By Dr. Nayyer Ali

July 04, 2008

Pakistan’s Poverty Profile

Over the last eight years Pakistan has seen a huge change in its economy and level of development. But has that affected the poor? Has there been much change among the lowest income groups?  Is poverty truly declining, or has the last eight years just been a party for the rich, the real estate speculators, and the stock market players?
To truly answer that question one has to look at real data. The evidence of one’s eyes on a trip to Pakistan is simply too unreliable. A traveler only sees what he sees, and frankly it is impossible to tell the difference between someone who is merely very poor and another who lives in poverty by what they look like on the street.  To get at this question one has to go to the economic statistics and survey data collected by the government of  Pakistan.  When Musharraf was in power, these numbers were routinely dismissed by critics as “fabricated” by Musharraf.  But the production of these numbers involves so many career civil servants and clerks, that it is difficult to imagine how anyone could carry out a total fabrication of official statistics without someone revealing the truth. And in fact, these were the professional products of government employees, not political operatives.  Shaukat Aziz transferred power to a caretaker government in November 2007, and the PPP has been in power since the February elections.  Nevertheless, no one has claimed that the statistics of the last few years were incorrect or politically manufactured, and the government released its Economic Survey of Pakistan in early June  in which it embraced and accepted all the numbers that Musharraf has rightly crowed about.
The main point of this survey is that the plunge in poverty continues.  Between 2000 and 2006 the number of people who were below the poverty line dropped from 34.4% of the population to 22.3% of the population. Even among those that were still below poverty, the severity of their poverty lessened, as the percent classified as “ultra-poor” and “extremely poor” dropped from 11.9% to 5.9% of the population. As these families ascended out of poverty, they gained the ability to afford basic health care and education for their children.
Now in Pakistan, the poverty line is set very low.  It correlates with the international definition of about 1 dollar per day (1993 dollars) in consumption per person. In Pakistan, income above 1000 rupees per month per person means you are not in poverty. And income above 2000 rupees per month (or say 150,000 rupees annually for a household of 6) puts you in the top 20% of the population.  The rich in Pakistan are not all that rich, it is still a very poor country.
In consumption terms, Pakistan has become slightly more unequal than it was in 2000.  One way of looking at inequality is how much consumption goes to each 20% band of the income ladder.  In 2000, the lowest 20% got 10.1% share of consumption, while the highest 20% got 38%.  In 2006 those numbers were 9.6% and 40.3% respectively.  So the wealthiest have benefited slightly more than the poorest, with the broad 60% in the middle holding their own.  But remember, this is in the context of rapid growth and rising total consumption. Although the poorest saw their slice of the pie drop a fraction, the total pie grew very fast, so they did pretty well anyway.  This reinforces the basic notion that the only really effective way of eliminating poverty is rapid economic growth, and rapid growth will always have the effect of reducing poverty.  In fact, inequality in Pakistan is very low by Asian standards (and much lower than India or China), which is why Pakistan has no billionaires.  I personally was rather amused at what constituted a “posh” area in Lahore or Islamabad when I visited last year.
The rapid growth has been marked by a huge rise in employment, in contrast to the relatively jobless growth that India has experienced.  In 2001 the Annual Labor Force Survey found a total labor force of 42 million, of which 3.5 million were unemployed. By 2007, the survey found a labor force of 50 million, of which 2.5 million were unemployed. The number of employed Pakistanis surged from 38 to 47.6 million. Unemployment was a low 5.2%. There remain significant cultural barriers to female participation in the labor force, but among younger workers, female participation rates in the labor force rose from 10% to 18% in the last 7 years, and have hit 25% in Punjab, compared with a steady 70% rate for males.
While economic growth can raise incomes and consumption levels, what about the government’s responsibility for social services and human development?  On this front too, there was major expansion in the last 8 years. Education spending went from 66 billion to 224 billion rupees, population planning from 1.3 to 13.3 billion, health spending from 19 to 62 billion, and water and sanitation from 5 to 17 billion rupees.  
The effect of this spending has been substantial. Gross primary school enrollment rates rose from 72% to 91%, and middle school gross enrollment went from 41% to 51%. Literacy rose from 45% to 55% and has reached 67% for males.  Soon we will no longer be able to refer to the average Pakistani as the “illiterate masses”.  
In health, infant immunization coverage has risen from 53% to 76%.  Life expectancy has reached 64 years for males and 66 for female, numbers equal to what life expectancy was in the United States in the 1930’s.  However, infant mortality at 7% and under 5 years mortality at 10% remain atrociously high, even by Indian or Bangladeshi standards.  Given that 4 million babies are born every year in Pakistan, that means 280,000 die in their first year, and another 120,000 die before reaching age five. Over the next ten years, almost 4 million Pakistani babies will die needlessly due to the shameful performance of many governments. By comparison, in Thailand only 2% of babies die before age 5.
All this data just begs the question: if things are going so swimmingly in Pakistan, why is the change not visible?  On one level it is visible, it is just a matter of perspective.  For a visitor returning for the first time in 20 years, the changes are everywhere you look.  But for someone who is living there, a 5% change in annual living standards isn’t going to make much difference.  Per capita income in the US is 20% higher than it was in the mid-1990’s, but it is very hard to see much difference in the average person’s life.
But on another level, there is some truth to that question.  Despite 50 years of 5% growth, Pakistan remains a very poor country.  That is because it has had to do the very hard slog of building the basic elements of a modern economy out of the subsistence agriculture that was all that existed before 1948.  It takes just as much work to raise incomes from 300 dollars per year to 3,000, as it does to raise from 3,000 to 30,000.
We all know what developed economies “look” like. That obvious physical appearance (let us say the United States in the 1950’s) is reached at income levels of about 15,000 dollars.  Pakistan has just reached 3,000, and is now ready to make a huge leap upward into a much more modern profile.  It can reach 15,000 dollars in income with 6% per capita growth for 25 years or so. This is the primary task of the governments of the next two decades, to allow Pakistan to achieve that goal and thereby provide a decent life to all its citizens.




