research proposal on economy of pakistan

Impact of Foreign Direct Investment on Economic Growth of Pakistan

Published in Vol 3(2) in 2018 in FUJBE . Earlier version was published in Proceedings of the Asian Multidisciplinary Conference, Asia Metropolitan University, Cyberjaya Campus, Malaysia on 30–31 December 2017

78 Pages Posted: 28 Jan 2018 Last revised: 25 Mar 2021

Mukhtiar Ali Shar

Singapore Management University - Yong Pung How School of Law; IQRA University, Students

Imran Riaz Malik

Capital University of Science and Technology

Date Written: November 17, 2017

This study investigates the short and long run impact of Foreign Direct Investment (FDI) on Economic Growth of Pakistan. For this purpose, time series data from 1976-2015 has been collected from State Bank of Pakistan, World Bank and Economic Survey of Pakistan. Dependent variable used as Economic Growth (Gross Domestic Product Growth Rate (GDPGR) and independent variables as FDI, Gross Domestic Educational Expenditure (GDEX), Domestic Capital (KD), Openness to Trade (OPT), External Debt (EXD) and Labour Participation Rate (LPR). For stationarity of data Augmented Dickery Fuller (ADF) test was used and Auto Regressive Distributed Lag (ARDL) model was used to check the long-term co-integration among variables. The results of the study indicate that the FDI has significant positive impact on Economic Growth of Pakistan in short run whereas; it has insignificant negative impact on long rum at 5% significant level. Furthermore, the statistical results show that economic growth has significant impact on GDEX, OPT, EXD, KD and Insignificant impact on FDI and LPR. The significant epitome of this study is the requirement of the policy restructuring and implications by the Government of Pakistan which can be drawn from the findings of this study. Government of Pakistan should take necessary measures based on the recommendations of this study to enhance FDI and attract more investments both national and international.

Keywords: Foreign Direct Investment, Economic Growth, Domestic Capital, External Debt, Autoregressive Distributed Lag, Labour Participation Rate

Suggested Citation: Suggested Citation

Mukhtiar Ali (Contact Author)

Singapore management university - yong pung how school of law ( email ).

55 Armenian Street Singapore, 179943 Singapore +923315777957 (Phone)

IQRA University, Students ( email )

Karachi Pakistan

Capital University of Science and Technology ( email )

Kahuta Road Islamabad, 46000 Pakistan

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Appraisal of Pakistan’s Economy

This economic brief outlines a cautiously optimistic recovery for Pakistan’s economy following a contraction in FY23. The GDP growth rate rebounded to 2.4% from -0.2%, driven predominantly by a robust agricultural sector which expanded by 6.25%. This resurgence highlights Pakistan’s reliance on its agricultural base, particularly noting significant increases in the production of key crops like cotton, rice, and wheat.

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Pakistan has important strategic endowments and development potential. The increasing proportion of Pakistan’s youth provides the country with a potential demographic dividend and a challenge to provide adequate services and employment.

Poverty reduction has slowed amid recent shocks, as economic growth has remained volatile and slow. Pakistan made significant progress towards reducing poverty between 2001 and 2018 with the expansion of off-farm economic opportunities and increased inflow of remittances. However, rapid poverty reduction has not fully translated into improved socio-economic conditions, as human capital outcomes have remained poor, with high levels of stunting at 38 percent and learning poverty at 78 percent. Critical constraints, including persistent fiscal and current account deficits, protectionist trade policies, unproductive agriculture, a difficult business environment, a heavy state presence in the economy, and a financially unsustainable energy sector, have remained unaddressed, leading to slow and volatile growth. Progress with poverty reduction has recently slowed amid macroeconomic instability, the COVID-19 pandemic, and the catastrophic 2022 floods. The estimated lower-middle income poverty rate is 40.1 percent (US$3.65/day 2017 PPP) for the year 2023-24, virtually the same as the poverty rate in 2018, but with 7 million more Pakistanis living below the poverty line.

Pakistan experienced heavy monsoon rains in 2022 leading to catastrophic and unprecedented flooding with enormous human and economic impacts. Roughly 33 million people were impacted, and many permanently displaced. More than 13,000 kilometers of roads were destroyed, 2.2 million houses damaged, around 3.8 million hectares of crops were flooded, and an estimated 1.2 million livestock were killed. Limited access to input and output markets and temporary disruptions to supply chains subsequently drove up food prices and added to existing price pressures resulting from reduced agricultural yields and the global rise of food prices. The Government’s Post-Disaster Needs Assessment estimated that the need for rehabilitation and reconstruction is at US$16.3 billion.

