This paper investigates wage differentials between workers in subcontracting and non-subcontracting firms, using data from a recent survey of small manufacturing firms in Gujranwala, Pakistan. The paper finds that subcontracting workers receive a high wage premium and invokes efficiency wage arguments to explain this differential. The paper argues that due to a client/vendor monitoring problem it is optimal for subcontracting firms to pay higher than the market clearing wages. The use of Heckman's two stage procedure to test for sample selection bias fails to give such evidence. A decomposition of the wage differentials indicates that endowment differentials partly explain higher wages for subcontracting workers while the bulk of this wage gap is explained by differential returns to workers' attributes.
KEYWORDS: Small manufacturing firms, Pakistan, allocation of resources, adjustment policies, competitive equilibrium model, cumulative wage growth.
JEL: N/A.

In the current era, increased attention is being paid to protect the environment in developing countries. The concern stems primarily from recent advances in information concerning health problems associated with pollution. The extent of the deep-seated dangers present has motivated detailed studies and consequent pollution abatement programmes to be adopted by several countries. However, the evaluation of projects and policy reform for environmental effects in Pakistan has been rare. The task thus is posed to provide credible estimates of the benefits that can be provided by pollution abatement, and the corresponding costs.
KEYWORDS: Pakistan, automobile pollution, air pollution, environmental costs, air pollutants, gasoline, petrol, emissions, health cost estimates.
JEL: N/A.

The debate over the relationship of population and development is now more than 200 years old, starting with the treatise on population by Malthus, in 1798. The increase in population, ever since, has remained a matter of concern for economists and development planners. The most recent high point of the issue was witnessed at Cairo in September, 1994. The conference which was attended by more than 10,000 persons from all over the world ended with an agreement on the issues involved in the growth of population and the economy. The outcome was a Plan of Action for the next twenty years, which would concentrate on Reproductive Health in order to obtain, “a state of complete physical, mental and social wellbeing, and not merely the absence of disease or infirmity in all matters relating to the reproductive system and its functions and process”. This can be a turn-around in global efforts for human health and welfare, if properly implemented.
KEYWORDS: Population growth, plan of action, poverty, industrialization, development, sustainable development, social development, Pakistan.
JEL: N/A.

Higher Education (HE) in Pakistan presents a case of the "inverted pyramid". The need of the country is to eradicate illiteracy and yet on the eve of the new millenium it stands at a humble 45 per cent. Poverty in the country is on the rise. Given the constraint of the financial resources the downward spiral is evident and yet the masses at the grassroots level could greatly benefit from increased literacy skills. Equipping them with functional literacy skills would clearly improve their quality of life. Given the two opposing trends whereby the country needs to provide massive literacy skills to its populace and the infrastructure of education heavily biased in favour of HE, an innovative approach within the education system and its mode of delivery is needed. This paper focuses on one such possibility and proposes a model to develop a link between the two to place the benefits of HE at the doorstep of the populace where it is desperately needed.
KEYWORDS: Pakistan, higher education, human development indicators, HDIs, national development programmes, community development unit, CDU, BUNYAD Literacy Community Council, BLCC.
JEL: N/A.

In recent years, the sensitive issue of child labour has received world-wide attention and has become the focus of serious discussion in developing as well as developed countries. Any exact information on child labour is usually hard to come by as most of the children work in the unorganised informal sector, which is neither regulated by labour laws nor is monitored by any organisation. These working children are usually illiterate and start working at a very early age, are inexperienced and vulnerable, they usually work long hours in deplorable conditions, have no medical cover, go without sufficient and proper food and clothing, and get little rest and recreation. In this paper, an attempt has been made to analyse the major causes of female child labour in the city of Multan and certain measures and policies have been suggested which could help in bringing an end to this inhumane practice. Legislation against child labour is not an ideal solution in a country such as Pakistan. The child labour phenomena is not as simple as it appears and needs consideration in the context of the microeconomics of the family and population growth and macroeconomics of the social security structure of a country, unemployment, underemployment, opportunity cost and productivity of formal education. There are very few studies on child labour in Pakistan and on female child labour, hardly any study can be found. Data has been collected for 60 female child labourers, employed as maidservants, baby sitters and other household activities etc. Most of these female children work in the houses of educated and well off people who are usually against child labour. This exploitation of child labour cannot be stopped by child labour laws only. In this regard, other measures such as more facilities for education and vocational training are indispensable. A group of social volunteers comprising workers, employers, government officers, media experts, members of non-government organisations and educationists should make earnest and sincere efforts to achieve the objective of minimising child labour and improve their living conditions as much as possible.
KEYWORDS: Child labour, Pakistan, female child labour, legislation, unemployment, formal education, literature, education policy.
JEL: N/A.

