Template-Type: ReDIF-Paper 1.0 Author-Name: Rizwana Siddiqui Author-X-Name-First: Rizwana Author-X-Name-Last: Siddiqui Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad Author-Name: A. R. Kemal Author-X-Name-First: A. R. Author-X-Name-Last: Kemal Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad Title: Remittances, Trade Liberalisation, and Poverty in Pakistan: The Role of Excluded Variables in Poverty Change Analysis Abstract: This study attempts to assess the impact of two shocks-trade liberlisation and a decline in remittances from abroad-on poverty in Pakistan using a CGE framework. It is found that tariff reducation in the absesnce of a decline in remittances reduces poverty, as measured by the head count, poverty gap, and severity ratios (FGT indicators) in both the rural and urban areas of Pakistan. In terms of welfare, all households appear to gain. The results show that the gain in welfare is larger for urban households than for rural households. We conclude from this that trade liberalisation reduces the gap between urban and ruralhouseholds. In a second set of experiments, it was found that trade liberlisation in the presence of a decline in remittances reduced welfare in urban households but rural households still show an increase over the base year. According to all FGT indicators, poverty increases in urban households but not in rural households. the combined shock is more harmful to households in the urban areas than for households in the rural areas. However, this welfare gain and reduction in poverty level in rural households in less than the welfare gain and poverty reduction in the presence of trade liberlisation only. Aggregate statistics show that the negative impact of remittance decline dominates the positive impact of trade liberlisation in urban areas. On the other hand, in the case of rural areas, the posve impact of trade liberlisation dominates the negative impact of a decline in remittances. It shows that teh decline in remittance inflows is a major contributory factor in explaining the increase in poverty in pakistan. Length: 40 pages. Creation-Date: 2006 File-URL: http://www.pide.org.pk/pdf/Working%20Paper/Working%20Paper%20Series%202006-1.pdf File-Format: Application/pdf File-Function: First Version, 2006 Number: 2006:1 Classification-JEL: F10, F16, I32, J61 Keywords: Trade, Remittances, Poverty, Pakistan Handle: RePEc:pid:wpaper:2006:1 Template-Type: ReDIF-Paper 1.0 Author-Name: Rizwana Siddiqui Author-X-Name-First: Rizwana Author-X-Name-Last: Siddiqui Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad Author-Name: A. R. Kemal Author-X-Name-First: A. R. Author-X-Name-Last: Kemal Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad Title: Poverty-reducing or Poverty-inducing? A CGE-based Analysis of Foreign Capital Inflows in Pakistan Abstract: Foreign capital inflows (FKI) help an economy by financing the imbalance between income and expenditure. However, their impact on poverty in the recipient economy is a controversial issue. In this study, we examine the impact on poverty in two different scenarios (1) labour is homogeneous (2) labour is heterogeneous. The Computable General Equilibrium model for Pakistan is used to conduct simulations in order to assess the impact of an increase in foreign capital on poverty both in the presence and in the absence of trade liberalisation. Several interesting results emerge from the study. First, FKI tends to reduce poverty in the presence as well as in the absence of trade liberalisation when labour is homogeneous. However, poverty reduction appears to be larger in the presence of trade liberalisation. Second, when labour is differentiated according to qualification and is assumed to be sector-specific, in the absence of trade liberalisation a higher proportion of benefits of FKI accrue to skilled labour and poverty increases by all measures for both urban and rural households. In the presence of trade liberalisation, FKI benefits unskilled labour more, and poverty is decreased irrespective of the choice of poverty indicators Length: 43 pages. Creation-Date: 2006 File-URL: http://www.pide.org.pk/pdf/Working%20Paper/Working%20Paper%20Series%202006-2.pdf File-Format: Application/pdf File-Function: First Version, 2006 Number: 2006:2 Classification-JEL: F, F3, F32 Keywords: Capital inflow, Poverty, Pakistan Handle: RePEc:pid:wpaper:2006:2 Template-Type: ReDIF-Paper 1.0 Author-Name: Ali Cheema Author-X-Name-First: Ali Author-X-Name-Last: Cheema