The Pakistan Development Review
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The Impact of Climate Change on Major Agricultural Crops: Evidence from Punjab, Pakistan
Get PDFIt is necessary for a country to make its agriculture sector
efficient to enhance food security, quality of life and to promote rapid
economic growth. The evidence from least developed countries (LDCs)
indicates that agriculture sector accounts for a large share in their
gross domestic product (GDP). Thus the development of the economy cannot
be achieved without improving the agriculture sector. According to the
Economic Survey of Pakistan (2011-12) its main natural resource is
arable land and agriculture sector’s contribution to the GDP is 21
percent. The agricultural sector absorbs 45 percent of labour force and
its share in exports is 18 percent. Given the role of agricultural
sector in economic growth and its sensitivity to change in temperature
and precipitation it is important to study the impact of climate change
on major crops in Pakistan. There are two crops seasons in Pakistan
namely, Rabi and Kharif. Rabi crops are grown normally in the months of
November to April and Kharif crops are grown from May to October. These
two seasons make Pakistan an agricultural economy and its performance
depends on the climate during the whole year. Climate change generally
affects agriculture through changes in temperature,
precipitation
The Coordination of Fiscal and Monetary Policies in Pakistan: An Empirical Analysis 1980–2011
Get PDFFiscal policy concerned with the government’s choice regarding
the optimal use of taxation and government spending to control and
adjust the aggregate demand in the economy. Monetary policy refers to
the central bank’s control regarding the availability of credit in the
economy to achieve the objective of price stability and this control can
be exerted through money supply and interest rate channel. The ultimate
objective of the both policies is to maximise the overall welfare of the
society which can be achieved by keeping the inflation rate low and
employment at its potential level. There are number of channels in which
fiscal policy can impinge on monetary policy. An expansionary fiscal
policy leads to an expansionary monetary policy, which may in turn fuel
inflation and appreciate the domestic currency and that cause
deterioration in the balance of payments. On the other hand if
government finances the deficit through the markets (in a non-monetary
way) then the fear of crowding out of the private sector arise in the
economy. On external side when a country is depending on foreign funding
of domestic debt, this results in deterioration in the exchange rate and
balance of payment. Another more direct channel of fiscal policy is the
impact of indirect taxes on price level. Besides this, perceptions and
expectations of the general public about the large and on going budget
deficits and resultant borrowings requirements may prompt a lack of
confidence in the economic prospects. At the same time when people
realise that government is borrowing for its own good, they will
conclude that this can lead to higher taxation levels in future and
consequently they consume less and save more, that is so called
Recardian equivalence
The Impact of Exchange Rate on Output Level: Bounds Testing Approach for Pakistan
Get PDFThe stabilisation of growth process has been the aspiration of
the nations in modern era. Since the industrial revolution in the world,
most of the developing nations have been in the paradigm of chronic
current account situation, loss in output, high import bill, less
integration of their export sector, and less competitiveness in trade
with the world. The process to devalue their currency may be evaluated
as optimism for the improvement of their national growth that not only
overcome the soaring trade deficit but also may be helpful to compete in
international market. In theoretical literature, there has been
contradiction among the researchers based on its effects in determining
the net output of the economy. Since the work of Cooper (1971) and
Krugman and Taylor (1978), the ambiguity arises for the effects of
currency depreciation on output and their pioneer work explain the
demand side as well as supply side channels through which depreciation
may appear as loss in net output. The devaluation induces higher prices
of tradable products that appear as loss in real balance of the economy
and ultimately result in less output and growth. Some studies [Krugman
and Taylor (1978); Edwards (1986) and Lizondo and Montiel (1989)] also
support to contractionay output hypothesis with the induction of income
redistribution channel that just redistribute income from the wage
earners towards profit earners having the excess savings. This process
ultimately leads to less aggregate demand as well as output via meager
consumption. On the supply side, depreciation of currency result in
higher input cost and less output level [Krugman and Taylor (1978); Van
Wijnbergen (1986)]. In addition, wage indexation mechanism is also
important that reduces the net benefits on producer side and escorts to
the contraction in output [Agenor and Montiel (1996)]
Firm Performance and the Nature of Agency Problems in Insiders-controlled Firms: Evidence from Pakistan
Get PDFMore than two centuries ago, Adam Smith (1776) showed
skepticism about the efficiency of joint stock companies because of the
separation of management from ownership. He observed that managers of
joint stock companies cannot be expected to watch over the business with
the same anxious vigilance as owners in a partnership would. Adam
