Sunday, May 9, 2010

1999-2009: Pakistan's Decade of Urban Middle Class Growth

The simplest definition of the middle class is a group of people in a society who are neither rich nor poor. The middle class has always been considered vital to a country's stability and growth. The rich and the poor simply distrust each other too much to let the other govern. Nations with large middle class populations find it easier to sustain good, democratic governance.

Unfortunately for Pakistan, the size of the middle class was very small when it came into existence, and the country was dominated by a small powerful feudal elite created by the British rulers to sustain their colonial rule. And the urban middle class remained small for decades. The situation has, however, finally begun to change in the the last decade of 1999-2009 with a combination of increasing urbanization and faster economic expansion that fueled significant job creation in the industrial and services sectors to enable middle class growth.

Pakistan is now more urbanized with a larger middle class than India as percentage of the population. In 2007, Standard Chartered Bank analysts and State Bank governor Dr. Ishrat Husain estimated there were 30 to 35 million Pakistanis earning an average of $10,000 a year. Of these, about 17 million are in the upper and upper middle class, according to a recent report.

Urbanization is not just a side effect of economic growth; it is an integral part of the process, according to the World Bank. With the robust economic growth averaging 7 percent and availability of millions of new jobs created between 2000 and 2008, there has been increased rural to urban migration in Pakistan to fill the jobs in growing manufacturing and service sectors. The level of urbanization in Pakistan is now the highest in South Asia, and its urban population is likely to equal its rural population by 2030, according to a report titled ‘Life in the City: Pakistan in Focus’, released by the United Nations Population Fund. Pakistan ranks 163 and India at 174 on a list of over 200 countries compiled by Nationmaster.

Pakistan has and continues to urbanize at a faster pace than India. From 1975-1995, Pakistan grew 10% from 25% to 35% urbanized, while India grew 6% from 20% to 26%. From 1995-2025, the UN forecast says Pakistan urbanizing from 35% to 60%, while India's forecast is 26% to 45%. For this year, a little over 40% of Pakistan's population lives in the cities.


A 2008 report by UN Population Fund says the share of the urban population in Pakistan almost doubled from 17.4 percent in 1951 to 32.5 percent in 1998. The estimated data for 2005 shows the level of urbanization as 35 per cent, and CIA Factbook puts it at 36% in 2008, and it is increasing with 3% of the nation's population migrating to cities every year. With over 5 million rural migrants each year, the population of Pakistani cities in exploding, and Karachi has now become the world's largest city, according to

India's urban residents in 2008 residents accounts for 29% of its population, and the CIA Fact Book estimates it growing at 2.4% of the total population every year.


India Poverty Estimates

Unlike poverty which is defined by the World Bank as people living on less than $1.25 or $2 a day, there is no widely accepted definition of who counts as a member of the middle class in the developing world.

In India, for example, a scooter company aims ads at a schoolteacher who earns $2,500 a year and lives in a tiny brick house with no running water. Why? Because that teacher is counted as middle class by Indian marketers, according to MSN Money.

Economist Nancy Birdsall of the Center for Global Development (CDG) is attempting to establish a $10 a day minimum limit in terms of purchasing power parity (PPP) as the low end of the middle class, while excluding the top 5% of the population in a country from the middle class. "An upper limit of the 95th percentile, while on the high side, is just about sufficient to exclude the country's richest," Birdsall adds.

In India's case, everyone who makes $3,650 a year is in the top 5% (about 55 million people) of the nation's population. It is on this basis that economist Birdsall concludes that India has no middle class. Over 75% of India's population (versus 60% in Pakistan) lives on less than $2 a day, or $750 a year, according to Human Development Report 2009. The rest of about 20% of India's people falls between $2 and $10 a day.

It is interesting to note, however, that India has been much more successful in sustaining democracy than Pakistan. Perhaps it is attributable to early land reform in India that significantly tamed the power of the feudal class.



According to development economist Lant Pritchett, fewer than 25% of the people in the richest quintile in India complete 9 grades of school.

This is a combination both of the depth of India's p overty and its inequality. China had no middle class in 1990, but by 2005, had a small urban middle class (3% of the population). South Africa (7%), Russia (30%) and Brazil (19%) all had sizable middle classes in 2005.

Contrary to popular myths about rich-poor gap often expressed in Pakistani and Western media, Pakistan is more egalitarian than most countries of the world, including nations of South Asia region. According to UNDP HDR report 2009, Pakistan's ratio of expenditures of the top and bottom 10% of the population is 6.7 versus India's 8.6 and China's 13.2. The resource consumption by the lowest 10% of the Pakistani population is 3.9% and highest 10% consumes 26.5%. This compares favorably with 3.6% consumption by the bottom 10% in India and 31.1% by the top 10%.

