The Pakistan Development Review
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The Impact of Global Cotton and Wheat Prices on Rural Poverty in Pakistan
Get PDFThe incidence of rural poverty in Pakistan increased during
the late 1990s after having declined during the 1980s and early 1990s. A
number of structural factors have been identified as contributing to
rural poverty in Pakistan. Among them are low levels of health and
education spending and the unequal of farmland distribution. These
structural factors help explain the levels of poverty in Pakistan, but
not the increase in poverty in the late 1990s. One hypothesis is that
the increase in rural poverty is the result of an adverse trend in world
commodity prices, particularly cotton, a major commercial crop, and
other agricultural commodities such as wheat, rice, and sugar. The
overall objective of this paper is to measure the impact of changes in
world commodity prices on poverty in rural Pakistan, with particular
focus on cotton prices and the main cotton producing districts of Punjab
and Sindh provinces
Banking: Interest Spread, Inelastic Deposit Supply, and Mergers
Get PDFInterest spread, the difference between what a bank earns on
its assets and what it pays on its liabilities, has been on an upward
trend during the last few years: during 2005 the average interest spread
of the banking sector has increased by 2.14 percent. An increase in the
interest spread implies that either the depositor or the borrower or
both stand to loose. In the context of developing economies, the lack of
alternate avenues of financial intermediation aggravates the adverse
impact of increase in spread.1 Interest spread also has implications for
the effectiveness of the bank lending channel. For example, with a
commitment to market based monetary policy, the central bank influences
the yield on treasury bills (T. bill hereafter) that in turn affects the
deposit and lending rates.2 The change in these rates influences the
cost of capital that in turn affects the level of consumption and
investment in the economy. If the pass-through of the changes in yield
on T. bill rate to the deposit and lending rates is asymmetric then this
changes the spread, for better or worse, depending upon the nature of
asymmetry. If the increase in spread is due to lower return to
depositors then this discourages savings; alternatively if it is due to
higher charge on loans, investment decisions are affected. In either
case the increase in spread has an adverse bearing upon the
effectiveness of bank lending channel of monetary policy and has
therefore important implications for the economy.....
Determinants of Exports in Developing Countries
Get PDFAccording to the orthodox classical economist as well to the
modern liberal view trade is equivalent to an engine of economic growth.
Exports promotion strategy is often in accordance with the principle of
comparative advantage, when a country specialises in a product, which it
can produce competitively. The goods become available to the community
of the world at cheaper prices. The markets are extended. The internal
and external economies are attained. Income and employment levels
expand. Consequently process of economic development is facilitated. In
a nutshell, putting more emphasis on the promotion of exports would
permit the optimal allocation of world resources and, therefore, returns
from trade sector depend upon accelerating growth of exports. The
proposition of FDI led exports growth is controversial in empirical
literature. But the role of domestic investment is believed to be much
important for export expansion strategies. In any case the importance of
FDI, if any, cannot diminish the role of productive investment from the
domestic economy. While private domestic investment can be regarded as a
permanent and reliable channel to enhance production capacity,
investment in public sector has been considered important, for example
in roads, communication and other public goods and services that are
essential to stimulate private investment. Furthermore, government has a
decisive role through support for research and contract with foreign
buyers as well as in facilitating access to credit to both directly and
indirectly exporting terms
Money, Output, and Inflation: Evidence from Pakistan
Get PDFPakistan has experienced inflationary episodes in the last
thirty years. “Why has inflation been high in some of the periods?” is a
debatable question. There are at least three possible candidate answers
to this question; monetary policy actions, supply side factors and/or
inflation in the rest of the world (trading partner countries). To test
whether monetary policy actions are responsible for episodes of high
inflation is the objective of this study. Khan and Schimmelpfennig
(2006) studied the relative importance of monetary factors and supply
side factors for inflation and found that monetary factors had played
dominant role in inflation determination. Agha, et al. (2005), while
studying transmission mechanism in Pakistan, found that inflation and
output respond significantly to shocks in monetary policy instrument.
However both studies depend on small data set. In this study Near-VAR
approach has been used to model inflation, real GDP gap and reserve
money and then impulse response functions are estimated by imposing
restrictions consistent with economic theory, [Enders (2004); Sims
(1986)]. Our results show the standard hump shaped response of output
and inflation to monetary policy shock, reaching at peak after several
quarters. Next Granger causality test is applied to test the direction
of causality between inflation and reserve money and real GDP gap and
reserve money. It is seen that inflation is Granger caused by reserve
money but not the other way around. This result does not hold in case of
reserve money and real GDP gap
Is Good Governance an Approach to Civil Service Reforms?
