Pakistan continues to persist among worst performing countries on account of Human Development Index (HDI) as it fell in the ranks by another notch to settle at 152nd position out of total 189 economies of the world.
It’s also a fact that Pakistan lags behind among all comparable regional counterparts. It requires soul-searching and in-depth analysis to ascertain its reasons if we are to find out permanent solutions for it.
The vicious cycle of with boom-and-bust continues to haunt Pakistan’s economic realities. The economic data of last three to four decades proved with empirical evidence the country had always performed for achieving stabilisation and always through compression of economy.
It always ensured a stabilisation phase with the help of tight fiscal and monetary policies. But when the country hit the higher growth trajectory it failed to keep its twin deficits -fiscal and current account- within manageable limits, leading to an ever-present balance of payment crisis. The reasons behind the vicious cycle, appearing again and again in the economic scene, are country’s inability to undertake structural reforms, which is bound to cause instability and hurdles in the way of reaching a sustained higher growth trajectory.
The country is currently passing through a stabilisation phase but this time around the sequencing of so-called reforms has been devised in such way that it resulted into suppressing the demand in economy for too long and it might take even longer to return to the revival track. Secondly, it is time for the government to devise well-thought-out structural reforms in order to avoid repetition of surfacing of twin deficits at the end of its five-year term because if this spadework was not done now the country would be back to square one again after few years.
Three areas are critical for averting balance of payment crisis in the future. First of all, the country will have to achieve exportable surplus at competitive prices and then explore new markets to fetch non-debt-creating dollar inflows. Secondly it needs to reverse the deindustrialisation because with the shrinking pace of manufacturing sector the desired level of exportable surplus will remain a far cry. Furthermore, with the help of increased exports, the current account deficit can be curtailed efficinetly.
Also, the fiscal reforms are important to create a cushion to spend more on the much-needed areas of social sector such as health and education and keep the country at a sustainable path on debt sustainability index. The expenditure side should also be looked into detail as there is no justification of duplication of expenditures incurred by the center and provinces in the aftermath of 18th constitutional amendments. The fiscal reforms will help control the yawning budget deficit.
Moreover, the fixing of cash-bleeding public sector enterprises, especially in the energy sector, should be another area of focus so all the economic policies should be formulated to attain these fundamental goals on long and sustained basis.
If a country remains distracted by its cyclic macroeconomic crises that return every four to five years to bite into its economy, it will obviously not be able to focus on taking effective measures to meet the targets of Human Development Index, on which Pakistan lags well behind its regional peers.
The Human Development Report 2019 showed Pakistan’s ranking was lower than all comparable regional countries of South Asia. We stood at 13 percent, below the average HDI of South Asia including Bangladesh, and India. The country however managed some good progress from year 2000 to 2015 but it slowed down afterwards.
Analysing the HDI value from 2000 to 2018, the report states Pakistan’s HDI value was 0.560 in 2018 compared to 0.558 in 2017. Now it’s at 152nd out of total 189 countries and falls in the medium human development category.
In 2017, Pakistan ranked at 151st position. The HDI improved by 25 percent from 2000 to 2015 with an average annual growth of 1.2 percent but the progress seems to have lost pace since then. The improvement could be attributed mainly to education and income indicators.
Despite improvements, Pakistan’s HDI was still lower than comparable economies of South Asian region. As it was 13 percent below the average South Asian HDI and 12 percent below the average HDI of medium human development category.
Pakistan was also lower in performance in terms of life expectancy (at birth), expected years of schooling, mean years of schooling, and GNI (gross national income) per capita with all regional countries.
On account of Inequality-adjusted Human Development Index (IHDI), Pakistan did not perform well as well and with an IHDI of 0.386 in 2018, Pakistan suffered a loss of 31.1 percent due to inequality in the distribution of HDI dimension indices. In comparison, Pakistan had a higher percentage of inequality in health and education dimensions as compared to the average of South Asia and other medium HDI countries.
On Gender Development Index (GDI), the HDR 2019 states Pakistan’s ratio of the 2018 female HDI value stood at 0.464 and the male HDI value 0.622, which resulted in a GDI value of 0.747. This signifies low equality in HDI achievements and absolute deviation from gender parity. Pakistan performed below the average values of South Asia and other medium HDI countries.
Dr Sabina Alkire from Oxford University said there were 541 million poor people in South Asia in accordance with Multi-Dimensional Poverty Index (MPI) out of which 75 million were in Pakistan, while 40 million were children. It indicated one out of three children is poor owing to deprivation in Pakistan, Dr Alkire added.
She highlighted that inequality in MPI across South Asian region stood at 0.8 percent in Maldives, while 56.9 percent in Afghanistan. The Oxford expert said 11 percent South Asian girls were poor and out of school in accordance with MPI definition but this number stood at 27 percent in case of Pakistani girls. In South Asia, 23 percent children, aged 0 to 4, experience intra-household inequality in nutrition but in Pakistan it’s over 33 percent.
She further said Pakistan’s national MPI ranged from 3 percent in Islamabad and 97 percent in Qilla Abdullah of Balochistan province.
With this kind of dismal performance, Pakistan’s HDI ranking cannot be improved without integrated approach adopted by both the central and the provincial governments. To begin with the country needs macroeconomic stability and then it will have to focus on improving social services delivery at grassroots level to nail the desired results.
The writter is a staff member