Pakistan has made recent progress towards macroeconomic stabilization, but risks remain extremely high and faster growth will require substantial reform. Real GDP growth contracted by 0.2 percent y-o-y in fiscal year FY23, after growing by 6.2 percent in FY22 and 5.8 percent in FY21. Accumulated economic imbalances, including high fiscal deficits and increasing debt, depleted Pakistan’s policy buffers resulting in high vulnerability to the catastrophic floods, high world commodity prices, and tight global financing conditions. Repeated delays in implementing the International Monetary Fund (IMF) Extended Fund Facility (EFF) program and the associated decline in external financing inflows saw foreign reserves fall to critically low levels, amid high inflation and sharp currency depreciation. Following the expiry of the incomplete EFF program, a nine-month Stand-By Arrangement (SBA) was approved by the IMF, with staff level agreement reached on its final review in March 2024. Under the SBA, exchange rate flexibility was restored, import controls were eased with some recovery in foreign exchange reserves and economic growth, and new measures were introduced to contain the FY24 fiscal deficit. Nonetheless, risks remain high. Short-term stability depends on remaining on track with the SBA, continued fiscal restraint, and new external financing inflows. Robust economic recovery over the medium term will require the steadfast implementation of much broader fiscal and economic reforms.

Economic activity is expected to remain subdued, with real GDP growth estimated at 1.8 percent in FY24, reflecting continued tight macroeconomic policy, import controls, high inflation, and continued policy uncertainty. Output growth is expected to increase to around 2.5 percent over FY25-26, remaining below potential. Poverty reduction is projected to stall with the poverty rate at around 40 percent in the medium term, owing to weak growth, limited increase in real labor incomes, and persistently high food and energy inflation. Inflation is projected to remain elevated at 26.0 percent in FY24 due to higher domestic energy prices, with little respite for poor and vulnerable households with depleted savings and lower real incomes. With high base effects and lower projected global commodity prices, inflation is expected to moderate over the medium-term. With continued import controls, the CAD is expected to remain low at 0.7 percent of GDP in FY24 and to further narrow to 0.6 percent of GDP in FY25 and FY26. The fiscal deficit is projected to widen to 8.0 percent of GDP due to higher interest payments but gradually decline as fiscal consolidation takes hold and interest payments fall over time.

The Government continues to face a challenging macroeconomic environment while maintaining progress towards macroeconomic stabilization and critical structural reforms. Significant downside risks include: i) policy uncertainty, which may undermine a coherent and timely policy response; ii) worsening external conditions, including unforeseen increases in global commodity prices and interest rates; and iii) risks associated with large domestic and external financing needs, especially in the context banking sector liquidity constraints. To manage these risks, it will be critical to adhere to sound overall economic management and buttress market sentiment, including through articulating and effectively implementing a clear strategy for economic recovery; constraining fiscal expenditures to the extent possible and carefully targeting any new expenditures; maintaining a tight monetary stance and flexible exchange rate; and remaining on-track with critical structural reforms, including those in the energy sector.

Last Updated: Apr 02, 2024

The  Country Partnership Strategy  (CPS) for Pakistan for FY2015-20 is structured to help the country tackle the most difficult—but potentially transformational—areas to reach the twin goals of poverty reduction and shared prosperity.

The Pakistan team continues to engage with stakeholders on the next Country Partnership Framework (CPF). The CPF will draw from several analytical works, including Pakistan Systematic Country Diagnostic: Leveling the Playing Field , and the recently published Country Climate Development Report and Country Economic Memorandum .

The four results areas of the current CPS are:

Transforming the energy sector:  WBG interventions are supporting improved performance of the energy sector by supporting reforms and investments in the power sector to reduce load shedding, expand low-cost generation supply, improve transmission, improve governance and cut losses.

Supporting private sector development:  A mix of budget support, investments and analytical work supports improvements in Pakistan’s investment climate, in overall competitiveness, agricultural markets and productivity, and skills development. 

Reaching out to the underserved, neglected, and poor:  Investments support financial inclusion, micro, small and medium enterprises (MSMEs), women and youth (including through enrollment outcomes), fragile provinces/regions and poorer districts, social protection, and resilience and adaptation to the impact of climate change.