Get PDFThe Civil Service refers to the body of officials who carry
out functions of government under the direction and supervision of the
head of government [Rahman (1998), p. 2]. Excluded in this definition
are employees of state-owned enterprises, the army, teachers, the
judiciary and the police who, together with civil servants, collectively
constitute the public sector. It is the civil service, and not the
public sector, which will be the focus of this paper. Civil Service
arrangements have emerged as important mediating institutions which
interface between the state and its citizens. Traditionally these were
monolithic, centralised, powerful structures with immense power over the
management of the affairs of a nation, and often not very responsive to
the changing needs of governance and public management
What Determines the Domestic Prices of Agricultural Commodities in Pakistan?
Get PDFRarely a month passes-by in Pakistan without complains on the
state of basic commodity markets, be it wheat or sugar, cotton or rice.
Prices are too high for the consumers, or too low for the farmers; and
often the government is asked to intervene, buying for or selling from
stocks, prohibiting export or import, increasing or reducing import
duties, introducing/withdrawing export taxes, or taking other measures
to protect the consumer or producer. It is as if domestic prices can
have a life on their own, with the government asked to guarantee “fair”
prices for everbody. The resulting on-and-off policy intervention by the
government is likely to have had a deleterious effect on the development
of the domestic and international trade for these commodities. This is
because of the uncertainty so generated, with the private traders always
facing the risk of a regime change at a time when import or export
contracts have already been signed. As a result too, the role of the
state-owned Trading Corporation of Pakistan self-perpetuates, even if
the government would like to see it minimised, as it is always being
asked to intervene because of the private sector’s
“failings”
Does Inequality Matter for Poverty Reduction? Evidence from Pakistan’s Poverty Trends
Get PDFThe paper explores the linkages between poverty, growth and
inequality in the context of Pakistan. Time series macro data are used
for the period 1979 to 2002. Consistent poverty and inequality measures
are interpolated to facilitate the estimation of poverty elasticity with
respect to growth and inequality in a multivariate regression framework.
The paper also attempts to find out macroeconomic and structural
correlates of inequality. The empirical findings—high poverty elasticity
with respect to inequality measures—confirm the importance of inequality
in poverty reducing effort. Inflation, sectoral wage gap, and terms of
trade in favour of manufacturing exacerbate inequality, while
progressive taxation, investment and development expenditure on social
services play a significant role in reducing inequality. The results
also indicate a positive correlation between per capita GDP and income
inequality
Jan-Peter Hartung and Helmut Reifeld (eds). Islamic Education, Diversity and National Identity: Dini Madaris in India Post-9/11. New Delhi: Sage Publications. 2005. 331 pages. Indian Rs 380.00. Paperback.
Get PDFThis book deals with a current subject, particularly
reflecting the fallout from the 9/11 events in the USA. For years dini
madaris (religious schools) have contributed to Muslim educational
development in India as well as across the border in Pakistan. As a
consequence of 9/11, these religious schools have come under the
spotlight with respect to their curriculum and whether they are turning
out fanatics bent on destabilising the existing political and economic
order, domestically as well as internationally. This has become all the
more important because in the western world-view these religious schools
encourage an extremely narrow frame of mind. Such schools, according to
the western world-view, promote violence (i.e., terrorism), have hidden
sources of funding, operate secretly, and impact significantly on the
political front
Moneer Alam. Ageing in India: Socio-economic and Health Dimensions. Delhi: Institute of Economic Growth. 288 pages. Indian Rs 695.00.
Get PDFA while back I read an interesting news item in the Indian
daily The Hindustan Times (dated July 21, 2006), giving results of one
“HelpAge India” survey, which made me wonder how much things have
changed in our part of the world. Among the many findings of the survey
the salient ones were that: one out of eight older people feel no one
cares they exist; 13 percent feel trapped within their own homes; 21
per- cent feel more or less alone and socialise with very few people;
and, most importantly, more elderly couples are choosing to live
independently. With these rather unexpected findings still lingering in
my mind I came across a book, Ageing in India by Moneer Alam, which
deals with the gerontological transition in India and the multifaceted
issues linked to it, and, needless to say, I was eager to know what the
book had to say
Predictability in Stock Returns in an Emerging Market: Evidence from KSE 100 Stock Price Index
Get PDFWe investigate the persistence in monthly KSE100 excess stock
returns over the Treasury bills rates using non-Gaussian state space or
unobservable component model with stable distributions and volatility
persistence. Results from our non-Gaussian state space model, which is
an improvement over Conard and Kaul (1988), show that the conditional
distribution has a stable of 1.748 and normality is rejected even after
accounting for GARCH. There exists a statistically significant
predictable component in the KSE 100 excess stock returns. The optimal
predictor in the unconditional expectation of the series is estimated to
be 0.18 percent per annum. An evidence of highly nonconstant scales in
different periods of time exhibits a tendency towards stock market
crashes which invites remedial policy action