In spite of the recent growth in Pakistan's middle class, it is still not strong enough to seize power. However, with the recent growth of independent mass media and greater political activism, the Pakistani middle class has begun to exert more influence on how the nation is governed. And the power of the current ruling feudal zamindars' party, the Pakistan Peoples Party, appears to be waning in the face of the new assertive middle class.

Unlike the more urban and middle class voters of the Pakistan Muslim League (PML) and the Muttahida Qaumi Movement (MQM), the PPP's voter lives in a different world, a world that has been dominant for decades. It is a feudal world controlled by the rural elite that is much more rural, more deferential, more rooted in tradition. Its nationalism is less marked and its Islam less influenced by the international trends of the last 30 years and thus much less politicized and much more based in centuries-old Sufi traditions. Describing this situation, Jason Burke of the Guardian has argued that "This is a Pakistan that is disappearing". Burke has quoted an unnamed 2008 PPP electoral candidate in rural Punjab who recognized and reportedly said that his party needed to "re-invent itself".

While many rural residents in Sindh and Southern Punjab who voted for the PPP have remained relatively isolated from major developments in Pakistan in the last decade, the urban middle class has grown dramatically in numbers and influence during the military rule of President Musharraf. The New York Times reported on this expansion of Pakistani middle class in November 2007 in these words: "As he fights to hold on to power, General Musharraf finds himself opposed by the expanded middle class that is among his greatest achievements, and using his emergency powers to rein in another major advance he set in motion, a vibrant, independent news media". Acknowledging this fact, William Dalrymple, a British journalist/author considered knowledgeable about India and Pakistan, recently wrote as follows: "It was this newly enriched and empowered urban middle class that showed its political muscle for the first time with the organization of a lawyers' movement, whose protests against the dismissal of the chief justice soon swelled into a full-scale pro-democracy campaign, despite Musharraf's harassment and arrest of many lawyers. The movement represented a huge shift in Pakistani civil society's participation in politics. The middle class were at last moving from their living rooms onto the streets, from dinner parties into political parties."

The future of Pakistan clearly belongs to its urban middle class. The behavior of the members of this rising urban middle class will largely determine if and when Pakistan grows out of the current crises to face the future with greater confidence.

Here's a video clip on Pakistan's middle class:

Here's a video titled "I Am Pakistan":

Related Links:

Comparing India and Pakistan in 2010

Indian poverty

Pakistan Wage Structure 1990-2007

Middle Class Clout Rising in Pakistan

Urbanization in Pakistan

The Rise of Mehran Man

Industr ial Sector of Pakistan

India Has No Middle Class

Pakistan's Foreign Visitors Pleasantly Surprised

Escape From India

Reflections on India

After Partition: India, Pakistan and Bangladesh

The "Poor" Neighbor by William Dalrymple

Pakistan's Modern Infrastructure

Video: Who Says Pakistan Is a Failed State?

India Worse Than Pakistan, Bangladesh on Nutrition

UNDP Reports Pakistan Poverty Declined to 17 Percent

Pakistan's Choice: Talibanization or Globalization

Pakistan's Financial Services Sector

Pakistan's Decade 1999-2009

South Asia Slipping in Human Development

Asia Gains in Top Asian Universities

Pakistan's Industrial Sector

Pakistan's Multi-Billion Dollar IT Industry

India -Pakistan Military Comparison

Food, Clothing and Shelter in India and Pakistan

Pakistan Energy Crisis


Rahul said...

Let's do some maths here Mr. Riaz....

You say that 75% of Indians live on less than 2 dollars a day.
Therefor about 800 million Indians earn less than $800 billion every year.

Now with remaining 300 million we count their Per-capita. As India's GDP is $3.5 trillion so 300 million Indians earn about $2.7 trillion, thats more than $9000/year. Well I hope this satisfies you....

Riaz Haq said...

Rahul: "so 300 million Indians earn about $2.7 trillion, thats more than $9000/year. Well I hope this satisfies you.... "

If the $2.7 trillion was distributed evenly among the 300 million Indians above $2 a day, then your argument would be valid. Nancy Birdsall's data says that the vast chunk of it goes to the top 5% of Indians which she excludes from the definition of middle class.

You are missing the whole point of Birdsall's paper. It is the depth of India's poverty and its inequality that leaves India with no middle class by her definition.

