The Pakistan Development Review
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The Relationship between Federal Government Revenues and Expenditures in Pakistan
Get PDFA sound fiscal policy is important to promote price stability
and sustain growth in output and employment. Fiscal policy is regarded
as an instrument that can be used to lessen short-run fluctuations in
output and employment in many debates of macroeconomic policy. It can
also be used to bring the economy to its potential level. If
policymakers understand the relationship between government expenditure
and government revenue, continuous government deficits can be prevented.
Hence the relationship between government expenditure and government
revenue has attracted significant interest. This is due to the fact that
the relationship between government revenue and expenditure has an
impact on the budget deficit. The causal relationship between government
revenue and expenditure has remained an empirically debatable issue in
the field of public finance. The question of which variable takes
precedence over the other has been a central issue to this
debate
From GST to RGST: A Raucous Ride (PANEL DISCUSSION-II)
No full textThe transition from General Sales Tax (GST) to Reformed
General Sales Tax (RGST) has become an intricate and controversial topic
for no particular reason. Let me start the discussion by acknowledging
that RGST is not a new tax as generally perceived, rather it is the old
GST which when fully implemented would be a sufficiently broadened and
extended version of the existing GST. The changes in the existing GST
would include withdrawal of many of the exemptions and concessions that
have been granted over time, gradual abolition of the zero-rating of
domestic sales while maintaining zerorating of the export sector, and
extension of the existing GST to services that are currently outside the
tax net. Thus, those who are opposing RGST believing it to be a new tax
are required to be properly educated by the Sales Tax and the Taxpayers’
Education and Facilitation wings of the Federal Board of Revenue
(FBR)
Pakistani Bureaucracy and Political Neutrality: A Mutually Exclusive Phenomenon?
Get PDFThis paper examines the reasons for the early dominance of the
bureaucratic élite in Pakistan and the downsizing that was brought about
by the administrative reforms of 1973. The perceptions of bureaucrats
and ministers indicate that loyalty to political establishment is now
regarded a crucial requirement in a bureaucrat. This shift from the
principle of political neutrality to the practice of political
allegiance has affected both the development agenda as well as the
institutions of the country
The Price Puzzle and Monetary Policy Transmission Mechanism in Pakistan: Structural Vector Autoregressive Approach
Get PDFThe prime objective of economic policies is to increase the
welfare of the general public and the monetary policy supports this
broad objective by focusing its efforts to promote price stability. The
growing importance of monetary policy stabilisation efforts may reflect
both political and economic realities. Understanding the transmission
mechanism of monetary policy to inflation and other real economic
variables is imperative for central bankers to conduct monetary policy
effectively. High inflation reduces growth by reducing investment and
productivity growth which reduces the welfare, gives a theoretical
foundation for the choice of price stability as an objective of monetary
policy. These arguments about monetary policy objectives lead to the
choice of price stability as the single or primary objective of monetary
policy. Monetary policy is one of the important tools with the monetary
authorities to achieve the objectives of price stability. There is
extensive theoretical as well as empirical literature available on the
effects of monetary policy shocks on the real economic aggregates and
prices
FDI, Unemployment, and Welfare in the Presence of Agricultural Dualism: A Three-Sector General Equilibrium Model
Get PDFThe present paper uses a three-sector general equilibrium
framework to examine the effect of Foreign Direct Investment (FDI) on
unemployment and welfare in laboursurplus economies in the
post-globalisation era. We show that the expansion of landhungry
export-oriented agricultural sector through FDI accentuates the problem
of urban unemployment in the presence of sticky urban wage and
agricultural dualism. We also note that multiple cross-effects and
factor specificity play an important role in determining change in
output composition and welfare in the wake of the inflow of foreign
capital. JEL classification: F16, F21 Keywords: Agricultural Dualism,
FDI, Unemployment, Welfar
Decentralisation of GST Services and Vertical Imbalances in Pakistan
Get PDFIt is generally believed that the 7th National Finance
Commission (NFC) Award and 18th Constitutional Amendment have taken a
major step towards much needed fiscal decentralisation. While these two
delegate more fiscal autonomy and transfers additional resources towards
provinces, it seems difficult that tax decentralisation options provided
in these two can practically be implemented. This assertion is based on
historical tax decentralisation debate in Pakistan, which has made it a
very complex issue in management of public finances. There are arguments
both in favour and against tax decentralisation in Pakistan. Its
proponents argue that tax decentralisation is an important principle of
governance. They generally propose three advantages of fiscal
decentralisation including; preference-matching, efficiency through
competition, and increased accountability. In particular, a rational
assignment of taxing powers helps providing each level of government, a
control over its fiscal destiny by allowing it the choice in the level
of spending. It helps assuring taxpayers that they are getting what they
paid for and consequently may stimulate participation and
improve/increase accountability. According to Bahl (1999), fiscal
decentralisation assists in revenue mobilisation, innovation in economic
activity, accountability of elected officials and grassroots
participation in governance. Given this, it is probable that fiscal
decentralisation lead towards improved efficiency in the use of
resources as the residents in the sub-national governments can decide
about their desired mix of public services and revenues that best suits
them
Impact of Climate Change on Wheat Production: A Case Study of Pakistan
Get PDFAtmospheric condition which remains for some days is called
weather, whereas, if such condition prevails for a season, decade or a
century, it is termed as climate. To keep the pace of growth fossil fuel
has been used in order to meet the energy requirement. However, fossil
fuel adds some gases in the atmosphere which are altering the climate
with the passage of time
Empowering States and Provinces or Unshackling Local Governments: Does It Matter for Peace, Order, Good Government, and Growth? (The Gustav Ranis Lecture)
No full textGlobalisation and the information revolution are profoundly
influencing the division of power within, across, and beyond
nation-states. Within nations, this mega change has led to a diminished
economic relevance of the intermediate order of government (states and
provinces) and an enhanced need for home rule (empowered local
governments) in both unitary and federal countries. Considerations of
peace, order, and good government further warrant that intermediate
orders of governments must assume a relatively less prominent role in
multi-order governance. The recent fiscal crisis and the ever-growing
concern about corruption have further heightened the need to the get the
government right, thereby creating additional pressures to limit the
size of the government by possibly downsizing the role of the
states/provinces and reconstituting these as provincial councils of
local governments to perform inter-local functions and coordination.
