A Sectoral Analysis of Poverty in Pakistan

Abstract

Since independence, the problem of mass poverty in Pakistan has been substantial. The number of the destitute has continued to soar. The problem of poverty now looks to be beyond control. The vast masses of the people, particularly in rural areas, are indeed, miserably below the poverty line. Moreover, the socioeconomic and demographic indicators are dismal. Official planning and the market economy system have failed to lessen poverty. The policies formulated to eradicate it have failed to achieve their objectives. The issue of poverty in Pakistan has its significance for sustainable development. Long run development is not possible without protecting the rights of the vulnerable groups and the participation of the entire population in the development process. Although Pakistan’s economic growth has been quite respectable for much of the last four decades but it has failed to trickle down to the masses. The country has experienced poverty and stagnation in 1950s, increasing poverty and growth in the 1960s, stagnation of growth but declining poverty in the 1970s, increasing growth and declining poverty in the 1980s and finally, increasing poverty and falling growth in the 1990s [MHCHD/UNDP (1999)]. The mainstream approach to identifying the poor specifies a cut-off point ‘poverty line’, defining the level of income/expenditure below which people are diagnosed as poor. The conventional measure of poverty, head-count index, has been widely used in Pakistan. However, in practice this absolute threshold usually cannot stand the pressures of changing circumstances and is not as absolute as the term would appear to imply [Zaidi and de Vos (1993)]. To show the true face of poverty this study uses Foster, Greer and Thorbecke (1984) class of additively decomposable measure to estimate the variation in the incidence, intensity and severity of poverty across sectors of employment. This study also determines the relative contribution of the various sectors to aggregate poverty. Location index is also used to measure the concentration of poor in each sector. To evaluate the sources of observed changes in sectoral poverty at the micro level ‘HIES’ data sets are used.