Pakistan aiming big for a Digital Economy
Pakistan’s population is increasing at an average rate of 2% per year and the future projections show that the trend might continue for over several years to come. A country with 225 Million population (2021) and having a youth bulge of over 65% is a challenge and an opportunity for any government. The Pandemic has only made the situation worse with global unemployment rates increasing.
Digitalizing “Naya Pakistan”
The present government of Imran Khan owes it to the younger generation who campaigned for him in the 2013 and 2018 general elections. Almost three years have passed and the expectations of the youth have been increasing with growing unemployment in the country. It has forced the Government to take some extraordinary steps, steps that have never been taken before. Successive governments in Pakistan have been unable to create an enabling environment with legislative reforms, skill development and investor confidence for the technology sector to flourish. These were some of the key bottlenecks that were hindering the unexplored potential to Pakistan’s digital and hi-tech sector. The Government in Islamabad has now turned to China, as a source of inspiration. Recently, PM Imran Khan launched the Special Technology Zones Authority (STZA) with an idea of replicating Shenzhen’s success story and creating an enabling environment in Pakistan where young entrepreneurs, large IT companies, R&D centers, and universities, all come together to add to the economic growth of Pakistan.
Imran Khan’s government looks serious in addressing the job creation and high-tech development in Pakistan. The STZA is headed by a dynamic person belonging from the Academia and Industry both. His experience with the Silicon Valley and Shenzhen gives him the unique edge and perspective which is needed to bring about a change in the country. These special technology zones will be backed by the federal and provincial governments both. Rapidev DMCC, a UAE based technology solutions provider will establish a Technology Park in Pakistan’s first Special Technology Zone (STZ) in Islamabad. Similarly, it is expected that more international companies from around the world will be facilitated and incentivized to setup their operations in these Special Technology Zones. This opens an open and fair opportunity for both local and foreign companies to establish their setups in these zones.
The post-pandemic world looks divided and confused. Countries are eager to secure their economic and territorial interests. While vaccination hoarding is accepted as a matter of national security, so are countries tightening rules for their high-tech industries. This tightening and conservatism has the potential to either pushback globalization or bifurcate the world into different virtual domains, each disconnected to the other. With recent events like labeling Huawei as a National Threat, the technology sector is under ever more pressure. Pakistan has to navigate through these tough times without choosing sides or joining blocs. Pakistan’s Foreign Minister in a recent statement mentioned that Pakistan’s priorities have changed from geo-political to geo-economics. As a historic bridge and peacemaker between the US and China, Pakistan is in a unique position to welcome tech industries from the east and the west both. The country is hoping for both Amazon and AliBaba to setup offices and operations in Pakistan. It is already home to multiple Western and Chinese tech companies providing services to its population. This not only creates an environment of competition, but also provides with the best costumer services. Chinese companies like Vivo have set up smartphone manufacturing plants in Pakistan, while recently Lucky Group of Companies will be manufacturing Samsung smartphones locally. Scores of young Pakistani professionals have joined the ranks of Telenor, Ericson, Huawei, ZTE and Samsung. Pakistanis have rejected tech-nationalism in their everyday life. Telecom companies with backgrounds from Europe, Middle-East and China, all are operating in Pakistan. This diversity of multinational tech companies will be the driving force for innovation, entrepreneurship and job creation in “Naya Pakistan” (New Pakistan).
Women’s mobility must be a key focus in urban policy
Historically, cities across the world have been designed to fit the needs of able-bodied men, or a neutral, often male, user. Yet, cities are experienced differently by men and women. Women and girls find their access to employment, education, care services and even leisure is constrained when urban mobility systems and public spaces are not safe and inclusive.
Across Indian cities, studies show that concerns about commuting safely during the late evening hours or beyond a particular radius are among the biggest barriers to girls and women going to school, college and work. For instance, a 2020 study in Bengaluru showed that only 2% of women commuters surveyed made journeys after 9 pm. Barriers to mobility can thus thwart women’s long-term aspirations, eroding their financial independence and agency. The threat of sexual harassment deters women from stepping out. For instance, a 2017 study in Delhi showed that women were willing to travel for 27 minutes more each day to take a route that was perceived to be safer. It will thus be important to devise strategies to prevent and penalise sexual harassment in public spaces.
Typically, women travel shorter distances at off-peak hours, and make chained trips, frequently changing between transport modes to complete multiple tasks, balancing domestic errands and employment. Systems are, therefore, needed to collect and analyse gender-disaggregated data to understand women’s mobility patterns and design public transport services accordingly.
