The Pakistan Development Review
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New Direction to Evaluate the Economic Impact of Peace for Bilateral Trade among World Economies
Get PDFEarlier researchers have been working to relate globalisation,
trade or free trade as an instrument for bringing peace and reducing
conflict in the world. But this study attempts to open up a new debate
that how social unrest in terms of lack of pace in nations leads to
failure of economic policing and outcomes. In past, few researchers have
tried to show peaceful environment as a generator for economic progress
by building theoretical models, but limited empirical analysis has been
conducted so far. This brings a novelty in the present study that for
the first time a large set of data covering 155 nations has been used to
explore the relationship between these two desired variables i.e. trade
related variables and peace, in new direction and employing new
indicators defining extent of peace in nations. Panel co-integration
technique has been applied along with Fully Modified Ordinary Least
Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) models to know
the parametric and non-parametric point estimates of variables. Data has
been extracted from Economic Institute of Peace and World Bank for the
time period 2008-2014. Results showed that lesser number of attacks are
associated with more volume of trade among nations and better relations
with neighbouring countries are linked positively with trade performance
of nations. Nations involved more into hostility acts like conflicts are
unable to maximise the benefits from bilateral trade. JEL
Classification: F10, D74, L33, C23. Keywords: Globalisation, Trade,
Conflict, Terrorism, Panel Mode
Determinants of GDP Fluctuations in Selected South Asian Countries: A Macro-Panel Study
Get PDFNow a days, the issue of volatility in GDP is becoming a
fundamental development concern due to the undeniable connections
between volatility and lack of development. In addition, the recognition
of the negative link between short-term fluctuations and long-term
growth not only signifies the importance of exploring this link but also
stresses the importance of studying the determinants of the GDP
fluctuations so that the efforts to manage these fluctuations can be
made. Therefore, keeping in view, the importance of studying the factor
causing fluctuations in GDP, the present study aims at exploring the
determinants of GDP fluctuations using macro panel approach in a panel
of five selected South Asian countries (SSAC) including Bangladesh,
India, Nepal, Pakistan and Sri Lanka over the period of 1980- 2010. For
this purpose, modern non-stationary panel techniques such as cross
section dependence test, second generation unit root test under cross
sectional dependence, panel cointegration and Group Mean Fully Modified
OLS (GM-FMOLS) estimation are applied. The results of the group mean
FMOLS estimates show that aid dependence (AIDGDP), trade openness
(OPEN), volatility in the price level (PRIVOL), reliance on agriculture
(AGRGDP) and political stability (POLSTB) are the significant
determinants of the GDP fluctuations. Thus, it is suggested that these
determinants may be managed to reduce the volatility in GDP growth rate.
JEL Classification: E32, F44, N15 Keywords: Determinants of GDP
Fluctuations, Determinants of GDP Volatility, South Asia, Group Mean
FMOLS, Panel Cointegration, Macro Panel, Business Cycle
Fluctuation
Economic Institutions and Growth Nexus: The Role of Governance and Democratic Institutions—Evidence from Time Varying Parameters’ (TVPs) Models
Get PDFThe present study has investigated the channels through which
the linkage between economic institutions and growth is gauged, by
addressing the main hypothesis of the study that whether quality of
governance and democratic institutions set a stage for economic
institutions to promote the long-term growth process in Pakistan. To
test the hypothesis empirically, our study models the dynamic
relationship between growth and economic institutions in a time varying
framework in order to capture institutional developments and structural
changes occurred in the economy of Pakistan over the years. Study
articulates that, along with some customary specifics, the quality of
government and democracy are the substantial factors that affect
institutional quality and ultimately cause to promote growth in
Pakistan. JEL Classification: O40; P16; C14; H10 Keywords: Economic
Institutions, Growth, Governance and Democracy, Rolling Window Two-stage
Least Squares, Pakista
An Empirical Analysis of the Implicit Growth Rate for Industrial IPOs Listed in Pakistan
Get PDFThis study examines the cash flow growth rate implicit by
offer prices of industrial IPOs using a reverse engineering DCF model.
In addition, this study also investigates the bias of implicit growth
relative to the realised growth rate by considering 19 IPOs listed on
Karachi Stock Exchange during the period from 1995 to 2008. We find that
the estimated growth in cash flows is slightly higher than realised
growth rate, which indicates that the median IPO firm is overvalued by
61.5 percent at the offering. It is observed that estimation errors
increase as a result of higher underpricing and diversified ownership.
