ishrat husain : comparison of pakistani economy with asean economies keynote address by mr ishrat husain, governor of the state bank of pakistan, at the 12th general council and general body meeting of the asia oceania tax consultants association, karachi, 26 november 2004. * * * it is now widely accepted that the asian economies have done extremely well in terms of economic growth and poverty reduction during the last three to four decades or so despite the crisis of 1997. three decades ago, china was among the world ’ s poorest countries with 80 percent of the population having incomes less than us $ 1 per day and only a third of all adults able to read or write. by 2000 the proportion of the poor ( income less than us $ 1 per day ) had declined to around 16 percent. korea and pakistan had identical per capita incomes of $ 100 in 1960. korea has now graduated as an oecd country and reached per capita income of approximately $ 10, 000 while we haven ’ t even crossed the threshold of $ 1, 000. asia ’ s share in world gdp ( at ppp ) has risen from 24 percent in 1973 to almost 40 percent in 2003. foreign currency reserves of asian central banks now account for 70 percent of the world currency reserves and financed more than half of the current account deficit of the united states in 2003. there was a time in the late 1960s when pakistan ’ s exports exceeded total exports of indonesia, malaysia, thailand and the philippines. but, unfortunately, all these countries have moved ahead whereas pakistan is still struggling to reach $ 14 billion target. had pakistan maintained its economic progress of the 1960s, its economy would have been akin to the east asian ones and moved into the middle income group by now. our per capita income is still around $ 650 and we are stuck in the low income category. whereas it took the united kingdom almost a century, united states of america 50 years to double their per capita incomes, most of the asean + 3 countries1 ( asean + japan, china and korea ) achieved this goal in less than half a century. japan did this in 40 years, korea in 25 years and china in 10 years. pakistan should learn from the experience of these countries and there are many lessons which should be followed by us if economic progress has to be sustained. the evidence on economic development asean + 3 countries suggests some common factors which have been critical to their success. ( a ) work ethic ; discipline ; trust : the foremost principle for

ishrat husain : the health challenge in pakistan - prognosis and prescription chief guest address by mr ishrat husain, governor of the state bank of pakistan, at the launch of the human development report of south asia, organised by mahbubul haq center for human development, islamabad, 30 may 2005. * * * there is a strong theoretical and empirical evidence that economic growth causes improvements in human development which, in turn, increases economic growth. the improvement in health results in enhancement of basic capabilities that adds value to human life. the transmission to growth takes place through impact on worker productivity, through demography and through trade and investment. health has a positive effect on poverty reduction too. poor households are hit by major illness and fall into poverty trap. lower earnings due to withdrawal from full time employment increases the risk of illness for the rest of the households. risk of falling below poverty becomes acute in case of death of the bread winner of the family. thus, investment in health, particularly preventive health such as availability of clean drinking water and sanitation can contribute to growth and minimize the risk of falling below the poverty line. there is no doubt that pakistan ’ s social indicators are not something we can feel proud of. pakistan ’ s competitiveness in the future knowledge based economy of the world will critically depend upon how well we are able to harness and increase the productivity of labor force for meeting future challenges. it is no longer a cliche that those lag behind in human development are going to become marginalized. it is all the more surprising to note this poor state of affairs at a time that there is almost unanimity on the intellectual front and broad consensus on the political front on the importance of human development in attaining national prosperity. both the economists and non - economists have converged their views on the critical role education and training, health and nutrition play in economic development. those on the left, those in the center and conservatives also have identical views though due to different reasons. all political parties in pakistan are committed to human development as a policy objective. why is it then that the progress in this area has been so unsatisfactory and what can be done to remedy this situation? in my view there are four cogent reasons for lack of progress in human development in pakistan. first, there is a structural ambiguity in the allocation of responsibilities between the federal, provincial and local governments in the whole endeavour of human development. the overlap and duplication in