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on Central and Western Asia |
| By: | Kirdar, Murat; Saracoglu, Sirin |
| Abstract: | The standard growth model predicts that allowing for labor mobility across regions would increase the speed of convergence in per capita income levels and that migration has a negative causal impact on regional growth rates. Although the empirical literature has uncovered some evidence for the former implication, the latter has not been verified empirically. This paper provides empirical evidence for the negative causal impact of migration on provincial growth rates in a developing country with a high level of internal migration that is characterized by unskilled labor exiting rural areas for urban centers. We utilize an instrumental variables estimation method with an instrument unique to the country examined, and we also control for provincial fixed effects. |
| Keywords: | Regional convergence; Regional growth; Internal migration; Fixed effects; IV estimation |
| JEL: | O40 R23 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:2648&r=cwa |
| By: | Erdogdu, Oya Safinaz |
| Abstract: | Considering the importance of military expenditures on political and economical success of a government, this empirical study analyzes the relations between political stability, economic growth and military expenditures. Based on the theoretical model developed by Blomberg (1996), the vector autoregression analyzes results for a democratic country indicates the significance of military expenditures on political stability and private sector investment decisions. |
| Keywords: | Defense; Political Stability; Growth; VAR |
| JEL: | C32 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:2520&r=cwa |
| By: | Kurmas Akdogan; Yunus Aksoy |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:tcb:wpaper:0703&r=cwa |
| By: | Sinha, Dipendra; Sinha, Tapen |
| Abstract: | This paper examines the relationship between the growth rates of household saving, public saving, corporate saving and economic growth in India using multivariate Granger causality tests. The conventional wisdom suggests that the causality flows from saving to economic growth. We show that the causality goes in the opposite direction for India. Hence, higher saving is the consequence of higher economic growth and not a cause. |
| Keywords: | Economic growth; public saving; corporate saving; household saving |
| JEL: | O11 E21 O16 |
| Date: | 2007–02–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:2597&r=cwa |
| By: | M. Ali Kemal (Pakistan Institute of Development Economics, Islamabad) |
| Abstract: | Rise in the underground economy creates problems for the policy-makers to formulate economic policies, especially the monetary and fiscal policies. It is found that if there was no tax evasion, budgets balance might have been zero and positive for some years and we would not have needed to borrow as much as we had borrowed. It is concluded that the impact of the underground economy is significant to the movements of the formal economy, but the impact of formal economy is insignificant in explaining the movements in the underground economy. In the long run, underground economy and official economy are positively associated. It is estimated that the underground economy ranges between Rs 2.91 trillion and Rs 3.34 trillion (54.6 percent of GDP to 62.8 percent of GDP respectively) in 2005 and tax evasion ranges between Rs 302 billion and Rs 347 billion (5.7 percent of GDP to 6.5 percent of GDP respectively) in 2005. Underground economy and tax evasion were increasing very rapidly in the early 1980s but the rate of increase accelerated in the 1990s. It declined in 1999, but reverted to an increasing trend until 2003. It declined again in 2004 and 2005 |
| Keywords: | Underground Economy, Tax Evasion |
| JEL: | E26 H26 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:2007:13&r=cwa |
| By: | Kirdar, Murat |
| Abstract: | There exist remarkable differences in educational outcomes across ethnic groups in Turkey. Moreover, almost a quarter of the population of 8- to 15-year-old children belong to ethnic minority groups. Yet, there exists no study that examines the ethnic disparities in educational outcomes in Turkey. This study presents these disparities and uncovers the factors that bring about these disparities using a rich micro-level dataset (Turkish Demographic and Health Survey). In doing so, this paper examines the differences not only in the levels of enrollment but also in the timing of drop-out across ethnic groups. The multivariate analysis accounts for a rich set of regional and socioeconomic factors, which also display striking differences across ethnic groups. The results show that regional and family level characteristics can fully account for the differences in the levels of enrollment across ethnic groups for male children, but not fully for female children. In other words, ethnicity has a direct impact on girls' school enrollment but not on boys'. There exists a gender gap among ethnic Turkish children as well as ethnic Arabic and Kurdish children. However, the gender gap among ethnic Kurdish children is wider than that among ethnic Turkish children. |