Accelerating improvements in service delivery:  At the federal and provincial levels the Bank supports increasing revenues to fund services and setting more ambitious stretch targets for areas that are not producing change fast enough (especially education and health). At a provincial level, this involves support to better service delivery in cities.

Cross cutting themes for the program include women’s economic empowerment, climate change and resilience, and regional economic connectivity.The WBG has fourth-largest portfolio of $14.7 billion in Pakistan ($10.7bn IDA, $3.8bn IBRD, $0.2mn in Trust funds and co-financings). The portfolio is supporting reforms and investments to strengthen institutions, particularly in fiscal management and human development. Partnerships are being strengthened at provincial levels, focusing on multi-sectoral initiatives in areas such as children's nutrition, education and skills, irrigated agriculture, tourism, disaster risk management, and urban development. Clean energy, and social/financial inclusion, both remain major priorities.

ENHANCING DISASTER RESILIENCE

Being one of the most vulnerable countries to climate change Pakistan is recurrently affected by catastrophes, including the unprecedented 2022 floods which affected an estimated 33 million people and resulted in US$14.9 billion in damages and US$15.2 billion in economic losses . Pakistan’s economy continues to suffer chronic strain from prevailing and likely future threats of hazards. Since the 2005 Pakistan earthquake, which led to nearly 73,000 deaths and caused damages to over 570,000 houses, the Bank has been supporting the Government of Pakistan in shifting to an anticipatory risk management approach. Initially, the Bank provided technical assistance to the government to highlight physical and fiscal risks from hazards, including risk assessments of federal and provincial capitals. In parallel, the Bank also used grant resources to build the capacity of Provincial Disaster Management Authority of Balochistan.

Following the floods of 2014, at the request of Government of Pakistan, the World Bank prepared the US$125 million IDA-funded Disaster and Climate Resilience Improvement Project (DCRIP) to support the restoration of flood protection infrastructure and strengthen government capacity to manage disasters and climate variability in Punjab. The project was successfully concluded in November 2021,achieving its intended development objectives and surpassing the targets for several key results indicators. DCRIP directly benefitted more than 8 million people, half of which are women. The project also repurposed US$7 million to support the Government of Punjab in the pandemic emergency response through procurement of personal protection and healthcare equipment.

In 2016, the Bank also prepared and delivered the US$100 million IDA-funded  Sindh Resilience Project  (SRP) to mitigate flood and drought risks in selected areas, and strengthen Government of Sindh's capacity to manage natural disasters. About 5.75 million people across the province have benefitted from project interventions till date. The drought mitigation component of the project, comprising construction of small groundwater recharge dams, has already started generating strong development impacts for the target communities. In 2021, the Bank approved an additional financing of US$200 million to scale up the small groundwater recharge dams component and set up an emergency rescue service for Sindh.

The Bank has also prepared and delivered the US$188 million IDA-funded Pakistan Hydromet and Climate Services Project which aims to strengthen Pakistan’s public-sector delivery of reliable and timely hydro-meteorological services and enhance community resilience to shocks. The Contingent Emergency Response Component (CERC) was activated under this project to disburse US$150 million in response to the 2022 floods to provide cash assistance to 1.3 million flood affected families.

Furthermore, as part of comprehensive emergency response and rehabilitation support for 2022 floods, the Bank delivered two emergency projects for the province of Sindh, which was disproportionately affected by the catastrophe. The US$500 million IDA-funded Sindh Flood Emergency Rehabilitation Project aims to rehabilitate damaged infrastructure and provide short-term livelihood opportunities through cash-for-work in selected areas of Sindh affected by the 2022 floods. The project will also strengthen the capacity of the Government of Sindh to respond to the impacts of climate change and natural hazards through expansion of the Sindh Emergency Rescue Service (Rescue 1122) and enhancing the preparedness of relevant line departments. The Project is expected to benefit 2 million people through rehabilitated infrastructure while short term livelihood support will be provided to 100,000 households.

Similarly, the IDA-funded US$500 million Sindh Flood Emergency Housing Reconstruction Project aims to deliver beneficiary-driven, multi-hazard resilient reconstruction of core housing units damaged or destroyed in the floods of 2022 in selected districts of Sindh. The Project will support the provision of an estimated 350,000 housing subsidy cash grants and strengthen the capacity of the Government of Sindh by providing technical assistance for the overall housing reconstruction program.