In addition, post-IPO returns are smaller for issues whose implicit
growth rates are biased upward. We also find that IPOs underperform in
long-run employing a buy-and-hold investment strategy. The policy
implication of the study is to evolve a price discovery mechanism by the
Securities and Exchange Commission of Pakistan which may help to reduce
the overvaluation of IPOs upto some extent. JEL Classification: G00, G30
Keywords: Initial Public Offerings, Reverse Engineering DCF Model,
Valuation, Growth Rat
Importance of Judicial Efficiency in Capital Structure Decisions of Small Firms: Evidence from Pakistan
Get PDFEmpirical evidence to identify factors that are responsible
for the sluggish development of bond and capital markets in Pakistan
remains scanty. This paper is a step forward in this direction.
Specifically, this paper draws on the recent developments in the area of
law and finance to formulate several propositions on how judicial
efficiency can have a differential impact on corporate capital
structures of small and large firms. These propositions are tested using
data of 370 firms listed at the Karachi Stock Exchange (KSE) and 27
districts high courts of Pakistan. The results indicate that leverage
ratio decreases, when judicial efficiency decreases; however, this
relationship is not statistically significant. This is due to the
composition effect. Allowing judicial efficiency to interact with the
included explanatory variables, the results show that worsening judicial
efficiency increases leverage ratios of large firms and decreases
leverage ratios of small firms, which is an indication of the fact that
creditors shift credit away from small firms to large firms in the
presence of inefficient judicial system. Results also indicate that the
effect of inefficient courts is greater on leverage ratios of firms that
have fewer tangible assets as percentage of total assets than on
leverage ratios of firms that have more tangible assets. The results
indicate that under inefficient judicial system creditors reduce their
lending to small firms and firms with little collateral and redistribute
the credit to large firms. This is why judicial inefficiency does not
change volume of credit, but changes distribution of the credit. These
results highlight the importance of judicial efficiency for small firms
in the determination of their capital structures. JEL Classification:
G10, G21, G32 Keywords: Judicial Efficiency, Leverage, KSE, Capital
Market Development, Law and Finance
Fiscal Decentralisation, Provincial Economic Growth and Spillover Effects: A Spatial Panel Data Analysis
Get PDFThis study examines the spatial dependence, direct and
indirect effects of fiscal decentralisation on the provincial economic
growth of Pakistan. Due to spatial dependence, spatial econometric
technique is applied on the augmented growth of Mankiw, et al. (1992) by
incorporating the fiscal decentralisation variable in the theoretical
framework. The empirical analysis is based on the spatial panel data
set, which is used from 1990 to 2011 of provinces. Model is selected on
basis of specific to general and general to specific approach, and
decided two-way fixed effects Spatial Durbin model (SDM) is appropriate
for our data. We have estimated the SDM by maximum likelihood (bias
corrected and random effect) estimation technique, otherwise, if we
applied OLS and ignore the spillover effect which makes our estimated
parameters biased and inconsistent. Results show that revenue
decentralisation has positive, while expenditure decentralisation has
negative effect to provincial economic growth. Spillover effects are
found to be significant in case of revenue decentralisation and
insignificant in case of expenditure. Negative and insignificant
spillover effect of expenditure decentralisation is due to weak
institutions, lack of intra governmental competition, and absence of
political vision which may increase the level of corruption and less
accountability. On the basis of econometric analysis, it may be
suggested that federal government should transfer the resources to
provinces as determined in the 18th amendment, and it is the
responsibility of provincial government to train their officials in the
area of professional ethics, technical and administrative skills by
different programmes. JEL Classification: C31, C33, H3, H50 Keywords:
Fiscal Decentralisation, Spatial Econometrics, Revenue,
Expenditur
E-government, Economic Growth and Trade: A Simultaneous Equation Approach
No full textLabour has always been considered as major source of income
and livelihood, and the labour market of Pakistan which provides an
important source to alleviate poverty and raise the standard of living.