Vikram said...

Riaz, there is no arguing India's poverty and inequality, but I feel that both you and Nancy are reading too much into income estimates, which at the end of the day are statistical quantities.

A better feel for the middle class of India and what Indians mean when they say middle class can come from looking at Internet Use and graduate students abroad. They are not complete measures, but do give us some idea.

Both internet use and graduate study abroad are mainly done by people who would identify themselves as middle class, regardless of statistics. The point is their behaviour is very different from those who would be called elites.

And on both counts, it seems that India does have a substantial middle class, atleast in absolute numbers. For example, the usage stats for the website blogger show that India has about half the hits the US has, and about 7 times more than Pakistan.

This would indicate to me that India has about the same proportion of middle class people as Pakistan. And that there are about half as many Indian middle class people than the US in absolute terms, although their purchasing power may be less.

If we look at grad student stats, again, we see that there are about 103000 Indian students in the US, 70 % of whom are graduate students. There are only 5300 Pakistani students, of which only 42 % are graduate students. If we take these numbers as an indicator of what proportion of students are getting a decent undergrad education, this would actually indicate that the middle class in India will be or already is a lot larger than Pakistan's.

Anonymous said...

india sells more cars in a month than pakistan sells in entire year.
May be that's a better indication of whose economy is faring better.

India: sale in Apr 2010 143,976

now see how much pak sells in a year

"Car sales soared by 41.3 per cent in July-March 2009-2010 to 86,483 units as compared to 61,185 units in the same period of last fiscal year. "

Riaz Haq said...

anon: "india sells more cars in a month than pakistan sells in entire year.
May be that's a better indication of whose economy is faring better."

There is no question that Indian economy is doing well now and Pakistani economy is currently stagnant.

But it does not mean that India has a bigger middle class than Pakistan as percent of population.

The top 5% of Indian population adds up to over 55 million people who make up a fairly large consumer group.

Riaz Haq said...



Riaz Haq said...

I have received several email messages mainly from Indians which refer to India's NCAER data and argue that "at least 75.30 Million households representing about 413 million people in India in 2009-10 are earning at least more than INR 90,000 = USD 2050 Absolute = USD 7200 PPP 2005."

The Indian NCAER data conflicts with the UNDP HDR 2009 data that says 76% of Indians (vs 60% of Pakistanis) live on less than $2 a day. NCAER data suggests that the entire population of about 400 million Indians at or above $2 a day is middle class, a definition that holds no water.

Middle class is defined differently by India than by the UN and the World Bank. Here's something from that might help understand the debate on middle class sizing:

"While consultants and companies advise investing in India based on the current and projected size of the “middle class”, the bogey of the definition and sizing of the middle class hasn't gone away yet and adds to the unease. The World Bank defines middle class as having between $10 and $20 purchasing power parity (PPP) per capita per day, which is a lot narrower than the NCAER definition of households income between Rs. 2-10 lakh ($4,000 to $21,000 at 2001-02 prices) annually; which is what McKinsey Global Institute uses in its Bird of Gold book. Chris Butel of IIMS-Dataworks suggests sensibly that the middle class are those that have their own personal transport (car or 2-wheeler), own entertainment as in a TV set, sound system and their own communication (phone). Some of us suggest that the middle class are those who are literally in the middle i.e., have approximately between the 33rd and 66th percentile of income. Expectedly the numbers swing wildly from 50 million to 200 / 230 / 300 million. What's more, the nagging worry persists that the middle class being defined by most of these income bands is actually India's upper class."

Anonymous said...

Sir Middle class - does not simply sit on income - it consumes as well. Shall we discuss consumption statistics?? Since these are ratios, total volume does not make a difference.

Television per thousand People - India has 3 times compared to Pakistan.
Cars per Capita - India has twice as compared to Pakistan.
Education: India has more than 3 times people going for higher education than Pakistan.

And Pakistan has half the saving rate compared to India. So all these commodities are purchased and still Indians on an average save twice of what Pakistanis do.... What does your common sense say to this??

As for your only argument, why dont we look at a country like South Africa with per capita Income of over $10,000(PPP), still about 50% of the population lives below $2 per day. Or for Brazil - Again PCI over 10,000 and 35% of population lives below $2 per day.

Your line of reasoning does not appeal to common sense. If we were to determine number of people over $3650 per year, we need not the average but median atleast to determine the clustering.

Riaz Haq said...


You are attempting to obscure the definition and size of the middle class in South Asia by bringing in misleading consumption figures.