Deflating Japan

Bush’s Axis of Evil

Speaking to Non-Muslims

If Arafat Were Jinnah

The Shape of Things to Come

South Asia Expert Calls for Negotiations on Kashmir

Kashmir After the Cold War

Kashmir Quagmire: How It Started

Kashmir: Where We’ve Been

Make Way for the Euro

Will there Be a Muslim Palestine?

Careful, Careful

Our Growing Community

Pakistan’s Golden Opportunity

Musharraf’s Reform Plans

Pakistan’s Afghan Dilemma

Humanity on the Move

Strategies of America, Pakistan and Benazir

Winners and Losers

America’s Strategy Defang the Fundamentalists

The Noose Tightens

Pakistan in America

Musharraf’s Moment

A Sad Day for America, A Sad Day for Islam

Repeal the Blasphemy Law

Bush’s Stem Cell Compromise

The Depressing Stock Market

An Evening on Human Development

“Benazir” Takes Over in Indonesia

Race Riots in Britain

Global Warming or Just Hot Air?

Milosevic on Trial

Russia’s Collapse

Economic Recovery in Pakistan?

President Khatami’s Re-election

Lifting Sanctions on Pakistan

Israel’s Moral Burden

A Break in the Logjam?

The Second American Century

Pakistan’s Constitution

Dr. Lodhi in Los Angeles

Literacy: The Road Forward

Why Yusuf Can't Read

Literacy: The Glass is Half Full

Blowing Up Buddha

A Truth and Reconciliation Commission for Pakistan

Did You See the Moon?

Cornrows, Ali Khan, and Culture

Will the Children Go To Harvard?

Muslim Political Progress

Information Technology Gets A Boost

Sand and Oil

On Lieberman

Pakistan Builds A Tank

Kashmir in the Nuclear Age

Full Speed Ahead on Privatization

A Muslim France?

Too Much Food

Watching the Election Why Are We Hollywood’s Villains?

A Tyrant Falls

Taliban Victorious

The Walking Whale of Pakistan
The Joy of Air Travel?

The Amazing American Economy
Arafat and Jerusalem

Names For The Children

Population: Too Many or Too Few?

It Does Matter

Aziz Goes For Growth

The Military Government's First Budget

L'Affaire Salam

End Sanctions on Iraq

Third World Democracy

Light Weapons Trade on the Rise

Iran Reforms

Back to the Future

The Saudis and OPEC Mature

How Can We Help Pakistan Develop?

Report Card on Musharraf

IMF Vs Pakistan

A Candid Discussion on Foreign Policy Issues

A Sad Tale of Missed Opportunities

Cold War In Kashmir

Whither Afghanistan?

National Security and Literacy

Pakistan Votes

The People Win

What is an Islamist?

Selling the Crown Jewels

Still Not Government

One Year After the Taliban

Benazir's Folly

Iraq and Oil

Saddam and Iraq - I

Saddam and Iraq - 2

Muslim Democracy

Zakat and Capitalism

Zakat and Capitalism - 2

The Economy Picks Up

The American Military: Power without Limit?

