Anchoring Khyber-Pakhtunkhwa Province

By Anjum Altaf

I learnt there is just one flight per week from Lahore to Peshawar and it returns three days later. This prompted an investigation of how the city is connected to the outside. Here is some quick information on the flights per week to Peshawar and their origins: None from Central Asia; 1 from East Asia; 1 from Afghanistan; 1 from the Punjab; 2 from Balochistan; 4 from within KPK; 4 from Islamabad; 10 from Sindh; and 56 from the Middle East.

While KPK is part of Pakistan, it seems reasonable to infer that its economic engine is in the Middle East.

One might post oneself outside Peshawar airport to determine the nature of the economic engine. I doubt one would see investors armed with briefcases and laptops. Much more likely that the vast majority would comprise migrant workers returning home for a break with the type of consumer goods unskilled and semi-skilled migrant workers come back with.

This would confirm that KPK is a manpower exporting economy. It does not generate enough jobs to employ its labor force; nor does the rest of Pakistan put together. The type of work for which the human capital of KPK has been equipped by its governments is to be found in sufficient numbers in Karachi and, at a living wage, mostly in the Middle East.

This is not an outcome of the recent unrest in the province. It has been so for a long time. I wrote a paper in 1992 – The Spatial Pattern of International Labour Flows from and to Pakistan – which showed that the NWFP (as it was then called) was the province with the highest relative outmigration from Pakistan (about three times the national average) and the lowest return migration to Pakistan (about half the national average). There was little for people to do in the province and little for them to come back to.

Within NWFP, Peshawar district had the highest relative outmigration (over six times the national average) and the lowest return migration (about a fifth of the national average) suggesting that better prepared workers were even more likely to leave the province and even less likely to return. Clearly the prospects for socioeconomic development would be dented if those most likely to contribute were left with no alternative but to exit.

It might be argued that there is nothing really problematic with the above scenario – we are part of a global economy and labor moves to where the jobs are. There are many sociological and political reasons to argue the contrary. Think of the inner cities in the US that were reduced to pockets of poverty after the flight of the affluent to the suburbs. The pathologies that arise from such phenomena are a source of concern to social scientists. One could surmise that the rise of social and religious conservatism in KPK is an outcome of its manpower-exporting economy, anchored in the Middle East, which transforms laborers into small-property owners imbued with the values of its host society (1).

For an economist, the aspect of interest is not that labor moves to where the jobs are but why jobs are not in KPK. Is it a desert capable of growing or producing nothing? Since few would subscribe to that judgment a search is needed for a plausible explanation.

The corollary to the above is that there has been very little investment in KPK from the Punjab, a neighboring province, or from Karachi, despite the fact that the province is rich in energy potential and many kinds of natural resources. At the very least one might have expected over the many preceding decades some relocation of industry attracted by lower  land and labor costs in KPK. An examination of the reasons for the absence might be a good place to start in designing a new development strategy for the province.

A thought experiment might trigger some ideas. Imagine KPK as an independent country no longer eligible for allocations from a federal budget. What might it do to generate its own revenues and how might it go about attracting foreign direct investment from its neighboring countries?

One could add an analogy to the thought experiment. There was a time when Mexico was exporting its labor across the border to the US for agricultural work. The shock of suspension of the arrangement in 1965 was the catalyst for a border industrialization program designed to provide alternative employment. By the end of the century, almost 4000 factories financed by US investment were generating 25 percent of Mexico’s GDP, almost 50 percent of its exports, and about 10 percent of its formal employment.

The analogy might seem far-fetched but is suggestive of a vision to develop the province. Central to the vision is identifying the type of industry compatible with KPKs natural resource endowments, the type of infrastructure and skills required to operate the industries, the type of incentives needed to attract back skilled labor, and the downstream industries that would cater to the consumption needs of workers with rising incomes to keep money circulating in the domestic economy (2).

In thinking of a border industrialization program it might be useful to re-examine the experience of the Hattar Industrial Estate presumably located on the Punjab-NWFP border to attract capital investment. By all accounts it has not been a success – a recent report indicated that abandoned and sick industrial units exceeded in number those that were operational and under construction. The reasons remain to be fully examined.

Khyber-Pakhtunkhwa is a rich province poorly served by its governments. Its citizens deserve better. They are too desperate to leave and too much in debt to find the time or energy to protest but such good fortune may not last forever.

Anjum Altaf is Dean of the School of Humanities, Social Sciences and Law at the Lahore University of Management Sciences. This op-ed appeared in Dawn on June 30, 2013 and is reproduced here with permission of the author.

(1) This is an involved argument that is developed more fully in a note, The Political Implications of Migration from Pakistan, which was published here and reproduced on this blog here.

(2) In connection with attracting migrants back, see Return Migration in a Lifetime Setting: An Exploratory Study of Pakistani Migrants in Saudi Arabia. At the time of the study, wage differentials between Saudi Arabia and Pakistan needed to be of the order of 7:1 to attract migrants. However psychic costs for the migrants were very high. They were willing to return at a wage ratio of 3:1.

