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.

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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.

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The twin problems of low school enrolment and high gender disparity have widely been addressed in the literature. In this paper we investigate the determinants of schooling of children overall and separately for boys and girls using primary data of rural households. The contribution of this paper lies in integrating the child schooling decisions of the households by rigorous econometric analysis. The empirical estimates based on the model point to certain findings. The first enrolment of children in schools is delayed and it is more severe for girls. There exists gender disparity in children’s schooling. The head of the household education significantly increases the probability of overall children’s schooling. It has a greater effect on boy’s schooling and does not matter in girl’s schooling. The head of household income has a slight impact on overall children’s enrolment but for girls it is significantly higher than boys. Parental education also significantly increases the probability of child’s schooling. Mother’s education exerts a much stronger effect of increasing school enrolment. The estimates of the gender specific determinants suggest that maternal education increases the likelihood of girl’s schooling enrolment than of boys. Higher per capita income of households and ownership of assets by households increases the probability of school attendance. Family size and household composition also plays a significant role. Children from large families are more likely to go to school but children from households with a large number of children (up to 15 years) are less likely to go to school. Similarly, children from households with larger number of children (in the age group of 5-15) are less likely to go to school. It is sibling size (in both age groups) which hinders the schooling of children, not the family size.
KEYWORDS: Pakistan, gender disparity, education, enrolment, human resources, agricultural productivity, poverty alleviation.

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Based on the Pakistan Integrated Household Survey (PIHS) 1998-99 the paper highlights the factors that influence the decision of married women in their participation/economic activities in rural Pakistan. Employing the probit model on 9427 observations it is found that married women in Sindh and Punjab are more likely to engage in economic activities than their counterparts in Balochistan and NWFP. Women’s age, family size and husbands working in agriculture have a significant positive effect on the involvement of rural women in economic activities. Household annual income, nuclear family system, number of children and husbands' literacy level and age have a strong negative effect. No significant relationships of education, migration status and the female being head of the household have been found.
KEYWORDS: Pakistan, rural, employment, gender, women, household, unemployment.

JEL: N/A.

Gordon de Brouwer (ed)., Financial Markets and Policies in East Asia, London: Routledge, 2002, ISBN 0-415-27388-9 When Thailand was forced to devalue its currency in July 1997, no one predicted the financial turmoil that would follow. Over the next two years, financial crises took a heavy toll on the economies of Indonesia, South Korea, Malaysia, the Philippines, Hong Kong, Russia and Brazil. Indeed, few developing countries emerged unscathed. Thus, it is hardly surprising that no event of the past fifty years has generated more calls for a reexamination of the institutions, structures and policies aimed at crisis prevention and resolution than the Asian financial crisis of 1997. This excellent volume moves beyond providing the now familiar story of the origins and impact of the crisis. Rather, the fourteen wellorganised chapters competently address three critically interrelated issues. Chapters 2 to 4 provide a concise discussion about the changing patterns of finance in East Asia. Chapters 5 to 7 document and assess the financial restructuring and liberalisation with particular focus on the five worst affected economies, including China. Chapters 8 to14 provide wide-ranging analyses of financial policies in the region, with special emphasis on monetary and exchange rate policy, including how they are related.
KEYWORDS: Book review, Asian finance markets, Asian financial crisis, 1997.

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M. Ashraf Janjua, History of the Slate Bank of Pakistan, Volume 111 (1977-88), Karachi, State Bank of Pakistan, 2003, pp. 790, Price: Rs.750 (US$30). If ever a history of development of institutions in Pakistan is written, the State Bank of Pakistan will occupy a central place in it. Of course the State Bank has a pivotal position in economic policy formulation and implementation in the country. Furthermore, the institution was founded and its basic processes laid down by men of integrity and vision and despite attempts at some stages of its evolution to denude and make it serve lesser purposes, the State Bank has managed to retain the dynamism and professionalism of its original wisdom. It is also worthwhile to note that the State Bank is probably the only institution to compile a well documented and comprehensive study of its evolution and performance "in the context of the changing political, institutional and economic milieu", as the State Bank governor points out in the foreword of the volume under review. The future historian of institutional development in Pakistan could not have asked for more from the premier institution of the country.
KEYWORDS: Book review, State Bank of Pakistan, financial sector, Pakistan, ministry, government, state.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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This paper identifies important economic and social determinants of child labour, taking grassroots level data on the working children of Dera Ismail Khan City of Pakistan. Working conditions and their impact on child health are also identified. The variables like fertility, adult literacy and schooling system etc., are empirically examined. The analysis shows that poverty is the main cause of child labour in the city while other factors such as fertility, family size, adult illiteracy and schooling system also contribute to the supply of child labour. The situation is comparatively less serious for female child labour, showing the importance of traditional factors, which restrict females from working outside their homes. The social system of the area does not allow female children to work outside the home. Therefore, female child labour is not wide spread in the city, which is contradictory to the findings of the national survey on child labour. Thus, national surveys do not accurately represent regional child labour by sex. The present study has been carried out in an area which is backward and where child labour is wide spread. Moreover, large family size and poor schooling are also keeping children away from school since parents think that poor quality education does not add to the children’s ability to improve their productivity. Additionally, working conditions for the children were analysed. The children work for the longest hours and are the worst paid of all labourers in the city. Child labour results indicated that working conditions were poor and dangerous and harmed children by ruining their eyesight, bone deformations, chronic lung diseases, and sometimes resulted in the death of children. In addition, the attitude of the bosses was also harsh towards young child labourers. These outcomes call for an effective policy to eliminate poverty. The policy requires spreading literacy and introducing effective and quality education that can lead to skill training, which in turn improves the productivity of children. Poor parents’ income may also be compensated to successfully eliminate child labour. Population control programmes need to be made more effective to control family size. Such programmes may be introduced through schools and adult literacy programmes.
KEYWORDS: Pakistan, child labour, determinants, household, primary health, working conditions.

JEL: N/A.

Primary school enrollment rates in Pakistan are lower than in other countries at the same level of economic development. The proportion of children reaching grade 5 is about half that in Sri Lanka and China and three-quarter that in India. Nationally, the gross primary school ratio is 74, and 101 for boys and 45 for girls. According to the National Education Policy 1992-2002, the target of literacy rate was set at 70 percent by the year 2002, which was achievable besides other measures, by inviting the private sector into education. Now, overall, private education accounts for about 10-12 percent of gross enrollments. The government of Pakistan has established a goal of universal primary enrollment by the year 2006. In the present study the quality characteristics of private schooling are discussed, i.e. qualitative aspects of schools, physical infrastructure of schools, teachers’ qualification and salaries, and fee, dropout rate, and repletion rate of the students, etc.
KEYWORDS: Pakistan, Primary school enrollment, education, economic development, privately run institutions, government, state.

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The financial sector in Pakistan has evolved over the years in response to the growth of the economy and the government’s plans for the growth and development of the country. The sector as on 31 March 2002 comprises the State Bank of Pakistan, 4 state-owned banks, 2 newly privatised banks, 4 specialised banks, 14 private scheduled banks, about 30 leasing companies, 45 Modarabas, 14 investment banks, 3 stock exchanges, 58 insurance companies, and Government Saving Centers. Commercial banks were nationalised in 1974 and are now in the process of being privatised. Two nationalised commercial banks have been privatised since 1990: Muslim Commercial Bank was sold by auction/ negotiation, while Allied Bank was sold to its employees .The market share of the nationalised commercial banks has been declining with the introduction of new private banks.
KEYWORDS: Pakistan, commercial banks, risk analysis, foreign banks, domestic banks, growth, gross revenue.

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