Smith’s worry remained buried for a century and a half until Berle and
Means (1932) rekindled interest in this area when they hypothesised in
their book that dispersed shareholding is an inefficient form of
ownership structure. They argued that separation of ownership and
management control has changed the role of owner from being active to
the passive agent. Dispersed shareholders lack incentives to monitor
self-interested managers who possess only a small fraction of the total
shareholdings. The propositions by Adam Smith (1776) and Berle and Means
(1932) received some support when Jensen and Meckling (1976) tied
together the elements of property rights, agency costs, and finance to
develop a theory of ownership structure of a firm. Jensen and Meckling
asserted that agency costs are real, which the owner can reduce either
by increasing ownership stake of the agent in the firm or by incurring
monitoring and bonding costs. In early tests, several research studies
supported the views of Jensen and Meckling. However, these studies did
not account for endogeneity problem
Modern Services Exports from Emerging Countries—Perspectives and Opportunities
Get PDFTraditionally, developed countries are the major exporters of
services; however, technological developments in IT and communications
over the last two decades have made it possible for developing countries
to exploit their comparative advantage in some modern services. The
driving force for this comparative advantage is the large pool of
semi-skilled and skilled graduates in emerging countries who can deliver
their services across borders, using advanced communication
technologies. Why do emerging countries have increasing modern services
exports? How are these exports explained by theory? What are the factors
behind this export growth and the reasons to expect future growth? These
are some of the important questions that researchers and policy-makers
would like to find answers to and an attempt has been made to answer
these questions in this paper. Identification of the sources of services
export growth from emerging and developing countries can be attempted
through established theories of goods trade and production. This paper
reviews selected theory and empirical work in order to explain the
underlying causes for growing exports of services. Causes for the export
of modern services may include a comparative advantage of the exporting
country, cost reduction for the importing firm through outsourcing,
reduction in trading costs due to technological improvements and an
increase in gains from services trade
Modelling Trade, Investment, Growth and Liberalisation: Case Study of Pakistan
Get PDFThe role of trade in economic development as an engine of
economic growth has been at the centre of hot policy debates over the
past four decades. History supports the success of import liberalisation
policy in the United States of America (USA) in the 1940s, Japan in
1960s and the exports promotion achievements of Asian Tigers in the
1970s and 1980s [Yen (2009)].1 There is no doubt that increased movement
of goods and services across international borders over the past few
decades has helped developing countries to achieve faster and
sustainable growth. Many researchers argued that free trade has a key
ingredient in facilitating transfer of technology from developed to
developing countries [Heokman and Javorcik (2006) and Harding and
Javorcik (2012)]. Theoretical literature suggest that trade
liberalisation enhances economic growth and development through the
specialisation and technological developments. The theoretical link
between international trade and economic development can be traced back
to the earlier writings of Classical Economists (Adam Smith and David
Ricardo) and Neoclassical Economists (Heckscher and Ohlin) in the early
part of nineteenth century. The Classical Economists hypothesised that
nations gain from trade, and World production would grow when trading
nations specialise according to the principles of comparative advantage.
On the other hand, the Neo-classical Economists argued that countries
will tend to specialise in those products that use abundant resources
intensively in the production process. As a consequence, factors prices
will tend to equalise across trading nations if production technologies
remain identical throughout the world (Stolper-Samuelson
approach)
Fiscal Responsibility: A Critical Analysis of FRDL (2005) Pakistan
Get PDFThe term fiscal responsibility in financial dictionary is
defined as “A balanced budget”. That is a budget wherein expenditures
during a given period of time equal to revenues. The fiscal
responsibility also includes a budget in which revenue is greater than
the expenditures. Fiscal responsibility is achievable and most of the
individuals in their private life practice fiscal responsibility. At
individual level everybody knows that they have to live within the
budget and usually they do not overspend. Usually overspending by
individual results in bad crediting rating which one receives from their
creditors due to non-payments or late payments of installments and thus
denies future benefits to the person concern. Fiscal responsibility at
national level implies that a government has a balanced budget and has
sufficient revenue to pay for its all expenditures. There would be no
overspending if government had a true balanced budget in each period.
The economic future of a nation largely depends on the way fiscal
responsibility is practiced. There is a direct link between budget
deficit today and what nation can enjoy in future. Fiscal responsibility
is crucial for a nation to remain prosperous and stronger in future.