Author-Workplace-Name: Lahore University of Management Sciences, Lahore Author-Name: Asad Sayeed Author-X-Name-First: Asad Author-X-Name-Last: Sayeed Author-Workplace-Name: Collective for Social Science Research, Karachi Title: Bureaucracy and Pro-poor Change Abstract: This paper takes a political economy perspective in analysing the nature and causes on the decline in bureaucratic conduct. Section 1 lays out the details of this structure. Based on a logical model which places the bureaucracy within the larger context of the objective function of the state, the nature of the political process, the degree of centralisation and fragmentation of the bureaucratic structure and processes for monitoring and accountability of the bureaucracy, this model provides the basis for subsequent analysis. Section 2 provides a historical overview with regard to changes in the bureaucratic and political structure and the impact it had on the above mentioned balance between bureaucratic conduct and political compulsions. Section 3 then analyses the consequences on service delivery that this systematic weakening of the bureaucratic structure has had. Section 4 then critically assesses some of the recent attempts at bureaucratic reform in the light of the framework developed in Section 1. The conclusion then summarises the paper and draws implications for pro-poor change of the structure and conduct of the bureaucratic structure in Pakistan Length: 26 pages. Creation-Date: 2006 File-URL: http://www.pide.org.pk/pdf/Working%20Paper/Working%20Paper%20Series%202006-3.pdf File-Format: Application/pdf File-Function: First Version, 2006 Number: 2006:3 Classification-JEL: I38 Keywords: Poverty, Poor, Bureaucracy Handle: RePEc:pid:wpaper:2006:3 Template-Type: ReDIF-Paper 1.0 Author-Name: Faiz Bilquees Author-X-Name-First: Faiz Author-X-Name-Last: Bilquees Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad Title: Civil Servants’ Salary Structure Abstract: The paper looks at the trends in nominal and real salaries of the Federal Government employees over the period 1990-2006. It examines the structural defects in the existing salary structure and the anomalies in the allowances structure to show that appropriate remuneration for the civil servants requires serious and urgent consideration. The widening gap in the emoluments of government employees versus the public sector corporations and private sector employees has a strong bearing on the motivation and ability to work. The paper makes serious recommendations to overhaul the existing structure of salaries and perks to make the public sector employment competitive and cost-effective Length: 21 pages. Creation-Date: 2006 File-URL: http://www.pide.org.pk/pdf/Working%20Paper/PIDE%20Working%20Paper%202006_4_.pdf File-Format: Application/pdf File-Function: First Version, 2006 Number: 2006:4 Classification-JEL: j3, j31 Keywords: Civil services, Wages, Pakistan Handle: RePEc:pid:wpaper:2006:4 Template-Type: ReDIF-Paper 1.0 Author-Name: Paul Dorosh Author-X-Name-First: Paul Author-X-Name-Last: Dorosh Author-Workplace-Name: The World Bank, Washington, D. C. Author-Name: Abdul Salam Author-X-Name-First: Abdul Author-X-Name-Last: Salam Author-Workplace-Name: Pakistan Agricultural Prices Commission, Islamabad Title: Wheat Markets and Price Stabilisation in Pakistan: An Analysis of Policy Options Abstract: This article provides a quantitative analysis of the effects of Pakistan government domestic wheat procurement, sales, and trade policies on wheat supply, demand, prices, and overall inflation. Analysis of price multipliers indicates that increases in wheat procurement prices (one means of promoting domestic procurement) have relatively small effects on overall price levels. Partial equilibrium analysis of wheat markets suggests that fluctuations in production, rather than market manipulation, are plausible explanations for price increases in recent years. Comparisons of domestic and international prices suggest that promoting private sector imports is one alternative for increasing supply and stabilising market prices, particularly in years of production shortfalls. Overall, this paper concludes that market forces play a dominant role in price determination in Pakistan, and that policies that promote the private sector wheat trade can both increase price stability and reduce fiscal costs Length: 17 pages. Creation-Date: 2006 File-URL: http://www.pide.org.pk/pdf/Working%20Paper/PIDE%20Working%20Papers%202006-5.pdf