It was after the Mumbai Railway Vikas Corporation, working with the World Bank, conducted a detailed study of mobility patterns on suburban trains, that it identified women’s safety as a key priority and devised solutions to make platforms, stations, and trains safer for women. These activities sought to do more than just introduce women-only trains — the Ladies Specials — by addressing the fundamental design of the infrastructure to make it more women-friendly.
Hiring more female staff can make travel safer. In Kochi, for instance, 80% of the metro staff are women, working as station managers, train drivers, ticket vendors, and cleaning staff. Similar initiatives can be taken by other bus and rail agencies to enhance safety.
What’s more, since deep-rooted social norms restrict women’s movement outside their homes, local communities need to be brought on board as partners to help shift the norms around women’s mobility. A number of community-based organisations have been working across cities such as Delhi, Gurugram, and Pune to sensitise communities; they also provide gender sensitisation training for frontline public transport workers.
Under the Nirbhaya Fund, the Centre provides valuable resources to states and central ministries to implement solutions for enhancing women’s safety. Since 2015, eight cities (Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Ahmedabad and Lucknow) have used these funds to identify hotspots for crime, enhance police capacity for investigating crimes against women and establish one-stop centres for violence survivors.
Moving a step further, the Greater Chennai Corporation established a Gender and Policy Lab, which will support the government of Tamil Nadu in implementing projects under the Nirbhaya Fund to create safer public spaces in the city. An assessment to understand gender differences in mobility was carried out, alongside a safety audit, in Tondiarpet in north Chennai. Installation of CCTV cameras and panic buttons in city buses is also underway, with Chennai’s Metropolitan Transport Corporation establishing a command-and-control centre to monitor incidents of harassment.
Our experience in Chennai and Mumbai, and other cities globally, shows that addressing gender concerns in urban mobility and public spaces requires long-term commitment from multiple stakeholders, with solutions aimed at addressing deep-rooted issues.
Drawing lessons from international best practices and project experiences in India, the World Bank has developed a toolkit for the Indian context, which both government and private agencies can use to make cities safer and more inclusive of women.
The toolkit outlines a four-pillar approach: First, assess the ground situation to understand gender-disaggregated mobility patterns and undertake safety audits; second, strengthen policies with a focus on fare policies and grievance redressal for sexual harassment; third, build capacity and raise awareness both within government agencies and through partnerships with community-based organisations; and fourth, improve infrastructure and services with a special emphasis on women’s safety and inclusion.
Making cities safer can ensure that women and girls have choices — they can choose to stay longer in the office, go to better educational institutions, and even have a wider array of entrepreneurship opportunities — all of which will help increase female labour force participation and, in turn, boost economic performance in India.
This Opinion piece first appeared in Hindustan Times, via World Bank
The Persian Gulf-Black Sea Corridor: Why should India consider an alternative getaway?
Recently Armenian has suggested the creation of a corridor linking the Persian Gulf and the Black Sea to facilitate trade between India, Russia, and Europe. On March 3rd, 2023, a delegation of high-ranking officials and experts from Armenia proposed the idea of creating a corridor linking the Persian Gulf and the Black Sea while visiting India. This suggestion came from the visit of Armenia’s foreign minister Mr. Ararat Mizoyan to India; he has suggested the creation of an alternative trade Corridor that will operate alongside the International North-South Transport Corridor(INSTC) to establish a trade link between Mumbai and Bandarabas Seaport in Iran and then proceed to Armenia and further on to Europe or Russia. This alternative route’s main objective is to bypass Azerbaijan because Azerbaijan has closer ties with Turkey and Pakistan, so Armenia is asking for India’s support and financial assistance. India and Armenia both have a very cold relationship with Turkey and Pakistan. Historically, Turkey has been the closest ally of Azerbaijan and supports Azerbaijan in the Nagarno-Karabakh dispute. Azerbaijan also has close diplomatic relations with Pakistan, and Pakistan also supports Azerbaijan in the Karabakh dispute, and in return, Azerbaijan backed Pakistan’s narrative on the Kashmir Issue. Azerbaijan has entered into defense cooperation and shown interest in incorporating JF-17 Thunder fighter aircraft jointly developed by China and Pakistan. Periodically participated in joint military exercises bilaterally and multilaterally. Azerbaijan has repeatedly supported the Kashmir issue on Pakistan’s position and criticized the India-Armenia defense deal on PINAKA multi-barrel rocket launchers, anti-tank munitions, and a wide range of ammunitions and warlike stores worth US $250 million to the Armenian Forse. India has overtly positioned itself on Armenia’s side in the Nagorno-Karabakh conflict and has consequently opted to resist Azerbaijan and its supporter, including Pakistan and Turkey, over the Kashmir issue and Turkey’s imperial aim of establishing a pan-Turkic empire, governed from Ankara. These factors created a lack of warmth in India-Azerbaijan’s political relations. Thus, India and Armenia both the country have some sets of issues with Azerbaijan as well as Turkey. Armenia’s relationship with India has been growing steadily due to defense exports in recent times.
