This paper applies the technique of Granger Causality to determine the relationship between total government expenditures and total tax revenue using annual revised estimates. The analysis discovers a firm unidirectional effect from expenditure to revenue suggesting the preference of controlling the spending decisions to reduce the tax revenue-expenditure deficit.
KEYWORDS: Pakistan, Granger Causality, estimates,  tax revenue-expenditure deficit.

JEL: N/A.

Pakistan’s youth1 consists one-fifth (25 million) of its population and is one of the most valuable resources for its national growth and prosperity. An educated, skilled, and healthy youth, in other words a developed youth, would most certainly put Pakistan in the course of social and economic enrichment. Hence, it is imperative to determine where Pakistan’s youth stands in terms of development characteristics and indicators. The present study is based on a national survey “Pakistan’s Youth: Transition to Adulthood: Education, Work and Marriage” undertaken in all four provinces by the Population Council in 2001-02, with a sample size of 8,074 youth and 6,812 households in 252 communities. The survey used three comprehensive questionnaires with various modules covering education, work, marriage, fertility, and living conditions of youth, their households and their communities. The survey also covered gender attitudes, norms, mobility, and safe places. The present paper has used the data from the above-mentioned study to work out “Youth Development Index” (YDI). The YDI is a simple summary measurement, as other development indexes, of four dimensions of the youth development concept: educational attainment, employment, recreation and health seeking behaviour. The index has been analysed with other independent variables to ascertain the links of various agents and determinants affecting the development of youth in Pakistan. Then a regression model has been used to finally ascertain the factors that are most significant in a young person’s life.
KEYWORDS: Pakistan, population, youth, living conditions, youth development index, YDI.

JEL: Y - Miscellaneous Categories.

In a democracy there is scarcely any public question of greater importance than the standard of living of the common people. It is essential to know the actual level of this standard of living, and whether it is improving or deteriorating. There can be two types of standards of living. One is the standard of living of the society as a whole, and the other is the standard of a group within the society. It is perfectly possible for the standard of the society as a whole to be improving, while that of one or more groups within the society is declining. Moreover, if the distribution of economic power in the society is very unequal, it may happen that the group, the standard of which is declining may constitute a very large proportion, even a majority, of the total population. Our aim is to explore that standard of living of the average household (the wage earner), taking into account the following factors. First, indices of price levels are almost always based on the prices of articles most of which do not enter directly into the budget of the wage-earner’s family. The increase in prices in recent years has affected different classes of commodities very differently, and that the commodities, the prices of which have fallen rapidly are those which belong to the category of luxuries, while those articles, the prices of which have risen at a rate greater than the average, are the necessities of life, which constitute the major part of the workingman’s expenditure. Second, an index of wage levels is likely to be meaningless because of the extreme difficulty in arriving at anything like an average of wages.
KEYWORDS: Pakistan, standard of living.

JEL: N/A.

The target set in the National Policy on Education (1998-2010) for primary level enrolment is 90% of the children of age group of 5-9. This again was an achievable target, provided the available resources were efficiently used and programme interventions were made in a timely fashion. But during the last five years, it has not been implemented effectively and efficiently due to rapid population growth, insufficient political will, a period of undemocratic governance, and poor management of scarce resources. Women and girls have been most affected by these negative factors. The national literacy rate for females is only 35%, compared to 59% for males, and in certain status the female literacy, enrolment and achievement rates are much lower. There are many issues related to low enrolment of females such as poverty and economic issues, inadequate school infrastructure, gender bias in content and teaching and learning processes and poorly qualified teachers. The analysis of the study indicates that the age of the child, parents’ schooling particularly the mother, income per capita of the household head and distance to school are relevant variables in explaining the probability of female enrolment at the primary school level.
KEYWORDS: National Policy on Education, Pakistan, resources, poverty,  school infrastructure, gender bias, household income.

JEL: I - Health, Education, and Welfare.