Relative to their populations, there are so few cars in India and Pakistan that the vast majority of such owners most likely belong to the upper class..not the middle class of these countries.

Let's take households with TV for example. 68% of Pakistani households and 64% of Indian households have televisions, according to data from Asia Ad Television Coalition.

11% of Pakistanis and 7% of Indians have Internet access.

Two-thirds of Pakistanis have cell phones versus less than half of Indian population with mobile phones.

Riaz Haq said...

On a trip to Singapore a few years ago, a Singaporean jokingly described to me what he called ABCD of Indian problem solving.

He said he's seen some of his Indian friends and colleagues first AVOID the problem, then try and BYPASS it and if that doesn't work, then try and CONFUSE and finally DENY that the problem exists.

The problem we are talking about here is that there is deepening poverty and widening rich-poor gap in India that leaves little room for a genuine middle class to grow, and most Indian commentators on this forum are DENYing this problem.

Citing consumption figures such as cars or Internet access means nothing for the middle class in India, the top 5% of Indians (about 55 million) who are rich are doing most of this consuming....and it's being incorrectly advertised as middle class consumption.

The issue is really simple: Excluding 76% of Indian people below $2 a day (UNDP HDR 2009) and excluding the top 5% (as suggested by Birdsall), the population in India that could potentially be candidates for middle class description is reduced to less than 19%, most of whom are closer to $2 a day than $10 a day minimum set by World Bank.

In Pakistan's case, if you exclude 60% poor (below $2 a day) and also exclude top 5% (as suggested by Birdsall), the potential pool for middle class is 35% of the population, almost twice as large as India's 19% for India.

Country Below $2 Top 5% Remainder (potential middle class)

India 76% 5% 19%

Pakistan 60% 5% 35%

Given Pakistan's lower rich-poor gap and higher urbanization than India's, there is a greater likelihood that a larger fraction of Pakistan's 35% belong to the middle class than India's 19%

Mayraj said...

Here's a Seekingalpha report commenting on McKinsey study of Indian urbanization:



* $1.2 trillion in capital investment
* 2.5 billion square meters of roads to be paved
* 700-900 million square meters of commercial and residential space
* 7,400 kilometers of subways and transportation to be constructed







Riaz Haq said...

Some commentators have raised questions about Standard Chartered Bank data about 30-35 million Pakistanis averaging $10,000 a year income, the group that Jason Burke of the Guardian calls "Mehran men" because they typically drive Suzuki Mehran model of cars (rather than European models or big SUVs).

Forget these numbers for the moment and just think about who should count as middle class in South Asia.

HDR 2009 says 76% of Indians and 60% of Pakistanis live on less than $2 a day. These are poor people none of whom can be considered middle class by any stretch of the imagination.

If you exclude the bottom 75% of Indians (versus 60% of Pakistanis) who live on less than $2 a day, and also exclude the top 5% rich, there are 19% of Indians (versus 35% of Pakistanis) who could be candidates for even a very loosely defined middle class status.

Add to the fact that Pakistan is more urbanized and has less inequality (Gini) than India, and the picture becomes clear.

Isn't it basic commonsense?

Riaz Haq said...

Here's a WSJ story about middle class's increasing gun ownership in Pakistan:

Since Mr. Afridi's ordeal ended in mid-October, police in his hometown of Peshawar, in northwestern Pakistan, haven't made an arrest in his case. They raided the kidnappers' hide-out, but the captors got away, a senior Peshawar police official says.

So the cops allowed Mr. Afridi to arm himself against future abductions. The 35-year-old journalist now carries an AK-47 to work and back home to his wife and five children. Relatives rotate duty as his bodyguards. If his car is again stopped by armed men on a dark road, Mr. Afridi vows to shoot first.

"I'm not going through that again," he said in an interview in this city in northeastern Pakistan.

Guns have long been part of Pakistan's traditional culture, especially in the rugged northwestern part of the country. Handed down through generations, rifles have been used for hunting and for firing celebratory fusillades. Now, however, modern assault rifles and handguns have come into vogue among middle-class Pakistanis, and gun registration has jumped.

This proliferation reflects many urbanites' dwindling faith that the country's new civilian government can protect them. Over the past year, Pakistan has endured the assassination of popular political leader Benazir Bhutto, a spreading Islamist insurgency and the bombing of Islamabad's Marriott Hotel. November's deadly terror attacks in Mumbai, allegedly carried out by 10 Pakistani militants trained here, further frayed nerves.

