OVERVIEW OF ECONOMY

GHANA

Well endowed with natural resources, Ghana has roughly twice the per capita output of the
poorest countries in West Africa. Even so, Ghana remains heavily dependent on international
financial and technical assistance. Gold and cocoa production, and individual remittances, is
major sources of foreign exchange. The domestic economy continues to revolve around
agriculture, which accounts for about 35% of GDP and employs about 55% of the work force,
mainly small landholders. Ghana signed a Millennium Challenge Corporation (MCC) Compact
in 2006, which aims to assist in transforming Ghana's agricultural sector. Ghana opted for debt
relief under the Heavily Indebted Poor Country (HIPC) program in 2002, and is also benefiting
from the Multilateral Debt Relief Initiative that took effect in 2006. Thematic priorities under its
current Growth and Poverty Reduction Strategy, which also provides the framework for
development partner assistance, are: macroeconomic stability; private sector competitiveness;
human resource development; and good governance and civic responsibility. Sound macro-
economic management along with high prices for gold and cocoa helped sustain GDP growth in
2008.

SOUTH KOREA

Since the 1960s, South Korea has achieved an incredible record of growth and integration into
the high-tech modern world economy. Four decades ago, GDP per capita was comparable with
levels in the poorer countries of Africa and Asia. In 2004, South Korea joined the trillion dollar
club of world economies. In 2008, its GDP per capita was roughly the same as that of the Czech
Republic and New Zealand. Initially, this success was achieved by a system of close
government/business ties including directed credit, import restrictions, sponsorship of specific
industries, and a strong labor effort. The government promoted the import of raw materials and
technology at the expense of consumer goods and encouraged savings and investment over
consumption. The Asian financial crisis of 1997-98 exposed longstanding weaknesses in South
Korea's development model including high debt/equity ratios, massive foreign borrowing, and an
undisciplined financial sector. GDP plunged by 6.9% in 1998, then recovered by 9% in 1999-
2000. Korea adopted numerous economic reforms following the crisis, including greater
openness to foreign investment and imports. Growth fell back to 3.3% in 2001 because of the
slowing global economy, falling exports, and the perception that much-needed corporate and
financial reforms had stalled. Led by consumer spending and exports, growth in 2002 was an
impressive 7% despite anemic global growth. Between 2003 and 2007, growth moderated to
about 4-5% annually. A downturn in consumer spending was offset by rapid export growth. In
2008, inflation increased in the face of rising oil and food prices before easing in the fourth
quarter. Korea was hit hard by the global financial turmoil that began in September 2008. Stock
prices fell by more than 40% for the year and the value of the won fell by approximately 26%.
Korean GDP shrank in the fourth quarter and GDP growth for the year was just 2.5%. The
Korean government adopted several measures to combat the credit crunch and stimulate the
economy.
PAKISTAN
Pakistan, an impoverished and underdeveloped country, has suffered from decades of internal
political disputes, low levels of foreign investment, and declining exports of manufactures. Faced
with untenable budgetary deficits, high inflation, and hemorrhaging foreign exchange reserves,
the government agreed to an International Monetary Fund Standby Arrangement in November
2008. Between 2004-07, GDP growth in the 6-8% range was spurred by gains in the industrial
and service sectors, despite severe electricity shortfalls. Poverty levels decreased by 10% since
2001, and Islamabad steadily raised development spending in recent years. In 2008 the fiscal
deficit - a result of chronically low tax collection and increased spending - exceeded Islamabad's
target of 4% of GDP. Inflation remains the top concern among the public, jumping from 7.7% in
2007 to 20.8% in 2008, primarily because of rising world fuel and commodity prices. In
addition, the Pakistani rupee has depreciated significantly as a result of political and economic
instability.
Economic Development in Pakistan
After the founding of Pakistani State in 1947, the Government’s economic policy concentrated
attention on developing an economic infrastructure, achieving self-sufficiency in food, and
developing export industries. However, an intrusive and over sized public sector, an over
regulated economy, excessive discretionary powers often incompatible with the level of the
official, and an absolute lack of transparency, provide the optimal environment for opportunities
of corruption restricting the economic development in the country. Combination of these factors
with weak accountability ensures that economic backwardness get entrenched into the entire
fabric of society. Despite the pervasive pessimism that is undoubtedly felt, we have come across
many who would willingly embrace new practices if only the scourge of corruption could be
lifted from their lives. The countries that have surged ahead, on the other hand, are characterized
by high level of human capital accumulation where the educated labour force has raised the level
of output and the rate of growth over a sustained period of time.
Inefficient public expenditure process, higher cost of basic input, lack of skilled human
resources, corruption and nepotism restrict Pakistan far behind in development according to
recently announced World Bank report. Pakistan is suffering from shortage of infrastructure in
the water, irrigation, power, and transport sectors. Infrastructure is essential for sustained growth
and competitiveness both in the local and international markets. The gaps between demand and
supply in these sectors are alarming. The plans needs to put in place urgently, these critical
shortages would continue to undermine the efforts to improve socio-economic indicators and to
reduce poverty. Without adequate irrigation resources, power and transport infrastructure, the
very sustainability of Pakistan as an independent nation may be at stake as shortages could lead
to increased social discontent and disharmony amongst the federation and the provinces.
Pakistan is on the list of the most water stressed countries in the world, and forecasts indicate
that available resources are depleting rapidly, possibly leading to a state of water scarcity in the
next two decades. Much of the water infrastructure is in poor repair and Pakistan has to invest
almost Rs 60 billion per year in new large dams and related infrastructure over the next five year.
In the energy sector, Pakistan will face severe power shortages of approximately 6,000
megawatts by the year 2010 (equivalent to about three Tarbela dams) and 30,700 MW by the
year 2020.
The per capita energy consumption in Pakistan is amongst the lowest in the world and a lack of
adequate energy resources precludes industrial growth affecting all sectors of the economy.
Similarly, the transport sector inefficiencies are costing the economy between 4 to 5 percent of
GDP each year indicating the need for massive investment in roads, rail, air and ports as
indicated in the World Bank report.
Delays in project implementation reflect poor planning, programming and weak implementation
capacity. Public agencies take on too many projects in their development programs and end up
delivering little, and what they do deliver is often determined by political priorities. The delays in
payment, imbalanced contracts, inefficiencies and corruption in the system force contractors to
incur additional financial and economic costs resulting in squeezing the already poor margins in
the industry.
Pakistan should lesson from international case studies on the development of the construction
industry and the literature reviews clearly show that a holistic long-term planning and a detailed
strategy must be evolved with a clear vision and commitment towards developing the industry,
and this process may take as long as a decade or more of sustained effort. The Government needs
to make serious efforts to strengthen revenue mobilization, contain its unproductive expenditure,
and utilize scarce external assistance more efficiently.
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