Pro-Poor Growth and Governance in South Asia: Decentralization and Participatory Development, Edited by Poona Wignaraja and Susil Sirivardana, Published by SAGE Publications, New Delhi/ Thousand Oaks/ London, 2004; ISBN: 81-7829-257-0 (India – Hb) pps 459. In the Forward of this book, Gowher Rizvi states that the present volume makes its particular contribution in recognising that the governance agenda, with an emphasis on participatory development, can be combined with systematic decentralisation of power and resources to the grassroots in order to lay the basis for sustained poverty reduction. The key to this process is community mobilisation through social movements and nongovernmental development organisations that can catalyse changes in the conditions of the poor. He goes on to say, "Decentralization without social mobilization creates scope for vested local interests to monopolize power and resources to their advantage". Also, Rizvi underlines the fact that social movements and organisations representing the poor can challenge the monopolisation of power and resources by officials and politically dominant groups and affect lasting social change and devolution of resources in a manner that is both democratic and reduces poverty.
KEYWORDS: Book review, poor, pro-poor, framework, governance, South Asia, India.

JEL: E - Macroeconomics and Monetary Economics, F - International Economics, G - Financial Economics, H - Public Economics, I - Health, Education, and Welfare, J - Labor and Demographic Economics.

Nurul Islam, Exploration in Development Issues, Selected Articles of Nurul Islam, International Food Policy Research Institute, Washington DC, Ashgate Publishing Limited, Hants, England and Ashgate Publishing Company, Burlington, USA, 2003, ISBN 0 7546 15952, pp 568, Price not mentioned. This collection of articles by a veritable stalwart in the field of economics, covers almost the entire spectrum of development issues ranging from Food Supply, Agriculture and the State, International Trade, Economic Assistance and Economic Policy. It is a book decidedly not for the uninitiated and to both comprehend and enjoy the work one has to have a certain devotion to the subject and perhaps even a modicum of passion for the same.
KEYWORDS: Book review, development, Nurul Islam, development policy.

JEL: N/A.

For the provision of better social services, the health sector has been an important part of national strategy for reducing poverty and income disparities among different income groups in Pakistan. The distribution of access to and use of health among households has been a long-standing concern among policy makers. In this study, government health expenditure is treated as a fixed factor that influences household health behaviour, conditional on such factors as household income, education, and family size. The results of the study suggest that government health expenditure is associated with higher use of both preventive and curative health services by children. The results also indicate that increased government expenditure is actually associated with lower use of health services by the children of the poor, although this negative association is generally weak. However, if increased government spending improves health care opportunities for the nonpoor more than for the poor, the total effect of government spending on the health outcomes of the poor could be less even though they have a higher marginal product of health care inputs.
KEYWORDS: Pakistan, health demand, social services, households, government expenditure, health care opportunities.

JEL: N/A.

The authors gratefully acknowledge the technical support of Indian Institute of Finance and IIF Business School. We would such as to thank Prof. Jaurahi Ali (University Utara Malaysia, Malaysia), Prof. Manuel Jose The paper has been accepted and presented at the 7th ISINI International Conference on “Frontiers in Finance and Economics” at Ecole Supérieure de Commerce de Lille, France. The paper was presented in the session Chaired by Prof. Patrice Fontaine, President, AFFI, France on 22nd August 2003 (16:00 – 18:30).
KEYWORDS: ASEAN, economic issues, international norms and practices, Focus of Total Quality, Total Quality Management, FTE, TQM.

JEL: N/A.