But more than heightened terrorist threats, many Pakistanis fear the surge in violent kidnappings, extortions and robberies that target those who look like they might have money. The 11,758 murders recorded in the first 11 months of 2008 were the highest in Pakistan in at least a decade, say Islamabad police, who compile nationwide crime statistics.

"People buy weapons because they're insecure," said a senior Interior Ministry official. "No need denying it."

Arms licenses are issued by numerous Pakistani agencies. Local authorities and police hand out permits for weapons that can be used only within their states. The Interior Ministry licenses nonautomatic weapons that can be carried across borders between Pakistan's states. The prime minister's office gives clearance for automatic assault weapons that can be used throughout the country.

Firearm licenses issued by the Interior Ministry rose sharply in 2008. Licenses for 12-gauge pump-action shotguns, used by private security guards and also duck hunters, more than doubled over 2007, according to ministry figures compiled through year's end. Over the same period, the ministry granted 47% more licenses for 30-bore pistols and 53% more for 9mm handguns.
[Pakistani police in July with arms and ammunitions seized in Karachi. Rising violence has prompted many middle-class families in Pakistan to seek weapons permits.]AFP/Getty Images


The ministry's chief spokesman didn't respond to requests for comment about the surge in gun licenses.

Some middle-class Pakistanis have appealed to politicians for help in obtaining licenses. On a recent morning at the Interior Ministry's Arms License Issuance Center in Islamabad, a scrum of applicants waved papers in clerks' impassive faces. One man carried a letter from a member of Pakistan's National Assembly, the country's top lawmaking body, asking that officials facilitate shotgun and pistol licenses for nine of his supporters.

Harris said...

Hello Mr Riaz I just wanted to bring your attention to (if you are already not aware) the latest 'doing business' economy rankings which covers among other things 183 countries ease of doing business. Pakistan is placed at 85 which is the same place it ranked last year in 2009, while india is ranked at 133 dropping 1 place from last year when it was at 132. The information can be found at

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The report shows that a typical white middle income family, earning
in wealth.


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With additional information from APP

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On the whole, things are looking up in Pakistan!

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Correspondents say there is no real likelihood of him returning soon.

'National salvation'















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India vs. Pakistan:

Agriculture: ($833 vs. $1,225)

Textiles: ($1,242 vs. $1,714)

Non-Textile Mfg ($11,155 vs $5,785)

Services ($7,246 vs $3,654)



Riaz Haq said...




A fragmented market


What it all means



Riaz Haq said...

Here are excerpts from a report on Pakistan's retail sector:




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Riaz Haq said...

Here are a few excerpt from an Op Ed piece by Francis Fukuyama in today's Wall Street Journal. It's titled "Is China Next?":

Observing the high levels of political instability plaguing countries in the developing world during the 1950s and '60s, Mr. Huntington noted that increasing levels of economic and social development often led to coups, revolutions and military takeovers. This could be explained, he argued, by a gap between the newly mobilized, educated and economically empowered people and their existing political system—that is, between their hopes for political participation and institutions that gave them little or no voice. Attacks against the existing political order, he noted, are seldom driven by the poorest of the poor in such a society; they tend to be led, instead, by rising middle classes who are frustrated by the lack of political and economic opportunity.

All of these observations would seem to apply to Tunisia and Egypt. Both countries have made substantial social progress in recent decades. The Human Development Indices compiled by the United Nations (a composite measure of health, education and income) increased by 28% for Egypt and 30% for Tunisia between 1990 and 2010. The number of people going to school has grown substantially; Tunisia especially has produced large numbers of college graduates. And indeed, the protests in Tunisia and Egypt were led in the first instance by educated, tech-savvy middle-class young people, who expressed to anyone who would listen their frustrations with societies in which they were not allowed to express their views, hold leaders accountable for corruption and incompetence, or get a job without political connections.......

It is certainly true that the dry tinder of social discontent is just as present in China as in the Middle East. The incident that triggered the Tunisian uprising was the self-immolation of Mohamed Bouazizi, who had his vegetable cart repeatedly confiscated by the authorities and who was slapped and insulted by the police when he went to complain. This issue dogs all regimes that have neither the rule of law nor public accountability: The authorities routinely fail to respect the dignity of ordinary citizens and run roughshod over their rights. There is no culture in which this sort of behavior is not strongly resented....

Indeed, there is some reason to believe that the middle class in China may fear multiparty democracy in the short run, because it would unleash huge demands for redistribution precisely from those who have been left behind. Prosperous Chinese see the recent populist polarization of politics in Thailand as a warning of what democracy may bring.

