Infrastructure for Growth and Human Development in Pakistan : A Simulation Analysis of Fiscal Policy Options

This paper explores the use of fiscal policy to accelerate development in Pakistan during the period 2013-2022, with a focus on the creation of fiscal space for increased investment in infrastructure, as well as on indicators related to macro and sectoral developments, Millennium Development Goals (MDGs), and education. In terms of method, the analysis relies on simulations with a Pakistani version of MAMS (Maquette for MDG Simulations), a Computable General Equilibrium model developed at the World Bank for country strategy analysis. The different policy scenarios point to the importance of selecting infrastructure projects with high productivity effects and the crucial role of financing in determining the net effects of expanded government infrastructure spending. Transfer programs can generate immediate welfare gains but are less effective over time unless they are designed to raise productivity, perhaps via improvements in health, nutrition, and education outcomes. A final high-growth scenario explores requirements and consequences for Pakistan's economy if, during the period 2013-2022, it managed to raise its rate of annual GDP growth from the 4-5 percent range to 7 percent. The results for the final scenario indicate that rapid growth acceleration may be achieved via a combination of strong increases in savings, investment and total factor productivity. By 2022, 10 years of growth at a rate of 7 percent would spread across the macro demand indicators as well as the major production sectors. Its effects would include significant, broader gains in terms of poverty reduction and better outcomes for indicators.

