This study explores the economic and political determinants of external debt in 37 Asian developing and transition economies (ADTEs) over the period 1997-2020. Controlling for endogeneity and dynamic panel bias using fixed effects (LSDV), bias corrected LSDVC and Generalised Method of Moments (GMM) estimators, we find that economic growth, national savings, trade balance and strong institutional quality significantly reduce external debt. However, debt levels are exacerbated by investment, government consumption, inflation, interest rate, exchange rate, debt servicing and international reserves. The study underscores the importance of institutional quality in the pattern of borrowing, providing useful insights for policy-makers for sustainable debt management and long-term economic development.
Deteriorating child health impacts socioeconomic outcomes and is a critical concern. This study explores how the child nutrition is affected by the family size in Pakistan, utilising data of 4031 individuals from the Demographic Health Survey of Pakistan 2017-18. The indicators like height for age S score, weight for height S score, and weight for age S score are used to estimate child nutrition. To address endogeneity, instrumental variable approach is employed, and the family size is instrumented by gender of the first child (girl). The results show that if there is an increase in the family size the HAS score lowers by 0.19 SD and the probability of stunting increases by 4.2 percent while no significant impact is observed on WHS and WAS. However, if family size increases, it is also associated with a 3.1 percent increase in the child’s likelihood of being underweight. Hence, an increase in family size will have a long-term detrimental effect on children’s nutritional status.
Different currencies have been at the center of the world stage in different eras, this book dwells upon the dominance of the dollar at the world stage. The author traces the challenges faced by the dollar in the past, contemporary threats to it, and the potential challenges to its hegemony. The author’s strong academic background, combined with practical experience, results in an analysis that is both theoretically sound and practically relevant, is a key strength of the book. The book is divided into sections exploring past and present challenges, global monetary issues, alternative currencies, the costs and benefits of dominance, and the peak of dollar supremacy. A limitation of the book is that occasionally author drifts away from the main topic, making the book more voluminous; otherwise, the content could have been reduced without losing important information. The book begins with an analysis of the factors that make a currency dominant, highlighting that it is a slow process either to attain it or even to lose it. Innovation, conflict, inflation, debt levels, the size of the economy, real and financial openness, share in the world trade, size of the financial markets and military strength are the key factors that determine whether a currency becomes dominant. The main conclusion of the book is that current state of affairs and the way the American economy is being run is the biggest threat to the dollar. The threat either from within or from outside has always been a source of discontent for each entity, and the USA is no exception. The first actual or perceived challenge that struck Washington emanated from the Soviet Union. Particularly, the Soviet achievement in space travel enthralled USA that this sophisticated technology may transfer into an economic technological edge and potentially endanger dollar’s dominance in future. However, the economists were divided: Samuelson and Rostow were of the view that Soviet is a threat, whereas Friedman was sceptic that socially planned economy would ever compete the market economy. I agree with Friedman and opine that to become a dominant currency trade openness and financial openness are essential.
Understanding the yield gaps in rice-based farming systems is crucial for achieving food security. Pakistan is the 11th largest rice producer, and rice contributes 0.7 percent to the country’s GDP. The country faces a yield gap across farms and rice-producing districts, with actual yields falling short of potential yields. This study assesses the productivity and yield differences in paddy rice farming in selected districts of Central Punjab. Two major rice-producing districts, Gujranwala and Sheikhupura, were randomly selected for analysis. This study finds significant yield gaps in rice production across the selected districts. On average, the combined yield gap is 31 percent, rising to 36 percent for Basmati rice. At the district level, Gujranwala records a total yield gap slightly lower than that of Sheikhupura. For Basmati rice, the gaps are even higher for both districts. These results highlight significant potential for productivity gains, underscoring the importance of reducing inefficiencies in rice farming systems. The exploitable yield gap was calculated by comparing the yield of the top 10 percent of farmers with the population average using the top-decile approach, also known as on-farm yield potential. The study identifies the importance of farm extension services in limiting the yield gap. Policymaking should focus on improving the relationship between farm extension agents and farmers and on ensuring the timely, affordable availability of necessary resources.
Does public infrastructure influence how people respond to climate shocks through borrowing? This study, using nationally representative household data merged with tehsil-level climate shocks, finds that rainfall shocks significantly increase the probability of household borrowing and the borrowed amount. It also shows that access to energy infrastructure significantly reduces the likelihood of household borrowing and the amount of debt. Access to road infrastructure reduces debt in normal conditions but increases it during climatic shocks. This study constructs a unique instrument, community-level access to media services, to address endogeneity in infrastructure. The heterogeneity analysis finds that poor and female-headed households face disproportionately higher debt burdens but derive greater financial protection from access to infrastructure. From a policy perspective, this study concludes that the availability of public infrastructure should be considered as a major factor in climate adaptation strategies.
