The Pakistan Development Review
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Elasticity and Buoyancy of the Tax System in Pakistan
Get PDFThis paper examines the elasticity and buoyancy of the tax
system for the period 1974-75–2003-04. The elasticity of the total tax
revenue both with respect to the total GDP and the non-agricultural GDP
base is less than unity. Overall, sales tax takes the lead by way of
improving revenues. The high coefficient of income tax inclusive of
withholding tax, which is an indirect tax, is high. Excluding the
withholding tax leads to a lower coefficient. Sales tax with respect to
imports and manufacturing also takes care of loss of revenue due to
lowering of tariff and excise duties. However, the sales tax coefficient
with respect to the GDP base reflects the inclusion of service sector
and utilities in the sales tax net, which has serious implications for
the poor. The estimates of buoyancy suggest that tax changes did not
lead to significant revenue augmentation. The low buoyancy of income tax
exclusive of the withholding taxes implies that imposition of massive
withholding taxes coupled with an increase in the taxable income limits
is working at cross purposes
Trade Policy and Economic Integration in a Cournot Duopoly Model
Get PDFThis paper investigates the policy and welfare implications of
forming an economic region in the context of a Cournot duopoly model.
Some theoretical results are obtained. First, the economic region lowers
the external tariff (against non-partner countries) less than its
pre-integration level when a sufficiently large subsidy on the imports
from the partner is carried out. Second, economic integration reduces
the non-partner country’s welfare. Third, although the region still
gains from integration even under some partial trade liberalisation
regimes, complete trade liberalisation within the region leads to higher
regional welfare. Finally, trade liberalisation within the region
improves the welfare of the world as a whole
External Determinants of Growth and Growth Projections: SAARC and Pakistan
Get PDFThe world is increasingly being divided into regions. The
regional trading blocs are becoming more and more deepened and widened
around the globe. The European Union (EU) has already reached a stage
approximating to the trading relations usually found within a country
rather than between the countries. The existence of regional economic
groups, particularly in European and American continents, pose a range
of theoretical, empirical and organisational questions for developing
countries like Pakistan who depend on the countries of these regions for
a significantly high share of their international trade. This paper
focuses on the prospects of extended economic cooperation of Pakistan
with the member countries of the South Asian Association for Regional
Cooperation (SAARC).1 The argument is structured around three parts.
Part I reviews the theoretical rationale of regional economic
cooperation and the recent developments shaping the trading relations
within the cooperating blocs. Part II critically evaluates the relative
size and significance of the external sector of the SAARC region
countries, along with presenting statistical estimates of the major
external determinants of the region’s economic growth. Finally, Part III
estimates the relationship of major directions of Pakistan’s exports
with the economic growth of the country and presents the growth
projections by increasing and diverting the exports to the SAARC and
ASEAN region countries
Saving-investment Behaviour in Pakistan: An Empirical Investigation
Get PDFSaving and investment are two key macro variables with micro
foundations which can play a significant role in economic growth,
inflation stability and promotion of employment especially if seen in
the context of a developing country. For self-reliance and growth
objectives, mobilisation of domestic resources and their efficient
utilisation are the two major policy oriented focuses today [Khan
(1993)]. National savings are critically important to help maintain a
higher level of investment which is a key determinant for economic
uplift. Thereby, necessitating the analysis of saving-investment
behaviour and its determinants for policy implications; this is a
demanding area because of continuing debate on the potential role of
their determinants
Exchange Rate Behaviour after Recent Float: The Experience of Pakistan
Get PDFExchange rate is a price of traded goods in the world market.
To maintain the commodities competitive in the market, exchange rate
should be adjusted according to the change in prices. If it is adjusted
accordingly, then we say that purchasing power parity (PPP) holds in
that country. However, phenomenon of PPP is completely kicked out under
floating exchange rate regime in the short run [see for example, Rogoff
(1999); Mark and Choi (1997); MacDonald (1999); Obstfeld and Taylor
(1997); Coleman (1995); O’Connel (1998) and Michael, et al. (1997)].