Back to Main Page

Advertisements

Tags: , , , , ,

16 Responses to “Anchoring Khyber-Pakhtunkhwa Province”

  1. Anjum Altaf Says:

    Just a coincidence there was an almost simultaneous op-ed about the migration from UP and Bihar to the Caribbean Islands – the one referred to in the note on the political implications of migration:

    http://www.thehindu.com/opinion/lead/the-bhaiya-express-to-misery/article4860822.ece

  2. irfan khan Says:

    I am from KPK amd i agree with you on the point of least investment. although in present situation law and order may be the reason but in the past it was totally a government failure. Also the least interest of the investor from Punjab is the reason. As we know that there are very small number of affluent people in the province and may be thay were not able to do investment. as we know after partition large land holdings were given to the people of Punjab which in the present time are the main business holder,while as KPK had very less land area and was not given favor in land allotment. i think this difference at the critical juncture of our independence is the main reason.

  3. Syed Muhammad Hamza Says:

    It is an interesting text. It is very informative. But I disagree with one thing: “suggesting that better prepared workers were even more likely to leave the province and even less likely to return.” The reason could be that those in Peshawar would have more exposure and opportunities to go abroad.

    Second thing I disagree with is inference made from flight numbers of Peshawar. Similar numbers should be given of Lahore (or other cities) to get comparable numbers, though the migration rates on themselves are pretty informative.

    • Anjum Altaf Says:

      Hamza: To some extent more exposure and opportunities would be correlated with better preparation, would they not? Also, if you wish to reflect on a really contrasting case to Peshawar, check out the number of flights per week into Hyderabad and their origins. Let me know what story you can tell from that data. I am planning to write it up very soon.
      And finally, if you wish to look at an example across the border see the numbers for a state capital in India, say Lucknow. That should give us much to talk about. There are places in India, say Bangalore, with many flights from outside India but they are bringing in a lot of investors and professionals, not unskilled and semi-skilled labor. I read some years ago, that there are more flights into Bangalore per day than into all the Pakistani airports put together. I am not sure if that is strictly true but it should be worth looking into and there could be another story there.

  4. Talal Says:

    Don’t you think that there are less flights from Lahore to Peshawar because it takes you six hours to make the journey on the motorway whilst the only viable mode of travel between Peshawar and the middle east is through airlines?

    • Anjum Altaf Says:

      Talal: The point is valid but only to an extent. Do you really believe any serious investor or CEO is going to travel six hours on the motorway for a meeting in Peshawar? If what you say is true, why are there more flights from Lahore to Islamabad which is only four hours on the motorway? The fact that there are fewer flights to Peshawar is telling us something about economic integration.

  5. Shaharyar Says:

    A number of reasons can be attributed to flight of human resource from KPK and limited investment in the province.

    – A gun culture – Investors want security of life, limb and property,
    – Poor security situation in the province since time-immemorial,
    – A thriving underground economy – Conveniently available cheap smuggled goods have damaged the local industry which is severely handicapped by direct/indirect taxes, power outages, unnecessary and constant govt. interference and low productivity of labor.
    – A conservative culture – People simply want freedom to live the way they want without intrusion from the govt., religious fanatics or other people in general. Since the advent of dish and cable TV in KPK, people realize that better oppertunites for such a life may exist elsewhere, this one is especially true for young people.
    – Concentration of wealth in a few hands – Those not interest in industrialization or human resource development.

    The reasons specified above can apply to Pakistan a a whole but in my view are valid for KPK to a greater extent.

    A ‘purchasing price parity’ index should also be developed between the provinces to explore living costs and understand if the difference can be entirely explained based on the reasons above and the like, or is it that people in KPK are generally more industrious in seeking out new avenues of growth and prosperity! It may be a bit of both.

  6. Shiraz Says:

    One reason of relatively more outmigration from KPK may be physical manpower available in KPK as compared to other provinces. During recent meeting with Overseas Pakistan Foundation (OPF), Bureau of Immigration and Overseas Employment Corporation (OEC), I inferred that KPK people are more physically strong. There were more unskilled and semi-skilled labor than businessmen & investors visas in Bureau of Immigration.

    “KPK people are more prone to operate heavy machinery and sit 1000 feet above the ground”.This is the type of work in which significant people are reluctant to work (representative’s from OPF, OEC).

    • Anjum Altaf Says:

      Shiraz: The question still remains: Why can’t that physical manpower be used in KPK? Also, recall that the previous great migration from South Asia (of indentured labor) was of people from Eastern UP and Bihar who had nowhere the same physical strength. This British theory of the martial races needs to be put to rest.

