Implications of Growing Middle Class for       Pakistan’s Socio-Economy                  Dr. Vaqar Ahmed      Sustainable ...
Global GDP Growth 1961 - 2010           10            8            6% Growth            4            2            0       ...
Regional Comparison of GDP Growth            10            8            6            4 % Growth                           ...
Household Consumption Expenditure            12            10             8             6 % Growth                        ...
Pakistan: Changes in Population Structure                              Labour force                             growth hig...
What makes middle class important?• Middle class:  – Is a precondition of stability in the social    structures  – Is a me...
What makes middle class important?• Collier (1999): Middle class forms alliance with  lower classes in order to demand an ...
What makes middle class important?• Warning:  – Basu (2003): If venues for channeling middle class    human capital and sa...
How big is middle class in Pakistan? Method 1: Expenditure from PPP $2 to $20 per person per day           Class          ...
How big is middle class in Pakistan?      Method 2: Computation by Weighted Composite Index        Class            Catego...
How big is middle class in Pakistan?     Method 2: Computation by Weighted Composite Index        Class            Urban (...
Occupational Proportion in Middle Class (%)                   Lower    Middle   UpperOccupation         Middle   Middle   ...
Occupational Proportion in Middle Class (%)                   Lower    Middle   UpperOccupation         Middle   Middle   ...
Occupational Proportion in Middle Class (%)                   Lower    Middle   UpperOccupation         Middle   Middle   ...
Occupational Proportion in Middle Class (%)                                Middle     Upper      Industry   Lower Middle  ...
Proportion of Occupational Status (%)   Occupational                     Middle      Upper       Status       Lower Middle...
What does this middle class want?• They want:  – Education  – Jobs• Nayab (2011):  – When compared to its neighbours Pakis...
Two facts about education in Pakistan • Average years of schooling (age 15-19) has not   changed since 1990 (currently at ...
What about jobs?                                                         Declining          12                            ...
Migration Increase Since 1972          Skilled                              20   Highly Skilled                         16...
ChoicesCurrently no space for middle class (physical & intellectual)            Reforms for engaging middle class         ...
Accommodating Middle Class                                       The rise in                                      consumpt...
Annual Projected Consumption Growth - 2030             16                                                                 ...
Urban Growth and Management• Births and migration will drive growth• Labour market shortages:  – Design  – Engineering  – ...
Inclusive Governance for Middle Class• Infrastructure governance  reform of PSEs• Social sector governance  18th Amendme...
Thank Youvaqar@sdpi.org www.sdpi.org                 26
Upcoming SlideShare
Loading in...5
×

Growing Middle Class and Pakistan Economy

2,381

Published on

Growing Middle Class and Pakistan Economy

0 Comments
2 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
2,381
On Slideshare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
62
Comments
0
Likes
2
Embeds 0
No embeds

