World Bank believes Pakistan’s rapid urbanisation can positively transform economy

WASHINGTON: A new World Bank report has said Pakistan’s rapid urbanisation could support the efforts to transform its economy.

“The country is the most urbanised large country in South Asia, with 36 percent of the population living in urban areas and urban centres which accounts for over half of Pakistan’s GDP,” it said.

According to the report, the pronounced youth growth, coupled with continuing rural-urban migration, provides a large labour pool. While until the late 1990s, much migration was towards Karachi, but the past 20 years have seen significant migration from smaller cities to larger cities in Sindh, Khyber Pakhtunkhwa (KP) and Punjab.

“Some urban centres are showing emerging signs of functional specialisation. For instance, manufacturing, finance and high-tech sectors are mainly concentrated in larger cities, whereas construction, mining and agriculture-related sectors are more prevalent in smaller cities,” said the report.

The WB said the concentration of economic activities in urban areas brought considerable benefits, it could also create congestion costs (traffic, pollution, price increases and crime) that could at times outweigh the benefits of agglomeration, negatively affecting productivity and growth.

“Whether the agglomeration benefits outweigh the congestion costs will depend on interventions to maximise the benefits and to manage and mitigate the costs. Digital development holds great promise as a driver of structural transformation,” it said.

The World Bank said the proliferation of the internet supported structural changes through two channels.

First, the internet is creating new types of jobs, work arrangements and opportunities for entrepreneurship, as it cuts search costs and market entry barriers, and makes it easier for workers, employers and customers to find each other, irrespective of their locations.

Digitally enabled work can be inclusive, as services including delivery, ride-sharing, or housework tend to employ informal workers in urban and suburban areas of the country, and flexible work arrangements can encourage greater female labour force participation.

Second, modern technology can enhance productivity in traditional sectors, and thus trigger structural transformation. In agriculture, for instance, digital technologies can overcome information barriers and open market access for many smallholder farmers, increase technical capacity through new ways of providing extension services, and improve agriculture supply chain management.

Pakistan has already derived some of the benefits from digitization, but the scope for further growth remains.

Pakistan has already derived some of the benefits from digitization, however there remains the scope for improvement with respect to the inclusiveness of digitally-driven growth.

Demand for access to the internet has increased rapidly, from 6 million internet subscribers in 2013 to an estimated 48 million in 2017 (Pakistan Telecommunication Authority).