Modify your search
Modify your search
Published:July - Dec 2002
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.
JEL: N/A.
Published:July - Dec 2002
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.
JEL: N/A.
Foreign Capital and Economic Performance of Pakistan
Minh Hang Le and Ali Ataullah
Published:Jan - June 2002
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.
JEL: N/A.
Published:Jan - June 2002
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.
JEL: N/A.
Using Theatre as a Research Tool: Troubleshooting and Benchmarking Pakistan's Devolution Plan
Shahrukh Rafi Khan and Aasim Sajjad Akhtar
Published:Jan - June 2002
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.
JEL: N/A.
Commenting on the Causal Factors Controlling Female Decision Making” A study of Female Decision Making Regarding Paid Employment: Punjab, Pakistan
Lubna Shahnaz and Zainab Kizilbash
Published:Jan - June 2002
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.
JEL: N/A.
Income Inequality among Various Occupations/Professions in Pakistan-Estimates Based on Household Income Per Capita
Mehboob Ahmad
Published:Jan - June 2002
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.
JEL: N/A.
Published:Jan - June 2002
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.
JEL: N/A.
Published:Jan - June 2002
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.
JEL: N/A.
Published:Jan - June 2002
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.
JEL: N/A.
Book Reviews: The Informal Sector In the Urban Economy: Low Income Housing In Lahore
Nabeel Ashraf and Waleed Mohsin
Published:Jan - June 2002
Imtiaz Alvi, The Informal Sector In Urban Economy: Low Income Housing
In Lahore, OUP, Karachi, 1997.pps 323. Price Rs. (Pakistani) 535/-.
Cities play an increasingly important role in the economic standing
of nations. Urban areas, with their anonymity and fast pace, can be nonconducive to societal cooperation. Social capital and trust are more difficult
to develop and sustain in large groups. In many cases, interactions between
parties are not repeated and therefore there is no incentive to develop
reciprocal relations.
In urban settings, people tend to cluster together in small
communities and networks of support, but trust and goodwill for those
outside immediate groups is minimal. High levels of intra-group social
capital and very little inter-group social capital (referred to as "bridging
social capital") may have profound effects on inequality, private sector
development, government and public welfare.
KEYWORDS:
Book review, Pakistan, Lahore, informal sector, low-income, local institutions, capacity.
JEL: N/A.
Published:Jan - June 2002
Giles Mohan, Ed Brown, Bob Milward and Alfred B. Zack-Williams,
Structural Adjustment, Theory, practice and impacts, Routledge, London
and New York, 2000, 215 pps, Price not mentioned.
This book touches on almost each and every aspect of the extremely
topical subject of structural adjustment, delving into the whys and
wherefores, the rights and wrongs of the issue. Despite the somewhat
technical nature of the subject, it reads more like a narrative. Yet because
to my mind it is virtually a masterpiece and one of its kind, it should in fact
be read in bits and pieces rather than in one go.
KEYWORDS:
Book review, structural adjustment, neo-liberalism, poverty alleviation.
JEL: N/A.
Poverty Reduction and Human Development: Issues and Strategy
Muhammad Aslam Khan
Published:July - Dec 2001
The paper assesses trends in poverty and improvements in the
material conditions of life of millions of people living in poverty and
human deprivation. It discusses the growth and poverty dimensions and
associated structural problems. Determinants of poverty in Pakistan are
discussed with a view to identify areas of intervention and public policies.
Poverty reduction and human development programmes are discussed to
show that pumping financial resources to address the issue of poverty is not
a correct strategy for poverty reduction and human resource development.
The paper discusses the poverty reduction strategy to assess government
commitment to poverty reduction and human resource development in a
sustainable manner. It concludes that poverty reduction and human
development in Pakistan is dependent on many factors particularly the
strengthening of institutional capacity and availability of human and
financial resources.
KEYWORDS:
Pakistan, poverty reduction, human development, determinants, interventions, public policies, social indicators.
JEL: N/A.
Contemporary Neoclassicism and its Methodology
Jawwad Noor
Published:July - Dec 2001
The last 10 to 20 years have seen a rapid rise of a new school
in Macroeconomics. One of the most interesting
characteristics of this school is its use of non-econometric
methods for predicting and calculating various variables of the
economy. If traditional econometrics has lost some of the force
it has had for decades, it is of interest to analyse the merits of
the new system replacing it. Most importantly, it is of interest
to study the methodological justification of this new system
and the paradigm it rests on. The latter is the main purpose of
this paper.
KEYWORDS:
Macroeconomics, neoclassicism, dynamic programming.
JEL: N/A.
Published:July - Dec 2001
From a technological perspective, the paper is mainly concerned with
finding the employment potential in different groups of industries of Pakistan.
The role of factor prices in determining techniques of production in the
industrial sector through elasticity of substitution has been analysed. Besides
taking the large-scale manufacturing sector as a whole, three broad categories
of industries viz., consumer goods, intermediate goods and capital goods
industries has been selected in particular for the empirical analysis. By utilising
the OLS technique, the cross-section analysis for the year 1995-96 has been
made. Our results indicate the there is great potential for employment in the
intermediate and capital goods industries provided there are no factor price
distortions in the economy.
KEYWORDS:
capital goods, empirical analysis, industries of Pakistan.