No notes for slide

Growing Middle Class and Pakistan Economy

  1. 1. Implications of Growing Middle Class for Pakistan’s Socio-Economy Dr. Vaqar Ahmed Sustainable Development Policy Institute
  2. 2. Global GDP Growth 1961 - 2010 10 8 6% Growth 4 2 0 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 -2 -4 -6 Middle income countries High income countries Low income countries 2 Middle income countries are now drivers of global growth
  3. 3. Regional Comparison of GDP Growth 10 8 6 4 % Growth South Asia 2 High income World 0 1977 1986 1971 1974 1980 1983 1989 1992 1995 1998 2001 2004 2007 2010 -2 -4 -6 3 South Asian has grown at a faster pace
  4. 4. Household Consumption Expenditure 12 10 8 6 % Growth South Asia 4 High income 2 World 0 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 -2 -4 -6 4 Rising growth shows in higher consumption expenditures
  5. 5. Pakistan: Changes in Population Structure Labour force growth higher than population growth Increasing working age population 5
  6. 6. What makes middle class important?• Middle class: – Is a precondition of stability in the social structures – Is a measure of mitigating inequality in a society• Easterly (2001): Nations with a large middle class tend to grow faster – English middle class of 18th & 19th century – Today’s China and India 6
  7. 7. What makes middle class important?• Collier (1999): Middle class forms alliance with lower classes in order to demand an inclusive political system• Acemoglu (2003): Decisive voters in democracy are from middle class• Bannerjee (2007): middle class is a source of new entrepreneurs and this class stresses on accumulation of human capital and savings 7
  8. 8. What makes middle class important?• Warning: – Basu (2003): If venues for channeling middle class human capital and savings not provided, then tendency towards consumption expenditure puts sustainability of growth in danger 8
  9. 9. How big is middle class in Pakistan? Method 1: Expenditure from PPP $2 to $20 per person per day Class Proportion (%)Lower lower (< $1.25) 21.3Lower ($ 1.25-2) 34.8Lower Middle ($2-4) 32.4 81.5Middle Middle ($4-10) 9.8 million peopleUpper Middle ($10-20) 1.3Upper (>20) 0.4 9
  10. 10. How big is middle class in Pakistan? Method 2: Computation by Weighted Composite Index Class Categorisation Proportion (%)Lower lower Destitute 41.9Middle lower Aspirants 23Upper lower Climbers 15.8 Fledgling middle 32.5Lower middle class 8.5 million Hard-core peopleMiddle middle middleclass 4.3Upper middle Elite middle class 6Upper Privileged 0.4Source: Dur-e-Nayab (2011) 10
  11. 11. How big is middle class in Pakistan? Method 2: Computation by Weighted Composite Index Class Urban (%) Rural (%)Lower lower 23.6 55.2Middle lower 21.8 23.9Upper lower 20.8 12.3Lower middle 12.5 5.7 Urban: 22.6mMiddle middle 8.1 1.6Upper middle 12.3 1.3 Rural: 9.8mUpper 0.9 0.1The middle class is an urban phenomenon – lives and works in cities 11
  12. 12. Occupational Proportion in Middle Class (%) Lower Middle UpperOccupation Middle Middle MiddleArmed forces 1.1 0.6 1.3 DominantSenior Officials 2.9 8.2 20.7 presence in civilProfessionals 18.3 15.7 26.4 serviceTechnicians 19.3 14.2 21.3Clerks 14.5 11.8 12.9Service /retail 30 28.9 17.1Agriculture 5.9 8.6 0.1Crafts 2.6 5 0Plant operators 2.1 3.1 0Elementaryoccupations 3.3 3.9 0Total 100 100 100The middle class is an urban phenomenon – lives and works in cities 12
  13. 13. Occupational Proportion in Middle Class (%) Lower Middle UpperOccupation Middle Middle MiddleArmed forces 1.1 0.6 1.3Senior Officials 2.9 8.2 20.7 DominantProfessionals 18.3 15.7 26.4Technicians 19.3 14.2 21.3 presence inClerks 14.5 11.8 12.9 engineering &Service /retail 30 28.9 17.1 medicineAgriculture 5.9 8.6 0.1Crafts 2.6 5 0Plant operators 2.1 3.1 0Elementaryoccupations 3.3 3.9 0Total 100 100 100The middle class is an urban phenomenon – lives and works in cities 13
  14. 14. Occupational Proportion in Middle Class (%) Lower Middle UpperOccupation Middle Middle MiddleArmed forces 1.1 0.6 1.3Senior Officials 2.9 8.2 20.7Professionals 18.3 15.7 26.4 DominantTechnicians 19.3 14.2 21.3Clerks 14.5 11.8 12.9 presence inService /retail 30 28.9 17.1 Services SectorAgriculture 5.9 8.6 0.1 (53% of GDP)Crafts 2.6 5 0Plant operators 2.1 3.1 0Elementaryoccupations 3.3 3.9 0Total 100 100 100The middle class is an urban phenomenon – lives and works in cities 14
  15. 15. Occupational Proportion in Middle Class (%) Middle Upper Industry Lower Middle Middle MiddleAgriculture 6.2 8.9 1.4Mining 0.8 0.5 0.9Manufacturing 7.6 9.7 11.6Power & fuel 2.6 2.6 2.7Construction 2.5 2.7 2.1 DomesticWholesale/retail 25.6 27 15.5 commerceTransport/communication 4.3 4.8 4.9Banking &Insurance 3.6 6.9 9.4Communityservices 46.8 36.8 51.5Total 100 100 100The middle class is an urban phenomenon – lives and works in cities 15
  16. 16. Proportion of Occupational Status (%) Occupational Middle Upper Status Lower Middle Middle MiddleEmployer with < 10employees 1.1 1.6 1Employer with > 10employees 1.4 3.9 4Self employed non- Moving fromagriculture 27.5 27 16.9 wage to selfPaid employee 64.5 60.1 78Unpaid family employmentworker 0 0 0Own cultivator 4.7 6.3 0.1Share cropper 0.3 0 0Contract cultivator 0.3 0.6 0Own Livestock 0.3 0.5 0Total 100 100 100 Barriers to entrepreneurship holding back the middle class 16
  17. 17. What does this middle class want?• They want: – Education – Jobs• Nayab (2011): – When compared to its neighbours Pakistan has a bigger middle class – The middle class in Pakistan has actually grown with time 17
  18. 18. Two facts about education in Pakistan • Average years of schooling (age 15-19) has not changed since 1990 (currently at 7.6 years) • Labour force with tertiary education under 22% 18
  19. 19. What about jobs? Declining 12 Growth, Rising 10 Unemployment 8Percent 6 4 2 0 GDP growth (annual %) Unemployment, total (% of total labor force) 19 Education without opportunity
  20. 20. Migration Increase Since 1972 Skilled 20 Highly Skilled 16Highly Qualified 20 0 5 10 15 20 25 % Growth 20 Remittances and Dutch Disease Phenomenon
  21. 21. ChoicesCurrently no space for middle class (physical & intellectual) Reforms for engaging middle class 21
  22. 22. Accommodating Middle Class The rise in consumption The Opportunities development and challenges of urban markets Backward Changes in linking of consumption urban with pattern rural markets 22McKinsey 2007
  23. 23. Annual Projected Consumption Growth - 2030 16 14 14 13 12 12 % Growth 10 9 8 8 7 6 6 4 4 2 0 23Emphasis has already shifted from food to durable goods – Choice driven consumption
  24. 24. Urban Growth and Management• Births and migration will drive growth• Labour market shortages: – Design – Engineering – Middle management• Localized savings instruments• Opportunity for niche cities• Backward linkages with farm activity – Diversification towards higher value addition 24
  25. 25. Inclusive Governance for Middle Class• Infrastructure governance  reform of PSEs• Social sector governance  18th Amendment• Legal and judicial reforms for inclusive markets• Efficiency of public expenditure  results based management 25
  26. 26. Thank Youvaqar@sdpi.org www.sdpi.org 26
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×