Journals of Forman Christian College
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Trade, Poverty and Employment: EmpiricalEvidence from Pakistan: Muhammad Tariq Majeed
Full text linkThis study investigates the development effects of trade liberalization in Pakistan. The results show that the effect of trade liberalization on per capita GDP is insignificant, though the sign is positive. However its effect on employment is negative. Although trade theory predicts that trade openness is the potential source of economic growth that in turn spills over its positive effects on labor market but this study reveals jobless-openness phenomenon in Pakistan. It is also found that trade liberalization has increased income inequalities because it creates winners and losers simultaneously that results in negative welfare impact. As far as eradication of poverty is concerned, it has been found that trade accentuates, not ameliorates, and that it intensifies, not diminishes, poverty in the case of Pakistan. The role of human capital emerged as a favorable factor in enhancing per capita GDP and eradication of poverty. The conclusion of this study is that trade liberalization is not pro-development in the case of Pakistan and investment in human capital is the effective tool for development and fighting against poverty
Performance of Alternative Price Forecast for Pakistan: Yaser Javed and Eatzaz Ahmad
Full text linkTo evaluate the price forecasts, we use two data frequencies i.e., annual and quarter with two most demanding techniques, i.e., ARIMA and VAR models to forecast the four index of inflation, named, Consumer Price Index (CPI), Wholesale Price Index (WPI), GNP Price Deflator (GNPPD), and Implicit Price Deflator of Total Domestic Absorption (DAPD).2 In order to test the performance of price forecast for Pakistan, we found Consumer Price Index (CPI) and Implicit Price Deflator of Total Domestic Absorption (DAPD) better than Wholesale Price Index (WPI) and GNP Price Deflator (GNPPD). In general more elaborate Vector Autoregressive (VAR) models outperform the simplistic Auto Regressive Integrated Moving Average (ARIMA) models in forecasting a price series. Another useful conclusion is that the quarterly data provide better forecasts than the annual data. All these results support the econometricians’ maintained hypotheses that, data observed at high frequency and statistically more elaborate use of a given data set provides better predictions than the data observed at low frequency and analyzed with simplistic statistical tools
Impact of Trade Openness on Exports Growth, Imports Growth and Trade Balance of Pakistan: M. Aslam Chaudhary and Baber Amin
Full text linkThis study mainly aims at analyzing the impact of trade openness on exports growth, imports growth and trade balance of Pakistan. Pakistan has undergone substantial trade openness measures during the last three decades. The main objective behind the openness and liberalization has been to reap the fruits of higher exports which contribute to higher economic growth. The study analyzes the data from 1980-2008. The OLS and Auto Regressive Distributive Lagged modeling approaches have been employed to find empirical support. The results of the study reveal that trade openness affected both exports growth and imports growth positively although the imports growth increased more than exports one, which worsened the trade balance. Nevertheless, trade openness played a limited role and remained constrained in promoting economic growth through exports expansion. Thus, there is a need to create a balance between exports and imports growth to reap the fruits of openness
Foreign Remittances and Household Poverty: Evidence from Pakistan: Faisal Mehmood Mirza, Muhammad Saim Hashmi, Saima Iqbal and Asif Iqbal
No full textThis paper evaluates the impact of foreign remittances on household incomes `and poverty using household data in Pakistan. Employing propensity score matching method, average treatment effects on treated suggest that remittances increase per capita income by 45 percent when compared to per capita income of households that do not receive remittances. Poverty results suggest that remittances reduce the probability of households getting under poverty line by 30 percent. This percentage is higher for rural households at 36 percent than the urban households at 23 percent. Findings suggest that government should facilitate expatriate Pakistanis in sending remittances to their home country
Unofficial and Official Exchange Rates Dynamics: A Case of Pakistan: Ali Farhan Chaudhry and Abdul Rauf Butt
No full textThis empirical study has been undertaken to investigate dynamic relationship between nominal unofficial and official exchange rates of Pak-rupee against US$ by using ARDL and error correction models. Monthly data for the period of 1948M04 to 2001M06 has been used. Statistical results conclude that both exchange rates are cointegrated. Error correction mechanism also confirms existence of long run relationship between two nominal exchange rates. Further, estimated error correction term indicates that nominal unofficial exchange rate corrects last month’s disequilibrium at the speed of 6.0972 percent. Toda and Yamamoto (1995) causality test indicates that causality does exist from nominal unofficial to official exchange rate in case of Pakistan. Restoration of nominal unofficial exchange rate to long run equilibrium implies that short-term fluctuations in official exchange rate can be forecasted in developing countries like Pakistan and central bank can align official exchange rate with unofficial exchange rat
Pakistan’s Trade with India – Disaggregated Prospects: Muhammad Salahuddin Ayyubi and Qais Aslam
