Template-Type: ReDIF-Paper 1.0 Author-Name: Muhammad Nasir Author-X-Name-First: Muhammad Author-X-Name-Last: Nasir Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Author-Name: Muhammad Salman Tariq Author-X-Name-First: Muhammad Salman Author-X-Name-Last: Tariq Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Author-Name: Faiz-ur-Rehman Author-X-Name-First: Faiz-ur- Author-X-Name-Last: Rehman Author-Workplace-Name: Quaid-i-Azam University, Islamabad. Title: The Effect of Foreign Remittances on Schooling: Evidence from Pakistan Abstract: The underlying study intends to show the impact of foreign remittances on the educational performance of children in the households receiving these remittances. Much of the literature in this area covers the effects of remittances on poverty, consumption, and investment behaviour of the receiving households. The literature on the impact of remittances on educational performance, however, is rare, especially in Pakistan. To investigate the impact of remittances on educational performance, primary data at the household level is collected from four main cities of the Khyber Pakhtunkhwa Province, Pakistan. The OLS results illustrate that, without considering parental education, remittances have significant adverse effects on educational performance. However, the effect becomes insignificant once parental education is included, as a control variable, in the regression. The results also reveal that the low level of parental education, current income, assets, family type, and family size play an important role in the educational performance of children. Length: 27 pages Creation-Date: 2011 File-URL: http://www.pide.org.pk/pdf/Working%20Paper/WorkingPaper-66.pdf File-Format: Application/pdf File-Function: First Version, 2011 Number: 2011:66 Classification-JEL: A20, I22 Keywords: Remittances , Education, Parental Absence Handle: RePEc:pid:wpaper:2011:66 Template-Type: ReDIF-Paper 1.0 Author-Name: Muhammad Arshad Khan Author-X-Name-First: Muhammad Arshad Author-X-Name-Last: Khan Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Author-Name: Shujaat Ali Khan Author-X-Name-First: Shujaat Ali Author-X-Name-Last: Khan Author-Workplace-Name: Middlebury College, USA. Title: Foreign Direct Investment and Economic Growth in Pakistan: A Sectoral Analysis Abstract: This paper establishes an empirical relationship between industry -specific foreign direct investment (FDI) and output under the framework of Granger causality and panel cointegration for Pakistan over the period 1981-2008. The result supports th e evidence of panel cointegration between FDI and output. FDI has a positive effect on output in the long run. The result also supports the evidence of long-run causality running from GDP to FDI, while in the short run, the evidence of two-way causality between FDI and GDP is identified. At the sectoral level, the effects of FDI on growth vary significantly across sectors. The most striking result obtained is that FDI causes growth in the primary and services sectors, while growth causes FDI in the manufacturing sector. Length: 22 pages Creation-Date: 2011 File-URL: http://www.pide.org.pk/pdf/Working%20Paper/WorkingPaper-67.pdf File-Format: Application/pdf File-Function: First Version, 2011 Number: 2011:67 Classification-JEL: F23, O40, C33 Keywords: FDI, Growth, Cointegration, Causality Handle: RePEc:pid:wpaper:2011:67 Template-Type: ReDIF-Paper 1.0 Author-Name: Naushin Mahmood Author-X-Name-First: Naushin Author-X-Name-Last: Mahmood Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Title: The Demographic Dividend: Effects of Population Change on School Education in Pakistan Abstract: This study examines how the changing demographics in Pakistan, resulting primarily from fertility transition, would affect educational attainment of school-age population during the next two decades. The basic question addressed is whether the expected population change would enable the country to benefit from the demographic dividend and enhance the chances to achieve universal primary education by 2015, one of the targets of the Millennium Development Goals (MDGs). Using projected population es timates and school enrolment data, the findings show that about 9.5 million children aged 5-9 years were not enrolled in school