Fiscal responsibility will also determine what kind of future we are
leaving to our children and grandchildren for the next 20 years and
beyond. If the fiscal responsibility is not practiced the government
would spend more money than its income and it borrows for the
difference. If the money borrowed come from domestic savings or from
domestic lenders the economy will have less money available for capital
investment and future productivity growth rates and levels would be
lower. If on the other hand deficit is financed by foreign
organisation/country the country will be indebted with growing debt to
the rest of the world, with growing interest costs which must be served
every year. If we rely more on foreign sources to finance the resource
gap the foreign ownership of our resources would grow and so has our
dependences on the actions of foreign governments and
investors
Risk Management in the Financial Services Sector—Applicability and Performance of VaR Models in Pakistan
Get PDFFinancial services sector has become a major driver of
economic growth in the developing countries through innovation in
response to the forces of globalisation and technology. Sound risk
management practices by financial institution are critical to the
stability of the institutions and to the sustainability of economic
growth. Therefore, measurement of market risk is important to all market
participants for devising risk management strategies. Value-at-Risk
(VaR) is the most widely used measure of market risk, which is defined
as the maximum possible loss to the value of financial assets with a
given probability over a certain time horizon. However, the task of
implementing the VaR approach still remains a challenge as the empirical
return distributions are found to be fat tailed and skewed in contrast
to the normal distribution as assumed in the theoretical models. An
extensive literature in finance (e.g., Nassim Taleb’s The Black Swan)
underscores the importance of rare events in asset pricing and portfolio
choice. These rare events may materialise in the shape of a large
positive or negative investment returns, a stock market crash, major
defaults, or the collapse of risky asset prices
Aminullah Chaudary. Political Administrators: The Story of Civil Service of Pakistan. Oxford University Press, 2011. 371 pages, Rs 895.00.
Get PDFA bureaucracy is a group of individuals who are non-elected
and serve as government employees to help implement rules and laws of a
country. The term bureaucracy was created by combining the words
‘bureau’ which means desk or office and ‘kratos’, meaning rule or
political power to govern. Different countries have adopted various ways
to induct people to run the government and make new laws. Max Weber, a
renowned and notable German administrative scholar is credited to be the
pioneer of the use of bureaucracy in public administration. In this book
on the Civil Service of Pakistan, the author has described the way
bureaucratic culture gained strength and restricted the grooming of
political culture in the country. He shows how ‘seniority’ overwhelmed
‘merit’ in the promotion process of the officers in the Civil Service of
Pakistan (CSP), an offspring of the Indian Civil Service (ICS). The CSP
officers always considered themselves as an élite class and looked down
upon the politicians. The author narrates the superior attitude of
Iskander Mirza (a notable member of the ICS, then CSP) in these words:
“Mirza was proud of his IPS and CSP lineage and never missed an
opportunity of proclaiming this fact. His admiration for the colonial
system of administration was matched by a corresponding contempt for
politicians.” The relationship between the bureaucracy and the military
was to ensure that politicians did not make a mess of things. The
bureaucracy was able to call on the military in times of crisis and
never worried about its overstaying the visit. The basic theme of the
Indian Civil Service was that the local Indians were recruited as
officers by the British to suppress and control an enslaved people.
Unfortunately, even after gaining independence the mindset of the
bureaucratic staff didn’t change and they conveniently forgot that an
independent nation required a different approach
Time Poverty, Work Status and Gender: The Case of Pakistan
Get PDFThe present study measures time poverty and its incidence
across gender, occupational groups, industries, regions, and income
levels using Time Use Survey (TUS) 2007, the first nationwide time use
survey for Pakistan. In the entire TUS sample, the incidence of time
poverty is 14 percent. Women are found to be more time poor than men
whether employed or not. This is because of certain women-specific
activities that they have to perform irrespective of their employment
status. Working women are far more time poor than those not working..
Women accepting a job have to make a major trade-off between time
poverty and monetary poverty. People working in professions and
industries that generally require extended work hours and offer low wage
rates are more time poor. This entails a situation of double jeopardy
for workers who tend to be money and time poor at the same time. The
close association of time poverty with low income found in this study
corroborates this conclusion. Government can help reduce time poverty by
enforcing minimum wage laws and mandatory ceiling on work hours in
industries with high concentration of time poverty. Eradication of
monetary poverty can also eliminate the need to work long hours at low
wages just to survive. A fair distribution of responsibilities between
men and women.is also needed. Keywords: Time Poverty, Gender
Disparities, Time Use, SNA Activities, Time Use Survey,
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