The Pakistan Development Review
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Estimating the Middle Class in Pakistan
Get PDFThe middle class is primarily an urban phenomenon generally
associated with professional occupations, service sector and salaried
jobs. Yet despite a general acceptance of the important economic,
political and social role that the middle class plays in society, the
term itself remains ambiguous and arbitrary. In much of recent
literature the middle class is equated with middle income which does not
reflect what „class‟ refers to in classical writings. The present paper
takes a multidimensional approach to measure the middle class in
Pakistan through a weighted composite index that takes into account all
possible factors associated with the concept, including income,
occupation, education, housing and lifestyle. Using the Pakistan Social
and Living Measurement Survey (PSLM) 2007-08, the magnitude of the
middle class in the country, as represented by the „expanded middle
class‟, is estimated at around 35 percent of the total population. The
proposed measure of the middle class has a sense of stability attached
to it, making it less susceptible to sudden inflationary shocks than an
income-based measure. JEL classification: Z13, R20, A14 Keywords:
Pakistan, Middle Class, Multidimensiona
Economic Growth and Regional Convergence: The Case of Pakistan.
Get PDFThe questions concerning the prevalence of poverty and the
deepening gulf between rich and poor have always been the burning issues
all over the world. These issues, irrespective of their causation
factors, bear far reaching economic and political consequences. The
federation of Pakistan displays complex regional diversities; the
component units differ not only in linguistic, cultural, and social
characteristics but also in the level of economic development. Although
the constitution of Pakistan guaranties equitable shares for all
provinces in national resources, the level of growth across regions has
not been uniform. During the past half a century, investment in physical
and social sectors concentrated in selected parts of the country,
particularly in big cities. This practice has led to creation of
economic disparities and a number of socio-political problems like
terrorism, regional tensions, weakening of the federation and difficulty
in arriving at consensus on issues of national interest. Growth theory
provides a powerful analytical framework to analyse the issue of
regional convergence. Given the assumption of perfect markets, the
countries within a geographical region are supposed to converge overtime
to a common steady state level of income, provided they are similar in
other socio-economic conditions. Put differently, if countries differ
significantly in these conditions, then each unit is likely to follow an
independent growth path. This is also true for different regions within
the same country/ political entity. The objective of this study is to
investigate empirically if there is any evidence of convergence across
different regions of Pakistan. The study utilises the conventional
analytical tools and time series data over the period 1979-2005 for the
four provinces, disaggregated into rural and urban sectors. As expected,
no evidence of absolute convergence could be observed obviously due to
presence of vast differences across the provinces in terms of the growth
determinants. In contrast, the income disparities across the regions
exhibited a widening tendency during the period under reference.
However, the data did support conditional convergence, which implies
that different regions followed independent growth paths. The findings
further indicate that certain socio-economic conditions are crucial to
explain the persistence of income disparities. The question as to why
these conditions differ so widely across the different parts of Pakistan
is often discussed at different economic and political forums. The study
concludes with some policy recommendations that may improve the
situation. JEL classification: 047, R11, O53, C33 Keywords: Economic
Growth, Convergence, Regional Disparities, Human Capita
Household Balance Sheets, Aggregate Demand and Unemployment (The Quaid-i-Azam Lecture)
No full textU.S. households accumulated debt at an unprecedented pace
between 2001 and 2007. In the aftermath of the housing downturn,
deleveraging by highly indebted households is the most important factor
responsible for the current economic slump. The deleveraging process has
led to sharp drops in both aggregate demand and employment. We argue
that meaningful policies aimed at facilitating debt-reduction for
under-water homeowners in the short run, and replacing non-contingent
debt with contingent-debt in the long run are essential for a robust and
sustained recovery
Rooftop Rain Water Harvesting Technology and Women Time Allocation in District Bagh and Battagram Pakistan.