The flood emergency response projects have made satisfactory progress till date. US$ 160 million has been utilized for infrastructure rehabilitation, benefitting more than 3 million people, and about US$100 million has been committed for tranche-based cash grants for housing support to 160,000 beneficiaries.  Efforts are ongoing to ensure the inclusion of eligible beneficiaries and putting emphasis on infrastructure resilience in design standards, which represent important steps towards enhancing overall resilience and building back better.

The Bank has also launched the Country Climate and Development Report (CCDR) for Pakistan. The Pakistan CCDR provides analyses and policy recommendations on harmonizing efforts to achieve further economic growth and lower poverty rates, on the one hand, with the pursuit of a climate-resilient, low-carbon, and equitable development path, on the other. In light of the devastating 2022 heatwaves and floods and the country’s vulnerability profile, the CCDR strongly emphasizes the need to build long-term resilience. Further, it explores pathways for Pakistan to achieve deep decarbonization by 2050, and eventually reach net-zero emissions by 2070 without undermining its development ambitions.

Pakistan has made progress in mainstreaming the Sustainable Development Goals (SDGs) in national policies and strategies, however, there is a slow progress in improving health outcomes. According to the maternal mortality survey in 2019 [1], the country’s maternal mortality ratio  was 186 deaths per 100,000 live births down from 276/100,000 live births in 2006-07. Large gaps exist across provinces with Sindh and Balochistan having twice the number of maternal deaths as compared to the national average. The country also has one of the highest infant and under-5 mortalities in the region (62 and 74 deaths per 1,000 live births, respectively). Twenty-two percent of the children born have low birth weight with variations across provinces.

On average, access to quality reproductive, maternal, newborn, child, and adolescent health with nutrition services in Pakistan is inadequate, with regional disparities. About 49 percent [2] of pregnant women do not receive the recommended four or more anti-natal care (ANC) visits essential for a safe and healthy pregnancy outcome. With 33.8 percent of births outside of health facilities, the risk of maternal and infant mortality and morbidity is high. 42 percent of women of reproductive age in Pakistan have anemia due to poor nutrition. At 3.6 births per woman [3], Pakistan’s fertility rate is still relatively high, and except for Punjab, adolescent fertility has increased, and modern contraceptive prevalence rate (mCPR) has been low in the last decade at 25 percent. High fertility rate and teenage pregnancies contribute to poor maternal and child health outcomes which pose risks of death and illness.  Poor health affects all facets of women’s lives including delayed development milestones, education, learning skills and gainfully participating in the labor force.

Stunting rates for children under age 5 have dropped from 45% to 40.2% from 2013 to 2018 [4]. However, it is still high and large disparities exist among provinces. This prevalence varies from 36.4% in Punjab to 46.6% in Balochistan. The average annual rate of reduction since the last 2018 National Nutrition Survey has been estimated at only 0.5 percent, which is frighteningly slow to reach the national targets. Although the situation is worse in rural and poor households, more than 20 percent of under-5 children in the wealthiest income quintile are also stunted, meaning poverty is not the only driver of stunting.

Immunization coverage for children aged 12-23 months, increased considerably over the past 8-9 years from 54% in 2013 to 77% in 2022. In Punjab 89.5% of children are fully immunized while in Khyber Pakhtunkhwa, Sindh and Balochistan 60.5%, 68%, and 37.9% are respectively fully vaccinated [5].

The World Bank has been supporting the health sector in Pakistan through national and provincial projects. The “National Health Support Program”, approved in Fiscal Year 2023, supports the strengthening of equitable delivery and quality of essential health services at the primary level and the “Sindh Integrated Health and Population Project”, approved in Fiscal Year 2023, supports to improve quality health services in selected areas and restore and rehabilitate healthcare services impacted by floods. The “Punjab Family Planning Program” is aimed to improve modern contraceptive prevalence rate (mCPR) while simultaneously tackling the knowledge and cultural barriers that hinder access to family planning services in the province. Provincial “Human Capital Investment projects” are being implemented in Balochistan, Punjab and Khyber Pakhtunkhwa with the aim to improve utilization of quality health targeted and social services to the poor and vulnerable population.

The World Bank also invests in analytical work through “Programmatic Advisory Services and Analytics (PASA)”, aiming to generate evidence for reforms and provide technical support to the federal and provincial governments in implementing Universal Health Coverage in Pakistan. Additionally, the Bank is working with the Government of Pakistan, through analytics to build capacity of the country stakeholders of the human and animal sectors on health emergency preparedness and response from a one-health perspective.  The Bank is also developing thorough and comprehensive analyses on nutrition that will contribute to the development of a nation-wide program to accelerate stunting reduction in under-five children in pursuit of accumulating human capital in Pakistan.

