After Pakistan flooded, the United Nations agreed on assembling $460 million from its member nations. It has, however, only received $310 million of the $460 million. The U.N. also plans on requesting at least double the original amount in order to better obtain more food, clean water, and shelter. The I.M.F. has also decided to contribute to the funds by donating $450 million to Pakistan within the next few weeks. Pakistan has also accepted a donation from rival country, India, of an amount of $5 million, showing that both Pakistan and India are willing to set aside some differences to help those in need. The total amount of money donated so far is estimated to be around $1.1 billion.
All of the money is going to the obvious; food, water, health, and shelter. Around 14 million people are affected, in over 7 regions of the country. There is, however, also a certain amount need to build and rebuild dams and levees. As rivers swell, due to the rain, the need for dams is extremely high. Most of the dams in the areas flooded, including the country’s third largest dam, are either damaged or not large enough to cope with the larger amounts of water in the rivers so this needs to be fixed. Debates have also resurfaced about constructing a dam on the Indus River at Kalabagh in the Punjab province. As well as providing protection down river, this dam would also be hydroelectric, generating more energy for the country.
Food Water, Sanitation and Hygiene Health Shelter/Non-Food Items
Total funding requested $459 million
||
IMF’s Dominique Strauss-Kahn (r) with Pakistan’s Finance Minister Abdul Hafeez Shaikh at IMF headquarters in Washington September 2 (IMF photo)
Jeff
A priority for Pakistan relief is to establish a stable government with which relief money can be used properly. From a short term stand point, we should create a trust fund, an immediate means to distribute money through a non-government organization. This would would circumvent the lengthy process of re-organizing a corrupt government and focus on current need. The fund could be run by a board consisting of prominent Pakistani organizations and economists and international representatives from groups like the IMF or World bank. This board would allocate relief money to avoid corruption and embezzlement. A large portion of funds pledged by the UN has not been donated for fear of corruption. Bureaucrats and military officials have hindered progress because of political strife like like with India's aid money. They delayed donation because of political turmoil over land and other issues. Instead, with this fund in place, the government would merely use its authority to carry out the placement of relief money throughout Pakistan. Once money comes into the country, a more stable system could help other aspects. Wheelan says "government builds and maintains infrastructure that makes private commerce," (Wheelan 55). This means once a governing body is stable, it can begin to repair and provide immediate aid to the country. Government provides public goods (Wheelan 57), and the repairs would be a public good. The government also redistributes wealth through taxing (59) and while in this situation, the government is not taxing as nobody is producing, the government is taking aid money, and providing relief as per the instructions of a trust fund. With this stability, Pakistan can also begin to recover its economy.
Pakistan's economic growth has dropped from 4 percent to zero. It has a foreign debt of 49 billion and is unable to produce because of the flood. They must use incoming aid to create some sort of functioning economy. Their is a massive amount of donated food but no way to distribute it so money can be given to citizens who can then buy and trade food to stimulate the market. Aid money can also be used in incentive programs to simultaneously repair Pakistan's state. Wheelan says that "government can plan and finance a new highway and then solicit bids from private contractors to do the work" (Wheelan 66). Pakistan should do just this; they should use aid money to hire out labor forces, as many citizens are out of jobs from the flood, to repair and build roads. They could then use this money to buy food or supplies and this would also stimulate the economy. They could also apply this concept to agriculture by providing an incentive to repair the agricultural sector. Most of the flood damaged the agriculture of Pakistan and they need it for food and supplies. The government could hire individuals using trust fund money or make loans or subsidize companies to get that sector of the economy running smoothly. Essentially, once Pakistan has established some form of political stability they can apply this and fix their economic situation.
Prachi
Two of the biggest immediate problems in the flooded regions of Pakistan are the destruction and subsequent shortage of food and adequate shelter. Until a majority of the floodwaters recede, shelter will consist of tents either provided by individual charities or purchased by the trust fund mentioned above. Similarly, food will be dropped via air or distributed at emergency camps. However, once the waters recede and people will began making their way back to the farmland with their main priorities being clearing the land to plant fall crops like wheat and building some sort of a house. If people are being paid to build roads, they can also be paid to clear farmland. Additionally, the trust fund can provide families with some sort of stipend so that they can make their own choice about what they want to buy for food, seeds, etc. This will lead to a market economy as other people or firms unaffected by the food will migrate to open up markets to supply the victims. Market prices will quickly be set and as people begin to buy and trade, “every market transaction [will make] all parties better off” (Wheelan 20). No only will the flood victims be able to buy what they really need to rebuild their lives, but the sellers will earn a profit and money will flood into the Pakistani economy.
