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Book Review Pakistan – The Political Economy of Growth, Stagnation and the State, 1951–2009, Routledge, London and New York, ISBN13: 978-0-415-57747-2 and ISBN13: 978-0-203-81476-5, 2011, pp. 241.
Nina Gera
Published:July - Dec 2012
McCartney, Mathew, Pakistan – The Political Economy of Growth,
Stagnation and the State, 1951–2009, Routledge, London and New
York, ISBN13: 978-0-415-57747-2 and ISBN13: 978-0-203-81476-5,
2011, pp. 241.
This book is, one can assert without a doubt, sui generis, unique in
that it provides an entirely new perspective on the development of
Pakistan’s political economy. It is a thorough and objective analysis, an
eye-opener, and the author leaves no stone unturned.
KEYWORDS:
Pakistan,
development,
Growth,
capital,
political economy.
JEL:
N/A.
Published:Sept 2012
The Lahore School’s Eighth Annual Conference on Management of the Pakistan Economy took place on 16 – 17 May, 2012 at the school’s Main Campus. The topic of this year’s conference was: “Towards Accelerated Economic Growth in Pakistan: Its Need and Feasibility”. It was attended by the country’s leading economists, Pakistani and foreign academics, and renowned researchers from India, Sri Lanka, United Kingdom, and United States. Some 25 research papers and oral presentations were made during the two days of the conference.
The richness of the discussions during the two days of the conference cannot be adequately captured in a short report but, as a record of the salient issues raised, it could be useful for the participants as well as others interested in the subject. Since discussions in different sessions tended to overlap, what is offered here is a composite summing-up rather than a chronological account of the actual proceedings.
KEYWORDS:
Pakistan,
Lahore School,
Annual Conference,
Pakistan economy.
JEL:
N/A.
Toward a Heterodox Approach: Reconciling Stabilization and Economic Growth in Pakistan
Irfan ul Haque and Sahar Amjad
Published:Sept 2012
This article attempts to show that a strategy for accelerated growth for Pakistan is both necessary and feasible. Pakistan’s macroeconomic conditions are broadly similar to some of its more rapidly growing neighbors. The country’s macroeconomic imbalances and inflation need to be brought down, but the required adjustment does not entail precipitate action, which could further depress the economy. We develop a “Heterodox Scenario,” which shows that macroeconomic adjustments can be phased in over the next few years and will be easier to make if the economy were to grow more rapidly. For accelerated growth to materialize, as a minimum, determined steps are needed to overcome the energy crisis, sharply raise the investment rate—particularly, private investment—and strengthen Pakistan’s competitiveness in the world market. A national strategy is needed toward that end.
KEYWORDS:
Growth,
inflation,
economy,
strategy,
Pakistan.
JEL:
O10,
E22.
The Captivating Vision of the “New Growth Strategy”: The Missing Political Economy Perspective
S. Akbar Zaidi
Published:Sept 2012
One hears little about the Planning Commission’s Framework for Economic Growth launched a year ago. This is indicative of its inappropriateness and lack of consideration of Pakistan’s economy or its structures and political economy. The Framework avoids tackling the core issues of taxation, distribution, and equity. It privileges the market and free enterprise over the role of the state, and undermines and dismisses the significant role and contribution of the government and state in promoting growth, particularly at a time when market failure has made economists rethink the role of markets after 2008. By ignoring central issues related to politics and the articulation of power, and of issues that fall in the realm of political economy, the Planning Commission constructs a technicist script that has little value to the messy world of realpolitics.
KEYWORDS:
Growth,
political economy,
Planning Commission,
Pakistan.
JEL:
O40,
O1.
Stagflation, the Labor Market Impact, and the Poverty Puzzle in Pakistan: A Preliminary Analysis
Rashid Amjad
Published:Sept 2012
This article discusses the impact of the current stagflation in Pakistan on the labor market and poverty. The paper presents a preliminary explanation of why the labor market and poverty impact of the current stagflation may be far smaller than projected in recent studies, especially for the rural economy. The main conclusions that emerge are that (1) The overwhelming expected negative impact of low economic growth, high double-digit inflation, and crippling energy shortages on poverty and the labor market appear to have been cushioned by the large increase in remittances, rising wages in agriculture and services, and social safety nets; (2) there is, however, no reason for complacency since over 20 million people live in absolute poverty and that the economy remains in deep stagflation, (3) the PSLM (HIES) 2010/11 data should be made publicly available so that it can be subject to more critical analysis and (4) studies on poverty should be based on a close integration of macro-sectoral–micro-factors to fully capture the underlying “poverty dynamics.”