This paper offers a critical assessment of a recent proposal advocating full-reserve banking in Pakistan, inspired by modern revivals of the Chicago Plan. While such proposals are motivated by legitimate concerns about financial instability, excessive debt creation, and the social consequences of private money creation, the paper argues that they are best understood as institutional power-sharing arrangements rather than purely technical reforms. Using a historicalinstitutional methodology, the analysis examines the causal mechanisms through which monetary systems evolve and the political constraints shaping reform feasibility. Drawing on historical experience in Pakistan and international cases-including Japan's window guidance system and China's state-led financial institutions-the paper shows that proposals such as full reserve banking typically require a rare balance of power between governments, financial institutions, and external actors. In Pakistan's current institutional context, where domestic financial interests and IMF programs constrain monetary sovereignty, such conditions are unlikely to emerge. The paper therefore proposes a set of more feasible reform pathways, including credit guidance, development finance mechanisms, and greater transparency in credit allocation. It also argues that deeper reforms may gain political traction when framed within Pakistan's constitutional commitment to Islamic finance, which provides a powerful source of social legitimacy for monetary reform. More broadly, the paper illustrates how historical and institutional analysis can be used to evaluate counterfactual policy proposals that cannot be analyzed using conventional data-driven empirical methods.
This study uses district-level panel data to measure the spatial effects of road infrastructure on employment while accounting for institutional quality, rural connectivity, and labour productivity in Pakistan. The estimates based on the spatial regression model show that road density positively and significantly impacts employment. A 10 percent increase in road infrastructure would lead to a 4.3 percent increase in employment directly and indirectly—the spillover effects of road infrastructure help optimise the benefits of public investment in infrastructure projects. Empirical results reveal that institutional framework and access to rural areas complement road infrastructure in channelising road development’s employment effects. These findings suggest a call for a comprehensive policy to reap the potential benefits of road infrastructure. Apart from developing the road network, the government should also develop complementary factors, namely institutional reforms and rural connectivity. Keywords: Road Infrastructure, Employment, Institutional Quality, Spatial Analysis, Pakistan
This paper investigates how Pakistani higher education students from different social strata act within the context of a game that allows for cooperation and punishment. Findings reveal that both female and male madrassa students are the most generous players. Moreover, there is more gender and social consciousness in male students than female students when deciding to penalise or not. Male madrassa students penalise female students more than male higher-income students; moreover, elite male students penalise male madrassa students more heavily than fellow elite students. The latter result suggests the presence of spite among elite boys towards high contributors if they belong to another social class/group. This research helps us break from social stereotypes that depict lower-income madrassa students as particularly intolerant of other social groups. JEL Classification: C71, C90, D91, Z12, Z13 Keywords: Higher Education, Madrassas, Public Goods Game, Social Stratification.
The State Bank of Pakistan (SBP) announced on June 16, 2021, that it has now allowed banks to charge a transaction fee of 0.1 percent of the transaction or PKR 200, whichever is lower on Inter-Bank Funds Transfers (IBFTs). SBP has made compulsory free-of-cost IBFTs of up to PKR 25,000 per month per account. For accounts exceeding the limit, the banks will charge the transaction fee as mentioned above. Following the onset of the COVID-19 pandemic, on March 19, 2020, the Government of Pakistan and SBP decided to make all IBFTs free of charge. The idea behind this decision was to limit consumer visits to banks and thus restrict the COVID-19 threat. Before that, the banks were allowed to charge a transaction fee on IBFTs as per SBP’s defined schedule of charges. The practice did continue for a little over a year until after the third wave, the state bank, as mentioned above, assumed an improved COVID-19 position for reviewing the policy and thus reimposed the charges on digital funds transfer. Since then, Pakistan has entered the fourth pandemic wave as a much deadly delta variant and other new variants grow rapidly in Pakistan. Consequently, the basis of this review and policy change can be contested on the pandemic spread grounds, but for now, this policy viewpoint discusses the decision from an economic and financial perspective.
This study analyses the impact of the government’s interventionist policies in the product and input markets for the two leading crops of Pakistan, wheat, and cotton. The study employs standard measures of the nominal rate of protection (NRP) and effective rate of protection (ERP). In addition, it also proposes a method to additively decompose the ERP into two components representing the effect of distortions in the product and input markets. The study finds that government policies in the wheat market are mostly designed to protect flour mill owners and thereby ordinary consumers at the cost of farmers. Since the consumers of wheat by far outnumber the wheat growers, this policy design seems to represent a political decision to appease the common public. Regarding cotton, the study finds that the government does not intervene much in the market to the extent that farmers are left at the mercy of monopolistic procurement agencies and better-informed rent-seeking intermediaries in the marketing chain. Export procedure is so cumbersome that only the well-informed and well-connected traders can benefit from price hikes in the world market. The study recommends serious reconsideration of government policies in the light of normative considerations. In this context, open debate on agricultural policy in Parliament and the Senate would be highly desirable.