Sources: [1] Pakistan Maternal Mortality Survey 2019; [2] Universal Health Coverage Index 2023; [3] Demographic and Health Survey 2018; [4] National Nutrition Survey 2018; [5] Third-Party Verification Immunization Coverage Survey Round Two 2022.

Actions to Strengthen Performance for Inclusive and Response Education (ASPIRE) is a 5-year US$200 million program that became effective in August 2020. The program is aimed at enhanced targeting of COVID-19 education response, generating improved learning opportunities for out-of-school children (OOSC) and at-risk students, and enabling stronger federal-provincial coordination and management. To date, the Ministry of Federal Education and Professional Training (MoFEPT) and the provincial education departments have achieved four Disbursement-Linked Results (DLR): adoption of National School Health and Safety Protocols, approval of National Education Response and Resilience Plan, provision of distance learning kits to 50,000 students across the country, and provision of hygiene and cleaning kits to 20,000 public schools nationwide. The activities planned in in FY23 mostly focused on construction and rehabilitation, communication campaigns, teachers training, multi-modal programs, and specific intervention related to Out of School Children (OOSC). The ASPIRE program has also been successful at leveraging the Inter-Provincial Education Ministerial Conference (IPEMC) and the Technical Steering Committee (TSC) platforms for improved coordination between the Federal and Provincial Education Departments.

Pandemic Response Effectiveness in Pakistan project (PREP) , initiated in April 2020, was closed in June 2023. Different donor organizations extended their support in the form of grants and loans to overcome the pandemic situation all over the world, especially to support the education sector. PREP was a USD187 million project of which USD17 million is the education component. The education component introduced distance-learning activities and the development and implementation of plans to ensure the continuity of learning including remote learning options, at all levels of education. These included TV /radio broadcasts, virtual networks of teachers, and other means of distance delivery of academic content at primary, secondary and higher secondary levels. The key activities that are being procured under PREP included: i) Teleschool initiative through Allama Iqbal Open University (AIOU), ii) Content procurement for Teleschool, iii) Strengthening of E-Taleem portal including Virtual Teacher Training (VTT) and Learning Management System (LMS) modules, iv) Development of VTT Training Modules/Courses v) Smart classrooms vi) Procurement and distribution of hand-held devices vii) Communication campaign viii) School on wheels, and ix) the monitoring and evaluation activities.

Data and Research in Education (DARE) is a US$10 million Bank Executed Trust Fund (BETF) provided by the Foreign, Commonwealth & Development Office alongside the ASPIRE program. The project supports Pakistan education sector’s response and recovery by providing technical assistance to the Federal Government, in order to strengthen the education data infrastructure and coordination mechanisms between the federal and provincial governments, enhance evidence-based decision making and improve targeting of programs to reduce inequality and gender-gap. The main components under DARE include strengthening the provincial-Federal education data management processes, enhancing sector coordination on student learning outcomes and improvement of sector monitoring, evaluation and decision making by supporting policy research and impact evaluations.

COVID 19 Response, Recovery, and Resilience in Education Project (RRREP)  - a Global Partnership for Education funded grant of US$19.85 million was successfully closed in November 2022. The project ensured learning continuity through a) broadcasting the digital content on National TV and Radio which reached around 2.7 million children across 58 lagging districts in Pakistan; b) contributed to the evolving EdTech ecosystem at the Federal level by enhancing the Ministry’s digital content library (6000 lessons for grades K-12) and mapping them to the National and Provincial Student Learning Outcomes; and c)  providing adequate infrastructure for the delivery of digital content. Moreover, to ensure safe school reopening post COVID-19, around 1.8 million children in over 12,000 primary schools received sanitizing and hygiene kits, as well as learning materials to lower barriers for re-enrollment and attendance. The Bank has also supported the government’s communication campaign on safe school practices as well as re-enrolment campaigns to encourage families to send their children back to schools once schools re-opened. The project also supported National strategic policy dialogue on strategies to mainstream Out of School Children (OOSC).

