OPPORTUNITIES P resentation by DR PERVEZ TAHIR at SDPIs Seventeenth - PowerPoint PPT Presentation

PRIVATISATION AND ECONOMIC GROWTH: REVISITING THE LINKAGES, CHALLENGES AND OPPORTUNITIES P resentation by DR PERVEZ TAHIR at SDPI’s Seventeenth Sustainable Development Conference: Pathways to Sustainable Development Islamabad: December 9-11, 2014 I

Linkages between privatisation and growth 1. Efficiency and productivity 2. End to bleeding of public exchequer to free resources for development programme 3. Better climate for private investment 4. Higher total investment

Efficiency and productivity Better No change Worse Total SOEs Manufacturing 9 13 16 38 units 2 12 5 19 Ghee mills Rice mills 2 - 6 8 Miscellaneous 3 10 1 14 16 35 28 79 Total

Better industrial performance • Javedan Cement privatised at throwaway prices in 2006 is now Naya Nazimabad Housing Society, Karachi • Cement cartel is next only to the sugar cartel in limiting competition and consumer exploitation

Better industrial performance Investment in large scale Year manufacturing: Real growth 2000 - 2001 8.6 2002 18.8 2003 -6.6 2004 -5.4 2005 2.3 2006 18.2 2007 2.6

Stop bleeding public exchequer, enhance development Year Deficit/GDP Development/GDP 1990 7.0 7.0 1991 8.8 6.4 1992 7.5 7.6 1993 8.1 5.7 1994 5.9 4.6 1995 5.6 4.4 1996 6.5 4.4 1997 6.4 3.5 1998 7.7 3.9 1999 6.1 3.3

Stop bleeding public exchequer, enhance development Year Deficit/GDP Dev. Exp./GDP 5.4 2000 2.4 4.3 2001 2.6 5.5 2002 2.7 2003 3.6 3.4 2004 2.3 3.2 2005 3.3 3.9 2006 4.0 3.7 2007 4.1 4.2

Public debt as % of GDP Year Debt 1990 91.7 1998 97.0 1999 104.7 2000 87.9 2001 93.3 2002 85.9 2003 79.3 2004 67.2 2005 62.5 2006 57.2 2007 55.2

Better climate for private investment Year Priv. Investment/GDP 8.9 1990 9.0 1991 9.8 1992 10.1 1993 9.6 1994 8.7 1995 9.1 1996 9.5 1997 9.8 1998 7.9 1999

Better climate for private investment Year Priv. Investment/GDP 10.3 2000 10.1 2001 11.1 2002 11.2 2003 10.9 2004 13.1 2005 15.7 2006 15.4 2007

Higher total investment Year Inv./GDP Year Inv./GDP 1991 26 2000 17 1992 25 2001 17 1993 20 2002 17 1994 20 2003 17 1995 19 2004 17 1996 19 2005 19 1997 18 2006 19 1998 18 2007 19 1999 16

Challenges • Unemployment • Poverty • Inequality

Higher employment Year Unemployment rate Long term unemployed 1993 4.3 7.4 1994 4.3 7.6 1995 5.0 7.8 1996 5.3 - 1997 5.8 6.2 1998 5.7 8.5 1999 6.1 - 2000 7.2 8.9 2001 7.4 - 2002 7.8 6.2 2003 7.7 - 2004 7.4 9.0 2005 7.1 - 2006 6.1 12.0 2007 5.1 11.7

Higher employment Year Informal employment Vulnerable employment 1995 - 65 1996 - 65 1997 - 63 1998 - 64 1999 - 64 2000 65.0 64 2001 - 64 2002 63.8 59 2003 59 2004 69.4 61 2005 61 2006 72.3 62 2007 71.5 62

Poverty reduction Year Headcount poverty ratio 1991 26.1 1993 26.8 1994 28.7 1997 29.8 1999 30.6 2001 32.1(34.4) 2005 23.9? 2006 22.3? 2008 17.2? 2011 12.4?

Inequality Period Gini 1990s 0.403 2000s 0.300 2009 0.321 2010 0.328 2011 0.332 2012 0.345

Opportunities • Privatisation has failed to achieve nearly all of its stated objectives • “the theoretical case for privatization is at best weak or non - existent” - Nobel laureate Stiglitz • Scrap the Privatisation Programme as it excludes rather than include • The implicit democratic consensus on privatisation has broken down • Go all out for an equitable growth strategy with employment as its centrepiece. This is the direction of pushing the opportunity frontier