Exploring Spatial Patterns and Determinants of Poverty: New Evidence from Pakistan

This study aims to explore two types of spatial determinants of district level poverty in Pakistan: factors that have direct effect, and indirect or spillover effect, on poverty levels of neighbouring districts. The Spatial Autoregressive (SAR) model has been applied to estimate previously mentioned objectives. Data of 148 districts were collected from the National Socio- Economic Registry (NSER), and provincial development statistics. The Small Area Estimation (SAE) technique provides district level poverty estimates. Empirical results reveal that spatial autocorrelation arises owing to the lag effect of outcome variables, and autocorrelation of error terms with neighbouring districts. Moreover, results are suggestive of factors that have direct influence on poverty levels of respective districts. These include urbanisation, population growth rate, average family size, education, road infrastructure as well as climatic factors (i.e. monthly temperature and rainfall). Apart from direct effects, some determinants of district level poverty have spillover or indirect impact on poverty levels of neighbouring districts. Such factors include level of employment, road length, literacy rate, and climatic factors. Poverty in one district itself has a spillover impact on determining poverty level of adjacent districts. The findings of this paper suggest that the government should enhance regional connectivity, which may be helpful in exploiting the spillover effect of road, health, and education infrastructure to reduce regional poverty levels in Pakistan

Katy Gardner and David Lewis. Anthropology and Development: Challenges for the Twenty-First Century. London: Pluto Press. 2015 (Second Edition). 240 page. Price £24.99

The book entitled Anthropology and Development: Challenges for the Twenty�First Century by Gardner and Lewis (2015) is the second edition of their previous book entitled Anthropology, Development and the Post-Modern Challenge, which was published in 1996. This second book incorporates recent issues that emerged since the first edition was released two decades ago. As the world keeps on changing, there are always new pressing issues that exert a significant influence upon development work to which an anthropological perspective has much to contribute

Daniel H. Pink. Drive: The Surprising Truth About What Motivates Us. Riverhead Books, U.S. 2009. 256 page. (Hardbound).

Daniel Pink points out that Encarta was developed by a of well-paid team by Microsoft as a flagship project, but it lost out to Wikipedia that was developed by people without payment. Modern human resource management (HRM) emerged in the industrial revolution and was based on extrinsic motivations—“carrots and sticks” such as “if you do this, you get that consequence”. Thus, promotions in a hierarchy were offered as were bonuses and salary increase and some non-cash advantages for work well done. In the opposite case, instruments were reprimands, denial of promotions, bonuses and benefits and in the worst case “fired from the job”. He calls these extrinsic motives because they are defined by the system with little involvement of the individual

Doing Taxes Better: Simplify, Open and Grow Economy

Taxes have been the cornerstone of IMF-led adjustment programs for Pakistan for over four decades. During this period, long term growth and productivity have declined while the tax policy has become more contentious and fragmented. Measures multiply as unrealistic targets are chased with mini budgets every quarter. The following arose from a high-level conference arranged by PIDE to outline future directions in tax policy

Parents’ Perception of Education and Choice of Childhood Activities: Evidence from Pakistan

We investigate parents’ perceptions of various educational systems and their impact on the decision to either send their children to school, or engage them in other childhood activities. Childhood activities are categorised as follows: secular schooling, religious (non- secular schooling), child labour, child labour combined with secular schooling, and leisure (inactivity). The paper uses the household survey data of 2,496 children, 963 households, and 40 villages in Pakistan. A Multinomial Probit Model analysed the impact of various socio- economic variables on the likelihood of choosing an activity for children. Results indicate that the following factors influence the parents’ decisions in selection of activities for their children: the parents’ level of education, mother’s relative authority in household decisions, degree of religiosity of the head of household, beliefs in tribal norms, household income, and proximity to the school. The findings provide insignificant evidence to support the “luxury axiom” hypothesis that children only work when their families are unable to meet their basic needs