Under the 5-year Higher Education Development in Pakistan (HEDP) the World Bank supports research excellence in strategic sectors of the economy, improved teaching and learning and strengthened governance in the higher education sector. The project has been successful in bringing some key reforms in the sector, including: introduction of an Undergraduate Education Policy which established the criteria for Associate Degree and transition of all Bachelor’s Degree programs from two-years to four-years; research capacity development by providing competitive research, innovation, and commercialization grants, such as the Rapid Research Grants, for research on critical COVID-19 related topics and Innovative Seed Fund to support startups and entrepreneurs; expansion of digital connectivity and remote learning systems to ensure continuity of education during COVID-19 and capacity building trainings of faculty, especially females under the newly established National Academy for Higher Education.

The World Bank supported Punjab with an reform program through the  Punjab Education Sector Project-III program (US$300 million), which closed  in June 2022. The Bank also supports interventions in the education sector in Punjab through the Human Capital Investment project (US$200 million, with US$30 million supporting strengthening and scale-up of early childhood education in 11 districts in South Punjab). The project supports the development of a 2-year early childhood education (ECE) curriculum and strengthening of ECE services in Punjab. Currently a minimum of 11,000 ECE classrooms meet new quality standards, which include the presence of a trained teacher and caregiver as well as a kit with instructional material. In addition, content for teaching and learning materials is being updated to ensure alignment with evolving curricula and standards.

The 5 year Sindh Early Learning Enhancement through Classroom Transformation (SELECT) project of $155 million, financed in part by the Global Partnership for Education grant ($55 million) supports the Sindh Education Sector Plan & Roadmap (SESPR) 2019–2024, focusing on 12 of 29 districts in Sindh, with the lowest performance on educational outcomes. Prioritized areas under SELECT include foundational literacy; teaching quality; classroom and provincial assessments improving access to elementary schools and enhancing the school learning environment, including in 250 flood-affected schools; proactive dropout mitigation (especially for girls) and transition from primary to secondary schooling through the development of a student attendance monitoring and redress system; and improved school and district-level governance which contribute to the achievement of its targets.

Balochistan

The Balochistan Human Capital Investment Project (BHCIP), which became effective in 2021, is implemented together with the health sector. The education component (US$17.75 million) focuses on the improved utilization of quality education services in selected refugee hosting districts. BHCIP funds the rehabilitation of schools and upgrading of primary schools to middle and high schools, merit-based hiring of additional teachers and strengthening of the education sector stewardship. To date, BHCIP has initiated the procurement of supplies for schools, including basic furniture, ECE classroom materials, science, and IT laboratory equipment. The project also aims to improve student assessment and teacher training across the province by supporting the Balochistan Assessment and Examination Commission and Provincial Institute of Teacher Education. Use of data for decision making and schools’ capacity to contribute to generating reliable data is another important element of the project that strengthens governance at school and district levels.

Khyber Pakhtunkhwa

In March 2021, the Government of Pakistan approved the US$200 million Khyber Pakhtunkhwa Human Capital Investment Project (KPHCIP) – a five-year project that aims to improve the availability, utilization, and quality of primary healthcare services and elementary education services in 4 districts of Khyber Pakhtunkhwa. The districts were selected because they have some of the highest refugee populations in the province. This financing includes a grant of USD $62.5 million from the IDA18 regional sub-window for refugees and host communities (IDA-18 RSW). The education component (US$115 million) of the project will focus on improving the availability, utilization, and quality of education services in selected districts for all children, especially refugees and girls. Approximately US$19M from the education component are being reallocated for flood rehabilitation and reconstruction in the original districts as well as 9 additional flood-affected refugee-hosting districts. 

OPERATING IN CONFLICT AREAS

In the aftermath of the militancy crisis in Pakistan, the Multi-Donor Trust Fund (MDTF) for Khyber Pakhtunkhwa (KP), Federally Administered Tribal Areas (FATA), and Balochistan was established in August 2010. The aim was to support the reconstruction, rehabilitation, reforms, and other interventions needed to build peace and create the conditions for sustainable development in the affected regions. After more than a decade of implementation, the MDTF officially closed on December 31, 2023.

In two rounds, the MDTF supported a range of projects to help build state-citizen trust in KP, FATA, and Balochistan. Round I of MDTF projects was implemented from August 2010 to March 2017 and focused on helping the provinces come out of the militancy crisis and take strides towards conflict prevention and peacebuilding. Subsequently, Round II was implemented from April 2017 to September 2023, achieving results towards reconciliation, peacebuilding and enhancing state- citizen trust by focusing on three pillars: (i) Growth and Jobs Creation; (ii) Improved Service Delivery; and (iii) Policy Reforms and Improved Governance.

