The Pakistan Development Review
Not a member yet
2465 research outputs found
Sort by
Political and Economic Uncertainty and Investment Behaviour in Pakistan
Full text linkThis study analyses the effect of political stability and
macroeconomic uncertainty on aggregate investment behaviour in Pakistan
over the period 1960–2015. The Auto-Regressive Distributed Lags (ARDL)
methodology is applied to explore both the long-run equilibrium
relationship and short-run behaviour of investment. The macroeconomic
uncertainty variable is derived from real exchange rate and is computed
by the best-fitted GARCH model. The results reveal robust effects of
political stability and macroeconomic uncertainty on overall investment
activity in Pakistan. The government nationalisation policy, GDP growth,
user cost of capital, credit availability and degree of openness are
found to be the other key determining factors for investment both in
long- and short-run. However, the favourable impact of physical
infrastructure on investment holds in long-run only, while its effect is
adverse though insignificantly in short-run. The findings support the
neoclassical flexible accelerator principle and are consistent with
economic theory. The volume of available funds is the binding constraint
for investment and the McKinnon-Shaw hypothesis is validated in the
short-run. Keywords: Aggregate Investment, Irreversibility,
Macroeconomic Uncertainty, Political Stability, GARCH, ARDL, Bound
Testing Approach, Pakista
Fareeha Zafar. Canals, Colonies and Class: British Policy in the Punjab 1880- 1940. Lahore, Pakistan: Lahore School of Economics. 2017. xxii + 317 pages. Price not given.
Full text linkFareeha Zafar’s book Canals, Colonies and Class: British
Policy in the Punjab 1880-1940 is essentially an edited reproduction of
her PhD thesis, The Impact of Canal Construction on the Rural Structures
of the Punjab: The Canal Colony Districts, 1880 To 1940. The thesis was
completed about 35 years ago at the School of Oriental and African
Studies, the University of London (now SOAS, the University of London).
She studies the British colonisation process in the Punjab and its
effect on the local environment, the production patterns, and social
relations, understanding that despite several similar studies on the
region, no serious effort had been made to synthesise these issues the
way she does in this book. However, in the form of a new book, the
synthesis does not add much value as it reiterates the British
colonisers’ well-known strategies, namely irrigation development as a
tool to settle disarmed forces and nomads and, thereby, strengthening a
class of local landed elite to maintain their power in the colonies,
their revenue-seeking policies, indebtedness of the landed class and
alike. Nevertheless, considering the timing of the original
contribution, the book, if read together with the contributions such as
Khuhro (1978/1999) and Cheesman (1997), provides a relatively rich
description of geographers’ analyses of the British policies, their
intentions, and their effects
Rashid Amjad (ed.) The Pakistani Diaspora: Corridors of Opportunity and Uncertainty. Lahore, Pakistan: Lahore School of Economics. 2017. 337 pages.
Full text linkThe book “The Pakistani Diaspora, Corridors of Opportunity and
Uncertainty”, which is edited by Rashid Amjad, is a collection of 17
academic essays on Pakistani migrants and Pakistani diaspora in
different countries. This book presents diverse viewpoints in the study
of diaspora. This book does not just analyse the size of the diaspora in
a chronological manner, but it also provides important understanding of
the cost and benefits associated with migration and assimilation of the
migrants’ families in new environments. In the first paper, the author
tries to capture the salient features and dynamics of Pakistan’s “age of
migration” across home and host countries. By 2017, the estimated
diaspora was at 9.1 million – almost 5 per cent of Pakistan’s
population. The labour class started to migrate to the UK in 1950s while
highly skilled professionals started moving to the US and Canada in
1960s. The unskilled and semiskilled workers began to move to the Middle
East in 1970s and due to easing off their visa policies in 1990s,
migrants began moving to Europe, Singapore, Thailand, Malaysia and
Australia from Pakistan. According to the author “A large number of
people face losses in the struggle to migrate to foreign countries. A
majority of illegal migrants are imprisoned in different countries while
trying to reach Europe while dozens are killed on their way to
Greece.
The Production of Terrorism in Pakistan: A Religious Market Explanation
Full text linkDoes intervention in religious market produce negative
externalities? To explore this question, firstly, I market for religious
products secondly, I provide a chronological discussion on the
consequences of government interventions in the market of religion in
Pakistan. It is argued that an oligopolistic market for religion exists
in Pakistan, thus, it is regulated over time by both democratic and
non-democratic regimes. Furthermore, it is discussed that the main
intent of regulations in the religious market of Pakistan was the
appropriation of rent by three players, that is, religious sect(s),
incumbent governments, and cold war allies of Pakistan. However, these
interventions produced negative externalities over space and time while
polarising religious sects and sub-sects. Over the years, these
spillovers are realised in the form of sectarian violence which slowly
and gradually transformed into an extreme form of conflict, i.e.,
terrorism. JEL Classification: L51, K42, Z12 Keywords: Regulations,
Religious Market, Violence, Terroris
Testing the Monthly Calendar Anomaly of Stock Returns in Pakistan: A Stochastic Dominance Approach
Full text linkIn this paper, we first examine the presence of monthly
calendar anomaly in Pakistan Stock Exchange (PSX) using aggregate and
firm-level monthly stock returns. Secondly, we classify the sample firms
into low-beta, medium-beta, and high-beta firms to examine the monthly
anomaly of stock returns for firms having different level of systematic
risk. By considering the stochastic dominance approach (SDA), we employ
the simulation based method of Barrett and Donald (2003) to identify the
dominant month over the period from January 2000 to December 2017. We
find significant evidence of the existence of the January effect in both
firm and market stock returns. We also find that the January effect
exists more prominently in both low-risk and high-risk firms categorised
based on their systematic risk. On the other end of the continuum, for
moderately risky firms, there is strong evidence of the presence of the
December effect. One of possible explanations of the January effect is
the yearend bonus received in the month of January. Such bonuses are
generally used to purchase stocks, causing the bullish trend of stock
prices in January. However, the evidence of the January anomaly in both
low-beta and high-beta portfolios returns is puzzling, suggesting that
investors may invest in both low- and high-risk stocks when
enthusiastically investing in stock market. The findings of the paper
suggest that investors may get abnormal returns by forecasting stock
return patterns and designing their investment strategies by taking into
account the January and December effects and the level of systematic
risk associated with the firms. JEL Classification: G02, G12, G14
Keywords: Behavioural Finance, Stochastic Dominance Approach, Monthly
Anomaly, January Effect, December Effect, TOY Anomaly, Abnormal Returns,
KS Type Test, PS
Impact of Micro Hydropower Projects on Household Income, Expenditure and Diversification of Livelihood Strategies in Azad Jammu and Kashmir
Full text linkThe study examines the impact of Micro Hydropower (MHP)
projects on households’ income, consumption and diversification of
livelihood strategies in District Hattian Bala, Azad Jammu and Kashmir.