in 2005-06. Assuming a gradual and steady increase in enrolment, education simulations show that the number of children aged 5-9 years who will never enter school will cumulatively rise to approximately 27.7 million by 2030, of which 12.2 million would be boys, and 15.5 million girls, and it may take another two decades to achieve universal primary enrolment. Furthermore, children aged 10-14 years not attending secondary level were 14.5 million in 2005-06. Given the current trends in enrolment, this number is expected to increase almost four times by 2030, thereby widening the population education gap over the years. Thus rapid increase in enrolment is the desired option. Otherwise the large education deficit would create conditions highly unfavourable to capitalis e on the demographic dividend, and pose a threat rather than offer an opportunity to stimulate economic development. In terms of policy actions, investments in school education need to be almost doubled to absorb the prospective increase in the school-age population during the next two decades. Length: 18 pages Creation-Date: 2011 File-URL: http://www.pide.org.pk/pdf/Working%20Paper/WorkingPaper-68.pdf File-Format: Application/pdf File-Function: First Version, 2011 Number: 2011:68 Classification-JEL: J1, I2, I22 Keywords: Demographic Dividend, Education, Primary Enrolment Handle: RePEc:pid:wpaper:2011:68 Template-Type: ReDIF-Paper 1.0 Author-Name: Muhammad Arshad Khan Author-X-Name-First: Muhammad Arshad Author-X-Name-Last: Khan Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Author-Name: Musleh ud Din Author-X-Name-First: Musleh ud Author-X-Name-Last: Din Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Title: A Dynamic Macroeconometric Model of Pakistan’s Economy Abstract: In this study, an attempt has been made of develop a dynamic macroeconometric model of Pakistan’s economy to examine the behaviour of major macroeconomic variables such as output, consumption, investment, government expenditure, money, interest rates, prices, exports, and imports. The model consists of 21 equations, of which 13 are behavioural and the rest are identities. The Engle-Granger two-step cointegration procedure is used to derive the long-run and short -run elasticities for the period 1972-2009. The test of significance of each estimated equation seems to validate the model. The estimated long-run parameters are used to perform simulation experiments to determine the model’s ability to track historical data and to assess the behaviour of the key macroeconomic variables in response to the changes in selected exogenous variables. The results indicate that the majority of macroeconomic variables follow an increasing trend over the period of simulation, 2009-2013. Length: 52 pages Creation-Date: 2011 File-URL: http://www.pide.org.pk/pdf/Working%20Paper/WorkingPaper-69.pdf File-Format: Application/pdf File-Function: First Version, 2011 Number: 2011:69 Classification-JEL: C20, C53, E1, E6, O5, R10 Keywords: Macroeconometric Model; Pakistan Economy, Cointegration, Forecasting Handle: RePEc:pid:wpaper:2011:69 Template-Type: ReDIF-Paper 1.0 Author-Name: Muhammad Nasir Author-X-Name-First: Muhammad Author-X-Name-Last: Nasir Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Author-Name: Wasim Shahid Malik Author-X-Name-First: Wasim Shahid Author-X-Name-Last: Malik Author-Workplace-Name: Quaid-i-Azam University, Islamabad. Title: The Contemporaneous Correlation of Structural Shocks and Inflation— Output Variability in Pakistan Abstract: Monetary policy has changed in a number of ways during the last two decades . Along with the other characteristics, modern monetary policy is forward-looking, and the central banks respond contemporaneously to structural shocks that are expected to make inflation deviate from the future targets. This study aims at investigating this aspect of the monetary policy for Pakistan. Using a modified version of Structural Vector Autoregression (SVAR) developed by Enders and Hurn (2007), we have found a weak response of policy to supply-side shocks as the correlation coefficient between the demand and supply shocks is only 0.041. Moreover, the results show that the demand shocks have no significant contribution to output variability. On the other hand, both the