ISLAMABAD: World Bank said that Pakistan’s economy can grow sustainably if country introduces “Productivity enhancing reforms” that facilitate better allocation of resources and improves female participation in workforce.

In its report titled ‘From Swimming in Sand to High and Sustainable Growth’, multilateral lender said Pakistan’s inability to allocate all its talent and resources to most productive uses has stunted economic growth.

In press release, World Bank said that report presented evidence of systematic productivity stagnation across firms and farms. “In manufacturing and services, most of productivity stagnation is related to firms losing efficiency over time. Report also shows systematic decline in agricultural productivity, as well as strong link between elevated temperatures and rainfall variations and productivity.”

Report presents roadmap to reduce distortions in economy that are currently acting as deterrent to productivity growth. Critical reforms recommended by World Bank include harmonising direct taxes across sectors, reducing anti-export bias of trade policy by lowering import duties and reversing anti-diversification bias of export incentives. World Bank to finance two hydropower projects in KP

World Bank Country Director for Pakistan Najy Benhassine said, “Women in Pakistan have made progress in educational attainment, but this accumulated human capital is underused because of constraints they face to participate in labour force.”

Meanwhile, World Bank senior Economist Gonzalo Varela said, “Long-term structural imbalances that have prevented sustainable growth for too long ought to be addressed urgently.”

He urged Pakistan to reduce distortions that misallocate resources and talent and support growth of firms through smart interventions.

Report quoted economist Zehra Aslam as saying, “firms in Pakistan struggle to grow large as they grow old. A young formal firm in Pakistan that has been in operation for 10 to 15 years is about same size as firm that has been in operation for more than 40 years.”

Published in The Daily National Courier, February, 11 2023

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