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Innovation and Technological Upgrading in Lahore: Results From the LCCI Business Confidence Survey 2016
Mahvish Faran and Azam Chaudhry
Published:Sept 2016
The Lahore School of Economics and the Lahore Chamber of Commerce and Industry (LCCI) conducted a unique business confidence survey of firms in March 2015. The objective of the survey was to determine industry-specific trends as well as firms’ perceptions of general macroeconomic trends. In 2016, the Lahore School and LCCI conducted a second business confidence survey in which they asked a sample of firms about the same issues as well as their level of innovation and technological upgrading. In this paper, we focus on the results of the innovation and technology component of the 2016 survey. We perform an aggregate analysis across firms to see if they have innovated and upgraded their technology. Next, we focus on the impact of innovation on exports and domestic sales to gauge whether firms reporting higher exports had innovated more. Finally, we look at each sector (manufacturing, services and retail) in turn and analyze the levels of innovation and technological innovation in each.
KEYWORDS:
Innovation,
technology,
macroeconomic trends,
business confidence survey.
JEL:
O14,
O11.
Science and Technology for Raising Income: The Choice of Activities, the State and the Private Sector
Sikander Rahim
Published:Sept 2016
Pakistan’s lack of industrial progress over decades should be cause for concern about the future. The goods the economy produces competitively are the typical goods that yield so little income that they are only exported by economies that have low wage labour. They are much the same manufactures now as during the 1960s and have been kept competitive by keeping wages down through repeated devaluation. Income per head will rise slowly, at best, if the economy does not learn how to produce goods that yield more income, and that means acquiring the up to date technical knowledge needed to be competitive from the foreign producers who produce such goods. But that is knowledge obtained through R&D and is not provided freely, least of all to would-be competitors. Pakistani firms can try to do their own R&D, but, even with public sector collaboration, they cannot catch up with the established foreign firms, which continue to do their R&D and have more money, experienced staff and facilities. The two possibilities are to attract foreign direct investment and for Pakistani firms to insert themselves into the production processes of foreign firms. Experience shows that the first, though it has worked well in several countries, can be ruled out for the present; there has been no FDI in Pakistan for making exportable manufactures. But economies like South Korea and China acquired the technical knowledge they needed through subcontracting and joint ventures with American, European and Japanese firms and moved on from there. There is no realistic alternative and task ahead is to determine what has to be done to realize it.
KEYWORDS:
Science and technology,
R & D,
productivity,
innovation,
Pakistan.
JEL:
O14.
Productivity Growth and Entrepreneurship in Pakistan: The Role of Public Policy in Promoting Technology Management
Shaukat Hameed Khan
Published:Sept 2016
Numerous public announcements are made regularly in Pakistan about moving towards a knowledge economy. These appear to be wishful thinking in the absence of any coherent understanding of the role of technology and its spillovers as major drivers of development and growth as well as lack of clarity about the manner in which science and technology are organized in Pakistan. Pakistan has not really been able to manage the major organizational changes brought about by the techno-information revolution of the 21st century. Its competitiveness is falling, organizational changes are slow and workforce skill levels are inadequate – all of which have stalled productivity and innovation. Pakistan faces a serious risk of deindustrialization unless the dynamics and disruptive nature of modern technology are better understood and embedded as a key pillar of public policy in order to enhance productivity and innovation. This article attempts to define the nexus between technology and entrepreneurship and show how it differs from scientific research. It also examines the role of public policy in promoting productivity growth and entrepreneurship through better policies in technology management.
KEYWORDS:
Productivity,
growth,
public policy,
technology,
Pakistan.
JEL:
O39.
The Aftermarket Performance of Initial Public Offerings in Pakistan
Muhammad Zubair Mumtaz, Zachary A. Smith and Ather Maqsood Ahmed
Published:Jan - June 2016
This paper estimates the aftermarket performance of initial public offerings (IPOs) listed on the Karachi Stock Exchange. The evidence confirms that IPOs generate statistically significant abnormal returns in the short run, which indicates that underwriters initially underprice IPOs when analyzed using a short time horizon. However, when using longer time horizons to estimate abnormal performance, the results indicate that IPOs underperform in the long-run. There is an apparent dislocation between the initial valuation set by underwriters and the premium paid by the market for these new issues. The market sentiment that causes this temporary disequilibrium eventually fades and the market reprices the newly issued shares. We conduct an extreme bounds analysis to test the sensitivity and robustness of 16 explanatory variables in determining the long-term performance of unseasoned newly issued shares. The results indicate that the long-term investment ratio, industry affiliation, market-adjusted abnormal returns, financial leverage, return on assets, IPO activity period, the aftermarket risk level of unseasoned issues, and the post-issue promoter’s holdings variables significantly affect IPOs’ aftermarket performance. Theoretically, the overreaction hypothesis, ex-ante uncertainty hypothesis and window-of-opportunity hypothesis best explain IPOs’ aftermarket performance in this study.
KEYWORDS:
Initial public offering,
underpricing,
underperformance,
extreme bounds analysis.
JEL:
G32,
G14,
G23.
