Pakistan is the fifth most populous country with a population of more than 212 million. Being in the process of development with ever increasing population, economic growth and sustainability has always been a struggling task. Economists and policy have tried to unveil the determinants of economic growth to make the optimum use of the population growth. For a long time, Foreign direct investment, trade, health and education, total factor productivity (TFP) and physical activity were considered as the determinants. Now the list has been extended as research and development (R&D) has proven to an important tool for economic growth.
The expenditure of a country on research and development shows one’s interest towards science and technology and other sectors leading towards development. It has been observed that rich and third world countries spend a good amount on research and development as one great way of development and competency. Economic growth highly depends on the productivity and investment within the country. The utilization of existing resources and investment in new resources by industries, agriculture, social, business and financial sector. Economies grow if all of these sectors are to grow or prosper. Success in this process generates increased incomes which then fuel demand and encourage further economic growth.
The world is changing not only because there is a new balancing center of prosperity from West to East and from North to South but also because the consumers of the products and services are more educated, less naive and in many cases can speak to their counterparts via social media. Hence, local or multi-national companies have to do their research before entering a market. The brand, the companies, the enterprises are changing and there is a switch in the way they operated. There are lots of news questions and suggestions for all sectors to progress and impact the economy.
The entire situation gives a lot of scope to the market research companies. The industry which was unexplored or fragmented has arose to the challenge to provide relevant information and insights to clients. Some companies that are very influential in this industry are Kantar, Nielsen and IPSOS. IPSOS has come under the highlighted due to the enormous global work over the years. It is the third largest market research company with the head-quarters in France. IPSOS was founded about 20 years ago and is still owned by research professionals to keep the core value alive.
IPSOS in Pakistan
The growing economy of Pakistan at a rate of 6.7% is very captivating for foreign investors. Companies require relevant information insights of the consumers before entering Pakistani market, thus led IPSOS come to Pakistan. Pakistan became a part of IPSOS group in 2011 to leverage the expertise of this firm to blend in the local and global market. IPSOS Pakistan is operational with its client services offices in 3 Key Metros i.e. Karachi, Lahore & Islamabad/Rawalpindi. IPSOS Pakistan is also mandated to operate in Afghanistan. Since IPSOS is operational in 6 cities, it is capable to conduct research of any scale with minimum turnaround time. The research provides authentic data of high quality to strategize ideas.
Recently, IPSOS conducted a study about micro and macro issues of Pakistan under supervision of former finance minister and renowned economist Dr. Hafeez A. Pasha. The study analyzed the growth indicators and sectors which have been contributing to the GDP. Moreover, sectors which are rising, sectors which have the potential to rise in the upcoming years and sectors which need the utmost attention.
In a nutshell, the agriculture sector produces 20 percent of the GDP, 20 percent from industry and 60 percent from services. Of these, the largest sector with a contribution of 18 percent to the GDP is the Wholesale and retail trade sector. However, the sector with highest expenditure is private consumption with a share of 80 percent whereas the government sector has a share of 25 percent. Efforts have been made to increase exports and decrease the income inequality. As per the reports, the ratio of top quintile with bottom quintile is 4.8 which is relatively lower according to international standards.
The service sector is the most functional sector as it generates income equivalent to $52 billion from more than 8 million workers. Whereas, the transport and communication has 2.8 million workers, education has 2.1 million workers and 0.7 health workers. The transport, communication, arts, entertainment and food sector have the most potential to attract foreign direct investment. Many multi-national companies are operating in Pakistan and many are planning to enter, many international universities will be seen setting up their campuses in Pakistan considering the higher education demands. Another reason for growth in this sector is the value added goods and services and increase of sales of FMCGs.
Reasons for growth in private consumption:
- After adjustment of inflation, the money made by companies or individuals which is called real income has increased by 61 percent.
- Other than that, remittances flowing into Pakistan have also jumped at a good rate year on year, contributing by 15 percent.
- Retail buying has increased. With the increase in income inequality, the income and middle income level prefer retail purchase. The increase in consumer spending increase domestic trade. As per the data of 2016-2017, 8.5 percent increase in consumer spending increased domestic trade by 7.5 percent.
Lessons to be learnt
If we compare the economic market of Pakistan to Bangladesh and India which are the most similar ones, both of them have higher GDP growth rates than Pakistan. Both of the countries have export-led growth, keeping account deficits and trade in control.
Pakistan is a blessed land which all sorts of crops and natural resources grown here. We should focus more on manufacturing and exports. Pakistan needs to work on its agriculture, it needs to modernized and diversified. The two players of South Asia; Bangladesh and India have managed to raise agriculture productivity primarily through a large outlay on input subsidies.
Despite of the differences, Pakistan has a lot of potential and resources which need to utilized to the maximum potential. India and Bangladesh have higher income inequality and it keeps increasing while it falls in Pakistan. The study also suggests that Pakistan has not achieved a lot of success over the years but has gained inclusive development. The government needs to take advantage of these factors and look into other loopholes which could lead to development.