Assessing the Role of Money versus Interest Rate in Pakistan

We have empirically examined the role of monetary aggregate(s) vis-à-vis short-term interest rate as monetary policy instruments, and the impact of State Bank of Pakistan’s transformation into the latter on their relative effectiveness in terms of inflation in Pakistan. Using indicators of ‘persistent changes’ in the underlying behaviours of variables of interest, we found that broad money consistently explains inflation in (i) monetary (ii) transitory and (iii) interest rate regimes. Though its role has receded while moving from the transition to the interest rate regime, the interest rate instrument seems to be positively related to inflation, a phenomenon commonly known as price puzzle. In light of these findings, we recommend that the role of money should not be completely de-emphasised. JEL Classification: E31, E52. Keywords: Monetary Policy Instruments, Price Puzzle, ARDL, Pakista

The Economic Analysis of Law in Pakistan

One of the most important functions of law is to assign rights and liabilities in such a way that disputes do not arise. The failure to prevent disputes in a society indicates that the structure of the law is inefficient. Since the focus of law and economics is on efficiency (see Box 1) and how people respond to incentives, one way to carry out the economic analysis of the law is to use the framework of market capitalism. Driven by the idea of the invisible hand, the fundamental point of capitalism is that individuals should be able to use their capital freely, without the state’s interference. It implies that individuals’ legal ability to move capital should be frictionless

Agriculture in Pakistan: A Revisit

I started studying the structure and performance of Pakistan’s agriculture in the early 1960s. Sadly this sector of the economy is still in a precarious state. I think the blame rests with the state, its policies and agents, more than the vagaries of nature. But the good news is that we can influence public policy far more than the moods of nature. The basic challenges for the agriculture sector in Pakistan are to

Intergenerational Mobility in Educational Attainments

This paper investigates intergenerational educational mobility, a non-monetary measure of socioeconomic status in Pakistan. Data from the Pakistan Social and Living Standards Measurements (PSLM-2012-13) are used for empirical analysis. Contingency tables and multinomial logit model are utilised. Results indicate strong evidence of intergenerational linkages in educational attainments between fathers and their sons. Although findings reveal some degree of upward mobility, opportunities are not equal for all. Chances for attainment of higher education for sons of fathers with education up to the secondary level only, are not as prevalent as for sons of highly educated fathers. Further, urban areas show higher mobility as compared to rural areas. Results also reveal that the affluent are more likely to attain higher levels of education than the financially disadvantaged. In addition, sons of affluent families in rural areas are less likely to attain higher levels of education compared to the sons of the affluent in urban areas. Our findings also support evidence in favour of the child quality- quantity trade-off as shown by negative impacts of family size on attainment of higher levels of education. JEL Classification: C24, J24, L86, O43, O47 Keywords: Inequality of Opportunity, Education, Intergenerational Mobilit

Pakistan: Withholdingisation of the Economic System—A Source of Revenue, Civil Strife, or Dutch Disease+?

The paper takes an incisive shot at the systemic inadequacies that have tiptoed into the economic order of the state over time via the apparently innocuous mechanism of withholding taxes. Withholding tax—a legitimate instrument of preponing the state revenues on clearly identifiable chunks of incomes—has historically been resorted to by most states, and to that extent it should be normal with Pakistan, too. However, what has happened in Pakistan is that the tool of withholding taxation has been used as a source of revenues way too large in scale, size, scope and intensity. In addition to the pulling forward of tax collection on clearly demarcated chunks of incomes, a large number of transactions have also been roped into its nexus and then charged to tax by presumptivising gross receipts as income—a withholdingisation of the sorts not only of the tax system but of the entire economic system as a weighty portion of ubiquitous withholding taxes gets stuck into the pricing structure of the final goods and services produced in the economy rendering them price-incompetitive in the international market. This overwhelming withholdingisation of the economic system, it is argued, has been brought about by a numb state continually operating under, using a Freudian framework, the “pleasure principle” instead of the “reality principle” with political governments complacently choosing to continue harvesting quick bucks into the exchequer, pushing the extractive system into a total disarray, the society into burgeoning civil strife, and the economy to the Dutch Disease effect. JEL Classification: H1 Keywords: Withholdingisation; Withholding Taxes, Pakistan Tax System; Federal Board of Revenue; Civil Strife; Dutch Disease Effect; Cost of Collection; Tax Refor