These economic imperatives, calling for an hourglass model of
federalism, are at odds with the political realties in countries
conforming to the traditional dual federalism model, i.e., federalism of
the provinces model of economic governance as prevalent in Australia,
India, Mexico, and Pakistan, among others. The political order in these
latter countries has blocked local governments from assuming their due
role as the primary agents of the people providing oversight on the
shared rule and as facilitators for network governance to improve the
economic and social outcomes. Such a role of local government is also
critical to international competitiveness and growth as demonstrated by
the experiences of China, Japan, Korea, and the Nordic countries. This
paper outlines reform options for multi-order governance to conform with
the new world economic order. The paper elaborates the role of local
governments under ‘glocalised governance’—the new vision of multi-order
governance—and argues that growth and economic prosperity of nations in
the coming decades would critically depend on how quickly political and
institutional impediments to the new (or the oldest?) paradigm of local
governance are overcome. The paper concludes that path dependency makes
such radical reforms infeasible in countries with strong provincial
governments run by feudal, military, and industrial elites
Sartaj Aziz. Between Dreams and Realities: Some Milestones in Pakistan’s History. Karachi: Oxford University Press. 2009. Pak. Rs 595.00.
Get PDFThe geo-strategic location of a country gives it advantage or
disadvantage in its relation with the comity of nations and addressing
its domestic challenges. The vision, acumen and capacity of political
leadership, however, determine the maximisation of advantages from
geo-strategic location in attaining the national interests. Interplay of
domestic political power, geo-strategic location and global power
dynamics are aptly reflected in the political history of Pakistan as
narrated in “Between Dreams and Realities”. “Between Dreams and
Realities” is both an autobiography and dispassionate account of
Pakistan’s chequered history as the author puts it “watched the
political drama as ring side observer.” The author was actively engaged
in roles, confronting formidable challenges to improve policy
coordination and implementation. A sequenced political, economic, and
foreign relations history of Pakistan is described illustrating turning
points, milestones, and debacles in her existence as a country. The
political scenario of Pakistan, marred by intermittent military
takeovers, with disregard, and mutilation of the constitution, mainly
served personal interests. The rulers, irrespective of whether elected
or otherwise, conjoined survival of their rule with that of the country.
Thereupon, usurpation of power is legitimised by engineered elections or
putting in place pliable judiciary. The indiscipline in political
parties, absence of vision, political inexperience, self-centered, and
headlong political leaders, increased the vulnerability of parliament to
complete its tenure. Weak organisation of political parties is, thus
easily maneuverable to the wheeling, dealings, and gaming of
‘establishment’. This is amply visible in all military takeovers of
elected governments, right from throwing of Zulfiqar Ali Bhutto’s
government to dissolution of Nawaz Sharif’s government in
1999
Macroeconomic Management in a Decentralised Set-up (PANEL DISCUSSION-III)
No full textI am thankful to PIDE for giving me the opportunity to be here
and participate in this important discussion. It is always exciting to
come back to this audience because this is where I started my career as
an economist. We have with us Dr S. M. Naseem and Dr Nawab Haider Naqvi
who guided me in my earlier years and I would like to thank them also. I
will try to restore some balance after Dr Ashfaque’s alarming comments
on the state of the economy, recognising well that we have challenges
that need to be addressed. Mr Baldridgde in his discussion has given us
fifty questions that capture many of the challenges. But first let me
say a few words about whether politics should triumph over economics or
the other way around. Lets not forget that we have a democratically
elected government that represents a delicate coalition of several
political parties and competing political interests. In this setting, it
is not at all surprising that technocratic economic solutions are
secondary to the political ones, and that “economics does not triumph
over politics” as lamented by the previous panelist. In a democratic
framework, the economists’ role is to ensure that political objectives
are met without inflicting an unsustainable fiscal burden and
sacrificing the long term development objectives