The Pakistan Development Review
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The Gender Differences in School Enrolment and Returns to Education in Pakistan
Get PDFUsing estimates of schooling demand function and private rate
of return to education by gender derived from Household Integrated
Economic Survey 2010-11, this paper attempts to examine if there is any
dynamics to define a differential behaviour across gender in enrolment
in Pakistan and if there is then what can be the possible cause of such
discrepancies and how can they be reduced. The first set of analysis
focuses on the estimates of probability of enrolment at primary,
secondary and tertiary level of education by gender. Strong evidence for
higher likelihood of enrolment emerges only at the secondary level of
education when the gender is male. The behaviour of the determinants for
these schooling demand functions at different levels of education
differs by gender. One such key variable is parental education, which is
more pronounced in case of mother’s education towards increasing the
likelihood of enrolment of girls at the primary and secondary level and
of father’s education for boys at all levels and girls at the tertiary
level. Hence investing in female education today will not only empower
females today but as a positive externality will also lead to gender
equity in educational outcomes in the future. Besides this
intergenerational externality of investment in female education, the
finding establishes that when conditional cash programmes are targeted
at mothers as a policy tool they become an effective measure in
increasing current female enrolment. Moreover the case for reducing
gender disparities in educational outcomes is further supported when we
see how gender imbalance in educational attainment and female labour
force participation lead to discrepancies in the private rate of return
to education by gender. The varied estimates of private rate of returns
to education for males and females show that such deviations arise
because the females labour force on average is much less educated than
males and hence if the object is to raise the rates of returns, a
targeted policy for reducing gender differences in enrolment at all
levels of education primary, secondary and tertiary will have to be
implemented
Pakistan, Politics and Political Business Cycles
Get PDFThis paper studies whether in Pakistan the dynamic behaviour
of unemployment, inflation, budget deficit and real GDP growth is
systematically affected by the timing of elections. We cover the period
from 1973-2009. Our results can be summarised as follows: (1)
Unemployment tends to be lower in pre-election periods and tends to
increase immediately after elections, perhaps as a result of politically
motivated employment schemes. (2) Inflation tends to be lower in
pre-election periods, perhaps as a result of pre-electoral price
regulation. (3) We find increase in the governmental budget deficit,
financed by heavy government borrowings from the central bank and
banking sector during election year. (4) Real GDP growth and real
governmental investment growth declines during pre and post election
terms possibly as a result of inefficient resource allocation. JEL
Classification: D72, D78, H50, H61, E51 Keywords: Opportunistic
Political Business Cycle, Fiscal Policy, Macroeconomics, Elections,
Pakista
Multidimensional Poverty Measurement in Pakistan :Time Series Trends and Breakdown
Get PDFIn the recent literature, consensus has emerged that poverty
is a multidimensional phenomenon; see Alkire and Santos (2010) for a
review of the major arguments. Nonetheless, the most widely used
measures of poverty remain unidimensional, being based on income or
caloric intake cutoffs. The logic for the use of income based measures
was that it was only lack of income which led to deprivation—with
sufficient income; rational agents would automatically eliminate
deprivations in all dimensions in the right sequence of priorities.
However, careful studies like Thorbecke (2005) and Banerjee and Duflo
(2006) show that this does not happen. Even while malnourished and
underfed, the poor spend significant portions of their budgets on
festivals, weddings, alcohol, tobacco and other non-essential items. The
move from abstract theoretical speculation based on mathematical models
of human behaviour to experiments and observations of actual behaviour
has led to dramatic changes in the understanding of poverty and how to
alleviate it. Some of these insights are encapsulated in a new approach
to poverty advocated by Banerjee and Duflo (2011)
Monetary Policy, Informality and Business Cycle Fluctuations in a Developing Economy Vulnerable to External Shocks
Get PDFModelling the sources of Business Cycle Fluctuations (BCF)1 in
an open economy Dynamic Stochastic General Equilibrium (DSGE) framework
is a fascinating area of research. The main advantage of this framework
over traditional modelling approach is due to an additional feature of
micro-foundations in terms of welfare optimisation. This feature allows
structural interpretation of deep parameters in a way that is less
skeptical to Lucas critique [Lucas (1976)]. In DSGE modelling context,
the sources of BCF are normally viewed as exogenous shocks, which have
potential power to propagate the key endogenous variables within the
system. This requires a careful identification, as the transmission of
these shocks may emanate from internal side, such as, political
instability; weak institutional quality in terms of low governance, or
from external side, such as, natural disaster (like, earth quacks and
floods); international oil and commodity prices; sudden stops in foreign
capital inflows; changes in term of trade and exchange rate, or any
combination of shocks from both sides. Also, the nature and magnitude of
these shocks may vary, depending upon their variances and persistence
levels
Living with China—Locally and Globally (The Mahbub Ul Haq Memorial Lecture)
No full textThis paper considers the impact of the economic rise of China
on both firms and competition in middle income countries (locally) and
on the world trading system (globally). It examines the size and nature
of the shock that China has administered to the world economy, the way
in which firms and export sectors in one middle income country have
accommodated that rise, some of the frictions and adjustment strains
that China’s rise pose for the world trading system, and two cases which
I believe to pose threats to the world trading system if the parties
involved do not behave with great care. I will argue that integrating
China into the global economy in a way that benefits nearly all presents
perhaps the most important international trade and trade policy issue of
the present era. The shock that the emergence of China is administering
to the world economy is larger than any seen previously—and by a large
margin. While the huge increase in global production that China has
generated brings widespread benefits, there are inevitably stresses and
indeed possibly some losers. I start to identify these in two exercises
that are reported here, both, for reasons of data availability, carried
out on Mexico. One looks at firm adjustment and the other at export
margins. I then discuss China’s role in the wider trading system—the WTO
and in global imbalances—and finally identify two areas in which the
poor handling of the integration of China into the world economy could
derail the world trading system. I mention these latter issues not as
inevitable disasters but as issues that are sensitive enough to explode
if not handled delicately. An important role of economists in
policy-making is to discourage inappropriate policies and descent into
trade war as a result of the competition that China brings would
certainly count as ‘inappropriate’. It is as a warning, no more, that I
address them in this paper
Ernst G. Frankel. Managing Development: Measures of Success and Failure in Development. Palgrave, USA. 2005. 303 pages.