Key Takeaways from Global Research ? Exchange rate is like temperature in a human body: It merely reflects underlying weaknesses. Like the human body artificially holding the temperature down for long periods without addressing the causes is likely to lead to grievous consequences. ? There is no such thing as an active devaluation policy for boosting exports. ? Holding the exchange rate at an artificially appreciated rate is only possible through reserve loss. These losses cannot be incurred over the long run as reserves are finite and market participants know that reserves can be attacked to their advantage. ? Bolstering the exchange rate through exchange and import controls serves only to disrupt supply chains and eventually weaken the domestic economy. At best it is a short-run painful solution.
The constant gap in demand and supply of vehicles in Pakistan gave birth to a phenomenon unique even today to the Pakistani automobile market known as the ‘own money’ for brand new vehicles. For immediate possession of an automobile that has been purchased, the buyer must pay a premium charge: own money. The question is, what is this own money, and why must one pay this to possess something one has already paid for? In the early 2000s, when car sales in Pakistan rose sharply, aided by the banks’ introduction of car financing services, the demand and supply gap widened. The number of buyers increased rapidly, while vehicle production capacities did not significantly increase to match this rise in demand, resulting in an increased waiting period for the delivery after booking the vehicle. An opportunity to earn commission was created for those in the middle of the supply chain, i.e., the 3S1dealerships.
Currently, there are more than 20 institutions, not including distribution and generation companies, involved directly in the power sector. There are several institutions with overlapping functions (Figure 1). At least three organisations National Electric Power Regulatory Authority (NEPRA), Central Power Purchasing Agency (CPPA) and Pakistan Electric Power Company (PEPCO), are responsible for monitoring and regulating the management and operations of distribution companies.Similarly, Private Power Infrastructure Board (PPIB), Alternative Energy Development Board (AEDB) and NEPRA, apart from seven provincial departments, have powers directly and indirectly to facilitate and guarantee the technical compliance of private generation companies. Board of Investment (BOI), though not involved directly in the power sector, performs similar functions.Despite this bulk of the administrative burden, power sector challenges in the form of inefficiencies, institutional disconnections in the management and the priority of issues are increasing.
AbstractINTRODUCTIONPakistan has for decades now been facing a financing crisis. The expenditures have always remained significantly higher than the revenues making the governments look to various sources to finance this gap. One major reason for the country’s lacklustre performance in managing its expenses stems from the import dependency of the economy. Not only do we import the raw materials for our industries, but the local demand for commodities, agricultural and manufactured, is met through imports. While Pakistan’s import per capita remains lower than other regional countries,[1] the low export value which has remained rather stagnant over years is a major cause of concern. Figure 1 below depicts Exports and Imports of Pakistan during the last decade.
The Pakistan Institute of Development Economics (PIDE) has recently launched a framework of economic growth titled “The PIDE Reform Agenda for Accelerated and Sustained Growth”. The Reform Agenda points out that Pakistan has had a rough economic growth journey since independence due to intrinsic flaws in the development model which the country is still following. A rethinking of the development model and reconfiguring the role of the government is imperative to achieve a higher and sustainable growth that is indispensable for employment generation and debt sustainability.Over the last seventy-two years, the economic growth of Pakistan has remained volatile and has fluctuated widely. Likewise, the long-term growth shows a downward trend (see Figure below). Investment and productivity are the key determinants of economic growth, unfortunately, the dismal performance of Pakistan on both these fronts has contributed to the decline in long-term growth. The sporadic growth experience of Pakistan raises two fundamental questions, One, why Pakistan’s growth episodes are not sustained and two, what are the basic constraints to economic growth in Pakistan? This brief seeks to address these two issues.
Existence of a social contract ensures cooperation among ethnically-diverse groups, especially when they are characterised by power asymmetries. Alternatively, constitution or any other form of social contract is meant to ensure resource and power sharing mechanisms in ethnically-diverse societies. In this regard, adherence to the commitments accentuated in the contract is Pareto superior outcome that not only prevents exploitation by the powerful group but also mitigates the risk of rebellion by the minority groups. A break-down arises when, in the presence of power asymmetries, the dominant coalition has an incentive to renege on the social contract by appropriating more than the agreed-upon share of resources. In this study, we focus on this aspect by exemplifying it with the issue of Balochistan, Pakistan, which is an important saga of deprivation and political violence. We utilise the post constitutional game-theoretic analysis of Kirstein & Voigt (1999) to establish the need for accountability for reneging on the social contract and then contextualise the framework for the case of Balochistan. We posit that while the existence of a formalised social contract in the form of a constitution is necessary, it is not sufficient for ensuring lasting peace. In other words, it is always essential to protect the constitution through ensuring accountability for violating its terms and commitments. We conclude that the recent surge in political violence in Balochistan highlights the urgent need for the country’s leadership to implement the 18th Constitutional Amendment, address Baloch grievances, and ensure that initiatives like the Peaceful Balochistan Programme to prevent civil conflict and uphold constitutional rights.