When it comes to protection against water contamination-related disease, however, trying to set a market economy will not help. The trust fund board needs to act as a sort of government and arrange deals with pharmaceutical companies. These companies need to either donate vaccines for diseases like cholera and measles or sell them to the trust fund board in bulk for a much lower price using the principles of price discrimination, or selling “the same item to different people at different prices” (Wheelan 16). This way, even the pharmaceutical companies are not losing revenue. Once the trust fund has the vaccines, various private/charity organizations can distribute them to the people, such as Doctors without Borders or the World Health Organization. Vaccination should be mandatory and dealt with by the stronger, more central trust fund board instead of distributed via a market because the vaccines are almost a sort of public good and makes a majority of the people better off. Additionally, if we simply give victims money, most are not likely to spend it on vaccines. Those that don’t are creating a sort of negative externality, where the “private cost of behavior is different from the social costs” (44). While people who don’t buy vaccines may be saving money, they are increasing the risk of spreading disease and harming others. As Wheelan emphasizes in Naked Economics, the “crucial role for government in a market economy is dealing with externalities” (45). Therefore, the trust fund board needs to act like a government in administering vaccines to protect the flood victims and other Pakistanis from an epidemic.
Pakistan’s turn for the worst has bought up many concerning issues for the flood ravished country. Because of the recent floods, all of Pakistan’s available food sources and main exports have been submerged, hundreds of businesses destroyed, as well a leaving millions homeless. Relief efforts and donations to help Pakistan have already started but as they continue to benefit the relief cause have created pressing issues that could have a negative end result. To achieve a successful recovery Pakistan needs 75 million dollars to rebuild the roads damaged by the flood so the supplies needed to provide shelter and other necessities can be given to the refugees of the flood. The first to donate to Pakistan was the UN. Although money was promised, at this moment there is no money available because “all the available funds are being used to recover the Haitians from their recent earthquake”. Another surprising donor was India coming to Pakistan’s aid. Reluctant to accept the donation of 5 million, both countries had the incentive to complete the exchange. India did it for reasons because of the water sources that they use (own) that is managed and located in Pakistan. Pakistan’s reasoning was due to the fact that the need every cent that they can get their hands on because the damage to the economy is so dire. However one negative externality is that since Pakistan is having good relations with India raises the protest of Pakistani terrorist groups due to the international hate of both countries. Just recently these terrorist groups have announced attack will occur if these relation continue. In order to fix these problems in the long run and keep the voices of the extremist groups at bay is for Pakistan to ask for more aid from other donors like Russia and China. “The lack of the money supply” (Wheelan) for Pakistan is foremost the worst problem because if the donations given by other countries as well as the pledges by the IMF and UN don’t fix Pakistan’s economy then the money donated will not be returned. This conflict is based off the idea of a nation built of the idea of monetary policy. The incentive for any country to do so must have the incentive to donate. For example the reason for India's donations is to protect their water supply.
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Jamie
The Situation The floods in Pakistan have posed serious long-term threats to the national economy, and recent statistics from the World Bank show that the county is in a dire situation. The flooding has directly affected 18 million people and destroyed over 800,000 homes, while the rest of the nation is faced with an economy that took a $1 billion hit to the agriculture industry, which composes 25% of GDP and employs 50% of the population. Of those affected by the flood, 80% depend on agriculture for there livelihoods and most now have no way to support themselves (World Bank). Along with homes, the Huffington Post says, the floods have destroyed hospitals, roads, and farm soil. Fixing these problems as well as developing new infrastructure is a critical part of recovery and future economic growth. (Huffington Post).
