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Published Date: Nov 30, 2011

Businesses and the middle class in Pakistan (SDPI Press Release)

“Countries with larger proportion of middle class have achieved exceptional economic growth despite the recent global recession in  national economies throughout the world” said Dr. Vaqar Ahmed, Head, Inclusive Growth Unit, Sustainable Development Policy Institute (SDPI) here on Wednesday.

He was giving a key note presentation on the implications of growing middle class for Pakistan’s socio-economy at a seminar organized by Planning Commission of Pakistan on “Businesses and the middle class in Pakistan.”

Dr Vaqar while citing results from a recent PIDE study explained that middle class is predominantly an urban phenomenon who lives and works in cities. Referring to the size of middle class population in country, he said Pakistan has a bigger middle class as compared to its neighbors. It was shown that size of middle class in Pakistan ranges between 32 million to 80 million depending upon various methods of calculation. The major chunk of this middle class is residing in urban areas, he added.

He cited recent global trends that indicate that middle income countries are now drivers of global growth such as India and China, who have grown at a very faster pace. He deliberated that higher income has led to higher household consumption in these countries where one sees a relative shift away from necessity items and towards choice-driven consumption.

While quoting experts, he warned that if middle class was not provided with venues for channeling human capital and savings, then tendency of consumption expenditure will put sustainability of growth in danger. He discussed that middle class is mostly employed in civil and military services, and this class provides the major chunk in professional cadres such as engineering and medicine. Furthermore the micro and macro barriers to entrepreneurship are holding back the middle class from moving from wage to self employment. 

He said that declining growth rate in Pakistan is resulting into unemployment whereas no physical and intellectual space available to middle class. He stressed on urban growth and management to accommodate middle class in the country. He also recommended measures such as infrastructure and social sector governance, legal and judicial reforms for inclusive markets and efficiency of public expenditure through results based management.

Dr. Nadeem-ul-Haque, Deputy Chairman Planning Commission, and Shahid Javed Burki, eminent economist, Former Caretaker Finance Minister and Former Vice President of the World Bank also spoke at the event.