The fact is that authoritarianism in China is of a far higher quality than in the Middle East. Though not formally accountable to its people through elections, the Chinese government keeps careful track of popular discontents and often responds through appeasement rather than repression. Beijing is forthright, for example, in acknowledging the country's growing income disparities and for the past few years has sought to mitigate the problem by shifting new investments to the poor interior of the country. When flagrant cases of corruption or abuse appear, like melamine-tainted baby formula or the shoddy school construction revealed by the Sichuan earthquake, the government holds local officials brutally accountable—sometimes by executing them.

Riaz Haq said...

Here's a Dawn piece on rising rural income disparities from high commodity prices:

..Is the current spike in the commodity prices benefiting everyone living in the villages, particularly in Punjab and Sindh which together contribute more than 90 per cent to the country’s agricultural output and where more than two-thirds of the country’s population lives?

“Whereas a large chunk of this income has ended up with the agriculture elite, there are signs that some of it has trickled down to the small farmers as well,” according to Waheed. Others argue that the transfer of additional cash has widened income disparity in the rural society even if many small farmers have also benefited from the soaring crop prices because the “trickle-down” has been uneven and limited.
Ashfaque Hasan Khan, dean and principal of the NUST Business School who served as a special finance secretary in Musharraf government, says the income disparity in the rural areas has widened as a result of the rising crop prices.

“Only 40 per cent of the rural population is engaged in the crop sector and a vast majority of them are small landholders. This means only a small portion of population in the rural areas has gained from the increasing crop prices,” he elaborates.

In Punjab, for example, less than half of the rural population is engaged in the crop sector. Some 90 per cent of it falls in the category of small farmers with landholdings up to 12.5 acres.--------

“An overwhelming majority of small farmers buys inputs on credit and, thus, is forced to pay a much higher price than those who pay cash for these inputs,” claims Mughal. “Even if they have cash their cost has gone up manifold, offsetting the gains of
higher crop prices.”

There are people who are of the view that smaller landholding have helped a more equitable distribution of additional incomes among the growers in Punjab compared to the farmers in Sindh where landholdings are very large.

Salman Shah, former finance minister, says the additional incomes generated by higher commodity prices have been distributed more evenly in Punjab compared to Sindh.
Shah is of the opinion that the landless labour in the villages has also benefitted from the new economic prosperity being experienced in rural areas and their wages have also gone up. But he says only a comprehensive study of the impact of commodity prices on the rural society could give answers to many questions.
Many fear that the growing agricultural commodity prices may rob the farmers of the incentive to boost their productivity. Mughal says the rising prices and decreasing productivity is not good for the economy.

“Our productivity per acre has decreased significantly over the decades whereas India has successfully managed to substantially boost its crop output. The new wave of economic prosperity in the rural areas should not be allowed to take our focus off the need to boost productivity. That will be disastrous for the economy as well as people,” he warns.

While the soaring prices have brought a semblance of prosperity to the rural areas, it has added to woes of the urban population where poverty levels are rising and the quality of life suffering. The Consumer Price Index (CPI) has increased by 55 per cent over the last three years whereas salaries have not risen accordingly, according to Waheed.

“The urban population that relies on manufacturing growth and trading, or earns fixed salaries has generally experienced a deterioration in its standard of living, and is not happy about it. Large scale manufacturing growth has declined by about one per cent over the last three years whereas the wholesale trade has risen by a marginal four per cent,” he says, underlining the impact of rising price inflation on the urban consumers

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Here's an inspirational story of a young man from rural Balochistan who graduated from Harvard University:




But his herculean struggle with English often left him frustrated.














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Market opportunities






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arbitrariness associated with defining and measuring the middle class.

are outside the the realm of poverty at a particular time.

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Riaz Haq said...

Here's an Express Tribune story on social mobility and a middle class suburb in Karachi:

The decision by Abdul Manan Shaikh’s family to move to Gulshan-e-Hadeed 10 years ago marked the beginning of his upward social mobility. Hailing from Larkana, where he learned the English alphabet at a government-run ‘taat’ school in sixth grade at an annual fee of less than Rs50, Shaikh has since attended three elite business schools of Karachi in the past decade.

Although he now drives a company car to a textile mill located in SITE every day, and attends evening classes at a business school in Clifton on weekends, he does not want to move out of Gulshan-e-Hadeed. In fact, his family bought a modest house there just three years ago.

So what makes Shaikh stay in a place as far removed from Karachi’s city centre as Gulshan-e-Hadeed?