This study examines the impact of monetary variables on the balance of payments of Pakistan. Besides, exogoneity of monetary variables is also tested. The empirical findings of the study show that balance of payments is a monetary phenomenon and monetary policy could be useful in improving the foreign sector. The studies so far have not confirmed this effect. The study also shows that an increase in price level and real income lead foreign reserves to inflow. However, an increase in the interest rate, money multiplier and domestic credit lead international reserves to outflow. Partial sterilisation was evident in the short run. But in the long run, it tends to be equal to minus one, indicating no sterilisation effect on the foreign reserve movements. The central implication derived from the study is that an increasing government budget deficit leads to excessive expansion in domestic credit creation and as a result a loss of foreign reserves. The null hypothesis for exogoneity of price level, real income, interest rate and inflation rate to foreign reserves is accepted. However, the null hypothesis for the exogoneity of domestic credit is rejected for the general model but accepted for the linear model. It appears that monetary policy is effective in Pakistan
KEYWORDS: Pakistan, monetary variables, exogoneity, domestic credit, monetary policy, balance of payments, adjustments.

JEL: N/A.

Child labour has emerged as a serious, widespread and growing problem in many parts of the world. Asia has a large number of children employed as child labourers. Child Labour Survey 1996 reports that there are 3.3 million children working between the ages of 5 and 14 years in Pakistan. Developed countries have linked trade with child labour through the Harkin Bill and the Uruguay Round of Multilateral Trade Agreement (1994), which banned the market manufactured or mined goods produced in whole or in part by children under 15 years of age. Pakistan is also facing restrictions on some of its exports due to allegations of child labour. However, Pakistan has enacted the Employment of Children Act of 1991, which has banned employment of children below the age of 14 years.
KEYWORDS: Child labour, socio-economic conditions, labour force survey, Pakistan.

JEL: N/A.

The purpose of this paper is to analyse the decline in private investment and formulate a comprehensive strategy to overcome this problem, which is the main cause of deceleration in the growth momentum of Pakistan’s economy. Due to lack of investor confidence, private investment has reached its lowest point in the recent economic history of the private sector led growth phase (1978 to 2002) in Pakistan. This paper argues that economic as well as non-economic factors are responsible for this declining investment. Economic policies are formulated in such a manner that the short-term objectives of lowering the fiscal and trade deficits were to some extent achieved but overall economic performance and investment were ignored. In order to control external trade deficits, a policy of devaluation increased the cost of production through an increase in prices of imported raw material especially of plant and machinery. Higher real interest rates due to excessive public borrowing that were due to the failure in reducing fiscal deficits has resulted in financial crowding out and has corroded the savings that might be used to finance private investment. The unexplained part of private investment that is not determined by economic factors can be attributed to non-economic factors, which include internal and external shocks. These shocks start from the sanctions which were imposed after the nuclear blast. Events following that initial shock like the freezing of foreign currency accounts, the military coup, the harassment of the partially successful accountability drive of the military government, the 9/11 incident, the Afghan war and tensions on the Pak-India border have complemented the shock. A comprehensive programme is required to boost private investment and for the restoration of investor confidence. Therefore, an economic package is recommended in this paper that consists of incentives that relax the supply side constraints by reducing cost of production as well as demand-enhancing efforts. It is the best time to introduce a strategy to increase investment activities in the * Kalim Hyder is an Economist at Social Policy and Development Centre, Karachi, Pakistan. Qazi Masood Ahmed is an Associate Professor at the Institute of Business Administration (IBA), Karachi, Pakistan and is a Member of the Advisory Board at the Social Policy and Development Centre, Karachi, Pakistan.
KEYWORDS: Pakistan, investment, economic package, recommendations, sanctions, determinants.

JEL: N/A.

In recent years, there has been a rapidly expanding literature on child labour that provides empirical evidence on its nature and determinants. The previous literature on Pakistani child labour includes Khan (1982), Hussain (1985), Ahmed (1991), Khan and Ali (1991) and Weiner and Noman (1995), and recently Addision, et. al. (1997), Burki and Fasih (1998), Ray (2000a), Ray (2000b), Ray (2001) and Ali and Khan (2003). Some studies (see for instance Khan 1982; Ahmed 1991) discuss mainly the qualitative features of child labour. The recent literature has focused attention on the quantitative aspect, taking advantage of the increasing availability of good quality data on child labour. Within the empirical literature on child labour, there has been a shift in emphasis from more quantification to an econometric analysis of its determinants. As child labour is seen to result from the same variables influencing child schooling but in inverse, so school enrolment is strongly correlated with child labour. Child labour commitments are major reasons for children’s non-participation in school. So the literature has moved to incorporate child schooling and child labour and thus analyses schooling and child labour jointly (see for instance, Degraff et. al. 1993; Mahmood et. al. 1994). The present study is one of this category.
KEYWORDS: Pakistan, child labour, household, school, determinants, education, poverty.