demand and supply shocks, along with the foreign supply shocks, significantly contribute to inflation variability. Length: 20 pages Creation-Date: 2011 File-URL: http://www.pide.org.pk/pdf/Working%20Paper/WorkingPaper-70.pdf File-Format: Application/pdf File-Function: First Version, 2011 Number: 2011:70 Classification-JEL: E31, E42, E52, E58 Keywords: Monetary Policy, Contemporaneous Correlation, Pakistan, Structural Shocks, Vector Autoregression Handle: RePEc:pid:wpaper:2011:70 Template-Type: ReDIF-Paper 1.0 Author-Name: Sadia Mariam Malik Author-X-Name-First: Sadia Author-X-Name-Last: Mariam Malik Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Title: An Empirical Investigation of the Relationship between Food Insecurity, Landlessness, and Violent Conflict in Pakistan Abstract: This study is an attempt to examine empirically the association between socio-economic measures of deprivation—such as food insecurity, landlessness, unemployment, and human under-development—and the incidence of violent conflict as measured by the number of violent attacks across districts in Pakistan. The study uses a linear probability model in which the dependent variable is defined on the basis of the presence or absence of violent attacks in a particular district. The results of the study indicate that in addition to the provincial-level fixed characteristics, landlessness and food insecurity are positively and robustly associated with the probability of violent attacks across districts in Pakistan. Quite contrary to the general impression held, the number of madrassahs (religious seminaries), employment rate, and literacy rate appear to be statistically irrelevant, on average, in terms of determining the probability of the presence of violent conflict across districts in Pakistan. While emphasising the need to collect better data on the intensity of violent conflict— to take into account both the incidence as well as the origin of violent attacks across districts in Pakistan—the study raises some important questions regarding the role of landlessness and food insecurity that need to be investigated further in future studies on socio-economic drivers of violent conflict in Pakistan. Length: 17 pages Creation-Date: 2011 File-URL: http://www.pide.org.pk/pdf/Working%20Paper/WorkingPaper-71.pdf File-Format: Application/pdf File-Function: First Version, 2011 Number: 2011:71 Classification-JEL: O29, D63, D74, F52 Keywords: Violent Conflict, Militancy, Food Insecurity, Landlessness, Pakistan Handle: RePEc:pid:wpaper:2011:71 Template-Type: ReDIF-Paper 1.0 Author-Name: Muhammad Javid Author-X-Name-First: Muhammad Author-X-Name-Last: Javid 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: Foreign Aid and Growth Nexus in Pakistan: The Role of Macroeconomic Policies Abstract: Despite receiving large quantities of foreign aid, Pakistan, like many other developing countries, has remained stagnant and become more aiddependent. This grim reality has provoke d a vigorous debate on the effectiveness of aid. This study examines the effectiveness of aid, focusing on the ongoing debate on the interactive effect of aid and policy on sustainable economic growth. The empirical analysis is based on the ARDL cointegration approach, using the data for the period 1960 to 2008. The empirical findings are that foreign aid and real GDP have a negative relationship, while the aid-policy interactive term and real GDP growth have a positive and significant relationship. Interesting results emerge when aid-GDP alone is introduced into the growth equation and has an insignificant positive coefficient in the long run and a negative and weakly significant coefficient in the short run, while the aidpolicy interactive term has a positive and significant coefficient both in the short run and the long run. When we disaggregate aid in terms of the bilateral and multilateral components, bilateral aid is significantly positive in the short run and multilateral aid is insignificant, while the aid interactive term is positive in both cases. The results strongly support the view that foreign aid does have a positive impact on economic growth in Pakistan, though conditionally so, i.e., if based on sound macroeconomic policies. Length: 23 pages Creation-Date: 2011 File-URL: http://www.pide.org.pk/pdf/Working%20Paper/WorkingPaper-72.pdf File-Format: Application/pdf File-Function: First Version, 2011 Number: 2011:72 Classification-JEL: O1; O2; O4; C23 Keywords: Foreign Aid, Macroeconomic policies, Economic Growth, Pakistan, ARDL Handle: RePEc:pid:wpaper:2011:72 Template-Type: ReDIF-Paper 1.0 Author-Name: Usman Mustafa Author-X-Name-First: Usman Author-X-Name-Last: Mustafa Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Title: Fiscal Federalism in Pakistan: The 7th National Finance Commission Awardand Its Implications Abstract: Pakistan is a federal country. Distribution of resources has a profound impact on income, development, backwardness, and poverty. The paper briefly discusses the federation, its needs and importance in general. The National Finance Commission (NFC) award is considered as a step towards federalism. In the historical perspective of the NFC awards, the salient features of the recent 7th NFC award, the weightings, and the criteria adopted in the n ational as well as provincial Finance Commission award s are described. Major issues faced by the Provincial as well as Federal governments regarding the award and its implementation are discussed in detail. Good practice lessons to be derived from it are also pointed out. The conclusion includes recommendations for a strong federation and effective use of the NFC award. Length: 16 pages Creation-Date: 2011 File-URL: http://www.pide.org.pk/pdf/Working%20Paper/WorkingPaper-73.pdf File-Format: Application/pdf File-Function: First Version, 2011 Number: 2011:73 Classification-JEL: H71, H72, H73, H77 Keywords: Fiscal Federalism, NFC Award, Impact and Implications, Political Economy, Rule and Discretion, Pakistan Handle: RePEc:pid:wpaper:2011:73 Template-Type: ReDIF-Paper 1.0 Author-Name: G. M. Arif Author-X-Name-First: G. M. Author-X-Name-Last: Arif Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Author-Name: Nasir Iqbal Author-X-Name-First: Nasir Author-X-Name-Last: Iqbal Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Author-Name: Shujaat Farooq Author-X-Name-First: Shujaat Author-X-Name-Last: Farooq Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Title: The Persistence and Transition of Rural Poverty in Pakistan: 1998-2004 Abstract: This study has used two rounds of the two panel data sets to examine the poverty dynamics in rural Pakistan (Sindh and Punjab). The Pakistan Socio- Economic Survey (PSES ) covers two periods, 1998 and 2000, while the Pakistan Rural Household Survey (PRHS) covers the 2001 and 2004 period. More than one-fifth of the households were chronically poor in the PSES rounds , and 11 percent in the PRHS rounds. Further, both chronic and transitory poverty are higher in Sindh and southern Punjab than in centra l and northern Punjab. Illiteracy, household size, dependency ratio, lack of livestock, landlessness, lack of ownership of dwellings, and health expenditure are the factors responsible for aggravating long-term poverty. The higher incidence of transitory poverty in rural Sindh and southern Punjab indicates the impact of large investments made in the public sector to raise the living standards there to the level of the better-off regions. Length: 27 pages Creation-Date: 2011 File-URL: http://www.pide.org.pk/pdf/Working%20Paper/WorkingPaper-74.pdf File-Format: Application/pdf File-Function: First Version, 2011 Number: 2011:74 Classification-JEL: I3, I32 Keywords: Poverty, Chronic Poverty, Household Panel Datasets, Rural Pakistan Handle: RePEc:pid:wpaper:2011:74 Template-Type: ReDIF-Paper 1.0 Author-Name: Rehana Siddiqui Author-X-Name-First: Rehana Author-X-Name-Last: Siddiqui Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Author-Name: Hafiz Hanzla Jalil Author-X-Name-First: Hafiz Hanzla Author-X-Name-Last: Jalil Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Author-Name: Muhammad Nasir Author-X-Name-First: Muhammad Author-X-Name-Last: Nasir Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Author-Name: Wasim Shahid Malik Author-X-Name-First: Wasim Author-X-Name-Last: Shahid Malik Author-Workplace-Name: Quaid-i-Azam University, Islamabad. Author-Name: Mahmood Khalid Author-X-Name-First: Mahmood Author-X-Name-Last: Khalid Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Title: The Cost of Unserved