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.

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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.

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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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The fad that different studies seeking to measure poverty in a given country often give differing results, although they apparently use the same method and same data source, has long disconcerted both experts in the field and the public in general. Such differences regarding poverty incidences reduce the credibility and technical reliability of these measurements, shed doubts on estimates of the level and evolution of poverty, and hinders inter-temporal comparisons. That is why it is important to foster greater consensus among researchers regarding the criteria and procedure to be used, with a view to progressing towards a common pattern, which will make the measurements more consistent and homogeneous, and guarantee their effective comparability. This policy paper provides a recommended strategy for estimating an absolute poverty line using household survey data of the years 1987-88, 1996-97 and 1998.
KEYWORDS: Poverty, income poverty, macro perspective, poverty incidence, Pakistan.

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Migration plays a pivotal role in the reallocation of human resources under changing demand and supply conditions. Migration takes place when an individual decides that it is preferable to move rather than to stay and where the difficulties of moving seem to be less than the expected rewards. In recent years there has been a trend of increasing migration rates. The United Nations (2000) estimates that about 140 million persons (roughly 2 per cent of the world’s population) reside in a country where they are not born.1 Usually migration takes place from the regions that are associated with poverty and insecurity towards regions which offer greater security of life, employment and basic social services. Poverty pushes people to migrate to urban areas-the outcome, the world’s urban population approaches 2.3 billion by 1990 with 61 per cent living in the metropolitan areas of developing countries and touches 66 per cent in 2000 (United Nations). Within the world Asia has about 15 of the largest cities of the world and most of them are growing at more than 5 per cent per annum. Increased rate of natural growth, immigration and rural-urban migration might be the causes of such a high rate of growth of urban population.
KEYWORDS: Pakistan, Punjab, internal migration, gender, male, employment, unemployment.

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When Carlos Saul Menem was elected Argentina’s president in May 1989, the economy was already under the punishing throes of hyperinflation. To salvage investor confidence and stabilise the economy, the government resorted to a desperate measure. In March 1991 the Congress passed the “convertibility law” establishing the convertibility of the austral (the Argentine currency since 1985) at a rate of 10,000 australes per U.S. dollar. In January 1992, the peso replaced the austral (1 peso for 10,000 australes). Under this arrangement (a form of a currency board system), outflows of foreign currency reserves had to be matched by reductions in the domestic monetary base. The domestic currency could be issued only in exchange for a specified foreign currency at a fixed rate. The convertibility plan allowed the use of either U.S. dollars or Argentine pesos in any transactions except wage and tax payments. Most importantly, the peso/dollar exchange rate was pegged at one to one with full convertibility between the two currencies. This meant that the public could go to the Argentine central bank and exchange a peso for a dollar, or vice-versa, at any time.
KEYWORDS: Review essay, IMF, Argentina, discretionary lending powers, fiscal policy, meltdown.

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The book consists of revised papers and commentary from the symposium "The Future of Development Economics" held in Dubrovnik in May 1999 and sponsored by the University of Zagreb and the World Bank. Nicholas Stem has written the forward to the book. In the Introduction: Ideas for Development, G. M. Meier notes that " Over the past Half-Century, we have witnessed an unprecedented effort by the international community to accelerate the development of poor countries. This effort has been based on evolution in thinking about economic development - its nature, its causes, and the choice of policies for improving the rate and quality of the development process. Although the development record exhibits many successes, there are also failures and disappointed expectations". He further points out "No formula exists for development. Aid alone cannot yield development".
KEYWORDS: Book review, development economics, general economic theory, governance, institutions, regulatory policies, next generation, growth.

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Haque Irfan ul Ed. Trade, Technology and International Competitiveness Economic Development Institute of the World Bank, Washington DC, 1995 pp 218. The book deals with the issue of international competitiveness and why developing countries need to look at this aspect of world trade in the context of their aspirations and limitations, keeping in mind the fact that the global economic system is becoming more and more unipolar and sophisticated. Haque’s book consists of papers by a number of well-known economists and policy anaylists, all of whom deal in detail with the present scenario of world trade and the lessons learnt from the past.
KEYWORDS: Book review, international competitiveness, technology, external environment, macro-economics, policy.