The characteristics of labour i.e. age, gender, location, caste and
religion makes labour market highly segmented. And these factors often
make buyer bias which indeed causes a discrimination and exclusion in
labour market. This study tries to investigate the issue of social
exclusion which has been faced by marginalised class in labour force
participation. While analysing trends of marginalised labour force
participation, the role of social networks also take into account. The
marginalised labour force has been selected based on religion and gender
(minorities, women, transgender) which is the part of formal and
informal labour market of the city Lahore, Pakistan. The study use logit
modelling to analyse the role of social exclusion and other determinants
in labour force participation of marginalised class and also evaluate
the role of labour force participation in the poverty status of
marginalised households. Results show a strong effect of social
exclusion on labour force participation and poverty. Keywords: Social
Exclusion, Labour Market Segmentation, Social Networ
Factors Influencing Choice of Energy Sources in Rural Pakistan
Get PDFModernisation of the agricultural and industrial sectors in
Pakistan over the last thirty years, increased village electrification,
increasing use of energy appliances by domestic users, and the usage of
modern technology in all sectors, caused energy demand to increase more
rapidly than energy supply. Sources of energy vary between urban and
rural populations, across income groups, and by type of households.
Pakistanis consume energy from both modern and traditional sources for
different purposes, such as lighting, cooking, heating, and
transportation. Modern sources of energy include electricity, oil, gas
and coal, while traditional sources consist of animal/plant residue
(firewood, crop residue and animal waste). Using a multinomial logit
regression model, this study analyses how rural households make choices
among different energy alternatives. The results suggest that because of
the limited access to modern energy sources, households rely on
traditional sources excessively, which may have a negative impact not
only on human and animal health but also on the environment. These
results suggest that the conversion of traditional energy sources into
modern ones, such as, biogas, use of energy efficient appliances, etc.
can have a positive impact on the environment and sustainable economic
growth. JEL Classification: R20, D11, Q43, Q42, Q5 Keywords: Rural,
Households, Energy Consumption, Energy Sources, Environmen
Impact of Public-Private-Partnership Programmes on Students’ Learning Outcomes: Evidence from a Quasi-Experiment
Get PDFLearning outcomes refer to the performance of the students in
academic tests pertaining to the respective grade level. In Pakistan,
survey evidences from Annual Status of Education Report (ASER) show a
significant dispersion in learning outcomes of public schools as
compared with private sector counterpart. The perceived results of
learning outcomes in private schools very clear but less evidence is
found for educational outcome of schools run under public-private
partnership programs. This becomes especially relevant when status of
curricular, co-curricular, and extra-curricular activities is compared
between public school, private schools, and schools run under public
private partnership. In recent literature, it is found that schools
taken up by public-private partnership have been providing a better
learning environment—Infrastructure Rehabilitation and Development,
Administrative changes, Academic Innovation and Planning, Teacher Reform
and Student Affairs—is perceived to have a positive impact on learning
outcomes. It is to investigate and document that the investments in
these areas are justifiable. To promote this fact, we conduct a
quasi-experiment to examine the profiles of students in a public-private
partnership school at Karachi (running under Zindagi Trust program) and
a public school (as counterfactual) in the same neighbourhood. We also
recorded the household and socioeconomic characteristics to create a
good set of control variables. The propensity-score results show that
public-private school is performing better than that of comparison group
in attaining learning outcomes thus showing positive effects of PPP.
Finally, the study probed into household and parental covariates of
student's educational outcomes to enhance internal validity of results.
JEL Classification: I21, C21, L32. Keywords: Educational Learning
Outcomes, Public-Private Partnership, Quasi-experiment
Naeem ul Haque. Transforming the Inchoate Duty of Samaritanism into an Obligation. Islamabad, Pakistan: Innovative Development Strategies. 2014. 302 pages. Pak Rupees 600.00
Get PDF“Transforming the Inchoate Duty of Samaritanism into an
Obligation” is the last book of Naeem ul Haque’s life. It is edited by
Uzma Cheema and Nina Gera and published by the Innovative Development
Strategies (IDS), Islamabad. The book contains seven chapters. Chapter 1
introduces the purpose of the book and the issues discussed in it.
Chapter 2 deals with the challenges of global poverty, while Chapter 3
links poverty with the changes in international law, mostly associated
with aid and grant to developing countries. Chapter 4 defines the
official development assistance (ODA) and discusses the history and
issues related to it. In addition to that, Chapters 5 and 6 throw light
on the various cases for and against the aid. The last chapter of the
book, Chapter 7, discusses the transactional efforts to transformational
outcomes