The Pakistan Development Review
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The Current Account Deficit Sustainability: An Empirical Investigation for Pakistan
Get PDFThe existence of large and persistent current account deficit
is always viewed with great concerns, as it usually leads an economy to
a state of insolvency due to building up excessive net foreign debt. As
the current account deficit is a persistent feature of Pakistan’s
economy, therefore, it becomes essential to empirically investigate,
whether this deficit is sustainable or not. To this end, the present
study has applied two alternative approaches, namely, the intertemporal
approach to the current account and the intertemporal solvency approach,
in order to get more convincing evidence on the sustainability issue in
Pakistan using the time series data over the period 1960 to 2012. From
the perspective of both the approaches, Pakistan’s current account
deficit is on a sustainable path and the macroeconomic policies of the
country remained effective in securing it from any external sector
crisis. JEL Classification: C32, F32, F41 Keywords: Current Account
Deficit, Intertemporal Budget Constraint, VAR Model,
Cointegratio
Socio-Economic Analysis of Household Energy Security: Evidence from 3D Energy Losses Surface Maps (ELSMs) of a Town Using Conjuncture of Factors Matrix, Digital and Mathematical Analysis
Get PDFPakistan is facing perpetual and worsening energy crisis. For
vision 2025, the most important litmus test is to overcome energy crisis
and ensure energy security by imaginative and innovative energy
alternatives. In the same context, scientists, experts and researchers
have been focusing on renewables and non-renewable energy generation
alternatives, but have largely ignored the flip side. The extravagant
use of energy, unlawful connections and losses in distribution system
are contributors to ongoing energy crisis. For energy security in a
developing country like Pakistan, elimination of energy losses seems a
viable option, alongside generation of energy. Therefore, there is a
need to have socio-economic analysis of energy losses. In this paper,
energy losses for electricity were estimated for Lali Bagh Town of
Peshawar, Khyber Pakhtunkhwa Province using a versatile and innovative
socio-economic framework. This framework was based on factors matrix
comprising socio-economic, environmental and energy factors pertaining
to households. Within the factors matrix approach, three methods were
used for analysis of energy losses; the statistical analysis to obtain
trend and ratings of electricity losses, digital analysis of the data by
computer assisted qualitative data analysis software (CAQDAS) to get the
digitally iterated and attenuated models along with representative
equations and mathematical analysis of equations by Newton-Leibniz
integration process to obtain numerical value of the ratings. Based on
the results obtained, three dimensional energy losses surface maps
(ELSMs) were prepared for Lali Bagh Town of Peshawar, Khyber Pakhtunkhwa
Province. At the end, policy recommendations have been given in the
context of vision 2025. Paper is a unique combination of theoretical,
mathematical and digital cum spatial economics. JEL Classification: O22,
Q21, Q31, Q41. Keywords: Socio-economic, Analysis, Energy, Security,
Electricity, Losses, Factors, Matrix, Digital, Maps
Measurement and Determinants of Inclusive Growth: A Case Study of Pakistan (1990-2012)
Get PDFEquality of opportunity is the core of inclusive growth, and
the inclusive growth emphasises to create employment and other
development opportunities through rapid and sustained economic growth,
and to promote social justice and the equality of sharing of growth
results by reducing and eliminating inequality of opportunity. The main
objective of the study is to measure the inclusive growth first and then
empirically examine its determinants. To measure the inclusive growth,
we use the methodology developed by Asian Development Bank using weights
and scores of different indicators. We develop a unified measure of
inclusive growth, which integrates growth, inequality, accessibility and
governance into one single measure. Results show that Pakistan is at
satisfactory performance level with respect to its performance in growth
inclusiveness. Further results of ARDL show that macroeconomic stability
and social financial deepening are important determinants to enhance the
inclusiveness, and reduce poverty and inequality, while reforms in trade
sector are required to increase their efficiency in terms of
inclusiveness. JEL Classification: O4 Keywords: Inclusive Growth,
Poverty Reduction, Income Inequality, Equity, Accessibility, Social
Protectio
A Nexus Approach to Food, Water, and Energy: Sustainably Meeting Asia’s Future Food and Nutrition Requirements (Sarfraz K. Qureshi Memorial Lecture)
No full textAgricultural and food production systems in Asia must undergo
a significant transformation in order to meet the concurrent challenges
of increasing food, water, and energy demands amid on-going climate
change. This is particularly true in countries in South Asia, including
Pakistan, where hunger and undernutrition persist and natural resource
are increasingly strained. Sustainable intensification with a focus on
nutrition is particularly crucial to provide adequate and nutritious
food for all without further damages to the planet. However, a silo
approach to meeting the demands of a growing, increasingly urbanised,
and wealthier population is no longer acceptable. Instead, capitalising
on the inter sectoral linkages between food, water, and energy can more
effectively minimise trade-offs and maximise synergies across concurrent
efforts to improve water, energy, food, and nutrition security
sustainably
Does Happiness Adapt to Increase in Income? Evidence from Pakistan Socio-economic Survey (1998-2001)
Get PDFThe fact that happiness does not increase as income increases
over time [the Easterlin Paradox (1974)] has puzzled a number of
scholars for a number of decades. The latest research on this topic
[Easterlin, et al. (2010)] concludes that happiness increases with an
increment in income in the short term but it adapts to this income
increment in the long term. The objective of this research is to test
whether happiness adapts to income increase in the short term using
two-period panel Pakistan Socio-Economic Survey [PSES (1998-2001)]. The
paper makes use of a unique question on happiness asked in PSES to
resolve two issues simultaneously: unavailability of happiness question
in period 1 and potential inconsistency of responses to general
