In an underdeveloped country, the state regulates not only the short- term performance of the economy but also its path of development. Such an overwhelming role of the state derives its justification from the very nature of underdevelopment itself. Economics and economists are usually concerned with policy, with a view to determining as to what policies are appropriate in a given economic situation to attain policy objectives such as economic growth, full employment, price stability, redistribution of income and wealth. But adopted policies are often not the policies that economists recommend as the best or even the second best. It is generally observed that vested interests and pressure groups compete for a greater share in the resources and only those policies have to be put into practice in a society which are adopted by all or a significant majority. The basis of decision-making is not economic factors alone and the influence of non-economic factors has been found more important in terms of compromising the interest of transparency as well as the system in almost all developing countries as against the developed countries1. Pakistan is no exception.
KEYWORDS: Pakistan, economy, political economy, fiscal policy making, theoretical framework.
JEL: N/A.

Diarrheal disease poses mortality and morbidity risks to infants and young children. Based on losses in terms of disability-adjusted life years, the World Development Report (1993) estimates that diarrheal disease is the third most burdensome illness among children in the 1 to 5 years age bracket. Using 1990 data, Murray and Lopez (1994) estimated that about 3 million children die every year due to diarrheal disease. Severity of diarrheal illness and alternative interventions are necessary inputs into the government’s decision-making. However, there is currently much uncertainty about the most appropriate policies in the context of low-income environments such as Pakistan. The debate could be described in terms of efficacy of economic/behavioural or environment/infrastructure. In this study, we explore the socioeconomic and environment determinants of diarrheal disease for children in Paksitan. The diarrheal determinants equation was estimated by logistic techniques. Diarrheal illness jointly with defensive behaviour was estimated from the reduced form to fully capture the relationship between defensive actions and illness. Such an endeavour will provide decision makers and policy analysts information to formulate policy design for the necessary interventions and respective investment plans for the alleviation of dairrheal disease among children, depending upon the relative contribution of socioeconomic and enviromental factors. For the specific case of Pakistan, socioeconomic development strategies do not necessarily gaurantee lowering the incidence of diarrhea, particularly among children below five years of age, unless supported by environmental interventions.
KEYWORDS: Pakistan, Diarrheal disease, policy design, solution, household behaviour, sanitation.
JEL: N/A.

The study analyses the degree of integration of Pakistan’s economy in global trade and financial flows. Pakistan’s integration into the global economy gained momentum in the late 1980s and early 1990s when it adopted more open and liberal policies as part of stabilisation and structural adjustment programmes negotiated with the IMF and World Bank. The paper presents an overview of Pakistan’s economy in the before and after period, it will specifically examine the trade performance from the 1980s onwards to see the progress made towards the integration of the Pakistani economy into the world economy. It will look into the opportunities that Pakistan is likely to gain in a more globalised world, with special focus on the textile and clothing sector and the potential growth in this sector after the abolition of the Multi Fibre Arrangement (MFA) in 2005. New challenges that may emerge in a more open trading environment will also be discussed.
KEYWORDS: Pakistan, globalisation, Mutual Fibre Agreement, MFA, integration, Pakistani economy.
JEL: N/A.

During the last two decades the role of international trade and flow of foreign capital have received considerable attention in the literature. Various studies have examined the impact of export instability and capital instability on economic growth in less developed countries.1 Empirical evidence supports the hypothesis of a deleterious impact of export instability on economic growth. However, some studies also indicated that the relationship was unstable but positive with economic growth.2 Yet there are no systematic empirical investigations into the implied links between export diversification and long-term economic growth, particularly in the case of South Asian countries. The major concern regarding export instability is that it retards economic growth. The theoretical rationale for the same is that export instability creates uncertainty in the supply of foreign exchange earnings, discourages capital formation and hence hampers economic growth.3 Another notion is that capital instability affects economic growth more significantly than that of exports instability.4 When a country uses other sources to finance development than export earnings, it leads to forced savings and foreign aid for funding investment projects, and then the speed and volume of capital formation determines economic growth, not the instability of export earnings. Thus, if there is instability in mobilising capital itself, it will be pernicious to output growth. As a result, it will affect economic growth more than export earning instability.
KEYWORDS: Capital instability, export instability, South Asia, international trade.
JEL: N/A.