Energy: Evidence from Selected Industrial Cities of Pakistan Abstract: This study is an attempt to explore the cost of unserved energy due to power outages in Pakistan that started in 2007. The study is based on a survey conducted for four major industrial cities of Punjab—Gujrat, Faisalabad, Gujranwala, and Sialkot. In addition to quantification of output losses, the effect on employment, cost of production, and delay in supply orders are also examined. The output loss is quantified using two-dimensional analyses, controlling for variations in the duration of outages and in the shift hours. The survey data reveal that employment has not suffered any significant drop due to alternative energy arrangements. These arrangements, nevertheless, have increased the production cost of the firms. Delays in the delivery of supply orders are also due to energy shortage. The study reports that the total industrial output loss varies between 12 percent and 37 percent, with Punjab as the major affected province. Length: 21 pages Creation-Date: 2011 File-URL: http://www.pide.org.pk/pdf/Working%20Paper/WorkingPaper-75.pdf File-Format: Application/pdf File-Function: First Version, 2011 Number: 2011:75 Classification-JEL: Keywords: Energy Crises, Output Loss, Pakistan Handle: RePEc:pid:wpaper:2011:75 Template-Type: ReDIF-Paper 1.0 Author-Name: Henna Ahsan Author-X-Name-First: Henna Author-X-Name-Last: Ahsan Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Author-Name: Zainab Iftikhar Author-X-Name-First: Zainab Author-X-Name-Last: Iftikhar Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Author-Name: M. Ali Kemal Author-X-Name-First: M. Ali Author-X-Name-Last: Kemal Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Title: The Determinants of Food Prices: A Case Study of Pakistan Abstract: Controlling prices is one of the major tasks for the macroeconomic policy-makers. The recent oil price hike that shifted the policy towards biofuels and some natural calamities increased food prices around the world. This paper analyses the demand- and supply-side factors that affect food prices in Pakistan. Long-run relationship is analysed using the Autoregressive Distributed Lag Model (ARDL) for the period 1970 to 2008. The result indicates that supplyside factors (subsidies and world food prices) have a significant impact on food prices , whereas demand-side factors, such as money supply, are the main cause of the increase in food prices in the short as well as the long run. The error correction is statistically significant and shows that market forces play an active role to restore the long-run equilibrium. Length: 21 pages Creation-Date: 2011 File-URL: http://www.pide.org.pk/pdf/Working%20Paper/WorkingPaper-76.pdf File-Format: Application/pdf File-Function: First Version, 2011 Number: 2011:76 Classification-JEL: Keywords: Food Prices, ARDL Approach, Pakistan Handle: RePEc:pid:wpaper:2011:76 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: Estimating the Middle Class in Pakistan Abstract: The concept ‘middle class’ is one of the most commonly used terms in the social sciences, including economics, sociology and political science. Despite its frequent use there is, however, no consensus on what the term exactly implies and its meaning remains ambiguous depending primarily on the context in which it is used. It is viewed as the class that is between, and separates, the lower and the upper classes, that is the rich and the poor, but there is no agreement on the exact boundaries that separates them. Most of the definitions and measurements of the middle class continue to be somewhat arbitrary and vague. Length: 37 pages Creation-Date: 2011 File-URL: http://www.pide.org.pk/pdf/Working%20Paper/WorkingPaper-77.pdf File-Format: Application/pdf File-Function: First Version, 2011 Number: 2011:77 Classification-JEL: Keywords: Handle: RePEc:pid:wpaper:2011:77 Template-Type: ReDIF-Paper 1.0 Author-Name: Mohammad Irfan Author-X-Name-First: Mohammad Author-X-Name-Last: Irfan Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Title: Remittances and Poverty Linkages in Pakistan: Evidence and Some Suggestions for Further Analysis Abstract: Global remittances experienced a dramatic increase over the years, particularly since 1990 wherein the developing world