Historically Armenia shares strong political and business ties with Iran. Both countries share a 35-kilometer-long border that runs along the northern edge of Iran. Iran’s foreign policy towards South Caucasus is very pragmatist in the case of Armenia and Azerbaijan. The conflict between Muslim-majority Azerbaijan and Christian-majority Armenia is viewed differently by Iran, which supports Armenia rather than Shia-majority Azerbaijan. India also maintains a strong relationship with Iran. For India, Iran plays an important role in its connectivity projects to link Central Asia and Europe. India also invested in Iran’s Chabahar Port to develop a transit hub that will benefit Indian trade reaching Europe, bypassing Suez Canal. Chabahar Port holds strategic importance for India, mainly because it is the direct competition with Chinese operated Gwadar Port in Pakistan, situated in the Arabian Sea, which is an important part of China Pakistan Economic Corridor(CPEC).
Armenia is seeking Indian Investments for the corridor within Armenian territory in light of the ongoing Russia-Ukraine conflict. The Indian investment could also facilitate the development of other regional projects like the International North-South Transport Corridor (INSTC) and put India on the map of Central Asian transport with links to Europe and Russia. India’s trade with Russia has substantially increased through the INSTC, which provides a trade link between Mumbai and Russia via Iran and the Caspian Sea. Azerbaijan plays a vital role in the INSTC mainly because of its geographical location and connectivity links with Iran. However, Azerbaijan has been slow in developing infrastructure projects under INSTC.
With the ongoing cold war between Russia and the West, any large-scale cargo transit passing through the Russia Europe border looks too risky for international Logistics and Insurance companies. Armenia intends to initiate a discussion with India to explore the possibility of Indian companies’ involvement and funding of the Persian Gulf Black Sea Corridor project. Armenia doesn’t have direct access to the Black Sea, which means Goods have to be further transported to Georgia. Only then can reach Europe and Russia. Armenia recognizes the need for Indian traders to do business with Europe, so they have proposed this idea to the Indian government.
The proposed Persian Gulf Black Sea Corridor aligns with India’s objective of seeking new trade routes to Europe that avoid the Suez canal, significantly reducing transportation costs and time. This corridor which will link Iran and Georgia via Armenia also reduces the risk of sanctions for India moving to Europe from the West because of ongoing West and Russian hostility. It will boost the confidence of the Indian Treadres and will be beneficial for the Indian economy.
In this sense, the Persian Gulf-Black Sea project has a reasonable cause. However, the question is, why would Iran agree to launch a multimodal corridor through territories with proven issues when it can reach the Black Sea via Turkey? Iran and Turkey have a conflict of interest in this case. Their relations have been tense lately since Turkey informally blocks Iran from using its rail routes to reach Europe. The root of this problem is situated within between Armenia-Azerbaijan conflict. The cold relations between Iran and Turkey are one of the main reasons behind the stagnation of the INSTC. Iran is closer to cooperating with Armenia, while Turkey backs Azerbaijan. The conflict in Nagorno-Karabakh has the greatest impact on the issue. Turkey is a key stakeholder in the conflicts and empowers Azerbaijan to overcome Armenia and block the Iran-Armenia border. If Iran eliminates Turkey, then Iran only has two options to reach the Black Sea: pass through Armenia or Azerbaijan via Georgia. Georgia has existing railway and highway connections with both Armenian and Azerbaijan, and Azerbaijan has a railroad reaching the Iran-Azerbaijan border, but the problem is there is no direct Railway connection that connects Iran to the Black Sea via Armenia.