JEL: N/A.

The basis for asset pricing in financial markets was provided by Bachelier (1900) in his magnificent dissertation “Théorie de la Spéculation” submitted at Sorbonne (Université de Paris). Although from today’s perspective, the mathematics and economics he applied were flawed, yet the great genius, Markowitz, declares this early work as an inspiration for his own classical paper of “Portfolio Selection”. The risk return relationship has always been a debatable issue in financial theory. “Portfolio Selection” came up with a meaningful measure of quantifying the risk associated with investment; the variance of returns. The equilibrium model of Capital Asset Pricing (CAPM) (Sharpe 1964, Lintner 1965, Mossin 1966) further classified the risk as relevant and irrelevant risk. According to the CAPM, the relevant risk is the systematic risk or non diversifiable risk. The systematic risk is the volatility of returns of a particular stock to the market returns.
KEYWORDS: Risk analysis, comparative, financial markets, banking sector, United States, South-East Asia, Western Europe.

JEL: N/A.

Khadija Haq, (Edited) The South Asian Challenge, Oxford University Press 2002, Second impression: OUP Pakistan 2003, pp 333. The South Asian Challenge is a compilation of nine essays on South Asia by eminent economists and social science researchers. The idea was initiated by Dr. Mahbubul Haq who had set up a South Asia Commission to analyse and identify the challenges facing the region, in order to publish a report on its recurrent issues of poverty and economic crises, and to offer new directions for meaningful change. Before the Commission could draft an outline of the Report, Dr. Mahbubul Haq passed away. Subsequently it was decided by the Human Development Centre in Islamabad to publish this collection of essays as a tribute to his memory and his quest for a new world.
KEYWORDS: Book review, South Asia, South Asia Commission.

JEL: N/A.

It is becoming obvious that all large multi-ethnic societies, after attaining the beatific status of development, lose interest in removing poverty. The undying myth of development, that it will remove all poverty forever from all comers of the world, now lies shattered. It comes somewhat as a surprise that so many people believed it for so many years with a sense of naivety and innocence. Even affluent economies such as the US have not been able to rid their societies entirely of the plague of poverty from within their borders. That said, it appears that somebody somewhere means business. The Centre for Research on Poverty Reduction and Income Distribution (CRPRID), an autonomous body with its own board of directors, has published its rather glossy Human Condition Report 2003, the second in its series. The main intent of the Report, as stated in the Forward, is to guide and influence policy makers and be an autonomous tool for monitoring and evaluating the progress made towards achieving the targets laid out in the Poverty Reduction Strategy of Pakistan as well as the Millenium Development Goals.
KEYWORDS: Book review, UN, united nations, Human Condition report.

JEL: N/A.

This paper examines the temporal interdependence between gross domestic product and health expenditure per capita for Pakistan in an augmented Solow growth model suggested by Mankiw, Romer and Weil (1992) for the period of 1973-2001. This paper is an extension of the MRW model by incorporating health capital proxied by health expenditure to the augmented Solow model. Moreover, an openness variable is also included in the model in order to capture the effect of technological changes on growth. The paper employs co-integration, ECM methodology and several diagnostic and specification tests. The empirical findings show a significant and positive relationship between GDP and Health Expenditure, both in the long- and short-run.
KEYWORDS: Pakistan, GDP, health expenditure, income, spending, modelling.

JEL: N/A.