emerged to be the major beneficiary accounting for 60 percent of the total amount. Because of the sheer volume, and magnitude of the remittances, and pre-eminence of these flows compared to the FDIs, development assistance and in some cases the trade related transactions, the development practitioners tended to focus and investigate the importance of remittances which are generally regarded as a dependable source for growth, improved welfare and poverty alleviation in the developing world. Given the fact that remittances flows entail wide ranging ramifications both for sending as well as receiving countries, difficult to be generalised, hence empirical evidence has been mounted though lack of consensus is visible. Length: 26 pages Creation-Date: 2011 File-URL: http://www.pide.org.pk/pdf/Working%20Paper/WorkingPaper-78.pdf File-Format: Application/pdf File-Function: First Version, 2011 Number: 2011:78 Classification-JEL: Keywords: Handle: RePEc:pid:wpaper:2011:78 Template-Type: ReDIF-Paper 1.0 Author-Name: Ayaz Ahmed Author-X-Name-First: Ayaz Author-X-Name-Last: Ahmed Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Author-Name: Henna Ahsan Author-X-Name-First: Henna Author-X-Name-Last: Ahsan Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Title: Contribution of Services Sector in the Economy of Pakistan Abstract: The services sector has provided steady support to Pakistan’s economic growth. It share in GDP now stands a more than 50 percent. The paper analyses its continuation in the growth of the economy in general and the development of trade and genera tion of employment in particular. The study identifies the bottlenecks in its growth and suggest measures to remove them. A set of policy reforms has been suggested to make the sector more effective in the growth of the national economy. Length: 27 pages Creation-Date: 2011 File-URL: http://www.pide.org.pk/pdf/Working%20Paper/WorkingPaper-79.pdf File-Format: Application/pdf File-Function: First Version, 2011 Number: 2011:79 Classification-JEL: Keywords: Services Sector, Industry, Employment, Financial Institutions and Pakistan’s Economy Handle: RePEc:pid:wpaper:2011:79 Template-Type: ReDIF-Paper 1.0 Author-Name: Umer Khalid Author-X-Name-First: Umer Author-X-Name-Last: Khalid Author-Workplace-Name: Pakistan Microfinance Network, Islamabad Author-Name: Sajjad Akhtar Author-X-Name-First: Sajjad Author-X-Name-Last: Akhtar Author-Workplace-Name: Centre for Research on Poverty Reduction and Income Distribution, Islamabad Title: Poverty Dynamics of Female-headed Households in Pakistan: Evidence from PIHS 2000-01 and PSLM 2004-05 Abstract: The paper attempts to empirically test a naďve version of what is rather stylistically termed as “feminisation of poverty”, using the sub-sample of female -headed households (FHHs) from two household surveys in Pakistan. Although, the database is constrained by quality factors and small sample size, the following findings add to the richness of current research in this area: (a) The numerical incidence of poverty among households headed by females is less than that for all households in the country, at the national, urban and rural level for both the years. This can be traced to the finding that more than 70 percent of households headed by females receive remittances, (b) The incidence of poverty among FHHs during the period 2000-01 to 2004-05 did not decline as fast as it did for mixed households, nationwide. In urban areas, it did not decline at all, (c) Among the determinants of poverty of FHHs, illiteracy, dependency and rural residence exacerbate poverty, while remittances domestic and/ or foreign reduce poverty, (d) The dynamics of incidence of poverty among FHHs during the period indicated that Illiteracy as the factor exacerbating poverty became less important in 2004-05. Moreover, residence in rural areas was also a weaker factor in determining the incidence of poverty. By far the most notable contribution in reducing the incidence of poverty was self-employment in agriculture in 2004-05. Length: 24 pages Creation-Date: 2011 File-URL: http://www.pide.org.pk/pdf/Working%20Paper/WorkingPaper-80.pdf File-Format: Application/pdf File-Function: First Version, 2011 Number: 2011:80 Classification-JEL: Keywords: Handle: RePEc:pid:wpaper:2011:80