File-Format: Application/pdf File-Function: First Version, 2006 Number: 2006:5 Classification-JEL: Q11, Q13 Keywords: Wheat, Agricultural prices, Pakistan Handle: RePEc:pid:wpaper:2006:5 Template-Type: ReDIF-Paper 1.0 Author-Name: Fazal Husain Author-X-Name-First: Fazal Author-X-Name-Last: Husain Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad Author-Name: Abdul Qayyum Author-X-Name-First: Abdul Author-X-Name-Last: Qayyum Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad Title: Stock Market Liberalisations in the South Asian Region Abstract: This study attempts to conduct an investigation of the characteristics of the South Asian stock markets including the effects of the opening of these markets. These markets were liberalised in early 1990s as a part of the economic reforms started in the South Asian region about two decades ago. The analysis is conducted for four countries in the South Asia, Bangladesh, India, Pakistan, and Sri Lanka, covering the period from 1980 to 2003. The analysis is done with the help of tables, regression analysis, Event Window analysis, and Error Correction Functions. The analysis indicates significant development in stock markets indicators such as market capitalisation and trading value in the region following liberalisation measures. However, the development in stock markets in South Asia does not seem to influence the real sector and the stock markets are still playing a minor role in their respective economies. The integration analysis suggests that the markets in South Asia are integrated with major markets, that is, of USA, UK, and Japan. There is clear evidence that the markets in India and Pakistan are affected by the major as well as the regional markets in the long run. In the short run, however, the markets appear to be independent of one another Length: 19 pages. Creation-Date: 2006 File-URL: http://www.pide.org.pk/pdf/Working%20Paper/PIDE%20QWorking%20Papers%202006-6.pdf File-Format: Application/pdf File-Function: First Version, 2006 Number: 2006:6 Classification-JEL: G1 Keywords: Stock Markets, South Asia, Liberalisation, Pakistan, India, Sri Lanka, Bangladesh, Market Integration Handle: RePEc:pid:wpaper:2006:6 Template-Type: ReDIF-Paper 1.0 Author-Name: Abdul Qayyum Author-X-Name-First: Abdul Author-X-Name-Last: Qayyum Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad Author-Name: A. R. Kemal Author-X-Name-First: A. R. Author-X-Name-Last: Kemal Author-Workplace-Name: Formerly of the Pakistan Institute of Development Economics, Islamabad Title: Volatility Spillover between the Stock Market and the Foreign Market in Pakistan Abstract: Our paper examines the volatility spillover between the stock market and the foreign exchange market in Pakistan. For the longrun relationship we use the Engle Granger two-step procedure and the volatility spillover is modelled through the bivariate EGARCH method. The estimated results from cointegration analysis show that there is no long-run relationship between the two markets. The results from the volatility modelling show that the behaviours of both the stock exchange and the foreign exchange markets are interlinked. The returns of one market are affected by the volatility of the other market. Particularly, the returns of the stock market are sensitive to the returns as well as the volatility of the foreign exchange market. On the other hand, returns in the foreign exchange market are mean-reverting, and they are affected by the volatility of stock market returns. There is a strong relationship between the volatility of the foreign exchange market and the volatility of returns in the stock market Length: 15 pages. Creation-Date: 2006 File-URL: http://www.pide.org.pk/pdf/Working%20Paper/PIDE%20Working%20Papers%202006-7.pdf File-Format: Application/pdf File-Function: First Version, 2006 Number: 2006:7 Classification-JEL: G1 Keywords: Stock Market, Forex Market, EGARCH, Volatility Spillover, Stock Market Returns, Foreign Exchange Return, Pakistan Handle: RePEc:pid:wpaper:2006:7 Template-Type: ReDIF-Paper 1.0 Author-Name: Fazal Husain Author-X-Name-First: Fazal Author-X-Name-Last: Husain Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad Author-Name: Abdul Rashid Author-X-Name-First: Abdul Author-X-Name-Last: Rashid Author-Workplace-Name: College of Business Management, Karachi Title: Significant Shift in Causal Relations of Money, Income, and Prices in Pakistan: The price Hikes in the Early 1970s Abstract: This study extends the analysis of