The MDTF has aimed to build peace and create the conditions for sustainable development, but it has also helped address an array of immediate emergencies in Pakistan. For example, the MDTF has responded to unforeseen and immediate needs by supporting livelihood improvement measures in Balochistan in the aftermath of the 2022 floods. Furthermore, the fund was among the first to respond to the COVID-19 pandemic in Pakistan, providing much-needed resources.

The MDTF was closed on December 31, 2023, after the activities were completed and the targeted results were achieved. Of the funds of around USD 283 million, which included USD 11 million in investment income, USD 279 million (98 percent) was used for results, resulting in savings of around USD 3.6 million.

The MDTF achieved noteworthy results under its three results areas. The World Bank will continue to engage with the Governments of Khyber Pakhtunkhwa and Balochistan through several projects that build on the results achieved under the MDTF.

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Research proposal on impact of Gwader port in Pakistan's Economy

In colleberation with China, Pakistan is constructing the port and will operate the Gwader port

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Dr. Zahid Anwar

Salman Anwar

In this Paper an attempt has been made to highlight the Geo-Strategic and economic significance of Gwadar Port. Gwadar Port is a deep water sea port on the southern coastal area of Pakistan in the Arabian Sea. its significance is evident from its Geographical location as Gwadar port lies at the mouth of the strait of Hormuz. world,s 40% proven oil trade has been carried out through this area. So this paper is highlighting in detail the significance of this Sea port in the future Geo-Politics of South and Central Asia

Usman Saeed

The pragmatic facets like geography and history have always imprinted the demographical mosaic and development of a civilisation. The civilisations have always developed along the waters. The waters have been used as trade route since long and the modern trade has further enhanced the need of trade through waters. Pakistan being a gateway to the strategically important 'Strait Of Hurmoz' in the Indian Ocean, blessed with hidden treasures and bordering two Islamic Republics, Afghanistan and Iran, has always been a centre piece for Regional Politics. The emergence of Gwadar Port as a vibrant regional economic hub has caused the regional and extra regional powers to develop strategic and infra structural development with Gwadar Port to reach the energy rich Central Asian Republics (CARs). Iran and Dubai Port World (UAE) have interests to keep Gwadar Port out of competition as it serves as a gateway to Strait of Hurmoz. Pakistan needs to be addressing all the concerns to make Gwadar as a regional energy corridor.

Hikmat Afridi

Pakistan has built a port at the south western city of Gwadar on the mouth of the oil rich Persian Gulf. The importance of Gwadar Port is manifold as it is not only going to play pivotal role in Pakistan’s economy but will influence the economy of neighbouring countries like China, Iran and Central Asia etc. Gwadar project will generate thousands of jobs for the local people due to which there will be revolution in creation of numerous job opportunities in the entire country. The progress will be on different levels i.e. individual and family, city and society, province, country and the region at large. The volume of expected trade is interpolated through trade trends of the areas, surrounding the Gwadar Port and evaluation of its economic potential. The envisaged trade forecast of Gwadar Port is based on the potential transit cargo of Western China, Afghanistan, flow of natural resources from Central Asia, trans-shipment cargo and the domestic import and export. The development of industries, trade and business in adjoining areas are some of the spins-offs of the port, which require appropriate policies to accrue maximum benefits. Pakistan is focusing on the immense potential of Gwadar Port. It will act as great energy centre and a multi-regional trade hub. Pakistan’s Sea Lines of Communications will be much safer from the threat of potential enemy of Pakistan ie India. In the times of naval blockade, it can provide strategic depth to Pakistan Navy in the shape of an alternate base. Its effective use will help Pakistan in keeping a watchful eye on the vital international shipping routes and can prevent the country from being surprised. Its existence addresses the strategic concerns that have hampered the progress in the past. However no port can flourish until conditions like viable government policies, political stability, law and order situation, development of infrastructure and identification of profitable areas are fulfilled. The purposes of this study are to highlight the geo-strategic significance of the port, identify its real potentials, and interests and roles of internal, regional and extra regional stakeholders. The important area of the study is the Chinese’s efforts in its construction and operating to the extent that US and key regional players are watching the Chinese involvement with suspicion. In a situation when US can request military basing rights at the Gwadar port to handle some future turbulent situation in the region. This eventuality would require Pakistan to strike a balance between a time-tested friend and US. The choice is obvious but can face tough time if Pakistan does not come up to the US expectations.