Real estate in Gulshan-e-Hadeed is affordable. A 120-squareyard independent housing unit with a lounge, drawing room and two bedrooms with attached bathrooms costs somewhere around Rs2.5 million. Similarly, 240- and 500-squareyard housing units are available for around Rs5 million and Rs6.5 million, respectively.

The average monthly rent for a 120-squareyard, single-unit house in Gulshan-e-Hadeed is between Rs4,000 and Rs6,000. Compared with other middle-class areas of Karachi, that rate is cheap.

Moreover, an improvement in the city’s inner highways means that it takes almost the same time from these areas to go to the centre of the city. Gulshan-e-Hadeed may be a remote place in terms of kilometres, but an easy drive through National Highway and Sharae-Faisal makes it a choice neighbourhood for mid-level corporate managers, like Shaikh, who have company cars and receive subsidised fuel.

Peaceful and suburban

Although Gulshan-e-Hadeed is 48 kilometres from SITE, and 42 kilometres from Clifton, it offers what many localities closer to the centre of the city do not: better security.

Gulshan-e-Hadeed connects to the main city through National Highway and Shahrah-e-Faisal. Even during the worst law and order situations, one can expect these two roads to stay clear of trouble. Moreover, the ethnic and religious harmony within Gulshan-e-Hadeed, thanks to a heterogeneous population mix, has kept the crime rate under control for years.

All streets in Gulshan-e-Hadeed are paved and have ample space to park vehicles. There are no slums. Public transport is easily available, as buses leave for Karachi’s financial district every two to three minutes for the most part of the day.

Other than several degree colleges offering a decent standard of education, Gulshan-e-Hadeed is dotted with both government and private schools, including a cadet college and a branch of Beaconhouse School System in the adjoining Steel Town.

“A school, mosque and market are always at a walking distance from your home no matter which street of Gulshan-e-Hadeed you live on,” a local real estate dealer told The Express Tribune. “How many localities in Karachi offer that kind of closeness to these places?”

The real estate agent’s question is rhetorical. The fact that is that many of Pakistan’s largest cities now have similar suburban areas, which are in many ways similar to the Levittowns that sprouted around the United States after the World War II. Pakistan’s middle class has grown rapidly, and this is where many of them increasingly live.

Indeed, many of the villages that used to surround cities in Punjab’s GT Road belt have since turned into suburbs, no longer truly rural and offering an affordable option of the good life to many of the Pakistan’s up-and-comers. Indeed, these areas are acquiring a character of their own...

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Here's an Express Tribune story on housing trends in Lahore, Pakistan: the middle class of the city has expanded, real estate developers have now increasingly begun to offer more affordable variants of the gated housing community, primarily by reducing the size of the average house. Builders predict the fastest growth in demand for the 125-square-yard duplex or townhouse, which is made affordable by offering an instalment plan for the full price, which can start as low as Rs1.2 million.

“The higher end of the market is saturated. Now the industry needs to cater to the rapidly growing middle class that is seeking comfortable housing facilities,” said Abdul Aleem Khan, who runs a real estate development business based out of Lahore.

“After completing one project with mostly larger units, I announced that I would build one with smaller, more affordable units and an easy instalment plan,” he said. “The response was very positive. People clearly need affordable housing and this [middle class] is a very neglected market segment.”

Eden Housing, one of the largest real estate companies in Pakistan, was the first to create such housing schemes in the 1990s, which typically include better roads and infrastructure than the rest of the city they are in. Since then, this formula has been copied by many developers, who saw how rapidly Eden was able to sell off its inventory.

“To live in such a community, which provides you with good infrastructure and security, is relaxing,” said Mujahid Ali, a resident of Eden Avenue, a gated community in Lahore developed by Eden Housing. “I moved here two years ago and have the peace of mind that there is no street crime or robberies within the scheme’s premises. My job requires me to visit other cities and I used to worry for my family’s safety. But since moving here, I can travel without that tension.”

Many of the facilities have hired a full-time staff of maintenance staff. The security is often provided by one of the more than 600 private security companies that now hire out both equipment and guards to a Pakistani middle class that is increasingly concerned for its safety.

Lahore has at least two dozen of these gated communities. In keeping with the temperament of the people in the Central Punjab region, there are hardly any apartments. Most of the housing units are bungalows, townhouses or duplexes. Some of the largest units can be spread over as much as 1,200 square yards, with the smallest ones generally being no more than 125 square yards. Other common sizes include 150 and 200 square yard units.