The obvious fact of female under-representation in educational management across cultures and nations is mentioned in every relevant study. Interestingly this phenomenon transcends the dichotomies such as developed/under-developed, Eastern/Western, Muslim/non-Muslim, First/ Third World countries. Variations are more often due to situational differences. For example, the percentage of female representation in higher education management for the U.S., Britain and China as given by Lyn Davies is respectively 24, 13, and 26 per cent (1992-6; Also see Coleman: 1996), 20-30 per cent in Pakistan (Ibid:4). These statistics could be misleading for generalisation purposes if it is assumed that a higher percentage means more educated women or less gender discrimination. We know that a comparatively higher percentage of women managers in Pakistan is because of 'women only' institutions. In the contexts where management jobs are open to men and women, women are in extremely low numbers, and the situation is not very different in other countries.
KEYWORDS: female under-representation, female participation, sex-roles, management, Pakistan.
JEL: N/A.

International economic policy is now more under the sway of orthodox economics than it has ever been. The main international economic institutions, the IMF, the World Bank, the WTO, and the major developed economies are unremitting advocates of free trade and impose their views on the developing countries. And the developing countries, whose attempts at economic development through protection have mostly failed, are on the whole inclined to accept these views. Over the last twenty years economic policy in these countries has more and more come to be formulated by orthodox neo-classical economists, often described in the press as “reformers”, who advocate more reliance on markets and less protection against imports.
KEYWORDS: International trade, neo-classical theory, shortcomings, specialisation, models, Heckscher-Ohlin, Haberler, Bensusan-Butt, mechanised production.
JEL: N/A.

Similar to most countries, the objectives of the taxation system in Pakistan are not well-defined. Historically, the primary objective has been resource generation for the government. The taxation system has simultaneously addressed the secondary objectives of promoting area/sectorspecific economic activities, discouraging undesired imports/production, encouraging savings and investment. These objectives were met through a variety of tax concessions and exemptions, rebates and credits, differentiated tax rates and tariffs. The revenue shortfalls/leakages resulting from preferential tax treatment of the desired activities were offset through appropriate changes in various fiscal instruments, e.g. high tax rates and tariffs, regulatory duties, extended withholding and presumptive taxes, excise duties on services, and many more. These measures, in turn, complicated the taxation system and adversely affected the equity, neutrality and progressivity thereof.
KEYWORDS: Tax policy, preferential tax treatment, structural reforms, administration, federal revenue.
JEL: N/A.

Ishrat Hussain, a former Pakistani civil servant and currently a World Bank official, has been writing on Pakistan's economy for the national print media. Much like the professional economist that he is, his views reflect an objective approach to a vast range of economic issues. It was now time for him to correlate his analysis of individual problems and sectors to a macroeconomic framework and make some sense out of Pakistan's baffling styles of economic management. How could a compact economy with a rich resource endowment be reduced to the position of a basket case? Hussain's hypothesis: a small group of elites managed to "hijack the state" and "rig the market" for its own exclusive benefit. The "Elitist State" now controls both the private and public sector. No matter which way the economy turns ___ market mechanism or state control ___, the goodies will inevitably land, and are actually landing, in the hands of the controlling elites
KEYWORDS: Book review, elite, Pakistan, privatisation, nationalisation, illiberalism, market mechanisms.
JEL: N/A.

The development of rural areas is now becoming one of the major objectives of government policy in less developed countries. It has become part of policy simply because governments in developing countries are beginning to realise that to tackle poverty effectively, and to reduce the pressure on urban centres, income levels, as well as the quality of life in rural areas has to be made significantly attractive to prevent people from migrating to the relatively higher income urban areas. Rapid urbanisation in many developing countries has resulted in increased social stress which is reflected in high crime rates, and a substantial decline in social services such as education and health, water supply and sanitation, electricity and housing, etc. The developing countries in Africa, Asia and Latin America are afflicted with both problems - rural poverty/environmental degradation and a rapidly urbanising sector that is estimated to double every twelve to fifteen years.
KEYWORDS: Book review, rural development, urbanisation, rural poverty.
JEL: N/A.