Policy reforms: Research sheds light on provincial economies

ISLAMABAD:

A report on growth of provincial economies by the Institute for Policy Reforms (IPR) was launched on Friday, said a press release. The research provides insights about dynamics of sub-national economies in the country.

IPR Chairman Humayun Akhtar Khan said the research was first in-depth study of provincial economies in the country. He stated that increased financial and administrative powers with the provinces, since the last NFC award and the 18th Amendment, meant that national growth was now an outcome of local and provincial growth. This realisation seems to have been lost, he added.

Dr Hafiz Pasha, author of the report, while giving a presentation said the federal and provincial bureaus of statistics should have undertaken preparation of data and accounts on provinces. He felt planning must re-orient to a bottom-up approach whereby provincial development plans must aggregate into a national plan. He presented estimates of provincial GDPs for the 15 year period between 1999-2000 and 2014-15. He said his study of provincial GDPs also deepened knowledge about drivers of growth and their geographical location.

The report reviews provincial growth rates across three governments. During 2000-2008, when the economy grew rapidly, Sindh was the best performing economy with high growth in large-scale industry. Provincial economic growth declined during the two succeeding periods of 2008-13 and 2013-15, with decrease in national growth rates. The report also shows that economy of Sindh grows faster during periods of high national GDP growth.  Punjab grows faster than other provinces during periods of slow growth. Throughout these periods, KP economy maintained a healthy rate of growth of 5 per cent or above.

The report states that growth in production of major crops in Punjab has declined which is an emerging structural problem for the provincial and national economies.

Deteriorating law and order in Karachi has slowed industrial growth in Sindh, with its effect on national growth, according to the report.

It states that foreign remittances have largely driven growth of KP, where 20 per cent of household income comes from remittances.

Balochistan has had the slowest economic growth where ‘real per capita income may have actually fallen.’ Agriculture, however, has been buoyant in the province.

The report asserts that economic planning and growth strategy must be led by provinces to reflect ground realities and to retain spirit of the constitution.

Published in The Express Tribune, December 5^th, 2015.