Bibliographic Details

Main Authors:	Kinnunen, Jouko, Lofgren, Hans
Language:	English en_US
Published:	World Bank, Washington, DC 2013-08
Subjects:	ACCOUNTING, ACCUMULATION OF CAPITAL, ADDITIONAL UNIT OF CAPITAL, AGRICULTURE, ANNUAL GROWTH, BALANCE OF PAYMENTS, BALANCE OF PAYMENTS DEFICIT, BANK POLICY, BENCHMARK, BUDGET CONSTRAINT, BUDGET CONSTRAINTS, CAPITAL ACCOUNTS, CAPITAL STOCK, CAPITAL STOCKS, COMMODITIES, COMMODITY, COMMODITY MARKETS, CONSUMPTION DECISIONS, CONSUMPTION GROWTH, CONSUMPTION INCREASES, CONSUMPTION SMOOTHING, CONSUMPTION SPENDING, CURRENT ACCOUNT, CURRENT ACCOUNT BALANCE, CURRENT ACCOUNT DEFICIT, CURRENT EXPENDITURES, DATA AVAILABILITY, DEBT, DEBT STOCK, DEBT STOCKS, DEFICITS, DEMAND CURVES, DEMAND GROWTH, DEMOGRAPHIC, DEPENDENCY RATIO, DEPRECIATION RATES, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DEVELOPMENT ECONOMICS, DEVELOPMENT POLICIES, DEVELOPMENT POLICY, DEVELOPMENT STRATEGY, DISTORTIONS, DIVIDEND, DOMESTIC BORROWING, DOMESTIC CURRENCY, DOMESTIC DEBT, DOMESTIC DEMAND, DOMESTIC MARKET, DOMESTIC MARKETS, DOMESTIC PRICE, DOMESTIC PRICE LEVELS, ECONOMIC DEVELOPMENT, ECONOMIC GROWTH, ECONOMIC PERFORMANCE, ECONOMIC POLICY, ECONOMIC STRUCTURE, ECONOMIC SYSTEMS, ELASTICITY, EXCHANGE RATE, EXCHANGE RATE STABILITY, EXCHANGE RATES, EXISTING GOVERNMENT, EXPENDITURE, EXPENDITURES, EXPORTS, FACTOR DEMAND, FACTOR MARKETS, FACTORS OF PRODUCTION, FERTILITY RATE, FINANCING SOURCES, FISCAL POLICY, FIXED CAPITAL, FIXED INVESTMENT, FORECASTS, FOREIGN CURRENCY, FOREIGN DEBT, FOREIGN DEBTS, FOREIGN DIRECT INVESTMENT, FOREIGN EXCHANGE, FOREIGN GOVERNMENT, FOREIGN INTEREST, FULL EMPLOYMENT, GDP, GENERAL EQUILIBRIUM, GENERAL EQUILIBRIUM MODEL, GINI COEFFICIENT, GLOBAL ECONOMY, GOVERNMENT ACCOUNTS, GOVERNMENT BORROWING, GOVERNMENT BUDGET, GOVERNMENT BUDGETS, GOVERNMENT DEBT, GOVERNMENT DEBTS, GOVERNMENT EXPENDITURE, GOVERNMENT FINANCING, GOVERNMENT INVESTMENT, GOVERNMENT INVESTMENTS, GOVERNMENT SAVINGS, GOVERNMENT SPENDING, GROSS FIXED CAPITAL FORMATION, GROSS NATIONAL SAVINGS, GROWTH RATE, GROWTH RATES, HOUSEHOLD SAVINGS, HOUSING, HUMAN CAPITAL, HUMAN DEVELOPMENT, IMPORT, IMPORT TARIFFS, IMPORTS, INCOME, INCOMES, INFLATION, INFRASTRUCTURE INVESTMENT, INFRASTRUCTURE INVESTMENTS, INFRASTRUCTURE PROJECTS, INTEREST PAYMENTS, INTERNAL RATE OF RETURN, INTERNATIONAL BANK, INTERNATIONAL PRICES, INVESTMENT CLIMATE, INVESTMENT FINANCING, INVESTMENT SPENDING, KNOWLEDGE ECONOMY, LABOR FORCE, LABOR MARKET, LANDLESS FARMERS, LEVEL OF DEBT, LIFE EXPECTANCY, LOCAL CURRENCY, MACROECONOMIC VARIABLES, MARGINAL PRODUCT, MARKET MECHANISMS, MARKET PRICES, MARKET TRANSACTIONS, MOBILE PHONE, NEW ENTRANTS, NOMINAL DEPRECIATION, NOMINAL EXCHANGE RATE, OPPORTUNITY COSTS, OPTIMIZATION, OUTPUT, OUTPUTS, PAYMENT FLOWS, PHYSICAL SECURITY, POLICY RESPONSES, POPULATION GROWTH, POSITIVE EFFECTS, POVERTY REDUCTION, PRICE CHANGE, PRICE CHANGES, PRICE LEVELS, PRICE OF EXPORTS, PRIVATE CAPITAL, PRIVATE CONSUMPTION, PRIVATE INVESTMENT, PRIVATE SAVINGS, PRODUCTIVITY, PROFIT MAXIMIZATION, RAPID GROWTH, RATE OF GROWTH, REAL CONSUMPTION, REAL EFFECTIVE EXCHANGE RATE, REAL EXCHANGE RATE, REAL GDP, REAL SECTOR, RELATIVE PRICE, RELATIVE PRICES, REMITTANCES, REORGANIZATION, RESOURCE ALLOCATION, SAVINGS, SAVINGS RATES, SLOW GROWTH, SMALL COUNTRY, SOCIAL DEVELOPMENT, SOCIAL DEVELOPMENTS, STANDARD DEVIATION, STRUCTURAL CHANGE, SUPPLY CURVE, SUPPLY CURVES, SUPPLY SIDE, SURPLUS, SURPLUSES, TAX, TAX INCREASE, TAX INCREASES, TAX RATES, TAX REVENUES, TAXATION, TOTAL DEBT, TOTAL FACTOR PRODUCTIVITY, TOTAL INVESTMENT, TRADE BALANCE, TRADE DEFICITS, TRADE POLICY, TRADING, TRADING PARTNERS, TRANSACTION, TRANSACTION COST, TRANSACTION COSTS, TRANSACTIONS COSTS, TRANSFER PAYMENTS, TRANSPORT, TRUST FUND, UNEMPLOYMENT, UNEMPLOYMENT RATE, UNEMPLOYMENT RATES, VALUE ADDED, WAGES, WORLD MARKETS, WORLD PRICE, WORLD PRICES, computable general equilibrium, MAMS,
Online Access:	http://documents.worldbank.org/curated/en/2013/08/18067770/infrastructure-growth-human-development-pakistan-simulation-analysis-fiscal-policy-options https://hdl.handle.net/10986/15916
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