| Keywords: | Education; Ethnicity; Gender; Human Capital |
| JEL: | I21 J16 J15 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:2649&r=cwa |
| By: | Attiya Y. Javed (Pakistan Institute of Development Economics, Islamabad); Robina Iqbal (Quaid-i-Azam University, Islamabad) |
| Abstract: | We investigated whether differences in quality of firm-level corporate governance can explain the firm-level performance in a cross-section of companies listed at Karachi Stock Exchange. Therefore, we analysed the relationship between firm-level value as measured by Tobin’s Q and total Corporate Governance Index (CGI) and three sub-indices: Board, Shareholdings and Ownership, and Disclosures and Transparency for a sample of 50 firms. The results indicate that corporate governance does matter in Pakistan. However, not all elements of governance are important. The board composition and ownership and shareholdings enhance firm performance, whereas disclosure and transparency has no significant effect on firm performance. We point out that those adequate firm-level governance standards can not replace the solidity of the firm. The low production and bad management practices |
| Keywords: | Corporate Governance, Firm Performance, Tobin’s Q, Agency Problem, Board Size, Shareholdings, Disclosures, Leverage, Code of Corporate Governance |
| JEL: | G12 G34 G38 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:2007:14&r=cwa |
| By: | Fazal Husain (Pakistan Institute of Development Economics, Islamabad); Abdul Rashid (College of Business Management, Karachi) |
| 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. |
| Keywords: | Money; Income; Prices, Price hikes, Casual relations, Pakistan |
| JEL: | E3 E4 N4 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:2006:8&r=cwa |
| By: | Asma Hyder (Pakistan Institute of Development Economics, Islamabad) |
| Abstract: | This paper examines the magnitude of public/private wage differentials in Pakistan using data drawn from the 2001-02 Labour Force Survey. Pakistan Labour Force Survey is a nationwide survey containing micro data from all over the country containing demographic and employment information. As in many other countries, public sector workers in Pakistan tend to have higher average pay and educational levels as compared to their private sector counterparts. First, this paper presents the inter-sectoral earning equations for the three main sectors of the economy, i.e., public, private, and state-owned enterprises. These results are further decomposed into “treatment” and “endowment effect”. To examine the role of human capital in wage gap, the rate of return to different levels of schooling is calculated. These rates of return to education may be important for policy formulation. The relative earning share is also worked out to look into the distribution of wages across the occupational categories. The earning equations are estimated with and without correction for selectivity, which is also the main objective of the study, i.e., to find out if any non-random selection is taking place within these three sectors of employment |
| Keywords: | Wage Differentials, Rate of Return to Education, Public Sector Labour Markets |
| JEL: | J32 J45 J24 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:2007:17&r=cwa |
| By: | Paul Dorosh (The World Bank, Washington, D. C.); Muhammad Khan Niazi (Innovative Development Strategies, Islamabad); Hina Nazli (Innovative Development Strategies, Islamabad) |
| 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 |
| Keywords: | National accounts, Social accounting matrix |
| JEL: | E01 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:2006:9&r=cwa |
| By: | Paul Dorosh (The World Bank, Washington, D. C.); Abdul Salam (Pakistan Agricultural Prices Commission, Islamabad) |
| 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 |
| Keywords: | Wheat, Agricultural prices, Pakistan |
| JEL: | Q11 Q13 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:2006:5&r=cwa |
| By: | Abdul Qayyum (Pakistan Institute of Development Economics, Islamabad); A. R. Kemal (Formerly of the Pakistan Institute of Development Economics, Islamabad) |
| 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 |
| Keywords: | Stock Market, Forex Market, EGARCH, Volatility Spillover, Stock Market Returns, Foreign Exchange Return, Pakistan |
| JEL: | G1 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:2006:7&r=cwa |
| By: | Muhammad Arshad Khan (Pakistan Institute of Development Economics, Islamabad) |