Who Should Implement New Policy? The World Bank warns that the Pakistani government has been a weak tax collector, with the rich often evading or controlling tax collection and, often times, much of the money that does come though the government is illegally placed in the pockets of politicians which has created a general lack of trust for the government (World Bank). Wheelan writes that, to grow, a country needs a government that can provide laws, law enforcement and courts, basic infrastructure, collect taxes, and maintain the respect of the citizens (Wheelan 208). This is a telling sign that the Pakistani government is not fit to manage flood relief alone, as it can not be trusted to properly handle money, but rather should be partnered with a board of directors made up of representatives from the largest donators, such as the World Bank. This board can then work alongside the government as well as closely with the people that are receiving the help in order to fund the long term economic policy fairly and respectfully.
The Policy The main focus of the policy to promote long term economic growth in Pakistan should be infrastructure, much of which was completely destroyed in the areas that experienced flooding. This is a practical economic policy for Pakistan because building infrastructure is not only a necessary part of the flood recovery, but also has a positive effect on the nation’s GDP, due to the high amounts of government spending and the jobs it helps to create. For the plan to be most effective, Pakistan cannot build infrastructure like what was in place before, but must improve upon it. By improving hospitals, roads, and dikes, and building its own dams the government can improve the confidence of citizens, specifically farmers, which will lead to higher investment, and the increased protection of farmland combined with a better road system will increase farm output which will help the industry recover. Thus, when used properly, infrastructure has the potential to improve Pakistan’s economy on multiple levels and sustain long term growth.
Works Cited “Pakistan Flood Recovery Expected to Take Years.” Huffington Post. Asif Shahzad. Writer. Aug. 2010. Huffington Post. Sept. 2010. <http://www.huffingtonpost.com>
“Pakistan.” World Bank. Informational. Sept. 2010. World Bank. Sept. 2010. <http://web.worldbank.org>
Wheelan, Charles J. Naked Economics: Undressing the Dismal Science//. New York: W. W. Norton, 2010. Print.
Table. Highlight "Add Data or Map", click File icon, upload file from desktop, add source in caption.
Alec
After Pakistan flooded, the United Nations agreed on assembling $460 million from its member nations. It has, however, only received $310 million of the $460 million. The U.N. also plans on requesting at least double the original amount in order to better obtain more food, clean water, and shelter. The I.M.F. has also decided to contribute to the funds by donating $450 million to Pakistan within the next few weeks. Pakistan has also accepted a donation from rival country, India, of an amount of $5 million, showing that both Pakistan and India are willing to set aside some differences to help those in need. The total amount of money donated so far is estimated to be around $1.1 billion.
All of the money is going to the obvious; food, water, health, and shelter. Around 14 million people are affected, in over 7 regions of the country. There is, however, also a certain amount need to build and rebuild dams and levees. As rivers swell, due to the rain, the need for dams is extremely high. Most of the dams in the areas flooded, including the country’s third largest dam, are either damaged or not large enough to cope with the larger amounts of water in the rivers so this needs to be fixed. Debates have also resurfaced about constructing a dam on the Indus River at Kalabagh in the Punjab province. As well as providing protection down river, this dam would also be hydroelectric, generating more energy for the country.
http://ochaonline.un.org/humanitarianappeal/webpage.asp?Page=1893
Key Parameters
Federally Administered Tribal Areas
Gilgit-Baltistan
Khyber Pakthunkhwa
Pakistan-Administered Kashmir
Punjab
Sindh
Water, Sanitation and Hygiene
Health
Shelter/Non-Food Items
$459 million
||
IMF’s Dominique Strauss-Kahn (r) with Pakistan’s Finance Minister Abdul Hafeez Shaikh at IMF headquarters in Washington September 2 (IMF photo)
Jeff
A priority for Pakistan relief is to establish a stable government with which relief money can be used properly. From a short term stand point, we should create a trust fund, an immediate means to distribute money through a non-government organization. This would would circumvent the lengthy process of re-organizing a corrupt government and focus on current need. The fund could be run by a board consisting of prominent Pakistani organizations and economists and international representatives from groups like the IMF or World bank. This board would allocate relief money to avoid corruption and embezzlement. A large portion of funds pledged by the UN has not been donated for fear of corruption. Bureaucrats and military officials have hindered progress because of political strife like like with India's aid money. They delayed donation because of political turmoil over land and other issues. Instead, with this fund in place, the government would merely use its authority to carry out the placement of relief money throughout Pakistan. Once money comes into the country, a more stable system could help other aspects. Wheelan says "government builds and maintains infrastructure that makes private commerce," (Wheelan 55). This means once a governing body is stable, it can begin to repair and provide immediate aid to the country. Government provides public goods (Wheelan 57), and the repairs would be a public good. The government also redistributes wealth through taxing (59) and while in this situation, the government is not taxing as nobody is producing, the government is taking aid money, and providing relief as per the instructions of a trust fund. With this stability, Pakistan can also begin to recover its economy.