AbstractToday, millions of people in low-income countries lack access to health services due to accessibility and affordability issues. Health financing refers to the “function of a health system concerned with mobilizing and allocating money to cover health needs. There are various healthcare financing models around the globe; the two broader ones are;The supply-side models provide free-of-cost health services in public hospitals, i.e., Canada, Taiwan, South Korea, etc.The demand-driven models encourage citizens to purchase health insurance, the government only partly finances the premium for marginalized segments, i.e., USA, UK, and many others.The Sustainability Issues of Sehat Sahulat Program (SSP)Pakistan has a mixed health financing system where the private sector dominates. Before the SSP’s emergence, the country faced a twofold burden: only 0.6% of the health budget as percentage of GDP, and more than two-thirds of the financing by households themselves.The federal government took a major initiative in 2015 by launching the Sehat Sahulat Program (SSP) in a few districts (excluding the KP province) to provide free in-door health services to poor and vulnerable segments having poverty scores up to 32.5 in the BISP database. At the same time, the Khyber Pakhtunkhwa (KP) government independently started it in four districts. Until 2020, the program served only marginalized segments by using the BISP data. However, the KP government declared it universal in 2020, and the same approach was followed by the federal government in 2021. There are settled package rates against each sickness; however, the federal and KP vary over premium rates and treatment packages.There are five stakeholders to run the program; the primary stakeholder is the State Life Insurance Company (SLIC), which is responsible for all operational activities, including; onboard empanel hospitals, providing free-of-cost in-door health services, and addressing all service-related grievances. So far the program has enrolled 43 million families by covering 190 million population of country. More than 14.6 million individuals have used in-door health facility in empanel hospitals (till November 2023).
The pandemic COVID 19 has fast-tracked the demand for digital technologies especially the internet requirements by five years. Internet is the lifeline for startups; distant learning is a new paradigm shift and perhaps the future of innovative learning for all ages which in turn will enhance productivity. The real potential of the internet is to create an enabling environment for people to access information on health, education, business, e-commerce, etc. PIDE’s Reform Agenda for Accelerated and Sustained Growth[1] also emphasised that the internet is a basic human right and it must be taken very seriously, especially by the regulators. It should not be regarded as access to Facebook, YouTube, Google, etc. for entertainment purposes.Action Point: With a 64% young population, the policy-makers and regulators need to realise the internet is a major source of opportunities and a basic human right.International ComparisonWhen we look at various international rankings we can see that on every index related to internet, Pakistan is ranked well behind the countries which share similar socio-economic and demographic conditions. Either it is internet inclusive index, network readiness index, e-government development index, telecommunication infrastructure index, ICT development index or world economic forum index, Pakistan stands behind several South Asian countries such as India, Bangladesh, Nepal and Sri Lanka. In terms of affordability, according to PTA and GSMA report, the four major operators in Pakistan provide cheapest service in terms of a gigabyte of data availability compared to Bangladesh, Turkey, India and Egypt. The availability of internet remains a big issue for the majority of consumers and the devices are also not affordable.
Pakistan, having a population of near to 220 million, has one fourth of its population living below the poverty line and 17% being food insecure. Benazir Income Support Programme (BISP) was initiated in 2008 with the objective of consumption smoothening, poverty alleviation and women empowerment. The programme was, and still is, unique in terms of resources, coverage and targeting. Given the resources dedicated to the programme (see box below), it is important to analyse where the BISP stands after 12 years of its initiation. This Policy Viewpoint does so by analysing the socioeconomic wellbeing of the households that have been receiving cash assistance for 9 years (2011 to 2019). Given the mandate of the Programme one would expect an improvement in their socioeconomic indicators. To see if this has actually happened, we measure the impact of BISP’s cash transfer on various factors of the recipient households’ socioeconomic condition.
AbstractBACKGROUND OF STUDYCorruption is a global issue that is present in numerous countries. Its broad meaning is the misuse of public power for personal gain, which leads to a less efficient allocation of resources than would be the case in an environment free of corruption. Corruption hinders social development, investment, and economic progress in several ways. The first effect of corruption is to decrease the effectiveness of government institutions and distort the distribution of resources. Additionally, it might cause capital flight and hinder international investment. Thirdly, corruption threatens the rule of law, which is necessary for economic growth.