casuality by Husain and Rashid by taking care of the shift in the variables due to the price hikes in the early 1970s. We investigate the casual relations between real money and real income, between nominal money and nominal income, and between nominal money and prices using using the annual data set from 1959-60 to 2003-04, examining the stochastic properties of the variables used in the analysis and taking care of the expected shifts in the series through dummies. The analysis indicates significant shifts in the variables during the sample period. In this context, the shift of the early 1970s seems to be more important to be incorporated in the analysis. The study finds an active role of money in the Pakistani economy, as it is found to be the leading variable in changing prices without any feed back. In the case of income, the study finds the feed back mechanism of money, which is generally missing in the earlier studies probably because of not taking care of the shift in the macroeconomic variables in Pakistan in the early 1970s. Length: 18 pages. Creation-Date: 2006 File-URL: http://www.pide.org.pk/pdf/Working%20Paper/Fazal%20and%20rashid%20PriceHikes.pdf File-Format: Application/pdf File-Function: First Version, 2006 Number: 2006:8 Classification-JEL: E3, E4, N4 Keywords: Money; Income; Prices, Price hikes, Casual relations, Pakistan Handle: RePEc:pid:wpaper:2006:8 Template-Type: ReDIF-Paper 1.0 Author-Name: Paul Dorosh Author-X-Name-First: Paul Author-X-Name-Last: Dorosh Author-Workplace-Name: The World Bank, Washington, D. C. Author-Name: Muhammad Khan Niazi Author-X-Name-First: Muhammad Khan Author-X-Name-Last: Niazi Author-Workplace-Name: Innovative Development Strategies, Islamabad Author-Name: Hina Nazli Author-X-Name-First: Hina Author-X-Name-Last: Nazli Author-Workplace-Name: Innovative Development Strategies, Islamabad Title: A Social Accounting Matrix for Pakistan, 2001-02: Methodology and Results Abstract: This paper describes the structure and construction of a social accounting matrix (SAM) for Pakistan for 2001-02. A SAM is an internally consistent extended set of national accounts that disaggregates value-added in each production activity into payments to various factors (e.g., land, labour, capital), and disaggregates household incomes and expenditures according to various household types. Because this Pakistan SAM is designed for analysis of the links between growth and rural poverty, agricultural activities, agricultural factors of production, and rural household accounts are more disaggregated than are those for urban activities and households. Rural household groups in the SAM are split according to three regions (Punjab, Sindh, and Other Pakistan) to capture the large differences in the structure of agricultural production and incomes across Pakistan. On average, household incomes in the SAM are 2.1 times greater than household expenditures in the HIES Survey, reflecting the apparent substantial under-reporting of expenditures (particularly on services) and informal sector incomes in the HIES and other household surveys. Agricultural factor incomes as calculated in the SAM account for only 23 percent of total factor incomes in Pakistan, but 60 percent of total factor incomes for agricultural households. 91 percent of agricultural incomes derive from land, water, own-farm labour, or livestock; earnings of hired labour and (nonlivestock) agricultural capital account for only 9 percent of agricultural incomes. Incomes of large- and medium-farm rural households, calculated using land area cultivated, data from the Agricultural Census, and other data, are significantly higher than indicated in household surveys Length: 31 pages. Creation-Date: 2006 File-URL: http://www.pide.org.pk/pdf/Working%20Paper/Pakistan%20SAM%20Paper%20March04-new.pdf File-Format: Application/pdf File-Function: First Version, 2006 Number: 2006:9 Classification-JEL: E01 Keywords: National accounts, Social accounting matrix Handle: RePEc:pid:wpaper:2006:9 Template-Type: ReDIF-Paper 1.0 Author-Name: Durr-e-Nayab Author-X-Name-First: Durr-e- Author-X-Name-Last: Nayab Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad Title: Demographic Dividend or Demographic Threat in Pakistan Abstract: Population growth and size have remained the focus of debate for centuries but the recent demographic transition in developing countries has made social scientists take note of the changing age structure of the population as well. As a result of declining