On the other hand, Iran and Azerbaijan also working on a 165-kilometer Railway section of the Rashtra-Astra line, which is missing a link to connect the Azerbaijani and Iranian Railways. The railway line will connect the city of Rasht, the capital of Gilan province, with the city of Astra, located on the border with Azerbaijan. This Railway link is part of the International North-South Transport Corridor, which aims to provide a more efficient trade route between India, Iran, the Caucasus, and Russia. Recently in January 2023, Russia and Iran agreed to fund the construction of this Missing Link. But the project completion is in question because of the ongoing cold war between Russia and the west.
For India, INSTC is more than enough to trade only with Russia, Iran, and the caucus region, but India also wants to trade with Europe to throw an alternative route and not via Suez Canal. Thus, the Armenian government is proposing to the Indian government. If India uses the Russian route to reach Europe via Iran through the Caspian Sea, then it has more chances of getting sanctioned from this Black Sea Corridor will reduce the chances of getting sanctioned by West. However, this alternative trade route involves two countries, Armenia and Georgia, which is calling for heavy infrastructure Investments. However, there can be several potential negative sites to investing in infrastructure projects in other countries, such as political and economic risks, cultural and Social Challenges, legal and Regulatory issues, Financial risks, and geopolitical risks, so it is going to be a tough call for India nevertheless opportunities are there, but nothing is risk-free. Currently, it is a proposal by the Armenian government, we have to see how the Indian government will respond.
The Role of Asian Infrastructure Investment Bank For Developing Countries
The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank that was established in 2016 with the aim of financing infrastructure projects in Asia and promoting regional economic integration.
The idea for the AIIB was first proposed by China in 2013, as a response to what it saw as a lack of representation in existing international financial institutions such as the World Bank and the International Monetary Fund (IMF). China believed that these institutions were dominated by developed countries and did not adequately address the needs of developing countries, particularly in Asia.
To address this perceived imbalance, China initiated the creation of the AIIB, which would be open to all countries in the region and would prioritize funding for infrastructure projects. The bank was formally launched in January 2016 with 57 founding members, including many Asian countries, as well as Australia, Germany, and the United Kingdom.
One of the main advantages of the AIIB’s creation is the increased availability of funding for infrastructure projects in Asia. The bank has a capital base of $100 billion, with over 90 percent of this contributed by Asian countries. This funding can be used for a variety of projects, including transport, energy, telecommunications, and water supply.
Another advantage of the AIIB is that it offers an alternative source of financing for developing countries in the region. In the past, many of these countries have relied on loans from Western-dominated institutions like the World Bank and IMF, which have been criticized for imposing strict conditions on borrowers and for promoting policies that prioritize the interests of developed countries. The AIIB, by contrast, has promised to be more flexible and to work closely with borrowers to ensure that projects are aligned with their development priorities.
AIIB creation is considered as a major power move. Its implications should be viewed through the prism of relationship between global finance and sovereign states. Moreover, power as a goal is prevalent and traditional in the strategic thinking in the policy of communities throughout East Asia.
China became powerful and this means it has the capacity to direct the decisions and actions of others and implement its policy [Freeman 1997]. Chinese government showed its ability to marshal necessary resources to establish China-led international organization, which was its goal because Beijing doesn’t have enough influence in the World Bank, ADB and IMF.
According to the Comprehensive National Power (综合国力) indicator, used by the Chinese government, now China is the second strongest state in the world. The creation of international financial organization has always been the hegemon’s prerogative. Thus, such China’s move reflects the tendency that global balance of power is changing not in favor of the USA.
Australian scientist and representative of the English School of International Relations Hedley Bull defined international order as ‘a pattern of activity that sustains the elementary of primary goals of the society of states, or international society’ [Bull 1987]. Institutions change the global balance of power and, in turn, influence the international order. AIIB’s appearance increases China’s impact in Asia. Therefore, growing Chinese financial power is accepted as a challenge by current status quo powers as the USA and Japan – both don’t want to change the rules of the game in Asia at the moment.
Even if, from the Chinese point of view, it is supposed to be natural. Asian international order existed long time ago and was led by China. It’s obvious that Beijing has a strong sense of entitlement to be a regional leader again. It considers the contemporary Chinese presence in the international order, established after World War Two, as not adequate to current China’s elevated position in the global economy. [门洪华 2016].