A multinomial logistic model is used to investigate the possible role of
MHP and other control variables on households’ adoption of livelihood
strategies. The Results show that MHP-micro hydropower has a positive
significant effect on household’s adoption of non-farm and diversified
livelihood strategies. These findings suggest that MHP projects in
Northern areas of Pakistan could help in improving household’s income
and consumption through adoption of high income livelihood strategies.
Keywords: Micro Hydropower (MHP), Livelihood Strategies, Income and
Expenditures, Poverty Alleviation, Multinomial Logistic Mode
Public Spending, Quality of Bureaucracy and Economic Growth: A Theoretical Analysis
Full text linkThis paper develops a theoretical framework to investigate the
relationship between public spending and economic growth, where public
spending provides both productive capital and unproductive services. We
take into account the quality of bureaucracy with the possibility of
rent-seeking motives. A key feature of the model is that it
distinguishes between utility enhancing and productivity enhancing
public spending. In the absence of rent-seeking motives, the paper
demonstrates that public spending will promote economic growth only if
marginal productivity of spending is high enough to offset the potential
output loss due to increased taxation. In the presence of rent-seeking,
however, the impact of public spending on economic growth depends on the
quality of bureaucracy and how the latter impinges upon the rentseeking
behaviour. The analysis shows that while improvement in bureaucratic
quality would unambiguously raise the share of utility enhancing public
spending, its impact on economic growth would depend on how bureaucratic
quality influences the relative magnitudes of the two types of public
spending as well as on how far bureaucratic extraction will be
controlled as a result of improvement in bureaucratic quality.
Bureaucratic extraction is likely to be minimised with strong
institutions and effective monitoring and accountability mechanisms
thereby improving the prospects of economic growth. JEL Classification:
C61, D23, D61, D73, H50 Keywords: Rent-seeking, Quality of Bureaucracy,
Public Goods, Public Expenditure
Corporate Financing and Firm Efficiency: A Data Envelopment Analysis Approach
Full text linkThis study investigates the endogenous determination of firm
efficiency and leverage while testing the competing hypotheses of agency
cost, efficiency-risk and franchise-value, in a sample of 136
non-financial firms listed on the Pakistan Stock Exchange (PSX), over
the period 2002 to 2012. Data Envelopment Analysis (DEA) method is
employed to measure firm efficiency as proxy for firm performance. The
endogenous nature of firm efficiency and leverage allowed using
two-stage least square (2SLS) technique. The findings of the efficiency
equation suggest that leverage has a significant positive effect on firm
efficiency. Additionally, firm risk, growth rate, size, board size and
board composition positively affect firm efficiency. On the other hand,
the results of the leverage equation suggest that firm efficiency has a
significant negative effect on leverage. Firm size and CEO duality have
positive effects on leverage while firm age, board composition,
institutional ownership, managerial ownership and asset tangibility have
negative effects on leverage. Generally, the results support agency cost
and franchise-value hypotheses that higher leverage improves firm
efficiency while higher firm efficiency results in reduced leverage.
Keywords: Leverage, Firm Efficiency, Capital Structure, Firm
Performance, Data Envelopment Analysi
Dictatorships, Patronage and Public Good Provision: Some Empirics
Full text linkDictatorship has been one of the most persistent regimes types
in history. Different dictators have applied different strategies for
maintaining political support across different societies. We discuss and
empirically estimate the hypothesis that states that dictators rely more
on patronage as compared to the general provision of public goods for
political support. Our results, based on the data from cross-section of
the countries from all continents, confirm this hypothesis. We use
military spending as an indicator of the patronage to military and the
secondary school enrolment as an indicator of the provision of public
goods. In the separate sets of regressions, we conclude that
dictatorship has a significant negative effect on the secondary school
enrolment rate and a significant positive effect on military expenditure
as percentage of GDP. These effects, in turn, might have caused the
persistent of dictatorships in many societies. In order to generalise
these findings, we also check robustness of the findings with respect to
other variables like infant mortality rate, average life expectancy,
Human Development Index (HDI), corruption, rule of law, ease of doing
business and competitiveness. The robustness analysis confirms our
findings. JEL Classification: P16, H11, H41, H42 Keywords: Dictatorship,
Patronage, Public Goods Provision, Military Spending, Secondary School
Enrolment Rate, Robustness Analysi