ali murtaza

Umbreen Javaid

China sees Pakistan as her longstanding and committed ally. Since the establishment of diplomatic relations, Pakistan and China have successfully maintained cordial ties muddling through all challenging circumstances and serving their national interests. As Pakistan's physiographic feature placed her at the junction of South Asia, West Asia, Central Asia and Western China, she is sited in a region which is strategically significant for world trade. She proposes the shortest route to China towards Middle Eastern and European countries and plays a vital role in transit economy. China depends a great deal on Middle Eastern states to satiate her energy needs. Presently, Pakistan and China are agreed to build an economic corridor; a multi-dollar's project, China has ever invested in any foreign country. With China Pakistan Economic Corridor and Gwadar port being functional the shipping cost would be reduced and delivery time for China to reach Middle East and beyond will be cut short. Integrating 2,000 km transport link between China's Kashgar region to Gwadar port at Pakistan close to Iran's frontier through physical roads and railways and oil and gas pipelines, the corridor will increase economy and trade, improve regional integration, expand transport and communication infrastructure and overcome energy shortage that are coupled with potential threats and challenges.

Manzoor Ahmad

Abdul Mateen Sandhu

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China Pakistan Economic Corridor: Demands, Dividends and Directions

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Economic Growth and Rural Poverty in Pakistan: A Panel Dataset Analysis

• Original Article
• Published: 19 February 2020
• Volume 32 , pages 1128–1150, ( 2020 )

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• Shujaat Farooq 1 &
• Usman Ahmad   ORCID: orcid.org/0000-0001-7317-6865 1  

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The relationship between growth and poverty is complex in Pakistan, where economic growth has not always been translated into poverty reduction. In the present work, three waves of a panel/longitudinal household survey, conducted between 2001 and 2010, were used to analyze poverty trajectories as well as the relationship between their patterns and economic growth. The findings from the panel survey reveal that more than half of the rural population remained in the state of poverty at least for one period. Poverty is transient in nature, as moving into and out of poverty is a common phenomenon in rural Pakistan. The high-growth period of 2001–2004 was not pro-poor, whereas the low-growth period of 2005–2010 was pro-poor despite the political and economic challenges. The findings reveal that policy interventions for the chronically poor may not be the same as those for the impoverished and transitory poor.

La relation entre croissance et pauvreté est complexe au Pakistan, où croissance économique ne rime pas toujours avec réduction de la pauvreté. Nous avons utilisé trois vagues d’enquêtes auprès de ménages, menées entre 2001 et 2010, pour analyser les trajectoires de pauvreté ainsi que pour évaluer la relation entre les modèles de trajectoires de pauvreté et la croissance économique. Les résultats de l’enquête par panel révèlent que plus de la moitié de la population rurale est restée en situation de pauvreté au moins pendant un temps. La pauvreté est temporaire par nature, puisqu’il est courant d’entrer ou de sortir d’une situation de pauvreté en zone rurale au Pakistan. La période de forte croissance de 2001-2004 n’a pas profité aux personnes en situation de pauvreté, alors que la période de faible croissance qui a suivi (2005-2010) leur a profité en dépit des défis politiques et économiques. Les résultats révèlent que les politiques publiques en faveur des personnes en situation de pauvreté chronique peuvent ne pas être les mêmes que celles en faveur des personnes en situation d’appauvrissement ou de pauvreté temporaire.

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Source Pakistan Economic Survey, various editions

Source Estimated from two waves (2001 and 2004) of panel micro datasets

Source Estimated from two waves (2004 and 2010) of panel micro dataset

Source Estimated from two waves (2001 and 2010) of panel micro dataset

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Acknowledgements

The current paper is part of the detailed report entitled “Economic Growth and Dynamics of Rural Poverty: The Case of Pakistan (2000–2010),” presented at the Technical Workshop on “Economic Growth and Dynamics of Rural Poverty” hosted by the Chronic Poverty Report (CPR), June 19, 2017 London, UK. The authors are grateful to the Chronic Poverty Advisory Network, Andrew Shepherd (Director CPAN), and Vidya Diwakar (Senior Research Officer CPAN) for giving valuable feedback on the report.

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Farooq, S., Ahmad, U. Economic Growth and Rural Poverty in Pakistan: A Panel Dataset Analysis. Eur J Dev Res 32 , 1128–1150 (2020). https://doi.org/10.1057/s41287-020-00259-y

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Published : 19 February 2020

Issue Date : September 2020

DOI : https://doi.org/10.1057/s41287-020-00259-y

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