Get PDFWater is essential requirement of life and its accessibility
is the basic right of all human beings. Safe drinking water is an
essential component of primary health. It plays a vital role in
livelihood, food security and sustainable development. Rooftop Rainwater
Harvesting Technology (RRWH) is a best alternative approach to conserve
and supply water. Especially, it is crucial in seismically sensitive,
geographically uneven, and countryside areas. A large majority of
population in Pakistan is living in areas, where access to safe drinking
water is very serious issue. In these areas most vulnerable segment of
population is women because they are the ones who have to fetch water
from far flung areas for their daily consumption. In order to resolve
the issue of water in Pakistan, a number of public and private agencies
are working in this field. Different approaches, techniques, and
practices are being adopted to address this issue. Present study
evaluates the impact of RRWH technology with special reference to women
time allocation in Bagh and Battagram districts of Pakistan. Analyses
were carried out using Ordinary Least Square (OLS) technique to quantify
the results. The results reveal that RRWH technology is viable, time
saving, women friendly, and sustainable source of safe drinking water
supply, especially in seismically sensitive, geographically uneven, and
countryside areas of Pakistan. JEL classification: O13, Q25, Q56, Q58,
R28 Keywords: Rooftop Rain Water Harvesting: Safe Drinking Water,
Seismically Sensitive, Geographically Uneven, and Countryside: Women,
AJK and KP, Pakistan
Interlinked Factor Markets and Allocative Efficiency: Evidence from Rural West Bengal, India
Get PDFThe issue of the implication of interlinkage of factor markets
on the allocative efficiency level of the farm households deserves a
special attention in the light of the controversy among two distinct
schools of thought: the Neoclassical and the Marxist. An attempt has
been made in the paper to measure allocative and cost efficiencies of
the interlinked holding vis-à-vis a comparable group of non-interlinked
holding in the framework of Data Envelopment Analysis. Empirical
evidence establishes the Neo-classical proposition that interlinked
factor markets can be considered as one of the “efficiency improving
institutional change” in rural agrarian economy. JEL classification:
D61, C87, Q14. Keywords: Interlinkage, Allocative Efficiency, Rural
Credit, Data Envelopment Analysi
Impact of Public Debt on the Economic Growth of Pakistan.
Get PDFOver the years Pakistan has failed to collect enough revenues
for financing of its budget. Consequently, the problem of twin deficits
emerged and to finance the developmental activities government has to
rely on public external and domestic debt. The positive effects of
public debt relate to the fact that in resource-starved economies debt
financing if done properly leads to higher growth and adds to their
capacity to service and repay public debt. The negative effects work
through two main channels—i.e., ―Debt Overhang‖ and ―Crowding Out‖
effects. The present study examines the consequences of public debt for
economic growth and investment in Pakistan for the period 1972-2009. It
develops a hybrid model that explicitly incorporates the role of public
debt in growth equations. As the some variables are I (1) and other are
I (0) so Autoregressive Distributed Lag(ARDL) technique has been applied
to estimate the model. Study finds that public external debt has
negative relationship with per capita GDP and investment confirming the
existence of ―Debt Overhang effect‖. However, due to insignificant
relationships of debt servicing with investment and per capita GDP, the
existence of the crowding out hypothesis could not be confirmed.
Similarly, domestic debt has a negative relationship with investment and
per capita GDP. In other words, it seems to have crowded out private
investment. JEL classification: H63, O43, E22, C22 Keywords: Public
Debt, Economic Growth, Investment, ARD
Remittances in Pakistan: Why They Have Gone Up and Why They Are Not Coming Down
Get PDFThe flow of workers’ remittances to Pakistan has more than
quadrupled in the last eight years and shows no sign of slowing down,
despite the economic downturn in the Gulf Cooperation Council and other
important host countries for Pakistani workers. This paper analyses the
forces that have driven remittance flows to Pakistan in recent years. A
methodological innovation is that we study the behaviour of per capita
remittances and draw a close link between remittances and remitters’
earning capacity, in the belief that higher earning power leads to more
remittances. Our main conclusions are that (i) the growth in the inflow
of workers’ remittances to Pakistan is in large part due to an increase
in worker migration, (ii) the higher skill levels of migrating workers
has helped boost remittances, and (iii) other imporant determinants of
remittances to Pakistan are agricultural output and the relative yield
on investments in the host and home countries. JEL classification: F22,
F24 Keywords: Workers’ Remittances, Migration, Pakista
Relationship between Trade Openness and Inflation: Empirical Evidences from Pakistan (1976-2010).
Get PDFThis study empirically verifies the existence of significant
relationship between inflation and trade openness for Pakistan using
annual time-series data for the period of 1976 to 2010. The basic
objective of this study is to examine the Romer‘s hypothesis for
Pakistan with real agriculture value added, real exchange rate, real
gross domestic product, financial market openness, money and quasi money
and used trade openness, import openness and export openness ratios
separately as explanatory variables with inflation rate as dependent
variables. For this purpose, we have used multivariate Johansen (1998)
and Johansen and Juselius (1990) Maximum Likelihood Cointegration
Approach and a Vector Error Correction Model (VECM) and the expected
empirical findings shows that there is a significant positive long-run
relationship between inflation and trade openness, which rejects the
existence of Romer‘s hypothesis for Pakistan. JEL classification: B26,
E31, P24, P44 Keywords: Trade Openness, Inflation, Unit Root Testing,
Multivariate Cointegration Approach, Vector Error Correction Model,
Pakista