JEL: N/A.
A Study on Saving Functions for Pakistan: The Use and Limitations of Econometric Methods
Aqdas Ali Kazmi
Published:July - Dec 2001
The econometric estimates of saving functions for Pakistan covering
the period 1960-88 are presented and examined in this study. The choice of
this period for analytical purposes was necessitated by the availability of
consistent time series data on numerous microeconomic and macroeconomic
variables required for estimating a wide range of econometric models of
saving behaviour. The study is divided into nine sections. The introduction
and the basic issues for estimating saving functions are outlined in Section
1. Section 2 delineates Sectoral Accounting Framework for defining the
inter-relationship between the main components of savings, investment and
national income. Section 3 outlines the econometric methods, the nature of
variables used and the basic saving functions for Pakistan. Section 4 deals
with the important hypotheses about private sector saving behaviour and
estimates of the related saving functions. The basic rationale and estimation
of public saving functions have been taken up in Section 5, while the results
of foreign savings functions are presented in Section 6. The model
specification and estimation of domestic saving functions and national saving
functions are covered in Section 7 and Section 8 respectively. The
conclusions and limitations of the study are briefly discussed in Section 9.
KEYWORDS:
Pakistan, employment potential, policy, employment, elasticity of substitution.
JEL: N/A.
Published:July - Dec 2001
Economic growth requires investment goods that may either be
provided domestically or be purchased from abroad. Domestic provision
requires saving; the foreign provision requires foreign exchange. If some
investment goods for growth can only be provided from abroad, there is
always a minimum amount of foreign exchange required to sustain the
growth process. The distinctive contribution of the dual-gap analysis to
development theory is that if foreign exchange is the dominant constraint it
points to the dual role of foreign borrowing in supplementing not only
deficient domestic saving but also foreign exchange. The Dual-gap theory
thus performs the valuable service of emphasising the role of imports and
foreign exchange in the development process. It synthesises traditional and
more modern views concerning aid, trade and development. On the one
hand, it embraces the traditional view of foreign assistance as merely a boost
to domestic saving; on the other hand, it takes a more modern view that
many goods necessary for growth cannot be produced by the developing
countries themselves and must therefore be imported with the aid of foreign
assistance. Indeed, if foreign exchange is the dominant constraint, it can be
argued that dual-gap analysis also presents a more relevant theory of trade
for developing countries which justifies protection and import substitution.
If growth is constrained by a lack of foreign exchange, free trade cannot
guarantee simultaneous internal and external equilibrium, and the gains
from trade may be offset by the underutilisation of domestic resources.
KEYWORDS:
Domestic provision, Pakistan, economic growth, Dual-gap theory, foreign assistance.
JEL: N/A.
Published:July - Dec 2001
It is highly desirable that the behaviour of imports is studied in both
demand and supply scenarios. Many studies in international trade have
estimated the price elasticities of demand but very few studies have been used
to study supply behaviour in international trade. However, Khan (1974),
Haynes and Stone (1983 a) and Arize (1986), using Simultaneous Equations
estimation have reported estimates of import supply in international trade. To
study the true behaviour of imports, the choice of the functional form is
important. Different researchers have used different forms according to their
objectives and inclinations. Leamer and Stern [(1970), pp.8-19] have discussed
at length the functional form of the import demand but they have not said
anything about import supply. Leamer and Stern (1970) noted that the linear
and log-linear forms of the import demand are:
KEYWORDS:
Pakistan, domestic income, imports, economic theory, liberalisation.
JEL: N/A.
Published:July - Dec 2001
A recent discussion conducted by the Anjuman Mimaran1
has
generated a concept for urban development that has immediate relevance to
Pakistan. It is based on high-density, low-rise, low-tech development that
integrates housing employment and social infrastructure, with a balanced
mix of income and occupational groups. This concept includes a location
strategy that results in
• Affordable housing for all income levels;
• Release of pressure on existing urban centers
• Injection of economic activity into rural areas; and
• Sustainable “green” urban communities;
The following extract from the discussion describes the central
argument, supported by a physical layout and analysis of the proposed
model.
We would welcome any initiatives to take these proposals further
towards practical implementation.
KEYWORDS:
Pakistan, urban development, walkable city.
JEL: N/A.
Interest and the Modern Economy: A Reply
Ali Ataullah & Minh Hang Le
Published:July - Dec 2001
“No single human being, human agency or group has a right to
impose its view, in matters of the faith, on others. That must be left to every
individual conscience to decide for him or her … Religious leaders and jurists,
with their literalist training, often lack knowledge of societies and economies
to have insights that may illuminate the fresh significance of old formulae”1
.
In the previous issue of this journal, Zaman & Zaman (2001), by
criticising Hamza Alavi, imply that the implementation of the so-called Islamic
Banking is in the best interest of economy and only by following this system
can we be serious Muslims. According to them, this implementation could be
justified on the basis of modern economic and financial theories, and also by
evaluating the financial system of developed countries. This paper only briefly
discusses some acute theoretical and practical shortcomings in their article and
suggests that the non-interest based system2
is not appropriate for the
Pakistani economy, at least in the conceivable future.
KEYWORDS:
Response, interest, modern economy, Islamic banking, criticism, equity financing and asymmetric information.
JEL: N/A.