Evaluate reasons for economic disparity amongst different regions of Pakistan?

Evaluate reasons for economic disparity amongst different regions of Pakistan?

Postby zedekiah16 » December 8th, 2013, 6:49 am


Mechanism of regional economic disparity

The earlier study by Naved Hamid and me and later studies by Hafiz Pasha et al showed that not only have inter-provincial economic inequalities increased over time, but the degree of inequality within provinces has also accentuated. It was interesting that the economic disparity between the districts of each province was positively correlated with the overall provincial economic growth rates, i.e., the rank ordering of intra provincial inequality was congruent with the rank ordering of provincial growth rates.

The evidence in Pakistan as indeed for the world as a whole shows that when industrial growth occurs within the framework of the market mechanism there is a cumulative tendency for the relatively developed regions to grow faster than the relatively less developed regions. The developed regions enjoy internal and external economies, and lower costs of production relative to other regions which make the initiating region cumulatively more advantageous for further investment. The specific factors underlying cumulative divergence in the attractiveness of regions for further investment and hence increased disparity in regional growth rates are: Concentration of communications, banking facilities, public utilities, technical know-how, trained manpower, and maintenance facilities.

Conversely, as growth is concentrated in the developed region, it pulls capital and skilled labour from the backward region, thereby adversely affecting the age composition, skill and capital endowment of the backward areas. Agriculture growth following the Green Revolution in the 1960s also served to accentuate regional economic disparity. This was because the new high yielding varieties required a seasonally flexible supply of irrigation water. Thus those provinces which had a larger proportion of their cultivated area under irrigation, could achieve a relatively faster agriculture growth.
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