Wordfall, by Kaleem Omar

A key element in the formulation of a feasible long-term path of development is a national marketing strategy aimed at optimal economic performance.

Four major problems continue to plague many developing nations: low levels of living; the problem of population growth; a lack of jobs; and a deteriorating plus inadequate infrastructure.

There is a huge per capita income gap between rich and poor nations. Switzerland, one of the world’s richest nations in GDP per capita terms, has over 400 times the per capita income of Ethiopia, one of the world’s poorest countries. Japan’s GDP per capita, at $ 34,715, is 40 times higher than Pakistan’s, at $ 850 (the latest government figure).

True, the gap is considerably smaller when one adjusts these figures for purchasing power parity, or what a dollar will buy in the respective economies. Even then, however, the disparity in incomes is huge.

Moreover, the gap between rich and poor nations has been progressively widening. In 1939, the average American worker’s income was 16 times higher than the average Indian worker’s income. By 1969, it was 40 times higher. Today, it is nearly 78 times higher.

As co-authors Philip Kotler, Somkid Jatuspripitak and Suvit Maesincee observe in their study “The Marketing of Nations”, there is also a large and often widening gap between the rich and poor within individual nations. This income gap is generally greater in less developed nations than in industrial nations.

If we compare the share of national income that accrues to the poorest 40 per cent of the country’s population with that of the richest 20 per cent, we find that countries like Canada, Japan, South Korea and Sweden have relatively lesser inequalities. Others like Chile, Costa Rica, Malaysia, Libya and Tanzania have moderate inequalities. Yet others like Brazil, Colombia, Ecuador, Guatemala, Jamaica, Kenya, Mexico, Pakistan, Sierra Leone, South Africa and Venezuela have drastic income inequality in their overall income distribution.

Apart from struggling with poverty, many people in developing nations fight a constant battle against malnutrition, disease and poor health. In 1999, the average number of doctors per 100,000 people was only 5 in the least developed countries compared with 220 in the industrial countries. Every year, about 20 million people die from infectious and parasitic diseases.

The infant mortality rate is 99 per 1,000 births in the least developed countries, compared with about 74 in developing countries and only 11 in industrial countries. Average life expectancy is about 52 years in the least developed countries compared with 61 years in developing nations and 75 years in industrial nations.

Malnutrition is another major problem in the poor countries. About one billion people in poor countries still do not get enough food. In terms of per capita daily protein consumption, it is 97 grams per day in the United States, compared with 63 grams per day in Brazil and 43 grams per day in Ghana.

Literacy levels in poor countries also remain low. Literacy rates in the less developed and developing countries average only 45 per cent and 64 per cent of the population, respectively, in contrast with 99 per cent for the industrial nations.

Most important is the interaction of all the above characteristics. They tend to reinforce and perpetuate the pervasive problems of poverty, ignorance and disease that restrict the lives of so many people in the poor countries.

In October 1999, the world population reached 6 billion, double the 1960 figure. The world population is projected to reach 7.2 billion in the year 2010, of which almost 5.9 billion will be living in poor countries.

The population of what comprises today’s Pakistan (the former West Pakistan) was only 37 million at the time of the first post-independence national census in 1951. Today, Pakistan’s population is an estimated 165 million, more than four times the 1951 figure. This very high rate of population growth lies at the heart of Pakistan’s economic problems.

As the authors of the “The Marketing of Nations” study note, the explosive birth rate found in many poor countries means that these nations have the burden of supporting millions of people younger than 15. In Pakistan, for example, 40 per cent of the population is under 15.

Today, millions of children in poor countries are working in farms, factories, workshops, street corners and garbage dumps. Enhancing educational opportunities is a way to make schooling a real alternative for these children. However, the immediate challenge is, how will the poor countries build enough schools? And some years later, how will these countries provide enough jobs for young people entering the job market?

As the authors of the study note, while the explosive population growth is the main problem facing poor nations, many industrial nations confront the opposite problem of stagnant or even negative population growth as well as an ageing population. The segment of the US population with the highest growth rate is 75 years old and above. Japan’s demographics make it the nation with the world’s oldest population.

Old people, like the very young, tend to consume resources and place higher demands on health and social services. Thus, for these “high-elderly-dependent” countries, how will the working population generate enough surpluses to support the retired population and the not-yet-of-age population?

As the authors of the study note, for the past decade, the French have had “1.9 children per family, well under the 2.1 figure considered necessary to prevent a substantive reduction in current population.” The French government has tried to stop the dramatic decline in the nation’s population growth rate by encouraging families to have more than two children. If the decline in the growth rate is not halted, France will become under-populated, under-productive, and top-heavy with senior citizens who will overtax the social security system.

Technology improves productivity but may reduce the number of jobs. The growth in GDP and unemployment in many countries indicates that employment has consistently lagged behind economic growth. This phenomenon, called “jobless growth”, is witnessed in both industrial and developing countries.

The authors of the study point out that between 1973 and 1987, employment in countries like France, Germany and the UK actually fell, even though they had fairly respectable growth rates. Three-quarters of the rise in output in these countries came from increases in total productivity, with the rest from increased capital investment – without creating new jobs.

The developing countries have also experienced jobless growth. The labour force in the developing countries continued to increase by 2.3 per cent throughout the 1990s, requiring an additional 260 million jobs. Women’s participation in the labour force also increased. And there was a steady migration of people to urban areas in search of work. These trends are likely to continue, with the rate of net migration expected to be about 4.6 per cent this year. Taking into account the number of people unemployed or underemployed, the total worldwide requirement for this decade (2000-2010) is projected at around one billion new jobs.

In Pakistan’s case, an estimated two million new jobseekers enter the job market each year. To create jobs in industry for all these jobseekers would be prohibitively expensive for a country of Pakistan’s means. At today’s prices, creating one job in the large-scale manufacturing sector in this country costs between Rs 300,000 to Rs 500,000, depending upon the type of industry.

It costs much less to create jobs in the agricultural sector, small- and medium-size manufacturing enterprises and the services sector. But even creating jobs in these sectors needs a framework of well-conceived economic policies and effective implementation of policies as well as continuity in policy – things that have often been lacking in Pakistan.