Pakistan as a multilingual country faces numerous problems in language planning in higher education. As educational standards in higher education decline, there are concerns about student difficulties in English and lack of required materials in Urdu, The research reported here is a nation wide survey of 2136 students, 121 Subject and English teachers of public and private sector colleges and universities from all the capital cities of Pakistan, as well as 63 parents who responded to the questionnaire. The survey examines the learner's background, attitudes to languages and motivational orientation, availability and quality of materials in different mediums, learner difficulties in English, provision of English support programmes, and language outcomes. Results point to the significant differences between private sector and public sector students in terms of socio-economic status, and other variables. The study recommends that public sector students be provided more state support by adopting an 'English for all policy', and strengthening the English programmes through a revision of courses, development of materials, and training of teachers so as to meet the students' learning and target needs.
KEYWORDS: Pakistan, language, higher education, access, English language teaching, Urdu, educationists.

JEL: N/A.

In the traditional sense, governments have predominantly funded social sectors. But in the face of limited financial resources and other constraints, governments have found it easier to formulate policies rather than to implement them. Thus the private sector has begun to play an increasingly important role both in the financing and in the provision of social services. However, neither sector can be relied upon completely to deliver comprehensive results independently. It seems apparent, therefore, that a public private mix of financing and provision will be the most sensible approach to achieve economic efficiency and equity in the provision of social services. Governance structures and degrees of progress towards governance goals vary widely and appear to be systematically related to the organisation, composition, location, and activity of each partnership. This paper highlights how a successful partnership can be evolved in the presence of synergy between partners; strong leadership; shared objectives; success in coalition building; appropriate change in governance structure; a proper legal framework; and building in of safeguards and outside patronage. It examines successful interventions of the public private partnership in the health sector between a private medical college in Abbottabad and a public hospital in Mansehra, both within the province of NWFP, Pakistan. This paper has seven sections: An overview; The Partners; The Process of Building a Partnership; The Model of the Partnership; Workings of the Partnership; Evaluation of the Partnership and finally, some conclusions.
KEYWORDS: Pakistan, health sector, PPP, nationalised institutions, private sector participation.

JEL: N/A.

The health sector in Pakistan is replete with multifarious problems. It is not responding to the needs of the masses in a way that would provide high-quality care to all in need. Despite the announcements our governments make about health care each year, it limits people’s life chances. That international financial institutions claim that state subsidies to health care create undesirable ‘ market distortions’ that benefit the rich is another contradiction faced by the health sector. In the name of greater equity and efficiency, they argue that users of primary health care services should pay user fees, even if they are from the impoverished class. These institutions have provided structural adjustment loans to remove short-term problems. This lending has not contributed to the improvement of health facilities. The state has significantly withdrawn itself from health matters: it only spent 0.7 % of GDP in 2000. According to the 1995-96 PIHS the private sector controls 80% of the health care provisions in Pakistan. Ongoing privatisation of hospitals is likely to strengthen the private sector further. In sum, the neo liberal medicine is not having the desired effect on the health status of the population
KEYWORDS: Pakistan, healthcare, adjustment, overall expenditure, health expenditures, household incomes.

JEL: N/A.

This paper examines the trends in marginal rates of return to various levels of education for paid employees and how rewards for additional investments at a particular level of education has changed over time. Although the findings are indicative of increasing returns at different educational levels (excluding Graduation) over the years, we find no evidence that additional investments at successive levels bring consistently higher returns as highlighted by certain previous studies in Pakistan. The changes in returns at the primary and pre secondary levels have been found to be miniscule, taking the time span into consideration. The paper has also examined the returns to education between males and females and across urban and rural areas in view of the large disparities that exist by gender and region. Our findings indicate that although the wage structure may be biased in favour of males, additional investments made in female education accrue higher returns in comparison to males. Moreover, higher education is better rewarded in the urban areas whereas medium of instruction is a significant indicator of earning differentials in the labour market.
KEYWORDS: Pakistan, education, labour market, investment, schools, educational profile.

JEL: N/A.