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Business & Finance

Pakistan needs productivity-enhancing reforms: World Bank

  • Report says that by closing female employment gap relative to its peers, Pakistan can accrue GDP gains of up to 23%
Published February 10, 2023

The World Bank said on Friday that Pakistan’s economy can grow sustainably if the country introduces “productivity-enhancing reforms” that facilitate better allocation of resources and improves female participation in the workforce.

In its report titled ‘From Swimming in Sand to High and Sustainable Growth’, the multilateral lender said Pakistan’s inability to allocate all its talent and resources to the most productive uses has stunted economic growth.

In a press release, the World Bank said that the report presented evidence of systematic productivity stagnation across firms and farms.

“In manufacturing and services, most of the productivity stagnation is related to firms losing efficiency over time. The report also shows a systematic decline in agricultural productivity, as well as a strong link between elevated temperatures and rainfall variations and productivity.”

The report presents a roadmap to reduce distortions in the economy that are currently acting as a deterrent to productivity growth.

Critical reforms recommended by the World Bank include harmonising direct taxes across sectors, reducing anti-export bias of trade policy by lowering import duties and reversing the anti-diversification bias of export incentives.

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World Bank Country Director for Pakistan Najy Benhassine said “women in Pakistan have made progress in educational attainment, but this accumulated human capital is underused because of constraints they face to participate in the labour force.”

“With only 22% of women employed in Pakistan, women’s labour force participation is among the lowest in the world. By closing the female employment gap relative to its peers, Pakistan can accrue GDP gains of up to 23%.”

He was of the view that successful implementation of policies to address the demand and supply-side barriers to female labour force participation can create about 7.3 million new jobs for women.

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Meanwhile, World Bank Senior Economist Gonzalo Varela said “long-term structural imbalances that have prevented sustainable growth for too long ought to be addressed urgently.”

He urged Pakistan to reduce distortions that misallocate resources and talent and support growth of firms through smart interventions.

The report urged Pakistan to maximise positive impact on businesses and productivity across the board by reducing regulatory complexity, harmonizing the general sales tax (GST) across provinces, reforming investment laws to attract more foreign direct investment and upgrading insolvency laws to reduce the costs of liquidating non-viable firms.

The report quoted economist Zehra Aslam as saying: “firms in Pakistan struggle to grow large as they grow old. A young formal firm in Pakistan that has been in operation for 10 to 15 years is about the same size as a firm that has been in operation for more than 40 years.”

Similarly, she said an average Pakistani exporter is less than half the size of one in Bangladesh, which shows a lack of dynamism amongst Pakistani firms compared to better functioning markets where firms either grow or exit.

Comments

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Az_Iz Feb 10, 2023 05:53pm
Increasing women participation can boost national income by almost 23%. That is so amazing and so doable. Along with improving education and healthcare, increasing women participation should be a top priority for the country.
thumb_up Recommended (2)
Az_Iz Feb 10, 2023 05:54pm
Increasing women participation is a low hanging fruit, and a real game changer.
thumb_up Recommended (2)
Johnny Feb 10, 2023 06:53pm
Pakistan need elections ASAP to put country back on track of progress! It cannot afford any technocratic crap cum ML!
thumb_up Recommended (1)
ProPakistani Feb 10, 2023 09:02pm
Pakistani exporters have developed their business empires on subsidies, over invoicing, parking money outside country etc.. This has neither helped the cause of Pakistan nor helped society at large. They have been engaged in businesses which are losing its charm at the global stage. It is time to innovate and venture into businesses, which are global in nature and which can be scaled up in other jurisdictions with minimum capital. Our exporters should learn to survive on their own rather than on subsidies and they should invest into research & development, as it will help our country to produce entrepreneurs. Singapore and Dubai should be role models for us, how to keep on investing into new ideas and build regional hubs even without natural resources.
thumb_up Recommended (3)
KhanRA Feb 10, 2023 11:37pm
This will require a societal change. Pakistanis have kept this pre-Islamic custom alive by being raised to believe women are lesser humans who are servants to men, and that those that dare exist in the public sphere are fair game for harassment. Instead of teaching boys to respect women, we think it’s a better idea to lock women up at home even though they have proven to have more potential than our men. Women can’t even go to work without being grabbed or verbally harassed. We need public transit to give them safe commutes, and shame the men who harass instead of blaming women for being out of the house.
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