KEYWORDS:
Macro-dynamics,
economic growth,
cycles,
Pakistan.
JEL:
F43,
P46.
Pakistan’s Power Crisis: How Did We Get Here?
Kamal A. Munir and Salman Khalid
Published:Sept 2012
This article has a rather modest aim. In contrast to most analyses that abound, it submits that Pakistan’s energy crisis stems primarily from a suboptimal policy and only secondarily from governance issues. This does not mean that governance is not an important issue. With around 20 different organizations involved in the power sector—e.g., WAPDA, PEPCO, PPIB, AEDB, GENCOs, and IPPs—there is much scope for governance failures. In addition, there is much malfeasance perpetrated by political and other interests. Still, since governance mechanisms are significantly shaped by incentive systems and operating policy regimes, we will argue that the problem lies primarily in policy choices made earlier, and focus in particular on two elements of the policy that need to be revisited.
KEYWORDS:
Power crisis,
policy,
governance,
Pakistan.
JEL:
G30.
Industrialization by Fitting in: Acquiring Technology through Collaboration and Subcontracting
Sikander Rahim
Published:Sept 2012
Since the 1950s, Pakistan has been trying to industrialize by investing in industries that have low value-added, notably cotton textiles. Here, low value-added means that the export value of the cotton textiles less the value of the raw cotton used to make them was low relative to the cost of the investment needed to make the textiles, i.e., contrary to the usual assumption, cotton textile manufacture was capital-intensive. The cause was the protection of the importing countries. But goods with high value-added in this sense required advanced technical knowledge, which is mostly the proprietary knowledge of the firms whose research and development (R&D) has generated it. Over time, all the production of goods that do not require such technical knowledge has passed to low-wage countries whose mutual competition keeps the value-added low. Since Pakistan cannot compete in high-value-added goods, it must emulate the East Asian economies by collaborating with firms in high-wage countries—i.e., subcontracting them to make simple components—and progress through such collaboration to receiving the knowledge and training to making components with higher value-added.
KEYWORDS:
Pakistan,
textiles,
protection,
value-added,
subcontracting.
JEL:
O14.
Export Barriers in Pakistan: Results of a Firm-Level Survey
Rashid Amjad, Ejaz Ghani, Musleh ud Din and Tariq Mahmood
Published:Sept 2012
This study attempts to evaluate exporters’ perceptions of the problems they face in exploiting their full competitive potential in the international market. Using firm-level survey data, we find that a shortage of skilled labor, the energy crisis, institutional rigidities, market imperfections, and weaknesses in physical infrastructure are the key impediments to achieving export competitiveness. Policies geared toward improving the quality of skilled labor, resolving the energy crisis, and reducing transaction costs by improving the institutional and physical infrastructure are key to expanding Pakistan’s exports on a sustained basis.
KEYWORDS:
Pakistan,
export competitiveness,
exporting procedures,
certifications.
JEL:
F13.
The Constraints to Industry in Punjab, Pakistan
Syed Turab Hussain, Usman Khan, Kashif Zaheer Malik and Adeel Faheem
Published:Sept 2012
This paper identifies the main impediments to investment and industrial productivity in Punjab, which have led to a decline in growth. This is done by analyzing the impediments and constraints to productivity and investment using the World Bank’s 2007 Investment Climate Assessment (ICA) data at the level of Punjab’s seven main industrial zones. This is followed by an analysis of a pilot survey of 100 firms conducted in the Lahore district. Almost 71 percent of the firms surveyed declared electricity to be the most important constraint and macroeconomic stability was ranked as the second-most important constraint. An inadequate workforce, access to raw materials, and corruption were ranked third, fourth, and fifth, respectively.
KEYWORDS:
Industry,
constraint,
Pakistan.
JEL:
O10.
The Birth of Exporters: Entry and Scale of Firms in Punjab’s Export Sectors
Azam Chaudhry, Marjan Nasir and Maryiam Haroon
Published:Sept 2012
In this paper we analyze which factors affect new firm entry and the scale of new firms in the export clusters of Punjab. Our analysis looks at local conditions (such as the degree of concentration in an industry, the employment of firms of that industry already located in a region, the employment of firms of all industries located in that region) and international conditions (such as the real exchange rates of Pakistan’s major trading partners and tariff rates). The results show that more export sector firms will enter highly concentrated industries and that firm entry increases significantly as a result of a depreciation in the trade-weighted real exchange rate, while the impact of changes in trade partner tariffs is not significant.
KEYWORDS:
Firm,
export clusters,
entry,
Pakistan.
JEL:
F14,
D22.