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This paper reviews the trends of two types of foreign capital inflows, namely foreign aid and foreign private investment, to Pakistan. Like other developing countries, the volume of foreign aid to Pakistan has been decreasing. Meanwhile foreign private investment to Pakistan has increased, though not as sharply as that to other developing Asian countries. The study finds that the impacts of foreign capital, aid and private investment on the economic performance of Pakistan have been insignificant. This paper suggests that these consequences are due to the inadequate development of domestic institutional structure, human capital, and indigenous entrepreneurship.
KEYWORDS: Pakistan, economic performance, capital, foreign capital, productivity, inflows, developing world, foreign aid, FDI.

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Income taxes treat interest either as cost or as income. It is a cost when borrowed funds are used to generate a taxable stream of income, justifying deductibility. When it is an accretion to income, interest is liable to taxation. Interest income, it may be pointed out, has been viewed as unearned income compared with earned, wage income right from the days of Adam Smith, furnishing the basis for higher taxation of the former. However, the cost and income concepts are not strictly adhered to. In the United States, the so-called tax expenditures have resulted from these departures, first, by allowing tax deductibility without interest being a cost of producing taxable income and, secondly, by exempting interest income from state-local securities despite accretion to taxable income. All these interest categories have interesting implications for efficiency, equity, investment pattern and corporate financial structure. The present paper seeks to spell out some of these in the context the United States insofar as there are lessons for the debate on riba.
KEYWORDS: Pakistan, tax, income tax, interest, tax expenditure, consumer debt, interest as income.

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One of the most key initiatives of the military government that assumed power in Pakistan in October 1999 is devolving power to the grassroots level.2 The elections for the lower three tiers, (Union, Tehsil and District) have taken place as has the elections for the pivotal post of the District Nazim (governor). Notwithstanding expressed reservations about the suspension of democracy, many civil society groups and donors, who had been advocating devolution or decentralisation in the past, hoped for the success of this initiative as one possible way for making effective the delivery of public service to the grassroots level. While others have undertaken benchmarking exercises to evaluate this initiative, it was thought that using theatre as a tool would be a unique method for complementing these other initiatives.
KEYWORDS: Pakistan, theatre, arts, grassroots, research tool.

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As societies grapple with incorporating the concepts of gender equality and gender sensitivity, female decision making is quickly losing its designation as a peripheral issue. Indeed the United Nations Division for the Advancement of Women in support of the Commission on the Status of Women has been exploring the question of women and decision making for some time. In 1997 it called upon governments to take into consideration diverse decision making styles and to enhance the images of women in political and public spheres [UN, (2000)]. Decision making in Pakistan, as in much of South Asia has been regarded as a predominantly male prerogative. Although some progress, albeit slowly, has been made in the emancipation and enhancement of women in all areas of society, in comparison with their male counterparts, women are largely neglected in economic, social, legal and political spheres. This can be ascertained by the fact that only 28% of women are present in the labour force in Pakistan in comparison with 42% in Bangladesh and 32% in India and an average of 33% for South Asia. (Haq, 2000). Female literacy in Pakistan still remains only 25%; representation in civil service remains a negligible 5.4% whereas female judges in 1999 were 1.5% of the total (Haq, 2000).
KEYWORDS: Pakistan, Punjab, female decision making, decision-making ability, poverty, household.

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There is a long list of studies related to distribution of income in Pakistan. Most of these have been confined to the calculation of various measures of inequalities. These studies include Khadija Haq (1964), Bergan (1967) Mehmood (1984), Ercelawn (1988), Ahmad and Ludlow (1969) etc. Apart from these there are other studies including Jeetun(1978), Chaudhry (1982), Cheema and Malik (1984) Kruijk and Leeuwen (1985), Kruijk (1986), Kemal (1994), Jaffery and Khattak (1995), Chaudhary (1995) etc. Jeetun (1978) in his paper concentrated on consequences of economic growth on the level of inequality whereas Chaudhary (1982) tried to find out the impact of the Green Revolution on income inequalities. Cheema and Malik (1984) tried to find out the effects of different income policies on the consumption and level of employment in Pakistan. Kemal (1994) examined the impact of the adjustment period of Pakistan since the late 1970s on efficiency and equity. Jaffrey and Khattak, while utilising HIES 1990/91, measured and analysed inequality and poverty in Pakistan together with their historical trends. They also analysed the phenomenon of income inequality and poverty and their relation to the distribution of assets and employment. Chaudhary (1995) computed and analysed income inequality in Pakistan as well as in its provinces broken down to rural urban level. He not only studied the extent of inequality in Pakistan but also its change over time measured on the basis of per capita income distribution involving households.
KEYWORDS: Pakistan, income inequality, income, household income, Gini coefficient.