| Abstract: | Recent theoretical and empirical literature suggests that foreign direct investment (FDI) exerted positive impact on economic growth through the process of technological diffusion. The literature also suggests that the development of the domestic financial system of the host country is an important pre-condition for FDI to have a positive impact on economic growth. A welldeveloped domestic financial sector enhances efficient allocation of financial resources and improves the absorptive capacity of a country with respect to FDI inflows. Particularly, a more developed financial system positively contributes to the process of technological diffusion associated with foreign direct investment. In this study, we examine the link between FDI, domestic financial sector, and economic growth for Pakistan over the period 1972–2005. Empirical analysis is based on the bound testing approach of cointegration advanced by Pesaran, et al. (2001). The results suggest that FDI inflows exerted positive impact on economic growth in the short-run and the long-run if the domestic financial system has achieved a certain minimum-level development. The results further suggest that better domestic financial conditions not only attract foreign companies to invest in Pakistan, but also allow maximising the benefits of foreign investment |
| Keywords: | Foreign Direct Investment, Financial Sector Development, Economic Growth, Technology Spillovers |
| JEL: | F21 F36 F43 O16 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:2007:18&r=cwa |
| By: | Qayyum, Abdul; Khan, Sajawal |
| Abstract: | This study aims at investigating empirically the x-efficiency, scale economies, and technologicalprogress of commercial banks operating in Pakistan. As banking sector efficiency is consider as a precondition for macroeconomic stability, monetary policy execution, and economic growth.We also make efficiency comparisons between the domestic and foreign banks and big banks.Our results indicate that the domestic banks operating in Pakistan are relatively less efficient than their foreign counterparts. The scale economies for small banks, especially foreign banks are higher. Results show also that market share of big five banks are declining over the period but average interest spread shows fluctuations. The main conclusions that can be drawn from these results are that mergers are more likely to take place, especially in small banks. If the mergers do take place between small domestic banks and foreign banks, these will reduce cost due to scale economies as well as x-efficiency (because foreign banks are x-efficient relative to small domestic banks). Even if mergers do take place between small and big banks, cost will reduce with out conferring any monopolistic power to these banks. This will also help in stability of the financial sector, which an important concern of the State Bank of Pakistan SBP). So the best policy option for SBP is to encourage mergers, while keeping a check on interest spread, so that the benefits from reduction in cost due mergers are passed on to depositors and borrowers. |
| Keywords: | x-efficiency; scale economies; technologicalprogress; Commercial Banks; Pakistan |
| JEL: | G21 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:2654&r=cwa |
| By: | Rizwana Siddiqui (Pakistan Institute of Development Economics, Islamabad); A. R. Kemal (Pakistan Institute of Development Economics, Islamabad) |
| 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. |
| Keywords: | Trade, Remittances, Poverty, Pakistan |
| JEL: | F10 F16 I32 J61 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:2006:1&r=cwa |
| By: | Fazal Husain (Pakistan Institute of Development Economics, Islamabad); Abdul Qayyum (Pakistan Institute of Development Economics, Islamabad) |
| 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 |
| Keywords: | Stock Markets, South Asia, Liberalisation, Pakistan, India, Sri Lanka, Bangladesh, Market Integration |
| JEL: | G1 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:2006:6&r=cwa |
| By: | Khan, M. Arshad; Qayyum, Abdul |
| Abstract: | This paper empirically investigates the impact of trade and financial liberalization on economic growth in Pakistan using annual observations over the period 1961-2005. The analysis is based on the bound testing approach of cointegration advanced by Pesaran et al (2001). The empirical findings suggest that both trade and financial policies play an important role in enhancing growth in Pakistan in the long-run. However, the short-run response of real deposit rate and trade policy variable is very low, suggesting further acceleration of reform process. The feedback coefficient suggests a very slow rate of adjustment towards long-run equilibrium. The estimated short-run dynamics are stable as indicated by CUSUMQ test. |
| Keywords: | Financial Sector Reforms; Trade Liberalization; Growth; Pakistan |
| JEL: | G28 O53 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:2655&r=cwa |
| By: | Nadeem Ul Haque (Pakistan Institute of Development Economics, Islamabad) |
| 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 |
| Keywords: | Commercial policy |
| JEL: | G0 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:2006:11&r=cwa |
| By: | Ali Cheema (Lahore University of Management Sciences, Lahore); Asad Sayeed (Collective for Social Science Research, Karachi) |
| 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 |
| Keywords: | Poverty, Poor, Bureaucracy |
| JEL: | I38 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:2006:3&r=cwa |