Get PDFIn this book, Ernst G. Frankel has reviewed development
programmes, plans and agendas, initiated by the developed world for the
developing countries. He has recounted numerous examples from the
developing world to provide a well-structured commentary, which helps
the reader to appraise the practical application of development theory,
development financing and development management over the last fifty
years. Author has himself been involved in development projects and
missions for a long time therefore, he explicitly accounts for the
causes of the enormous failures and the meagre success rate of
development projects. He primarily forms his argument on the call of
incorrect perception of local context and thus inappropriate planning,
funding and implementation of development projects. Overall, he has
taken an unconventional view of development and making development
happen. He describes development as a dynamic process, which is flexible
and iconoclastic in nature and, thus, should incorporate the mutable
nature of human behaviour, culture, science and technology over
time
The Idea of Inclusive Growth and Development Policy
Get PDFThis paper explores the idea of Inclusive Growth as it has
evolved over time since the Industrial Revolution in the West, and in
the developing countries since 1950, when development economics and
development policy were officially born. It is defined as a policy that
deliberately seeks to achieve concurrently a dynamic relationship
between the growth of per capita income, the distribution of income and
the level of poverty in a growing society. The active pursuit of this
three-pronged objective must, therefore, be the basic aim of development
policy. Experience shows that this relationship, though generally true,
is by no means automatic, nor is it amenable to quick fixes. The main
premise of the present paper is that without inclusive growth the
standard of living of a people cannot be raised on a permanent basis.
The paper argues that to succeed in grasping the Holy Grail will require
a major rethinking of development policies to guide developing countries
along a high-growth trajectory. In particular, development policies that
the fast-growers (especially the miracle-growers of East Asia and now
China) have pursued must also form part of the policy-packages of
developing countries together with measures to promote high rates of
saving to finance the investment requirements of a fast-growing economy,
and government-supported import-substituting industrialisation, among
others. Yet, the policies of the fast-growers need not be imitated
blindly. But they should be adjusted to take into account new knowledge
about the development process. To institutionalise growth on a long-term
basis, governments must also prepare a new social contract to lay firm
foundations of a dynamic society based on social justice; which, in
turn, requires a creative synergy of economic, political and social
forces at work in the society
Is Informal Sector Employment Marginal to Formal Sector Growth?
Get PDFPakistan has adopted a neoliberal regime to open the economy
to global competition and reduce the role of the state. This directional
change brought increased flow of overseas remittances, speculative
investment, and consumerism. Consequently, the economy in mid-2000s grew
but commodity-producing sector contracted. Public sector spending has
been falling, especially on social sectors. There are inadequate
provisions for social security and employment based income guarantees.
However, this growth and stability was short lived and there is now a
fragile state and slowing economy. In the absence of an effective
regulatory role of the state, and due to the failure in developing a
long-term strategy to harness the labour force potential, there is a
huge informal sector existing side by side with the formal economy.
Almost 22 million of the employed labour force is earning its livelihood
in streets and the government has no record of it. The informal workers
can be categorised as self-employed workers and wage workers, doing
diversified jobs from petty traders to small producers and from rickshaw
driver to shoe shiners. It is difficult to measure the value added
contribution of the informal sector in Pakistan. Indirect estimation
approaches on the basis of employment and hours worked have been used to
estimate the contribution of informal economy. For instance, Idris
(2008) estimates the share at 36.8 percent of GNP, which is significant.
Arby, Malik and Hanif (2010) measured the size of informal economy in
Pakistan through a monetary approach. They find that the size has
declined considerably
Foreign Aid, External Debt and Economic Growth Nexus in Low-Income Countries: The Role of Institutional Quality
Get PDFForeign capital and institutional quality simultaneously play
an important role in the development process of low-income countries. By
and large developing nations fell short of funds necessary to spur the
economic growth. Along with this constraint, they are facing the down
fall in the quality of governance. Low earned revenues and high
government expenditure increase the reliance upon the foreign capital
mostly in the form of foreign aid and external debt. Just the
availability of foreign funds is not sufficient to stimulate the
economic growth, there is a need of good governance along with better
quality of institutions that will act as a catalyst and improves the
efficiency of capital, [see for instance, Agnor and Montiel (2010)].
Good governance establishes impartial, predictable and consistently
enforced rules in the form of institutions and thus crucial for the
sustained growth [North (1990 and 1992)]. Those countries which have
good institutions show positive growth rates whenever the stock of
capital increases but the countries with bad institutions, increase in
capital investment may lead to negative growth rates due to rent seeking
and other unproductive activities, Hall, et al. (2010). In this context,
North (1992) argues that the institutions as well as the ideology shape
economic performance. While taking into account the technology used,
institutions affect economic performance by determining the cost of
transaction and production. Formal rules, informal constraints and
characteristics of enforcing those constraints together formulate the
institutions. Institutions affect economic performance and the
differential in performance of economies is basically influenced by the
way institutions evolve. The neoclassical economic theory is of little
help in investigating the sources beneath economic performance because
institutions are taken for granted in their models Agnor and Montiel
(2010)