population growth and consequent changes in age structure, the proportion of working-age population is increasing in most developing countries, with an associated decline in the dependent age population, offering a window of opportunity to these countries that is referred to as the “demographic dividend”. Pakistan is also going through the demographic transition, and is experiencing a once-in-a-lifetime demographic dividend as the working-age population bulges and the dependency ratio declines. This paper looks into the demographic dividend available to Pakistan and its implications for the country, mainly through three mechanisms: labour supply, savings, and human capital. For economic benefits to materialise, there is a need for policies dealing with education, public health, and those that promote labour market flexibility and provide incentives for investment and savings. On the contrary, if appropriate policies are not formulated, the demographic dividend might in fact be a cost, leading to unemployment and an unbearable strain on education, health, and old age security Length: 29 pages. Creation-Date: 2006 File-URL: http://www.pide.org.pk/pdf/Working%20Paper/Demographic%20Dividend%20Final.pdf File-Format: Application/pdf File-Function: First Version, 2006 Number: 2006:10 Classification-JEL: j11 Keywords: Demographic dividend, age-structure, demographic transition, Pakistan Handle: RePEc:pid:wpaper:2006:10 Template-Type: ReDIF-Paper 1.0 Author-Name: Nadeem Ul Haque Author-X-Name-First: Nadeem Ul Author-X-Name-Last: Haque Author-Email: nhaque_imf@yahoo.com Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad Title: Awake the Sleeper Within: Releasing the Energy of Stifled Domestic Commerce! Abstract: Policy in Pakistan has been fairly path-dependant, placing a higher weight on export promotion and domestic industrialisation development than on domestic commerce. Yet domestic commerce is growing rapidly, and quite possibly is the largest sector in the economy. This paper argues that a more holistic policy, with no favourites, that allows for all sectors to grow leads to better long-term economic results. A vibrant domestic commerce sector is the core of the economy facilitating intermediation between supply and demand, entrepreneurial development, risk-taking, innovation, and competitive markets. Such an economy moves beyond commodity exports to brand name, process, and capital exports, all of which command a higher rate of return. Pakistan could therefore achieve a higher and a more sustainable growth rate by adopting a more balanced growth strategy Length: 14 pages. Creation-Date: 2006 File-URL: http://www.pide.org.pk/pdf/Working%20Paper/dom_comrce_paper.pdf File-Format: Application/pdf File-Function: First Version, 2006 Number: 2006:11 Classification-JEL: G0 Keywords: Commercial policy Handle: RePEc:pid:wpaper:2006:11 Template-Type: ReDIF-Paper 1.0 Author-Name: Lubna Hasan Author-X-Name-First: Lubna Author-X-Name-Last: Hasan Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad Title: Myths and Realities of Long-run Development: A Look at Deeper Determinants Abstract: It has long been realised that factor accumulation and technological development are only proximate causes of economic development, and focus has now shifted to investigating the ‘deeper determinants’ of economic growth. Two such forces are highlighted in literature: institutions and geography. However, it remains controversial as to which of these two is the more important. The “Institutions school” assigns primal importance to institutions, whereas the “Geography school” considers geographical factors as the primary determinant of economic performance of countries. This paper reviews the debate surrounding these “deeper determinants” of economic performance. It reviews the work of these two schools of thought and their interpretation of the long-run development. The paper then examines the evidence provided by the respective schools in favour of their hypotheses. It concludes in favour of the Institutions hypothesis as the Geography school does not provide a consistent story of long-run development Length: 37 pages. Creation-Date: 2006 File-URL: http://www.pide.org.pk/pdf/Working%20Paper/Working%20Paper%202006-12.pdf File-Format: Application/pdf File-Function: First Version, 2006 Number: 2006:12 Classification-JEL: O10, O43, N00, P51, R11 Keywords: Institutions, Geography, Long-run Development, Deeper Determinants of Growth Handle: RePEc:pid:wpaper:12