A high quality teaching staff is the cornerstone of a successful education system. Daily interaction between teachers and students is at the center of the educational process. Attracting and retaining high quality teachers is thus a primary necessity for a strong education system. One step in developing a high quality faculty is to understand the factors associated with teaching quality and retention. One of these factors is job satisfaction. Very often, it is not merely satisfaction with the job, but with the career in general, that is important. With teachers, satisfaction with their careers may have strong implications for student learning. Specifically, a teacher’s satisfaction with his or her career may influence the quality and stability of instruction given to the students. Some researchers argue that teachers who do not feel supported in their work may be less motivated to do their best work in the class- room (Ostroff, 1992; & Ashton & Web, 1986). This would ultimately have an adverse impact on student achievement. In addition, highly satisfied teachers are less likely to leave the teaching profession altogether than those who are dissatisfied with many areas of their work life (Choy et al., 1993). Such departures disrupt the education system and result in the shift of valuable educational resources away from actual instruction towards costly staff replacement efforts. It is not necessary to be a management expert or an economist to understand that if the education managers are spending thousands of rupees and hours of their time to replace teachers who have left, preventing the brain drain in the first place might have saved some of those resources. Because faculty are both the largest cost and the largest human capital resource of an education system, understanding factors that contribute to teacher satisfaction (or dissatisfaction) is essential to improving the information base needed to support a successful educational system.
KEYWORDS: Pakistan, Lahore, education, private sector, higher education, university, college.
JEL: N/A.

This paper develops a multivariate model to test the causality between exports and investment and economic growth in Pakistan. Most of the previous studies in this area have not paid any attention to stationarity and co-integration issues. The underlying series are tested and it was found that the series are non-stationary in their levels and not co-integrated. The Hsiao’s version of the Granger Causality method is used, the order in which the variables are entered into the model is also considered by using (SG) criterion, which is very important in the multivariate frame work and it improves the robustness of the causality results. The results show that there exists a strong bi-directional causality between exports growth and investment growth to GDP growth. It was also found that exports growth causes imports growth, investment growth causes exports growth, and imports growth causes GDP growth and investment growth, but not the opposite. These findings support the fact that both exports and investment are considered as an engine of growth in Pakistan. The causal inferences are fairly stable over the sample period.
KEYWORDS: Pakistan, trade, investment, neo-classical, economic growth, national income, domestic output.
JEL: N/A.

The paper analyses the income patterns of women workers employed in the urban manufacturing sector of Pakistan. It examines the wage differentials across regions, manufacturing sectors and industrial categories including large scale factories, small-scale enterprises and home based work. The central conclusion is that wages of women workers across sectors and industry size vary because of differences in the capital-labour ratio and hence labour productivity. The paper determines the proportion of women earning above and below the legally mandated minimum wage, which differs significantly across formal and informal industries. Finally, the earnings of workers have been examined in the context of human capital accumulation.
KEYWORDS: Pakistan, manufacturing sector, woman workers, gender, income, employment.
JEL: N/A.

A healthy financial sector is an essential ingredient for a strong and prosperous economy as it performs the important functions of mobilising and allocating savings to meet the funding requirements of business and industry. This in turn enables the commercial and industrial base to expand leading to higher economic activity with increased levels of output and employment. The above stated roles are performed to perfection in the developed countries where a vast web of financial institutions and financial instruments exist to channelise savings into investments. Moreover, the developed financial markets have a very effective distributive system whereby the investors reap the benefits of their investments according to set distributive rules. As against this developing economies lack an efficient financial system. This has invited many cross country and time series studies to gauge the level of financial development in the developed and developing economies.
KEYWORDS: Pakistan, financial development, stock market, development, financial institutions, distributive rules.
JEL: N/A.

Stiglitz Joseph E, Globalization and its Discontents, published by Allen Lane, printed by Penguin Press, 2002, London, ISBN 0-713-99664-1. Price $ 16.99 pp 282 Joseph Stiglitz in this book, spearheads the much needed and timely attack on the international organisations - the IMF, the World Bank and the WTO - as well as the ‘Western’ industrially developed nations, especially the USA. This attack is not new. During the Cold War era - the Communist Block countries led by the USSR, liberals, socialists and communists around the world - levied allegations and accused these very organisations and countries in helping the West to win their war against Socialism and trying to keep the developing countries under developed. Also the opposition political parties, economists and thinkers, as well as the governments in developing or Third World countries have long accused the IMF, the World Bank and the USA of playing ‘foul’ when negotiating trade, financial and other agreements with these countries. All of them have accused these organisations of harsh conditionality as well as using ‘arm-bending’ tactics, forcing poorer nations to remain poor in the wake of exploiting their natural and human resources.
KEYWORDS: Book review, Globalization, Third World, IMF, World Bank, alternatives.
JEL: N/A.

In this paper scope economies for a sample of 387 farms in the Punjab province of Pakistan were estimated using nonparametric techniques and sources of economies of scope were determined by using econometric techniques. The result indicated that diversified farming in crop, livestock and custom hiring enterprises results in cost savings of 17.81% for all enterprises, 17.36% in the crop sector, 15.84% in the livestock sector and 1.90% for custom hiring. Econometric results indicate that overall economies of scope are inversely related to farm size, positively to location of farms nearer to the head reaches of canals and positively to the amount of capital used on a farm. The existence of Scope economies in Pakistan agriculture implies that production functions in agriculture are interdependent and the effects of Government policy of setting support prices of individual crops may affect resource allocation with respect to other crops on the same farms.
KEYWORDS: Pakistan, economies of scope, cost savings, joint production, economies of scope, farming, farm machinery services.
JEL: N/A.