Recent statement by the President of the National Bank of Pakistan, that
the exchange rate and the interest rate are two faces of the same coin
[Bokhari (2004)], shows that the changes in the exchange rate is
strongly associated with the changes in the interest rate differential.1
It is also argued that under free float the value of currency is
determined by demand and supply of foreign exchange and to control the
value of currency using open market operations interest rate is used as
the key monetary policy tool. Moreover, deterioration of trade balance
leads to deprecation in exchange to make the exports competitive in the
market and vice versa
Volatility of Exchange Rate and Export Growth in Pakistan: The Structure and Interdependence in Regional Markets
Get PDFPakistan follows the flexible exchange rate system since July
2000. Prior to this period it followed a managed floating exchange rate
since 1982 and a fixed rate prior to 1982. Due to controlled exchange
rate a little fluctuation in exchange rate was observed. It is empirical
concluded that the Pakistan’s share of exports in world market did not
indicate any significant change during fixed and managed floating
exchange rate regimes [Kumar and Dhawan (1991)]. Pakistan’s share in
world exports was stable during the last 24 years, ranging between a
minimum of 0.12 percent in 1980 and a maximum of 0.18 percent in 1992.
After introduction of floating exchange rate during 2002-2003 (the share
was 0.17 percent) Pakistan’s exports performance was related to the
volatility of exchange rate. Only one empirical study is available
regarding to Pakistan’s context by Kumar and Dhawan (1991) who estimated
the impact of exchange rate volatility on Pakistan exports to the
developed world from 1974 to 1985. They found that volatility of
exchange rate adversely effect on export demand. They also investigated
the third country effect and suggested that Japan and West Germany act
as the alternate market for Pakistan’s export to the United States and
United Kingdom. The high degree of volatility and uncertainty of
exchange movements observed in Pakistan is of great concern of
policy-makers and researchers to investigate the nature and extent of
the impact of such movements on Pakistan’s volume of trade. In many
countries it is experienced that higher exchange rate volatility reduced
the trade by creating uncertainty about future profit from
exports
Deepa Narayan (ed.). Measuring Empowerment: Cross-Disciplinary Perspectives. Washington, D.C.: The International Bank for Reconstruction and Development / The World Bank, 2005. Pages xx+475. Paperback. Price not given.
Get PDF‘Empowerment’ has different meanings in different
sociocultural and political contexts, and does not translate easily into
all languages. Choosing indicators for measuring empowerment, therefore,
depends on the social, economic, political, and cultural environment of
the target population, and this multi-dimensional nature of empowerment
complicates issues of measurement. This book brings forth the different
indicators of empowerment in a cross-disciplinary perspective,
underlining the challenge of evaluating empowerment and its contribution
to development effectiveness and outcome
Exports, Imports, and Economic Growth in South Asia: Evidence Using a Multivariate Time-series Framework
Get PDFThis paper examines the export-led growth hypothesis for the
five largest economies of the South Asian region using a multivariate
time-series framework. The South Asian countries present an interesting
case study in view of their increasing outward orientation and adoption
of export promotion policies as part of their growth strategies. A key
feature of the study is the explicit incorporation of imports in the
analysis to make allowance for their role in the export-economic growth
relationship. While controlling for imports, the results indicate
bi-directional causality between exports and output growth in
Bangladesh, India, and Sri Lanka in the short-run. The study finds
long-run equilibrium relationships among exports, imports, and output
for Bangladesh and Pakistan. However, for India, Nepal, and Sri Lanka,
no evidence of a long-run relationship among the relevant variables is
found. These results are in contrast to some earlier work that found the
export-led growth hypothesis to be a long-run phenomenon for all
countries in the region
M. Ashraf Janjua. History of the State Bank of Pakistan (1978-1988). Karachi: State Bank of Pakistan. 2003. 790 pages. Hardback. Price not given.
Get PDFHistory of the State Bank of Pakistan (1978-1988) contains the
major events relating to the real and financial sectors of the economy
as well as a rich analysis of economic development in Pakistan. Although
the book’s main focus is the 1977-88 period, it also traces the
developments since Independence up to 1972 to put relevant decade in its
proper perspective. As such, the book would help in better understanding
of the economic reforms that have been undertaken since 1988. It is also
an important contribution towards understanding the evolution of
economic policies in Pakistan. There are twelve chapters relating to
various aspects of growth in the real sectors; monetary policies and
credit management; regulatory framework and prudent regulations;
supervision of banks; exchange rate management; the State Bank and the
government; role of the State Bank in economic development; Islamisation
of banks; and management organisation and administration of the State
Bank of Pakistan, followed by four appendices, a select bibliography,
and an index