People in Pakistan are quick to criticize and that too without an effort to understand. Take the Framework for Economic Growth of the Planning Commission which is also known as the New Growth Strategy. Often people say that there is not enough for the poor. Or that it is not a poor friendly policy. Let us examine how true these statements are.
I would argue that the critics are wrong. I would further argue that the Planning Commission’s growth framework is extremely poor friendly far more than previous plans and policies. Let me show you why.
A version of this article was published in DAWN on 7/11/11 http://www.dawn.com/2011/11/07/cities-as-growth-centres.html
I would argue that the critics are wrong. I would further argue that the Planning Commission’s growth framework is extremely poor friendly far more than previous plans and policies. Let me show you why.
We can all agree that there can be no poverty reduction without growth. Whether there is trickle down or not there is certainly the possibility of all boats being lifted up by the rising tide. Rapid increase in the GDP has proved to be a necessary (even if not sufficient) condition in every country that has managed to reduce poverty by a substantial amount. The main thrust of the growth strategy is accelerating economic growth and sustaining it. It is an approach that goes beyond projects and targets public service delivery, productivity, competitive markets, innovation and entrepreneurship.
Our previous plans and policies have all focused on infrastructure and government led growth. Poverty is eliminated not through government interventions but through opportunities for the poor. The poor are willing to work hard, they migrate to opportunity. But where is the opportunity in Pakistan? Have we created enough opportunity?
Opportunity exists in dense messy cities. Planning Commission’s growth strategy for the first time places emphasis on economic geography. International evidence shows that on average, an increase of 10% in a country’s urban population leads to an increase in the country’s per capita output by 30%. Cities are open to people with different backgrounds and offer jobs and self-employment.
Dense cities are the centres for providing opportunities to the poor and promote domestic commerce at all levels. Currently in Pakistan, 78% of the national GDP is contributed by the economic activity in cities. A focus on cities implies an improvement in local markets – including the markets for agricultural produce! It is in cities where much of the rural products are bought and sold and where the major chunk of rural income is generated. Wholesale and retail trade, markets for street-vendors, construction activity, storage and warehousing activity, hotels and restaurants, shopping malls, entertainment – all these activities (and more) create employment for the poor.
As such, through unfriendly zoning and building regulations, Pakistani cities cater only to the rich population, primarily rich housing. To change this trend, zoning and building regulations must become commerce and business friendly. By allowing space for street markets for example, not only will poor entrepreneurs and street vendors get the opportunity for business, cities will become more open to the poor. Through amending building regulations and allowing high rises to be built, cost-effective apartment buildings will be built and large suburban type houses will be pushed outside city limits. Following these recommendations would lead to a construction boom – and jobs for the poor. Construction growth linked with the growth of commerce will allow space for the inclusion of women and youth as well as the demand for many new skills.
Dense urban clusters also promote entrepreneurship and innovation at all levels, if the market is developed. Proximity and density create large markets for goods and services; and in turn, large markets build social capital; allow interactivity; nurture innovation and entrepreneurship. Innovation occurs in dense clusters, where there is intense competition. Also, reforming and strengthening institutions such as the legal and judicial framework, the civil service and the taxation system could provide an impetus to innovation and entrepreneurship – both employment generating growth drivers. As such, the aggregate of the programs suggested could vastly improve the investment climate and reduce the cost of doing business, alongside creating employment.
The ‘Framework for Economic Growth’ presents several new ideas and perspectives that we should take time to consider and reflect upon. Providing opportunities to the poor is at the forefront of this growth strategy. It is estimated that sustained economic growth at over 7% is required to productively absorb the workforce. If we do not think creatively about our cities and how they are the potential hubs of commercial activity and employment, we could be heading towards what the social scientists call a demographic disaster.