happiness question. The paper applies Random Effect Ordered Probit model
to investigate the hedonic adaptation effect using various formulations
used in the happiness economics literature. The results show positive
and statistically significant impact of income change on happiness with
weak evidence of adaptation to income since it is statistically
insignificant. The result is consistent with the studies that show no
adaptation during a short period. Among several reasons for hedonic
adaptation, falling positive emotions and rising aspirations are
discussed along with causes of happiness and policy implications. The
significance of the present research lies in the fact that it is the
first study in Pakistan that tests the hedonic adaptation to income and
hence contributes to the evidence on happiness dynamics. JEL
Classification: I31, D60, C25 Keywords: Happiness, Adaptation, Income,
Panel Ordered Probit Mode
Analysis of Infrastructure Investment and Institutional Quality on Living Standards: A Case Study of Pakistan (1990-2013)
Get PDFIn this study, the relationship of Infrastructure Investment
and Institutional Quality (CIM) on Living Standards of people was
analysed for Pakistan. This paper comprises of trend analysis of
institutional quality for different periods of governments of Pakistan
coupled with an empirical analysis of the model. The empirical estimates
are comprised of unit root test, Johansen Cointegration, VAR analysis
and Granger Causality tests for the sample of 1984– 2013. The trend
analysis depicts fluctuations of Institutional Quality in different
governments due to different political conditions of every period. The
empirical analysis shows that there exists long standing relationship
between the Institutional Quality, Infrastructure Investment and living
standards of people. However, the VAR analysis shows that the
coefficients of only Institutional Quality and Living Standards of
People (previous year i.e. lag variables) resulted significance in
affecting living standards of the people. The Granger causality result
shows bidirectional and uni-directional relationships among variables.
The results in our study indicate bi-directional relationships of Living
Standards of People (GDPC) with Institutional Quality (CIM). Secondly,
CIM and Infrastructure Investment (Developmental Expenditure) are having
uni-directional relationship. Thirdly, Population and Institutional
Quality (Contract Intensive Money) are having uni-directional
relationship. Fourthly, GDPC and Infrastructure Investment carry a
uni-directional relationship. JEL Classification: E02, F41, H53, O1, O4,
P23. Keywords: Institutional Quality (Contract Intensive Money (CIM),
Infrastructure Investment (Developmental Expenditure), Trade Openness,
GDP per Capita, and Population
Restructuring of WAPDA: A Reality or a Myth
Get PDFSerious financial crisis in Pakistan energy sector, mainly due
to poor governance, rising fuel prices and rampant corruption, led to
the decision of corporatisation of Water and Power Development Authority
(WAPDA) in 1992. However, this decision has been highly debated in the
context of its socio economic benefits as the energy crises continues
unabated. This study, by using semi-structured interview from energy
experts in the power sector, attempts to find the factors that withheld
the positive effects of this decision. The objective is to provide
useful input to frame future energy policy to overcome critical energy
crises in Pakistan. The study concludes that the decision of
corporatisation of WAPDA was a forced decision without proper homework
recommended by the International Monetary Fund (IMF) which worked as an
obstacle to achieve required targets in context of energy crises.
However, expert opinion shows that unbundling of WAPDA if managed
adequately in line with the ground realities would help bring in the
competition in market and support the neoliberal theory which calls for
deregulation of businesses and privatisation of publicly owned assets,
thus minimising the state intervention. Therefore, the only choice for
the government is to move forward with the reforms to frame efficient
and effective power policy. Chile, with successful power reforms, is the
example quoted by the experts to be followed by Pakistan to overcome
load shedding and black outs. JEL Classification: H7 Keywords: Energy,
Pakistan Energy Sector, WAPDA, Neoclassical Theory, Corporatisation,
Privatisation, Restructuring, Governanc
Private Sector Led Growth and the Entrepreneurship (The Mahbub Ul Haq Memorial Lecture)
No full textDr Mehboob Ul Haq is surely an inspiration for anyone like me,
who is interested in working with applied data and thinking about how
that might be used to inform economic policy in useful ways. It is
possibly application to usefully inform policies. Coming to the topic,
it is important to consider two things. Firstly, what do the firm
actually do, and secondly, what one should think about private sector as
essentially fulfilling. Hence, there is a need to find out the most
pressing research questions that need to be considered in this regard. I
would start with the most fundamental question i.e. what does the firms
do? Some would say it is a straight forward question. Firm takes
different factors of production, sticks them together and then ends up
with some output. As economists, we traditionally think obviously about
the Cobb Douglas production function, which reflects concept of
production. I am not going to talk today about the technology and
capital, but I will discuss about workers role in production in a more
holistic / comprehensive way. Imagine a firm in Pakistan that have a
number of workers. Let us call them “N” and these workers have different
abilities and qualities, so how would one calculate the total
productivity, output or total contribution of the labour force. The
simplest way to do this is just to add them up and say that the total
labour contribution is the sum of the individual labourer‟s
contribution. This means that if one were to improve the productivity of
the first worker, then yes, it would improve the firm‟s productivity,
however, it will not affect the productivity of any other worker of the
firm. In practice, let us suppose in a firm in Sialkot, there are two
women workers producing soccer balls, and to know their productivity we
sum their output. Hence, if one out of these two women increases her
production, it will be imagined as the increase in firm‟s total
productivity (without affecting the productivity of the other woman) and
that will be imagined as a good thing