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Empirical studies of international trade have concentrated on singleequation models to analyse the demand relationship for imports and exports [Houthakker and Magee (1969). Naqvi et al (1983), Bnhmani-Oskooee (1984,1986)]. These studies have assumed that the imports and exports price elasticities facing any individual country are infinite or at least large. The assumption of infinite supply price elasticity may be acceptable for the world supply of imports to a single country. Export demand and supply functions have been estimated in a simultaneous equation framework by Khan (1974), Goldstein and Khan (1978). Dunlevy (1980), Arize (1986.1988). Balassa et al [1989]. Anwar (1985), and Khan and Saqib (1993)] for both developed and underdeveloped countries. Haynes and Stone (1983) argue that previous studies failed to estimate the supply behaviour of both imports and exports not only because of a simultaneity bias but also because quantity rather than price were specified as the dependent variable. They have, based on the evidence of USA and UK trade data for the period 1947-79, found support for a dynamic supply- price model for both exports and imports and no evidence to support dynamic supply-quantity specification for these countries.
KEYWORDS: Pakistan, exports, supply-price, priced separation, import and export behaviour.

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Economists have been trying to study the linkages between aid inflow and government activities in developing countries. With the passage of time, the analysis has become more sophisticated. The development of two-gap models [for example, Chenery and Bruno(1962); and Chenery and Adelman(1966), among others] was an important contribution to the literature. More recently, two-gap models have been extended into threegap models. Iqbal (1995) added a fiscal constraint to the traditional saving and foreign exchange gap. In such cases, the fiscal constraint is intended to reflect potential limitations to finance public investment that may be required to support a given level of output. Another development is the analysis of effectiveness of foreign aid on the fiscal behaviour of governments in underdeveloped countries. Empirical studies by Khilji and Zampelli(1991), Khan and Hoshino(1992), among others are important contributions to this topic. All these studies gave conflicting conclusions about the effectiveness of assistance in terms of fiscal behaviour. Generally, these studies prove that aid reduces the taxation effort and is substituted between public investment and public consumption.
KEYWORDS: Pakistan, aid inflow, foreign aid, fiscal behaviour.

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After 50 years of nationhood, about 60 million Pakistani citizens still live in absolute poverty which is a condition so debasing that it robs the poor of the very potential of their genes. Illiteracy, malnutrition, high maternal, child and infant mortality afflict more than 50% of Pakistan’s population of 144 million. Due to mismanagement of its human and natural resources Pakistan is in a vicious cycle of economic dependence (Figures 2 & 3) with high indebtedness, low growth rates of exports and GDP and a decaying education system. During the last two decades Pakistan has engaged in firefighting through external debt re-schedulings and increasing its dependence on the Bretton Woods institutions (World Bank, International Monetary Fund) and their richer shareholders. As a result the important development needs of the nation’s human capital have been grossly neglected. It has failed to develop its human capital, particularly its domestic scientific and engineering communities and thus is not ready to meet the growth challenges of the 21st century. It is postulated that Pakistan must, on a crash basis, develop a domestic scientific and technology (S&T) community and create a scientific infrastructure if it seeks to become economically and politically self-reliant. With about 100 scientists/engineers for a million population, Pakistan’s current S&T capacity is woefully inadequate to be able to capitalize on the wealth of opportunities that are becoming available through globalization. The S&T capacities of Pakistan’s competitors in the world marketplace are significantly higher (300 per million for India; 600 per million for China; 2,600 per million for Korea). Pakistan needs both enhanced S&T capacity and the associated education system if it is to increase the “science-cum-knowledge content” of its exports and GDP. This is a sine qua non for achieving expanded economic well being for its citizens and providing the wherewithal for ensuring their security from internal and external threats. Not doing so will leave Pakistan at the bottom of the country league table in terms of poverty, security and even liberty. This is a future that Pakistan should not have.
KEYWORDS: Sustainable development, economic independence, Pakistan, science and technology.

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