ISLAMABAD  - The World Bank has said that Pakistan urgently needs to invest more in its people if they are to be richer, better educated and healthier when the country turns 100 in 2047.

In its report titled ‘Pakistan@100: Shaping the Future’ launched at the Human Capital Summit Monday, the World Bank recommended essential reforms Pakistan needs now to accelerate and sustain growth.

This means increasing and improving human capital investment, boosting productivity, promoting social and environmental sustainability, ensuring good governance, and leveraging its location to connect more with neighbours and the world beyond.

The report urged Pakistan to overcome its boom-bust cycles through a deep-rooted economic transformation.

“There are steps Pakistan can take today to boost its economic performance and thereby ensure a better future for its people,” said Hartwig Schafer, World Bank Vice President for South Asia.

“These steps are ones that other countries have taken to open up their business sectors to competition and innovation and laying the foundations for growth, investment, and good jobs.”

The report added Pakistan’s greatest asset is its people, a young population of 208 million that can transform into a demographic dividend that drives economic growth.

208m youth can transform into demographic dividend

To achieve that, Pakistan must act fast and strategically to (i) manage population growth and improve maternal health, (ii) improve early childhood development, focusing on nutrition and health, and (iii) boost spending on education and skills for all.

“Because the next generation is meeting only 40 percent of its potential it means that Pakistan is foregoing much of its economic growth, but this can change if women’s potential is unlocked,” said Annette Dixon, World Bank Vice President for Human Development.

“When women and girls are empowered to make their own decisions, they stay in school longer, they start families a little later, have fewer children, contribute more to the economy, and invest more in their children. It’s a virt uous circle that’s good for families and good for the whole country.”

In addition to human capital, the report called for reforms in other key areas.

To increase investment levels, the report recommended ways to make it easier to do business in Pakistan, as well as reforms to tax policy and administration to increase fiscal space and public investment in the country’s top priorities. Strong governance will be crucial to implement a difficult set of reforms.

The report discussed the key elements of a strong governance environment, including the need for a stronger civil service.

“Accelerating and sustaining Pakistan’s growth over a 30-year period is ambitious, but possible,” says Illango Patchamuthu, World Bank Country Director for Pakistan.

“Many other countries have achieved economic transformations within a generation with the right set of policies. The World Bank is committed to working with the government of Pakistan and other stakeholders in the country to advance the necessary reforms, so that Pakistan can significantly increase growth and sustain it, so it is an upper middle-income country by the time it celebrates its centenary.”

It added Pakistan’s macroeconomic challenges are structural: a revenue system that is unable to meet the government’s financing needs and consumption-led growth that relies on external flows (remittances, aid) for its sustainability and is therefore very vulnerable to changes in flows. Failure to address these structural, medium-term challenges, while stabilising the macroeconomic imbalances, just means that the next crisis is another 4 to 5 years away. The proverbial can is constantly being kicked down the Pakistani road.

Today, Pakistan’s economy is relatively closed to global and regional markets, limiting its ability to benefit from its pivotal geographical situation.

Average tariffs and tariff escalation are relatively high, and it is not well integrated in global value chains, limiting access to newest technologies and the opportunity to use increased competition and specialization for structural transformation.

According to the report, Pakistan’s average economic growth rate has been declining over the past 30 to 40 years, with periods of accelerating growth usually followed by a crisis. Growth has declined because the country is not investing enough in either physical or human capital, and because misguided economic policies mean that limited resources are not used in the most productive way.