The informal sector plays a significant role in Pakistan’s economy as well as in other developing countries. The role of the informal sector in solving the unemployment problem of Third World countries has become the focus of a conceptual and empirical debate in recent years. Most of the research takes a favourable view of this sector and suggests that it should be used as a policy instrument for the solution of the most pressing problems of developing countries, such as unemployment, poverty, income inequalities, etc. Before proceeding further, we will define the informal sector and differentiate it from the formal sector. There are various definitions, but the one given in an ILO report (1972) is generally considered the best. According to this report, informal sector activities are ways of doing things characterised by a heterogeneous array of economic activities with relative ease of entry, reliance on indigenous resources; temporary or variable structure and family ownership of enterprises, small scale of operation, labour intensive and adapted technology, skills acquired outside the formal school system, not depending on formal financial institutions for its credit needs; unregulated and unregistered units, and not observing fixed hours/days of operation.
KEYWORDS: Pakistan, informal sector, rural informal sector, developing sector, formal sector, employment, unemployment, rural women, working women.

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Few would deny that there is increasing disillusionment with democracy as practised today in Pakistan. The experience with dictatorships has been equally disenchanting. Since both dictatorships and elected governments have failed, a common refrain these days is the need to empower people through democratisation, decentralisation and opening up of new avenues for participation in politics to enable them to change their own destinies.
KEYWORDS: Pakistan, power structures, role of the state, institutional structures, representation, empowerment.

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Profit sharing refers to the splitting of profit between two or more business partners. It is a substitute to the interest system where one partner gets a fixed return irrespective of business performance. In the past two decades profit sharing has captured the attention of policy makers and researchers alike. This increased interest has been roused by factors including research interests in the West, practical supremacy of the system and commitment to Islam. Martin Wietzman (1984, 1987, 1990) carried out research work on profit sharing, which gave respectability to the concept. Japan, during its boom era, used profit sharing in a small segment of the labour market. The UK passed legislation to provide tax incentives to encourage the adoption of profit - related pay schemes and following Islamic principles, a few Muslim economies attempted to modify banking practices in line with Islamic principles.
KEYWORDS: Pakistan, community saving, investment, profit, loss sharing, micro level, return on investment, savers.

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The educational system in Pakistan is beset with multiple dilemmas and constraints. Some are underlying and deep-rooted, while others are rooted in immediate, superficial reasons. Understandably all are inter linked and each affects the other. One that pervades as an under current is the issue of lack of Equal Opportunity (EO) which takes myriad forms when translated into practice. This paper delineates the various forms the absence or imbalanced prevalence of EO takes within the context of the education system of the country, and primary education in particular.
KEYWORDS: Pakistan, educational system, social development, statistical data, literacy, poor education indicators.

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Textile is one of the most heavily protected sector in developed countries. This paper addresses the issue of anti-dumping measures, a new form of trade restriction. Protectionism is still common place in textiles, tariffs remain high and progress in eliminating import quotas has been slow. In fact, protectionism is on the rise in a new guise: anti-dumping cases against Asian countries are multiplying in the US, EU and around the world. Pakistani textiles (yarn, unbleached grey cotton fabric and bed-linen) exports are being increasingly subjected to the initiation of anti-dumping investigations, which creates uncertainty and depresses business sentiment. Investigation periods are quite lengthy and the legal costs of defending against these cases are enormous. These result in a great loss of time that could be better spent in a productive manner. This phenomenon is a matter of great concern because it has created a damaging impact on the normal growth of trade. In fact, by merely initiating an anti-dumping case against exporting country's manufacturers, or even just threatening to do so, developed countries producers can cause extensive disruption to the market for an extended period of time. At the end of the day, whether dumping and injury are proven may no longer matter for some Asian manufacturers, who could be driven out of the market simply as a result of the case being initiated.
KEYWORDS: Anti-dumping, protectionism, WTO, Pakistan, procedural rules, ADP agreement, preliminary affirmative determination.

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Micro-finance is an idea which occurred to developing countries considerably late in the day. When during the colonial era, the modern sector and its peculiar institutional framework emerged in the South Asian continent, the system catered to the needs of the modern sector i.e. trade and industry. Agriculture did not receive the kind of attention that it deserved although colonial rule was responsible for destroying the viability of this vital sector. A compensatory effort to provide finance for the rural sector would have been in order. However, this task was left to the cooperatives and informal sources of credit. The governments in the colonial system only undertook “distress lending” in the form of Taccavi loans on a somewhat limited scale.
KEYWORDS: Micro-finance, rural credit, Third World, cheap credit, assessment, India.

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The first part of this paper showed that the neo-classical theory of international trade leads to conclusions that contradict the facts or leads to no conclusions that can be verified. The version of the theory with two factors and the same production functions in different countries has some appeal because relative abundance of factors or intensities of their use have consistent meaning and make the theory plausible, but it results in the Leontief paradox and factor price equalisation. This appeal is lost when the number of factors is greater than two or production functions are not the same in different countries; relative abundance and intensity can not be consistently ranked or their connections to the pattern of trade is not the simple one of the Heckscher-Ohlin theory. Nor does the theory have much left to say; the kind of verifiable general prediction that was possible with two factors is not possible when the factors are more than two; such conclusions as can, in principle, be drawn are specific to the general equilibrium calculated for a given set of production functions and a given set of countries, with specified factor endowments and consumer preferences.
KEYWORDS: International trade, neo-classical theory, shortcomings, specialisation, models, Heckscher-Ohlin, Haberler, Bensusan-Butt, mechanised production.

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

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

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

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

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

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

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

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

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

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

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This is undoubtedly a most useful, updated collection of articles on various aspects of the Pakistani canvas. It is a valuable contribution given the relative paucity of material and literature on such topics. Aside from the somewhat tedious chapter on foreign policy, tiresome by virtue mainly of its bulk (stretching over a total of about a hundred pages in its entirety), the articles make for interesting and refreshing reading for not merely the specialist but the layperson as well. If length is any indication of importance, then surely it is a case of misplaced priorities to have given so much space to a subject such as foreign policy and, in comparison, the pieces on such vitally crucial issues as population planning and human rights are allocated, for whatever reason, a considerably less quantum of space in the book.
KEYWORDS: Book review, Pakistan, economic development, human rights.

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This is the second edition of Dr. Saeed Shafqat's popular and well received book, the first edition of which came out in 1995. Pakistan studies has been an integral part of the country's educational syllabi and competitive examinations for many years now. Unfortunately the syllabi for our school, college and university students reflect a narrow definition of the subject. Not much attention has been paid to historical authenticity and accuracy of facts. The approach in general is simplistic and one is sorry to note, jingoistic. No wonder this discipline, whose importance cannot be overemphasised, fails to capture the minds and imagination of the young students and the level of perceptions manifested by its study are abysmally low. There is need to raise the tone and level of debate and to move beyond the Pakistan Movement to which this subject has largely been confined. Even here the treatment is by and large narrow and simplistic.
KEYWORDS: Book Review, Pakistan studies, Pakistan Movement, syllabi, Pakistan.

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Government health expenditures as a percentage of GDP have declined in Pakistan, though not in absolute real terms, over the structural adjustment period. Progress over this period is evident on a number of health indicators. However, Pakistan still lags far behind the means of low income countries and South Asian countries in all child survival statistics. In view of this, and since the evidence shows a significant and sizeable association of public sector health expenditures and the decline in infant mortality rates, there seems little justification in cutting public sector expenditures.
KEYWORDS: Government, Pakistan, government health expenditures, public sector expenditures, basic health unites, rural health centres, Social Action Plan, SAP, service delivery.

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