada as of 2021, according to Statistics Canada. There are nearly 6 million people from India living in North America, according to government data.

Pakistani Diaspora in North America. Source: US, Canadian Governments

Non-immigrant visas issued annually by the US government to Pakistani passport holders have almost doubled over the last 5 years, from 40,679 in 2018 to 80,852 in 2023, according to Gallup Pakistan. Meanwhile, immigrant visas issued annually to Pakistani citizens have increased by about 60% in the last 5 years, from 10,114 in 2018 to 16,320 in 2023.

Pakistani immigrants make up the 25th largest group in America, far behind immigrants from Mexico, India and China. In Canada, Pakistani immigrants are the 5th largest group of foreign-born residents.

Top 8 Source Countries of Foreign Students in US. Source: IIE OpenDoors

Pakistani student enrollment in America's institutions of higher learning rose 16% last year, outpacing the record 12% growth in the overall number of international students hosted by the country. This puts Pakistan among eight sources in the top 20 countries with the largest increases in US enrollment. India saw the biggest increase at 35%, followed by Ghana 32%, Bangladesh and Nepal at 28% each, Pakistan 16%, Colombia 13%, Italy 10% and Spain 5%.

"During 2022-2023, there were 10,164 Pakistani students, compared to 8,772 in the previous year, indicating an impressive 16% increase," according to IIE Open Doors Report for 2022-23. There has been an overall 33% increase in enrollment of Pakistani students in US colleges and universities.

The average annual household earnings of Pakistani-Americans are $149,178, according to the latest update issued by the United States Census Bureau for 2022. The update estimates the median income of 132,958 Pakistani-American households at $106,281. Average is calculated by adding up all incomes and dividing it by total number of households. Median income level divides the top 50% of families from the bottom 50%. It shows that Pakistani-American household incomes are roughly at par with the Asian-American households' median of $104,646 and average of $149,363. The highest income ethnic group in the US are Asian Indian households with a median of $152,341 and average of $197,732. Asians are significantly richer than Whites (mean $78,636, average $112,415) and African Americans (mean $52,238, average $76,888). The word "alone" in the labels in the following table excludes mixed race households.

South Asian Americans Households. Source: US Census Update 2022

Asian Americans are the best educated racial group in the United States. From 2012 to 2022, the percentage of adults age 25 and older with a bachelor’s degree or more increased from 34.5% to 41.8% for the non-Hispanic White population; from 21.2% to 27.6% for the Black population; from 51% to 59.3% for the Asian population; and from 14.5% to 20.9% for the Hispanic population, according to the US Census.

Educational Attainment By Racial Groups (Source: US Census)

Among Asian Americans, the Indians (three quarters) have the highest educational attainment with at least a bachelor's degree, followed by Koreans and Pakistanis (about 60%), followed by the rest.

Asian American Educational Achievement by Countries of Origin. Source: US Census

Asians, including Chinese/Taiwanese, Indians and Pakistanis, tend to be concentrated in STEM (Science, Technology, Engineering and Technology) fields where incomes are generally much higher than in other occupations.

As of 2019, there were 35,000 Pakistan-born STEM workers in the United States, according to the American Immigration Council. They included information technologists, software developers, engineers and scientists. These figures do not include medical doctors and healthcare workers.

Foreign-Born STEM Workers in America. Source: American Immigration Council

Foreign-born workers make up a growing share of America's STEM workforce. As of 2019, foreign-born workers made up almost a quarter of all STEM workers in the country. This is a significant increase from 2000, when just 16.4% of the country’s STEM workforce was foreign-born. Between 2000 and 2019, the overall number of STEM workers in the United States increased by 44.5 percent, from 7.5 million to more than 10.8 million, according to American Immigration Council.

India and Pakistan Among Top 10 Countries Receiving US Immigrant Visas. Source: Visual Capitalist

India topped the top 10 list of foreign-born STEM workers with 721,000, followed by China (273,000), Mexico (119,000), Vietnam (100,000), Philippines (87,000), South Korea (64,000), Canada (56,000), Taiwan (53,000), Russia (45,000) and Pakistan (35,000). Enormous number of Indian STEM workers in the United States can at least partly be attributed to the fact that India's "body shops" have mastered the art of gaming the US temporary work visa system. Last year, Indian nationals sponsored by "body shops" like Cognizant, Infosys and TCS received 166,384 H1B visas for work in the United States. By comparison, only 1,107 Pakistanis were granted H1B visas in Fiscal Year 2022. In addition to H1B work visas, 9,300 Indian nationals and 7,200 Pakistani nationals received immigrant visas to settle in the United States as permanent residents in 2021.

Doctor Brain Drain. Source: Statista

In addition to 35,000 Pakistan-born STEM workers, there were 12,454 Pakistan-born and Pakistan-trained medical doctors practicing in the United States, making the South Asian nation the second largest source of medical doctors in America. Pakistan produced 157,102 STEM graduates last year, putting it among the world's top dozen or so countries. About 43,000 of these graduates are in information technology (IT).

H1B Visas Issued in Pakistan. Source: Visagrader.com

H1B Visas Issued in India. Source: Visagrader.com

Every year, applicants sponsored by Indian body shops claim the lion's share of H1B visas. In 2022, Indians received 166,384 new H1B visas, accounting for nearly three quarters of all such visas issued by the US government. The figures reported as India IT exports are in fact the wages earned by millions of Indian H1B workers in the United States.

Many developing countries are experiencing brain drain. But India is losing its best brightest at a much faster rate than others. Some call it "The Great Indian Brain Drain". This is the reason why Indians in the United States are the best educated and the highest earning group. In a recently published book titled "The Other One Percent", authors Sanjoy Chakravorty, Devesh Kapur and Nirvikar Singh explain this phenomenon.

They write that the vast majority of Indians who migrate to the United States are from privileged backgrounds in terms of caste, class and education. They have gone through “a triple selection” process that gave Indian-Americans a boost over typically poor and uneducated immigrants who come to the United States from other countries. The first two selections took place in India. As explained in the book: “The social system created a small pool of persons to receive higher education, who were urban, educated, and from high/dominant castes.” India’s examination system then selected individuals for specialized training in technical fields that also happened to be in demand in the United States. Kapur estimated that the India-American population is nine times more educated than individuals in the home country. Here's an excerpt of it:

"A major focus of this book is on demonstrating and understanding the multiple selections that shaped the Indian-American population. These selections applied not only to education (that, in terms of attaining college degrees, made the India-born population three times more educated than that in the host country and nine times more educated than the home country’s population) but also to class and caste (favoring, by large margins, the “upper” and dominant classes and castes of India), profession (engineering, IT, and health care), and both the region of origin (Gujarati and Punjabi were overrepresented in the first two phases, and Telugu and Tamil in the third phase) and region of settlement (in specific metropolitan clusters in and around New York City, the San Francisco Bay Area, Chicago, Washington, D.C., and Houston and Dallas). In addition to direct selection is what we call the “selection+” advantage: we suggest that group characteristics or norms, such as the fact that Indians had the highest propensity to live in married-couple households of any major immigrant group, added to the advantages of being an already selected group. We show, in particular, how family norms were useful in keeping the Indian-American poverty level low (under 5 percent) and family income high (the highest in the United States). It is also likely that the selection process enabled, without explicitly intending to, the generation of high levels of social capital (through linguistic/ professional networks such as Gujarati entrepreneurs in the hotel industry, Telugu and Tamil workers in the IT industry, IIT engineers, Malayali nurses, Bengali academics, etc.)"