Pakistan's economic growth has dropped from 4 percent to zero. It has a foreign debt of 49 billion and is unable to produce because of the flood. They must use incoming aid to create some sort of functioning economy. Their is a massive amount of donated food but no way to distribute it so money can be given to citizens who can then buy and trade food to stimulate the market. Aid money can also be used in incentive programs to simultaneously repair Pakistan's state. Wheelan says that "government can plan and finance a new highway and then solicit bids from private contractors to do the work" (Wheelan 66). Pakistan should do just this; they should use aid money to hire out labor forces, as many citizens are out of jobs from the flood, to repair and build roads. They could then use this money to buy food or supplies and this would also stimulate the economy. They could also apply this concept to agriculture by providing an incentive to repair the agricultural sector. Most of the flood damaged the agriculture of Pakistan and they need it for food and supplies. The government could hire individuals using trust fund money or make loans or subsidize companies to get that sector of the economy running smoothly. Essentially, once Pakistan has established some form of political stability they can apply this and fix their economic situation.
Two of the biggest immediate problems in the flooded regions of Pakistan are the destruction and subsequent shortage of food and adequate shelter. Until a majority of the floodwaters recede, shelter will consist of tents either provided by individual charities or purchased by the trust fund mentioned above. Similarly, food will be dropped via air or distributed at emergency camps. However, once the waters recede and people will began making their way back to the farmland with their main priorities being clearing the land to plant fall crops like wheat and building some sort of a house. If people are being paid to build roads, they can also be paid to clear farmland. Additionally, the trust fund can provide families with some sort of stipend so that they can make their own choice about what they want to buy for food, seeds, etc. This will lead to a market economy as other people or firms unaffected by the food will migrate to open up markets to supply the victims. Market prices will quickly be set and as people begin to buy and trade, “every market transaction [will make] all parties better off” (Wheelan 20). No only will the flood victims be able to buy what they really need to rebuild their lives, but the sellers will earn a profit and money will flood into the Pakistani economy.
When it comes to protection against water contamination-related disease, however, trying to set a market economy will not help. The trust fund board needs to act as a sort of government and arrange deals with pharmaceutical companies. These companies need to either donate vaccines for diseases like cholera and measles or sell them to the trust fund board in bulk for a much lower price using the principles of price discrimination, or selling “the same item to different people at different prices” (Wheelan 16). This way, even the pharmaceutical companies are not losing revenue. Once the trust fund has the vaccines, various private/charity organizations can distribute them to the people, such as Doctors without Borders or the World Health Organization. Vaccination should be mandatory and dealt with by the stronger, more central trust fund board instead of distributed via a market because the vaccines are almost a sort of public good and makes a majority of the people better off. Additionally, if we simply give victims money, most are not likely to spend it on vaccines. Those that don’t are creating a sort of negative externality, where the “private cost of behavior is different from the social costs” (44). While people who don’t buy vaccines may be saving money, they are increasing the risk of spreading disease and harming others. As Wheelan emphasizes in Naked Economics, the “crucial role for government in a market economy is dealing with externalities” (45). Therefore, the trust fund board needs to act like a government in administering vaccines to protect the flood victims and other Pakistanis from an epidemic.
