Despite onslaught of COVID pandemic from the beginning of 2020, a number of middle and high income developing countries were confident of the fact that due to sustained growth of their economies they will be able to achieve all the 17 Sustainable Developmental goals within specified period (by2030), but on the basis of findings of recent studies conducted at World Bank relating to last three years the healing process for the shock coming to World economy through pandemic and Ukraine war is not over yet. However some divergences have been noticed in growth rates of different regions thus accordingly global poverty line has been updated in September 2022 reflecting changes in prices linked to currency exchange parity ratios across the world. Now extreme poverty level stands at $ 2.15 per person per day, which replaces $ 1.90 determined on the basis ofWorld Bank report of 2017 and accordingly impact of this increase in threshold increased the global number of impoverished population to 749 million, from 656 in 2017.
Besides that ILO’s report of 2020 reveals that lately another 50 million people have been categorized as financially disadvantaged population due to lay offs resultant of financial and economic meltdown being experienced for the last fifteen years all over the globe. In low income developing countries, particularly South Asian and some African countries poor are more than 45% of the population. However galloping economies of East Asian countries particularly of China could brought down number of poor below 17% of their total population. Even now despite repercussions of global recession due to pandemic percentage of poor oscillates between 17 to 18%. India also made quite a headway in bringing down poverty level from 60% in 1981 to 38% by 2021 despite upward movement of poverty measuring global borderline ($1.90 per day in 2017). However substantial rise in poverty in other South Asian countries including Pakistan and also in Sub-Saharan African countries where poverty level has exceeded 51% have nullified overall global progress relating to poverty related SDGs.
Apart from commonly recognized factors responsible for augmenting poverty in large number of countries, it is total neglect of basic economic principle of comparative advantage while formulating policies / plans for growth of both industrial and agriculture sectors of these countries. To promote trade openness for achieving accelerated growth of economies has been a most hyped strategy by several countries, but recent wide spread economic meltdown resultant of irrational move for global economic integration on the part of both developed and developing countries particularly emerging economies has falsified this approach. The trade promotion apart from its widely recognized advantages brings distributional effects and widens inequalities particularly among low and middle income economies in a scenario where WTO rules are not being adhered to by industrially rich countries.
Michael Porter, an eminent economist advocates for upholding comparative advantage principle both for achieving sustained economic growth and trade promotion. He emphasizes the need of focus on:
a) Sectors / industries for which resources are in abundance.
b) Large domestic markets, which enable firms to reach economies of scale.
c) Industrial clusters (both of large manufacturing units and SMEs).
d) Vibrant domestic competition that encourages both efficiency and growth of projects.
While examining this theory in context of Pakistan it is apparent that country’s industrial and agriculture development is not in consonance with the guiding principle of comparative advantage, which is mainly due to lack of required infrastructure. As such country is having comparatively a closed domestic economy and non-competitive market for industrial products and ultimately work force suffer due to slow growth and lack of jobs. Hence poverty continues to grow. No doubt country is adhering to policy of promoting labor intensive and agro-based industries in which it enjoys comparative advantage, but as already said absence of needed infrastructure particularly in rural sector where inadequate and irregular availability of utilities particularly sources of energy / electricity combined, lack of means of communications and transportation combined with increasing terrorism in the country is impeding industrial as well as agriculture sectors from achieving required level of efficiency and productivity.
Agriculture sector where apparently comparative advantage is the deciding factor for farm utilization for cultivation of various crops and until now Pakistan has been exporter of major food and cash crops, but due to increasing exploitation of poor cultivators/Haris/tenants in recent years, inadequate and irregular water supply to farms and move for integrated / collective farming initiated in certain areas for improving crop yield is hampering development of proper initiative on the part of growers to achieve very best level of crop yield. Experience of integrated farming in quite a number of countries particularly China and Vietnam has no doubt helped reducing inequalities as it promotes equal sharing in the benefits / return, but at the same time it damages the incentive for efforts.
Growing number of absentee big farmers in the country and resultant lack of interest to apply latest technologies of farming in the form of quality seeds, fertilizers and crop rotation continue to give lowest yield of almost all crops even among South Asian countries, hence poverty position stand highly aggravated in rural areas. Agriculture land is the most important non-labor asset in any developing rural economy. In fact an effort to arrest growing poverty depends on formulation of prudent policies relating to harmonious land utilization and crop production. China’s efforts to lower poverty level to 5% by 2005 from 50% in 1981 was the outcome of their total focus on development of their agriculture sector through introduction of market oriented land reforms. In Pakistan apart from the need for legal reforms to be introduced for proper redistribution of agriculture land or market in land use rights there is need to reallocate land in such a way that small cultivators who presently own or cultivate small piece of land with inefficiently low yield be allowed low cost opportunity to increase their productivity. In this regard a move on the part of Sindh government to allocate land to haris including women need to be replicated in other provinces also. This need to be done under strict monitoring by provincial as well as local governments. Above suggested land reforms need to be introduced at the earliest to enable farmers to respond to market incentives by raising output in the wake of dramatic rise in prices of food crops all over the world. Further land reforms thus initiated must be accompanied by a comprehensive program for infrastructure development with emphasis on regular water supply to farms.
Besides above farmers should have easy access to institutional credit. No doubt Zarai Taraqiati Bank, commercial Banks and Micro finance banks have ample presence in rural areas, but they need to expand the scope of their financing products for non-conventional uses like construction of store houses with and without facility of cold storage etc and also credit needs of non-farming businesses of rural population must be addressed to promote micro and small businesses, which in turn generate employment opportunities for poor.
Apart from agriculture SME sector need to be promoted by making available needed finance not only to meet working capital needs but also for development of required infrastructure. Recent announcement by Sindh government to allocate200 yards industrial plots to owners of cottage/ small industries in Orangi town cottage industrial zone, which was set up during ex prime minister late Benazir Bhuttos regime is the most needed incentive for SME sector.
Investment in human capital development for agriculture sector and making use of latest technology is equally important. As such Agriculture universities and colleges must disseminate findings of research work through electronic , print and social media regarding new and improved varieties of various food, can and fruit crops and techniques to be used for cultivation of these products with highest yield and quality.
To conclude, country need to make enormous progress in the field of agriculture to fight against poverty and similarly conduct environment need to be created on immediate basis for sustained growth of industrial and service sector for combating growing unemployment and also improving supply position of all consumer products to meet not only domestic demand, but also producing exportable surplus of quality products.
Most importantly at governmental level steps should be taken to combat hazards arising from climatic change impacting both economic and social sector of the country.