The main consequences of the AIIB’s establishment for China are its increased international influence and progress in its efforts to manage domestic economic challenges. The USA and its Asian allies are disinclined to accept AIIB as one more additional puzzle to the global financial system alongside with other MDBs, that’s why they perceive it as a threat to their current geopolitical position. However, if there had been some attempts from the Obama administration to stop or slow down the establishment of the AIIB, they didn’t succeed and this was precisely articulated by Evan Feigenbaum, a former State Department official in the George W. Bush Administration: “The U.S. attempt to halt or marginalize the AIIB failed miserably”.
Additionally, it should be noted that AIIB’s creation led to one more economic implication – preparing grounds for possible future internationalization of Yuan.
China still is in the “dollar trap”: on the one hand, it has to continue buying the US Treasury securities because USD huge reserves accumulated by China are devaluating due to the quantitative easing monetary policy conducted by the Fed (The Federal Reserve System). A violent despeciation of the USD can lead to huge losses to China. On the other hand, at the moment China can’t borrow in its own currency, therefore, it is vulnerable to the balance of payment crises [Lai 2015]. Chinese currency internationalization may be a way to deal with those hurdles.
Firstly, internationalized Yuan should improve the globalization process and this intention was stated in the 14th Five-Year Plan (2021-2025). It will hasten the trade between China and the world, reduce transactions costs and risks of cross-border exchanges, settle payments, denominate financial assets and become the reserve currency for foreign central banks. Secondly, it will give China a seigniorage – the ability to issue Yuan to other countries in exchange for real goods and to lend Chinese currency abroad at low rates. The increased international demand for Yuan for trade invoicing and settlement will keep the interest rates low. Thirdly, once Yuan is internationalized, Chinese companies will be able to borrow internationally in their own currency – this will reduce the risk of businesses’ bankruptcy amid the possible sharp depreciation of Yuan [Huang and Lynch 2013].
The economic troubles and widespread bankruptcies in Asian countries during 1997-1998 Financial Crisis were mainly caused by the currency mismatch, when the companies were unable to cover their debts issued in foreign, not domestic, currency.
China has been already giving loans in Yuan and using its currency for the international trade settlements, for example, partly with Russia. Beijing would like other countries to peg their currencies to Yuan. However, China sees the Yuan internationalization as a long process according to Hu Xiaolian (胡晓炼) – the Chairman of Export-Import Bank of China. She stressed that Chinese currency internationalization wouldn’t be a confrontation weapon.
Nowadays AIIB provides loans in the USD, but in the near future it may lend in Yuan as well – and this will come in accordance with the national economic development blueprint.
The creation of the AIIB reflects China’s growing economic and financial power, as well as its desire to increase its influence in Asia and on the global stage. This move challenges the current status quo powers, such as the USA and Japan, who are reluctant to accept the AIIB as a new addition to the global financial system. However, the establishment of the AIIB also has economic implications, as it may pave the way for the future internationalization of the Yuan. This could help China deal with its domestic economic challenges, such as the need to borrow in its own currency and reduce its vulnerability to balance of payment crises. The internationalization of the Yuan could also improve the globalization process, give China a seigniorage, and reduce the risk of businesses’ bankruptcy. Nevertheless, Chinese officials have emphasized that the Yuan internationalization is a long process and not intended as a confrontation weapon.
The AIIB represents an important development in the international financial landscape, providing much-needed funding for infrastructure projects in Asia and offering an alternative source of financing for developing countries in the region. While concerns about the bank’s governance and China’s influence remain, the AIIB has taken steps to address these issues and has the potential to play a positive role in promoting economic development and integration in Asia.
 Evelyn Goh, “Great Powers and Hierarchical Order in Southeast Asia: Analyzing Regional Security Strategies”, International Security, Vol. 32, No. 3, 2008, pp. 113-157
 大国兴衰与中国机遇：国家综合国力评估， 海外生活，available at: https://m.juwai.com/news/225747
 Evan Feigenbaum, “China and the World,” Foreign Affairs, January/February 2017
 Wang Da, “Chinese consideration and global significance of the AIIB”, Northeast Asia Forum, No. 03, 48–64, 2015
 Paul Krugman, “China’s Dollar Trap”, The New York Times, 2009, available at: https://www.nytimes.com/2009/04/03/opinion/03krugman.html
 Peterson Institute for International Economics, available at: https://www.piie.com/publications/chapters_preview/373/2iie3608.pdf
 进出口银行胡晓炼：不能把人民币国际化当成国际对抗的武器, available at: https://finance.sina.com.cn/roll/2021-06-11/doc-ikqcfnca0417359.shtml
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