Corporate Financial Leverage, Asset Utilization and Nonperforming Loans in Pakistan
Sami Ullah Khan and Muhammad Jehangir Khan
Published:Jan - June 2016
This study examines the impact of remittances on school enrollment and the level of education attained among children aged 4–15 years in Pakistan. It uses a nationally representative survey, the Pakistan Social and Living Standards Measurement Survey for 2010/11. The migrant network variable at the village level interacting with the number of adults at the household level is used as an instrument for remittances. The results of the IV probit model show that children from remittance-receiving households are more likely to enroll in school. The marginal impact of remittances on school enrollment is larger for girls and for rural households. Hence, remittances help reduce regional and gender disparities in child school enrollment in Pakistan. The IV censored ordered probit model is used to investigate the impact of remittances on children’s grade attainment. The estimated impact is negative and significant, except for urban children, lowering the probability that a child will move to a higher grade.
KEYWORDS:
Child education,
school enrollment,
educational attainment,
remittances.
JEL:
O15,
I25.
Electricity Consumption Patterns: Comparative Evidence from Pakistan’s Public and Private Sectors
Karim Khan, Anwar Shah and Jaffar Khan
Published:Jan - June 2016
This study examines the behavioral aspect of Pakistan’s energy crisis by comparing electricity consumption in the public and private sectors. Specifically, we compare consumption patterns of electricity across a sample of student hostels at two public sector universities and privately run student hostels. In addition, we collect household data for a sample of students at Quaid-i-Azam University (QAU) in Islamabad and compare their average electricity consumption with that of the public sector university hostels. We find that the latter’s average consumption of electricity is significantly higher than among private hostels and households. In assessing the moral hazard problem of the public sector in this context, we test the energy conservation behavior of QAU students and the university administration. The results show that students are largely indifferent to conserving electricity, while the administration pays little attention to the use of energy-efficient lights and equipment.
KEYWORDS:
Electricity consumption,
public sector,
private sector,
moral hazard,
conservation of electricity,
organizational inefficiency.
JEL:
H83,
D00,
D12,
D03,
D04.
Was the SAFTA (Phase II) Revision Successful? A Case Study of Bangladesh’s RMG Exports to India
Namra Awais
Published:Jan - June 2016
Bangladesh has experienced phenomenal growth in its readymade garments (RMG) sector and become the world’s second-largest RMG exporter after China. Given the country’s robust position in this context, many observers expected that the SAFTA revisions under Phase II – which allowed Bangladesh’s apparel products duty-free and quota-free access to the Indian market – would lead to a surge in Indian imports of apparel and RMGs. However, this did not materialize. This study analyzes Indo–Bangladesh trade in RMGs in order to determine the underlying reasons for this anomaly. Using Balassa’s concept of revealed comparative advantage, the study establishes the strong comparative advantage enjoyed by Bangladesh though the results also show a lack of effective trade complementarity between the two countries. Overall, the findings suggest that India enjoys economies of scale in RMG production – as Bangladesh’s competitor, India has artificially maintained a secure regime through a combination of domestic export incentives and nontariff measures to restrain imports.
KEYWORDS:
Bangladesh,
India,
comparative advantage,
liberalization,
RMGs,
SAFTA.
JEL:
F14,
F15,
F13.
Education and Maternal Health in Pakistan: The Pathways of Influence
Shandana Dar and Uzma Afzal
Published:July - Dec 2015
Although numerous studies have explored the relationship between education and women’s health-seeking behavior, the role of education – and the pathway through which it affects health-seeking behavior – remains unclear. We use data from the Pakistan Demographic Health Survey for 2006/07 on women aged 15–49 who had given birth at least once in the last three years to determine which socioeconomic factors affect maternal healthcare use, and how the effect of women’s own education is transmitted to their health-seeking behavior. We implement two estimation techniques: (i) a two-step instrumental variable linear probability model, in which women’s exposure to mass media is used as an instrumental variable for their health knowledge; and (ii) a community fixed effects model. The results of the analysis indicate that predisposing factors – such as women’s level of education, their children’s birth order, their spouse’s level of education, type of occupation, and empowerment – are important determinants of maternal health-seeking behavior in Pakistan. The results also confirm the important role played by women’s own health knowledge, independent of their education, on their maternal healthcare use.
KEYWORDS:
Maternal health,
education,
health knowledge,
instrumental variable analysis,
mass media exposure,
Pakistan.
JEL:
C26,
I15,
I29.
Is There an Arms Race Between Pakistan and India? An Application of GMM
Muhammad Ramzan Sheikh and Muhammad Aslam
Published:July - Dec 2015
This study employs the Richardson model to investigate the presence of an arms race between Pakistan and India during the period 1972–2010. Using the generalized method of moments approach, we find that the grievance term for the Pakistan model is positive while that for India is negative. Both countries’ defense spending in the previous period is negatively related to the change in their own defense spending due to the economic or administrative incidence of an arms race. Moreover, the defense or reaction coefficients in the specified model determine the presence of an arms race between the two countries. The signs of these coefficients are positive in accord with the classical Richardson model, suggesting that an arms race does indeed exist between Pakistan and India.
KEYWORDS:
Arms race,
defense spending,
generalized method of moments,
grievance term,
reaction coefficients,
Pakistan,
India.
JEL:
C45,
H56.