The question of whether devaluation of the currency affects output positively or negatively has received considerable attention both from academic and empirical researchers. A number of empirical studies have supported the contractionary devaluation hypothesis using pooled time series data from a large number of heterogeneous countries. Since the effects of devaluation on output and the price level may not be uniform across all developing countries, the empirical results can not be generalized for all countries. In addition, almost none of the empirical studies used to test the contractionary devaluation hypothesis separate the effects of devaluation from import prices. Thus, a country specific study is needed that separate the effects of devaluation from the import price effects. This paper uses a VEC model to analyze the effects of the exchange rate on output and the price level in Pakistan for the period 1975-2005. Our analysis shows that devaluation has a positive effect on output but a negative effect on the price level. Thus, the evidence presented in this paper does not support the contractionary devaluation hypothesis for the Pakistani economy.
KEYWORDS: Devaluation, currency, exchange, Pakistan, economy.
JEL: N/A.

This paper has analyzed the economic and political justification, trade impact and extent of antidumping measures initiated by Pakistan. Screening models for anti-predatory behaviour, Herfindahl-Hireshmann Index (HHI) for concentration and descriptive statistical measures are used to test the antidumping (AD) behaviour. The results are consistent with the earlier literature that AD duties have both a trade reduction and diversion effect. It is evident from the results in half of the cases studied that an economic rationale has been followed in the application of AD duties in Pakistan. Although the number of AD cases is limited, Pakistan has emerged as one of the intensive users of AD, relative to its total import share. It is also evident from the fact that intensive use of AD reduces trade and increases trade barriers, similarly, trade diversion reduces the chances of trade reduction. The key message emerging from this research is that trade diversion persists and in some cases trade diversion is substantial and it offsets the effect of AD measures on named countries to the benefit of non-named countries.
KEYWORDS: Antidumping, Pakistan, AD behaviour, trade reduction.
JEL: N/A.

In this paper, we have addressed a key issue in the current debate on economic development: the effect of trade liberalization on poverty. We investigated the relationship between trade liberalization and poverty levels both in the long run as well as in the short run for Pakistan. To measure trade liberalization, we used standard indices of trade openness, financial openness and public intervention in the country, while the head-count ratio was used for poverty measurement, and GDP per capita controlled for economic growth. Applying the Johansen Co-integration Techniques and Error Correction Method, for long-run and short-run analyses respectively, our findings suggest that trade liberalization has a cumulative effect on poverty reduction in the long-run but not in the short run in Pakistan. Lower poverty is associated with low taxation and high foreign direct investment, while trade openness does not have a significant impact on poverty reduction, particularly in the short run, in Pakistan.
KEYWORDS: Trade, Liberalization, Poverty.
JEL: I31.

This paper investigates the efficiency of the Karachi stock exchange (KSE) with corrections for thin trading and non-linearity as suggested by Miller, Muthuswamy and Whaley (1994). Daily, weekly, and monthly data on stock prices from December 1991 to May 2003 have been used, with three non-overlapping periods (December 1991 to May 1998; May 1998 to September 2001; and September 2001 to May 2003) and one combined period (May 1998 to May 2003). The results indicate that the Karachi Stock Market is efficient for the overall period, the three sub-periods, and the combined period in linear and non-linear behavior after making adjustments for thin trading. The same result is observed when the efficiency test is conducted on weekly and monthly data after adjusting for thin trading during the overall study period.
KEYWORDS: Karachi Stock Exchange, KSE, efficiency, market, Pakistan.
JEL: N/A.

The Policy Analysis Matrix (PAM) methodology was used to determine the level of economic efficiency and competitiveness in the production of rice crops in Pakistan’s Punjab. The methodology was also used to assess the effect of policy intervention on the production of Basmati and IRRI rice crops. The results indicate that an expansion of the production of Basmati rice can lead to an increase in exports. The production of IRRI in Pakistan’s Punjab is characterized by a lack of economic efficiency implying inefficient use of resources to produce the commodity. On the other hand, both Basmati and IRRI rice production in the Punjab demonstrate a lack of competitiveness at the farm level for the period under analysis. The analysis shows that the prevailing incentive structure affected farmers negatively. A negative divergence between private and social profits implies that the net effect of policy intervention is to reduce the farm level profitability of both rice production systems in Punjab. The results highlight the need for removing existing policy distortions in the structure of economic incentives to enhance economic efficiency and to attain farm level competitiveness in rice production.
KEYWORDS: Pakistan, Punjab, Policy Analysis Matrix, PAM, policy intervention.
JEL: N/A.