Builders often locate these communities close to major thoroughfares. Yet as real estate within Lahore proper grows increasingly scarce, many developers have begun to create such offerings on the outskirts of the city, taking advantage of the improvements in the transportation infrastructure in Punjab that includes a highway network comparable to that in some parts of the developed world. Once Lahore’s Ring Road is completed, such housing projects will be able to offer even faster access to the inner city.

Khan, the real estate developer, says that nearly all of the buyers of houses in these projects tend to be buying their own primary residences. “These schemes are not really meant for investors,” he said.

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Gangsters with Kalashnikovs






Riaz Haq said...

Here's a Daily Times story on higher education growth in Pakistan:


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Here's an LA Times story on gated communities in Pakistan:










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Here's an ET story about rising middle class consumption in Pakistan:

It is the paradox that puzzles everybody: the headline numbers indicate an economy in an abysmal state, but everywhere one looks, there are people shopping like there is no tomorrow. How is this possible? An analysis conducted by The Express Tribune reveals a surprising answer: women.

While the headline GDP numbers suggest sluggish economic growth, not all sectors are underperforming. A closer look suggests that the economic slowdown has been far from uniform, with some sectors booming, while others are in a deep slump. The retail and wholesale sector in Pakistan was worth about $40 billion in fiscal year 2012, and has been growing at 5.3% in real (inflation-adjusted) terms for the past five years, much faster than overall economic growth during that period.

And the benefits of this growth have been visible throughout the country. While large shopping malls opening up has become common place in cities like Lahore and Karachi, national newspapers now carry advertisements for shopping malls in smaller cities like Dera Ghazi Khan, Sukkur, Sargodha, etc as well. The average Pakistani household is very clearly more able and more willing to shop than ever before.

The reasons for this newfound consumerism are complex. Despite all the complaints about inflation, household incomes for Pakistanis in urban areas rose faster than inflation by an average of about 1.5% per year between 2006 and 2011, a period of extraordinarily high inflation rates. (Rural Pakistan did not fair quite as well.) The average household size also fell during that period, further raising per capita gains....
The reasons for why women have entered the workforce are manifold. Education levels have been rising rapidly across the board. Fertility rates have dropped from 7.1 in 1980 to just over 3.1 in 2011, causing household sizes to decline. Women with fewer children have more freedom to pursue careers outside the home.

And persistently high inflation may also have forced many families to consider being more open to women working outside the house: a second income can clearly go a long way in changing the fortunes of a household. It has clearly already helped the economy through a particularly difficult time.

Riaz Haq said...

Here's a Financial Times Op Ed on Pakistan:



adaptability and resilience, entrepreneurship and shared coping.










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World Bank report on population planning in Pakistan:







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The Emerging Middle Class in Pakistan: How it Consumes, Earns, and Saves
Dr. Jawaid Abdul Ghani
Professor, Strategy and Marketing Research,
Karachi School of Business and Leadership

During the first decade of the twenty first century, and for the first time in the history of
Pakistan, over half of the households in the country belonged to the middle class (M-class).
During this period (2002-2011) the M-class, defined as households with daily per capita
expenditures of $2-$10 in 2005 purchasing power parity dollars1
, grew from 32 percent to 55
percent of all households in the country, and the number of people in this class doubled from 38
million to 84 million. Real aggregate national consumption increased by about $60 billion, of
which $55 billion was accounted for by the increase in consumption of the M-class. As a result
90 percent of the increase in national consumption during this decade came from the increase in
consumption of the M-class2
. It is not surprising that the Asian Development Bank listed
Pakistan as among the top five countries3
in the Asia Pacific region with the fastest growing Mclass
during 1990-2008 (Chun 2010).
What characterizes the M-class? Bannerjee and Duflo (2008) suggest that holding a relatively
secure job is the single most important characteristic of the M-class. Individuals with higher
levels of “permanent income” are less vulnerable to economic shocks, have lower discount rates
for future rewards and thus invest more in health, education, and other “rent generating”
credentials. Professionals and others in the “service class” with large amounts of human capital
and stable employment relationships are considered the most likely to invest in securing their
own and children‟s future. Indeed, according to Sorenson (2000) it is the level of uncertainty in
“lifetime wealth” and resulting living conditions which result in differences among social
. M-class values are described as optimism and confidence regarding the future, a
preference for moderation and stability, a willingness to pay a little extra for quality, the “ability
to defer gratification”, and income often based on specialized skills. As a result the M-class has
the “base amount of income to invest in productive activities that contribute to economy-wide
welfare” (Chun 2010), and is more likely to accumulate human capital and savings, and more
inclined towards entrepreneurship (Lopez 2012, Meyer 2012).