Deep dive into #investments and learn how wages have increased in #Pakistan despite #productivity lagging behind, private savings continue to contract leading to lower investment and why not all #FDI is good for #NayaPakistan macropakistani.com/2020/06/saving… (1/n)
~60% Pakistanis rely on wages/salaries for income w/ slight differences across quintiles. While housing takes up a significant chunk of private consumption, the rich are biggest benefactors of that expenditure, deriving 18% of their income from property. (2/n) 
No. of income earners per HH is also imp: rich people work less than poor. If rich, your household probably has 1.5 earners but if you are poor, more hands will be on deck. There are a lot of provincial and gender differences that we can discuss later but... (3/n)
…inherited family advantage could also be a key reason – if my father made a healthy income, I am more likely to make a healthy income. To be exact, if my father makes $100 more than your father, I am likely to make $46 more than you. (4/n)
In theory, wages should equal marginal productivity of labour. But while labor productivity has increased by 50% in last 30 years, real incomes have increased by over 150% meaning workers have been compensated more than their productivity. (5/n)
Compensation for inflation (which again is a result of low productivity) does not explain increase in averages wages either. Since 1990, prices have increased by 10x while average wages have increased by more. Minimum wage spikes might offer an explanation. (6/n)
Persistent current account deficits have meant a large saving investment gap, lower contribution of private saving and higher reliance on foreign savings in Pakistan (7/n)
Notice every time foreign saving rises, productivity measures tank. This is because foreign direct investment in Pakistan has historically not been efficiency seeking. We instead have market-seeking FDI aimed at serving a large country with a large population (8/n)
Firstly, we need to save more domestically and channel that into investments. But even if we have to encourage FDI, we will need to make sure those investments are aimed at improving our labor productivity and TFP. (n/n)