  7. Anjum Altaf Says:

    Here are some ideas from India to promote airports in smaller cities:

    http://www.thehindu.com/opinion/editorial/helping-towns-take-flight/article4905789.ece?homepage=true

  8. Sher M Khan Says:

    Very well researched article . Let me if I may give example of one part of KPK :Swat . Before partition people used to go to Bombay and Ahmad Abad . After partition they started going to Karachi and then Middle East . Most of them because of economic reasons . A lot can be done to keep the people in Swat as well as attract them back to their places by developing the tourism industry .channelizing the Swat river and building dual carriage ways on both banks will not only prevent the devastating floods but also create jobs and can be also used for water sports and power generation .In 1944 one of the last British Chief Secretary Mallam had approved a development plan for present tribal areas covering education , health and infrastucture etc and had that been implemented KPk would not have these man made disasters and economic migration but NWFP has been neglected by successive governments .
    One has to be optimistic and let us hope that the present government of KPK alleviate poverty , create jobs , try to remove the injustices from the society ,usher in good governance and take measures for quality education . The workers in the middle east earn billion of dollars for the country by their sweat and blood and let us hope that some of the money is spent on raising the standard of living of the people .

    • Anjum Altaf Says:

      Sher M Khan: Thanks for a very useful response. In my view, being optimistic and hopeful is not enough – we might find after another five years that nothing really happened. Putting a portion of the worker remittances at the control of the state might result in even more waste and leakage. Why would governments that have performed so poorly in the past suddenly start doing a better job without any pressure from below?

      We have to be more pro-active and put some concrete ideas on the table as elements of a development program for the province. If the Mallam Report can be found, it might provide some ideas for an initial work plan. We should also try and form a Citizens Commission to monitor, review and critique the government’s actions on a regular basis.

  9. Sheraz Ahmad Says:

    Though Provoking. Yet, its a fact that decades of War in neighborhood has plagued KPK as for jobs are concerned.
    Geo-Strategic placement of KPK explains many things, but lets move ahead.

    1.Another Border Industrialization industrialization along China’s proposed route to Central Asian Republic can Bring-in FDI and our labor force back.
    2.Public-Private Partnership in Investment but ALSO IN GOVERNANCE is need of the day.
    3. Skilled people like nurses and paramedics can be better alternative to raw labor.
    4. MEDICAL TOURISM is what KPK can offer if planned properly.
    5.Let’s make an Independent think tank and advocacy group focusing on issue this article describes.

    Yes, Pro-active public is what we need, but, lets get busy for the BUSY public, as it will take another century for them to realize their problems. Recently, i asked my schoolmate who is now an MBA and did his research on KSE about 100 Index, and he he didn’t even know what the term means, what to expect of the rest???

    • Anjum Altaf Says:

      Sheraz Ahmad: I agree making an independent think tank and advocacy group would be a good idea. How do we go about it? Part of the task of the group would be to disseminate ideas to the busy public. Even if the public is not proactive it needs to be receptive and not resistant to new ideas.

      All your ideas make sense. I mentioned in the article that there was no flight to Peshawar from Central Asia. There is a big potential we are missing. A border industrialization program could well be explored. Peshawar is already catering to the medical needs of Afghanistan – the fancy hospitals in Hayatabad are evidence of that. This could become a planned initiative. If labor is going to be exported, it makes a lot of sense to add value to it before sending it abroad – Philippines does that in the case of nurses.

      Do give some examples of what you have in mind re public-private partnership in governance.

      • Sheraz Ahmad Says:

        Yesterday had a meeting with a person having huge mandate to do things in KPK, He asked for a cohesive plan on Glorifying Lady Reading, Sherpao, and Hayatabad complex like those other hospitals u mentioned. So:

        1.All these 3 Hospitals under public private partnership can bring MEDICAL TOURISTS far beyond Afghanistan.

        2.Tourism Industry, Public Infrastructure with private publicity and Operational Partnership.

        3.Academia-Industry Partnership: All our small industries failed partly cos they had no business plan and entrepreneurs were not technocrats. Private think tanks- Industrial partnership. Planning a mandate of Academia & think tanks, implementation on Govt. and even private companies/ Industries.

        4. Power-Generation.

        5. e-System introduction. Public-Private partnership: To bring about efficiency in HR management & Governance. NADRA is getting dubbed under loads of e-Assignments given.

        5. IT: Look at Net-Sole, its a Listed company at KSE serving worldwide from Lahore!!! We have the potential at KP too. Government IT zones with free Building and Electricity and u’ll c scores of Aafia Siddiquis from KP exporting software to the US and EU markets the way India does.

        Sir, u know what, writers transform Societies, but mere writing in a newspaper or a blog doesn’t, cos, your intellectual message doesn’t get to concerned people. If we are a think tank, and once concerned people feel it in their own interest to seek wisdom from here, then yes, You’ll be a transformer.

        • Anjum Altaf Says:

          Sheraz Ahmad: I am in agreement with all the points you have made and concur that this is the way to go. Every little bit helps. My message in a newspaper/blog got to you and you suggested a way to move it forward. I am willing to be part of a think tank to disseminate the message further.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: