1. How Inclusive Has Development Been In Pakistan?
Farrukh Iqbal, Director, Institute of Business Administration
September 8, 2016

2. Definition of inclusive development
Outcome A is a situation where, on average, incomes and health and education indicators have all improved.
Outcome B is a situation where incomes, health and education indicators have improved among the poor (our focus of interest)
Outcome C is a situation where the distribution (or inequality) of income, health and education indicators has improved; one way of putting this is to say that the rate of improvement among the poor has been greater than the pace of improvement on average or among the rich
Some consider Outcome C to be the appropriate definition of inclusive development
Some would accept Outcome B as a case of inclusive development; this is a lower bar and can be thought as a weaker test

3. Empirical measure of inequality in income, health and education
we will pick a ratio that’s simple to understand and simple to implement; this is the parity ratio between the top 20% and the bottom 20%; simple to understand of course and simple to implement because health and education indicators by wealth quintile are now available in global databases
if the value of the indicator for the top 20% is equal to that of the value for the bottom 20% then the parity ratio is 1; the level of the ratio can be interpreted as the level of inequality
changes in the value of the parity ratio provide an indication of the direction of movement of inequality

4. Consumption share of bottom 20%

5. Parity ratio for consumption shares among top and bottom quintiles

6. Child mortality rates for bottom quintile

7. Parity ratios in child mortality levels

8. Pakistan’s experience is not unique among Asian countries

9. Years of schooling for the bottom quintile

10. Parity ratios for years of schooling

11. Pakistan’s experience is not shared by other Asian countries for which we have data

12. Summary of results Consumption indicator shows falling inequality
Health indicator shows rising inequality
Education indicator shows rising/stable inequality
Implications
Don’t base views on just one indicator
Check out longer run trends as well

13. Longer run trends in consumption inequality

14. Concluding observations
Is it easy to change inequality in the long run? Can democracies change inequalities substantially?
Strong tests and weak tests for development performance
Importance of having DHS style household data to carry out these tests