Full text linkThe study has made an attempt to expose the disaggregated dynamics Pakistan’s trade with India for a period of 2004-14 at HS-2 digit classification. It was observed that at least three quarters of Pakistan’s total exports to as well as imports from India comprised of top ten categories at HS-2 digit classification in each case. Nearly half of Pakistan’s bilateral trade with India comprised of edible vegetables, organic chemicals, plastics and its articles and cotton, almost consistently during 2004-14 and each of these four categories were also included in Pakistan’s top ten exports to and imports from India. The study further revealed that Indian exports to Pakistan enjoyed three times more complementarity in Pakistan than Pakistani exports enjoyed in India, consistently during this period. Pakistan’s imports from India were more than expectations in all the top ten categories though India possessed consistent revealed comparative advantage only in three of the top ten Pakistani imports from India
Regional Growth Causalities, Dependency and Integration among the Provinces of Pakistan: Tahir Sadiq, M. Aslam Chaudhary and Aribah Aslam
Full text linkThe paper addresses an empirical question whether the provinces of Pakistan are growing equitably and or integrating over time. Regional growth inequalities and deprivation among provinces of Pakistan is one of the hot issues. It is a general perception that small provinces are neglected in the development process, while focus of development policies was on large provinces. Therefore, this study has investigated growth dependency of provinces among each other. The study applied Engle Granger co-integration and Granger causality test to find the long run and short run relationships and growth causalities among provinces. The empirical evidences indicated that there exist long run and short run relationships between large provinces. However, the growth of small provinces (KPK and Baluchistan) depends on the growth of large provinces, Punjab and Sindh. Punjab effects growth of Sindh; both in short and long run but Sindh effects economic growth of Punjab, only in the long run. Such a strong relationship hardly exists for small provinces; i.e. KPK and Baluchistan. The trickled down effect is not evident for small provinces. The small provinces are less beneficial from this relationship. Besides, the growth of small provinces is dependent upon the performance of large provinces, such dependent nature of growth of small province may have created a sense of deprivation in small provinces. Thus, there is a need to integrate small provinces in to the main stream of economic growth by allowing economic policies to be directed towards deprived region (provinces) of Pakistan. It will help to improve equitable growth and integration of the small provinces in to the main stream of national developmen
Addressing the Pitfalls of Single Poverty Line in the Estimation of Poverty in Different Regions of Pakistan: Fatima Bashir and Muhammad Idrees
No full textHighlighting the importance of region- specific poverty lines, the study examines the biasness of single poverty line that is widely used in the measurement of poverty in Pakistan. Since consumption patterns and unit cost of calorie varies substantially across different regions, so the over-reliance on single poverty line is not viable as it suppresses all the relevant information and eventually result in misleading poverty assessment. Cost of basic needs approach is applied on the recently available HIICS/ HIES data of 2015-16 to evaluate estimates from single and regional- specific poverty lines. The comparison of poverty incidences revealed the biasness as results appear to be extensively dissimilar based on two approaches, such as the urban poverty is found to be higher than rural one in case of regional poverty lines indicating that the extent of urban poverty is systematically under[1]estimated by the use of single poverty line. Furthermore, the province-wise poverty rankings differ drastically in both cases. The study found that region-specific poverty lines are consistent and appropriate for poverty analysis as the estimates based on single poverty line fails to capture regional price variations and consumption patterns
Globalization and Poverty Nexus: A Panel Data Analysis: Farzana Naheed Khan and Muhammad Tariq Majeed
Full text linkThis study analytically explores and empirically tests the impact of different dimensions of globalization on cross-country poverty using a panel data set for 113 developing countries over the period 1980-2014. The empirical results show that globalization generally helps to reduce poverty. However, this effect is not consistent for different forms of globalization. Economic and social globalizations significantly help to reduce global poverty while the political globalization does not significantly cause poverty reduction in all models. The overall results of this study indicate that globalization ameliorates not accentuates poverty. Moreover, findings of the study are shown to be robust to different specifications and alternative econometric techniques
Private, Public and Foreign Investment Nexus in Pakistan: An Empirical Analysis of Crowding-In/Out Effects: Ahsan Abbas and Eatzaz Ahmed
Full text linkThis study empirically explores the relationship among private domestic, foreign direct and public investments for Pakistan economy using time series data from 1960 to 2015. Simultaneous equations and Vector Error Correction Model (VECM) frameworks are employed to examine the inter relationship among the three categories of investments. The study primarily works out crowding-in/out effect. Notably, the crowding-out effect is observed showing substitutability among the three types of investments. The study also finds that public, private domestic and foreign direct investments have strong positive impacts on economic growth. The findings suggest that better economic environment and favorable investment climate are pre-requisite to marginalize the crowding-out effect