DETERMINANTS OF BASIC NEEDS FULFILLMENT THE CASE OF PAKISTAN

Abstract

This study investigates the impact of different socio economic indicators on basic needs fulfillment in Pakistan. Basic needs gap index (BNGI) is dependent variable and is used as proxy of basic needs fulfillment. Ordinary least squares (OLS) and two different versions of empirical Bayes techniques have been applied on the time series data of eight different regions of Pakistan with rural and urban bifurcation for the period 1979 – 2008. Significant factors are figured out of ten explanatory variables: per capita income, per capita savings, remittances (domestic and foreign), human capital index, household size, ratio of income of top 20 percent to bottom 20 percent , share of income held by bottom 20 percent , higher education , unemployment, and dependency ratio. Our final model comprises of the following four explanatory variables, per capita income, human capital index, share of income held by bottom 20 percent, and unemployment. It is found that per capita income and income held by bottom 20 percent are highly correlated with BNGI in all the regions of Pakistan. It is also observed that share of income held by bottom 20% is also a significant variable that affect BNGI. Human capital index and unemployment showed mixed and sometimes contrasting results for rural and urban regions. Income distribution is more uneven in urban areas as compared to the rural areas. In the case of human capital, there is a considerable difference in rural and urban areas of Pakistan. Growth for the sake of growth is meaningless unless it reduces the miseries of the masses. To make every person part of development process, it needs to ensure that no one is underprivileged and marginalized. This can only be done when all the basic needs of the individuals are met. To improve the indicators of basic needs fulfillment it is important to improve the income share held by the poorest 20% people, which is in accordance to the MDGs. This requires strong political will at the part of the policy makers, the government officials, and the political parties.