Good Foreign Policy is Good Anti-Terrorism Policy

The Arrest of Khalid Shaikh Mohammad

Bush Takes a Gamble

Bush Attacks

Besieging Baghdad

Darkness in Saddam's Bunker

Piccadilly It Aint Qissa Khani Is Still Qissa Kahani

Ed Asner and Afghanistan's Progress

Bush Delivers a Roadmap

Liberation or Imperialism

The Roadmap

Economic Rebound

Musharraf in Los Angeles

Economic Growth will lead to Democracy

Trapped by Myths and Fantasies

The Surge in Karachi Stocks

Bush's Busted Budget

America's Broken Healthcare

Time to Buy Stocks?

Islam, the State, and Human Rights

30 Years after the Oil Shock

The Future of Oil Wealth

Pakistan, India and Human Development

Pakistan's Eid Present

Iraq, Democracy and Islam

The End of Saddam Hussein

Three Wins for Pakistan

The Islamabad Declaration

Kerry's Big Wins

Repeal Hudood and Blasphemy

Bush's Growing Vulnerability

What Has Aziz Done?

Bits and Pieces

The Growth of India

Chaos in Iraq

Bush Caves in to Sharon

Abuse at Abu Ghraib

Too Harsh, Musharraf

The BJP Loses

What Do the Jihadis Want?

The Pak Economy: Bigger than We Think

Is America Richer than Europe?

Prime Minister Aziz

Unbundling WAPDA

Musharraf's Uniform

Chess Game in Kashmir

Three States, Three Debates

What's Wrong with the Democrats?

Can Elections Bring Peace to Iraq?

Elections in Iraq

Can Generals Yield to Democrats?

IMF Give Pakistan an “A”

Improve Higher Education in Pakistan

A Framework for Reconciliation

Iraq’s Elections By

Privatizing Power

Bullish in Karachi

Palestinians Should Abandon Suicide Bombings

The F-16’s

Bush’s Social Security Plan

Growth and Investment

Patronage Versus Policy

Aziz, the PML, and 2007

Are We Running out of Oil?

Purchasing Power

Economic Progress

Social Progress

PTCL and the Privatization Roller-coaster

Bombing in Britain

The Ummah is Not a Tribe

Is the US Oppressing the Muslims?

Is Iraq Dissolving?

Sharon Retreats

Pakistan and Israel

The Earthquake

The Other Earthquakes

The Battle for the Supreme Court

Pakistan’s Physician Exports

Beginning of the End in Palestine

Intelligent Design and Other Religious Beliefs

Shifting Populations in South Asia

Sharon’s Stroke

Building Dams

Hamas in Charge

Free Elections in 2007

Muslim Perspectives on Zionism

Iraq Falls Apart

Big Successes in Privatization

Iran’s Nuclear Ambitions

Global Warming

Dennis Ross on the Middle East

What Makes an Islamic State?

The Iraq War

Strong Growth, Falling Poverty

Buffett and His Billions

Why Peace Is Elusive in the Middle East

How Poor is Poor?

How Poor is Poor?
Pakistan’s Growth Moment

Declare a Palestinian State

The London Bomb Plot

Who Won the Lebanon War?

Iran, Israel, and the Bomb

The Pope’s Speech

Democrats Win!

The Republicans Lick Their Wounds

Finally, Some Enlightened Moderation

The Error in the War on Terror

Economic Challenges for Pakistan

Reshaping the Middle East - Part 1

Reshaping the Middle East - Part Two

The Surge to Defeat

Whither Palestinians?

Pakistan and Afghanistan

Blind to the Future?

Musharraf Goes Too Far

Letter from Lahore

Can Musharraf Escape His Own Trap?

Will Healthcare Swallow the Economy?

Israel’s Surprise Offer

The Economy Surges Again

Al Gore Should Run

Pakistan’s Arms Industry

Any Exit from Iraq?

Deal, No Deal, or Many Deals

Nawaz Comes and Goes

Will Musharraf Wriggle Through?

Can We Stop Global Warming?

Bush’s Sputtering “War on Terror” Loses Again

Mental Health at Guantanamo Bay

What a Mess!

Will Musharraf’s Errors Prove Fatal?

How About Some Good News?

Anyone but Nawaz

China, India, and Pakistan: Whose Citizens Live Best?

Electing the Next President

Benazir’s Tragedy

Pakistan Election

Democracy and Pakistan

False Hopes in Palestine

Dinner with Shaukat Aziz

How Real Were Aziz’s Reforms?

The State of Pakistan

A Real Debate on Iraq

Stop Negotiating

Severe Challenges Face Pakistan’s Economy

Mindless Obsession with Musharraf

After Musharraf, More Musharraf?

Can Obama Do It?

Editor: Akhtar M. Faruqui
© 2004 . All Rights Reserved.