Six carp and carp based culture technologies were selected to examine the sustainability of supplementary feed-based aquaculture through availability of domestic feeds compared to the total requirement in Bangladesh. The study covered seven districts of Bangladesh with a sample size of 376. It was found that farmers used a good number of feeds (more than 35) for the selected technologies but they maintained no standard doses for them. There were important differences among the prices of different feeds and other inputs used for different technologies in different parts of the country. Prices of all inputs were found to be increasing and this increase has been greater in recent years as compared to previous years. Though all the technologies were found to be profitable, the feed situation was not satisfactory. Except for rice polish, the supplies of other local feeds were unable to meet the national demand. If this situation persists and no measures are taken to secure the local feed supply, the present development of supplementary feed-based aquaculture will become dependent on imported feeds and would not be sustainable in the future. This study strongly suggests that the authorities should handle the matter with proper attention, considering its significant impact in the economy of the country.
KEYWORDS: Bangladesh, feed-based aquaculture, sustainability, technologies.
JEL: N/A.

Inayatullah, Rubina Saigol, Pervez Tahir (Eds), Social Science in Pakistan: A Profile, Council of Social Science Pakistan (COSS), Islamabad, 2005, pp 512, Price Pak Rs. 500, US $ 20. Social scientists study various facets of human society. Historically, societies were understood and explained through religious and philosophical texts. History, Philosophy and Politics also developed as independent disciplines. One thinks of Plato’s Republic, Chanakya’s Arthashastra, and histories by various Greek, Roman, Arab, Persian, Turk, Chinese and Indian writers. One notable contribution to the study of societies is by Ibn Khaldun, the 14th century Tunisian, considered the first sociologist of the world.
KEYWORDS: Book review, social science, Pakistan.
JEL: N/A.

Potato cultivation accounts for 5.71 percent in total cropped area of the Punjab province and it supplements the diet of the growing population at lower prices as compared to grains, meat and chicken. Data from 100 farmers, 50 each from the districts of Okara and Kasur during the year 2002-2003 (the autumn crop) has been collected. The study estimates the technical efficiency in potato production by employing the Cobb-Douglas stochastic production frontier approach. The null hypothesis of no technical inefficiency in the data is rejected. Our results indicate that potato farmers are 84 percent technically efficient, implying significant potential in potato production that can be developed. By shifting the average farmer to the production frontier, the average yield would increase from 8.33 tons per acre to 9.92 tons per acre using the available resources. The additional quantity of potatoes gathered through efficiency improvements would generate Rs. 990.81 ($16.51) million of revenue each year. Consultation with extension workers significantly contributes to the improvement of technical efficiency and implies that the extension department should be one of the major targeted variables from the policy point of view in order to improve technical efficiency in potato production.
KEYWORDS: Potato, stochastic production frontier, technical efficiency.
JEL: QR.

This paper investigates the technical efficiency of selected manufacturing industries of Bangladesh using a stochastic frontier production function approach suggested by Battese and Coelli (1992) applied to panel data. A feasible Cobb-Douglas stochastic frontier production function, which has time-varying technical inefficiency effects, was estimated. Two alternative distributions were used to model the random inefficiency term: a truncated normal distribution and a half-normal distribution. The estimated average technical efficiency for four groups of industries of Bangladesh over the reference period was 40.22% of potential output for the truncated normal distribution, whereas it was 55.57% of potential output for the half-normal distribution.
KEYWORDS: Stochastic frontier, Production function, Technical efficiency.
JEL: N/A.

This study, which is among the first in Pakistan to value recreational benefits, estimates the benefits of the Margalla Hills National Park near Islamabad. The study examines how much park visitors are willing to pay to visit the park. Annual benefits from the park are considerable—the total annual consumer surplus or economic benefit obtained from recreation in the park is approximately Rs. 23 million (US $ 0.4 million). Various factors influence the value visitors obtain from the park — these include travel cost, household income, and the quality of the park. Improvements in the quality of the park are estimated to increase recreational benefits by 39%. The study recommends that a park entrance fee of Rs. 20 per person be introduced, which could be utilized for park management. This would generate nearly Rs. 11 million in revenues annually, a sizable amount of money that represents about 4% of the annual budget allocated to the environment sector in Pakistan.
KEYWORDS: Environmental valuation, willingness to pay, total recreational value, consumer surplus, environmental resources, national parks, Pakistan.
JEL: N/A.