Long term International Relations of Pakistan
Pakistan’s turn for the worst has bought up many concerning issues for the flood ravished country. Because of the recent floods, all of Pakistan’s available food sources and main exports have been submerged, hundreds of businesses destroyed, as well a leaving millions homeless. Relief efforts and donations to help Pakistan have already started but as they continue to benefit the relief cause have created pressing issues that could have a negative end result. To achieve a successful recovery Pakistan needs 75 million dollars to rebuild the roads damaged by the flood so the supplies needed to provide shelter and other necessities can be given to the refugees of the flood. The first to donate to Pakistan was the UN. Although money was promised, at this moment there is no money available because “all the available funds are being used to recover the Haitians from their recent earthquake”. Another surprising donor was India coming to Pakistan’s aid. Reluctant to accept the donation of 5 million, both countries had the incentive to complete the exchange. India did it for reasons because of the water sources that they use (own) that is managed and located in Pakistan. Pakistan’s reasoning was due to the fact that the need every cent that they can get their hands on because the damage to the economy is so dire. However one negative externality is that since Pakistan is having good relations with India raises the protest of Pakistani terrorist groups due to the international hate of both countries. Just recently these terrorist groups have announced attack will occur if these relation continue. In order to fix these problems in the long run and keep the voices of the extremist groups at bay is for Pakistan to ask for more aid from other donors like Russia and China. “The lack of the money supply” (Wheelan) for Pakistan is foremost the worst problem because if the donations given by other countries as well as the pledges by the IMF and UN don’t fix Pakistan’s economy then the money donated will not be returned. This conflict is based off the idea of a nation built of the idea of monetary policy. The incentive for any country to do so must have the incentive to donate. For example the reason for India's donations is to protect their water supply.
Table. Highlight "Add Data or Map", click File icon, upload file from desktop, add source in caption.
The Situation
The floods in Pakistan have posed serious long-term threats to the national economy, and recent statistics from the World Bank show that the county is in a dire situation. The flooding has directly affected 18 million people and destroyed over 800,000 homes, while the rest of the nation is faced with an economy that took a $1 billion hit to the agriculture industry, which composes 25% of GDP and employs 50% of the population. Of those affected by the flood, 80% depend on agriculture for there livelihoods and most now have no way to support themselves (World Bank). Along with homes, the Huffington Post says, the floods have destroyed hospitals, roads, and farm soil. Fixing these problems as well as developing new infrastructure is a critical part of recovery and future economic growth. (Huffington Post).
Who Should Implement New Policy?
The World Bank warns that the Pakistani government has been a weak tax collector, with the rich often evading or controlling tax collection and, often times, much of the money that does come though the government is illegally placed in the pockets of politicians which has created a general lack of trust for the government (World Bank). Wheelan writes that, to grow, a country needs a government that can provide laws, law enforcement and courts, basic infrastructure, collect taxes, and maintain the respect of the citizens (Wheelan 208). This is a telling sign that the Pakistani government is not fit to manage flood relief alone, as it can not be trusted to properly handle money, but rather should be partnered with a board of directors made up of representatives from the largest donators, such as the World Bank. This board can then work alongside the government as well as closely with the people that are receiving the help in order to fund the long term economic policy fairly and respectfully.
The Policy
The main focus of the policy to promote long term economic growth in Pakistan should be infrastructure, much of which was completely destroyed in the areas that experienced flooding. This is a practical economic policy for Pakistan because building infrastructure is not only a necessary part of the flood recovery, but also has a positive effect on the nation’s GDP, due to the high amounts of government spending and the jobs it helps to create. For the plan to be most effective, Pakistan cannot build infrastructure like what was in place before, but must improve upon it. By improving hospitals, roads, and dikes, and building its own dams the government can improve the confidence of citizens, specifically farmers, which will lead to higher investment, and the increased protection of farmland combined with a better road system will increase farm output which will help the industry recover. Thus, when used properly, infrastructure has the potential to improve Pakistan’s economy on multiple levels and sustain long term growth.
Works Cited
“Pakistan Flood Recovery Expected to Take Years.” Huffington Post. Asif Shahzad.
Writer. Aug. 2010. Huffington Post. Sept. 2010.
<http://www.huffingtonpost.com>
“Pakistan.” World Bank. Informational. Sept. 2010. World Bank. Sept. 2010.
<http://web.worldbank.org>
Wheelan, Charles J.
Naked Economics: Undressing the Dismal Science//. New York: W. W. Norton, 2010. Print.
Table. Highlight "Add Data or Map", click File icon, upload file from desktop, add source in caption.