Tuesday, August 7, 2007

Pakistani economy Compare, Contrast and Analyze.

Asalaamu-Alykum,


I was recently wondering about Pakistan's Economy, so I decided to do a little research and I found some completely obvious and some utterly amazing answers.

Starting out with probably the least surprising is Pakistan's GDP per Capita, which sits at around $2600.00 per person as opposed to India's $3800(~150% of Pakistan's) or U.S.A. $44,000(~1700% of Pakistan's). But surprisingly India's GDP is not only 1.5 fold that of Pakistan but it is also growing at rate that is 139% of Pakistan. Pakistan GDP is growing at about 6.6% while India which is already ahead, is zooming at the rate of 9.2%. Not only India has achieved a greater economic success but it is en route to achieve some more. While America's GDP has reached near saturation and is growing at a mere rate of 3.2%

Another surprising fact is that Pakistan has a lower unemployment rate and poverty rate than India. India's unemployment rate is 7.8% while Pakistan is slightly behind at 6.5%. India has 25% of its population below poverty line while Pakistan has slightly less at 24%. Another major difference is the gini index(measure income inequality) of Pakistan is 41% while India is 32.5%. It means that there is a higher difference between income classes in Pakistan than in India. Pakistan has more rich-poor gradient than India.

Looking at all this you are probably wondering is that a solution to all this, Can Pakistan's Economy ever blossom? Well, the answer is always yes, but How? First of all Pakistan need increase it GDP growth rate, which can be accomplished by one of two ways. First Pakistan needs to increase exports and increase the income from outsourcing. The west has recently gotten a recent urge to outsource it programming and customer service contracts. India took a huge advantage of that and has made a lot of money from it while Pakistan is yet take advantage of it, primarily because India has a literacy rate of 61% while Pakistan only 50% that means India had more educated, English-speaking and unemployed people that Pakistan. But If Pakistan had a lower literacy rate than India therefore it must have a higher labor force, and since Pakistan has a higher gini index means there are a lot of rich people in Pakistan. Rich people+Poor labor force=Factories-->Jobs-->Exportable Goods-->Pakistan Success, Simple equation, basically rich gets richer, the poor get rich.

How do we get these Lazy and Rich people to make factories, simple TAX, if they have money that is not being used, they have to pay luxury-tax on it, any reasonable person will invest his money to make more money rather than give it away.


Abu Abdullah,
The Doctor of Truth

*All facts came from the CIA website.

No comments: