How Pakistan is coping with the Challenge of High Oil Prices

The paper is a review of possible consequences and challenges presented by high oil prices in Pakistan. Pakistan is heavily dependent on imported fuels and this dependence is expected to increase even further in future given the depleting gas resources. The rising oil prices in the international market has had effected negatively balance of payment position as well as on the budgetary position of the country and contributed in creating inflationary pressures in the economy. For long run development oil will remain an important source of energy. The government should chalk out strategies for ensuring efficiency in use; and development, adequacy and reliability of supply. Unless appropriate steps are taken this trend of rising oil prices will further aggravate the negative impacts on the economy.Oil; Prices; Deregulation; Pakistan; Macro-economy

Effectiveness of Regulatory Structure in the Power Sector of Pakistan

This paper is an attempt to study the regulatory environment in the electricity sector of Pakistan. NEPRA, a regulatory authority was formed in 1997 to protect consumer interests in the area of electricity provision, and to ensure an efficient and competitive environment for the electricity generators and distributors, but it has so far not been able to achieve anything. The power sector (dominated by WAPDA and KESC) is still affected by institutional and organisational weaknesses, with inefficient and non-optimal tariffs, high line losses, and high level of corruption. It has been found weak administrative governance in NEPRA in the form of lack of autonomy, resulting in the overall institutional inability to carry out the desired functions effectively. In addition, NEPRA is lacked in professional expertise to supervise and control the power sector and establish a rational and equitable pricing regime.Electricity, NEPRA, Pakistan, Reforms, Regulation

Crude Oil Price, Monetary Policy and Output: The Case of Pakistan

This paper has analysed the impact of rising crude oil prices on output. Crude oil prices and real output are found to be strongly related, and this relationship has a bellshape. That is, when crude oil prices are below the critical level (i.e., 22 $s/bbl), the relationship between crude oil prices and real output is positive; whereas when the crude oil price rises and exceeds that critical level the relationship becomes negative. Moreover, high debt-GDP ratio, high deficit spending, and high real effective exchange rate would have a negative impact on output. While the existence of foreign exchange reserves and capital investment would cause output to rise.Oil Prices, Output, Pakistan, Macroeconomy

Does Decentralized Welfare Reform Lead to a Race to the Bottom in Local Economic Development and Local Public Services?

This paper tests the hypothesis that devolution of welfare programs leads to heightened intergovernmental competition and a "race to the bottom" in the provision of local public services. Data from a national survey of county governments is used to estimate an econometric model of strategic interaction by county governments.Community/Rural/Urban Development,

Debt and Economic Growth in South Asia

After 1980s, in most developing countries, the rate of debt accumulation and increase in debt servicing are highlighted as major factors affecting the growth rate of output. Most of these countries lost their competitiveness in the international market mainly as a result of insufficient exchange rate adjustments. In addition, the weakening of terms of trade, economic mismanagement and crisis of governance also lowered growth rates in the developing countries. The downward pressure was larger in the countries facing higher debt burden as these countries faced higher interest rates, decline in the external resource inflow, lower export earnings, lower domestic output and lower imports. In case of South Asian countries, the external debt scenario has changed over time. According to World Bank (2001) Pakistan’s ranking worsened to ‘severely-indebted low income country’ from ‘moderately-indebted low income country’ in 1997, where as India’s ranking improved to ‘less indebted low income’ country from ‘moderately indebted’ in 1997. The rapid accumulation of debt, rising repayment burden and the economically and politically resource inflow or rescheduling motivated rescheduling of debt (as in case of Pakistan) has raised concerns regarding the impact of debt on the growth process of the South Asian countries. Khanobis and Bari (2001) claim that foreign resource inflow increased the resource availability and as a result it contributed to economic growth in South Asia. However, the study does not examine the effect of debt accumulation on economic growth. In this paper, given the diversity of growth experience, we examine the impact of rising debt burden on economic growth of South Asian countries.

The Relationship between Real Wages and Output: Evidence from Pakistan

Information on wage levels is essential in evaluating the living standards and conditions of work and life of the workers. Since nominal wage fails to explain the purchasing power of employees, real wage is considered as a major indicator of employees purchasing power and can be used as proxy for their level of income. Any fluctuations in the real wage rate have a significant impact on poverty and the distribution of income. When used in relation with other economic variables, for instance employment or output they are valuable indicators in the analysis of business cycles. There has been a long debate regarding the relationship between real wages and the employment (output). Despite the apparent simplicity, the relationship between real wages and output has remained deceptive both theoretically and empirically. Keynes (1936) viewed cyclical movements in employment along a stable labour demand schedule thus indicating counter cyclical real wages. His deduction is in line with sticky wages and sticky expectations, which augments models like Phillips curve. In these models real wages behaved as counter-cyclical as nominal wages are slow to adjust during recession (decrease in aggregate demand and associated slowdown in price growth). Stickiness of wages or expectations shifts the labour supply over the business cycles [Abraham and Haltiwanger (1995)]. Barro (1990) and Christiano and Eichenbaum (1992) have associated these labour supply shifts with intertemporal labour-leisure substitution. This in response to temporary changes in real interest rates (fiscal policy shocks) could yield counter-cyclical real wages. However, Long and Plosser (1983) and Kydland and Prescott (1982) while studying the real business cycle models highlight on the technology shocks which leads to pro-cyclical real wages.

Naila Kabeer, Geetha B. Nambissan, and Ramya Subrahmanian. Child Labour and the Right to Education in South Asia: Needs versus Rights? New Delhi: Sage Publications, 2003. 412 pages. Paperback. Indian Rs 365.00.

The volume is based on the proceedings of a workshop, organised on the issue of child labour and the right to education. The studies in the volume reflect on topics related to the problems of universalising education in South Asia. All the studies are based on the experience of either Bangladesh or India, with the exception of one or two studies where a comparison with other South Asian countries is considered. The problem of child labour is quite widespread in South Asia and that has prevented children in these societies from participating in schooling. At the same time, there are children who are neither at school nor at work. The reason identified for this is not only poverty but also the school system, as well as discrimination on the basis of caste, gender, tribal, or religious reasons. The volume generally examines the patterns of social discrimination and how this problem has been aggravated by the formal educational system. It also reflects on policy interventions addressing the problem—the efforts by the government, on the one hand, and by the non-governmental organisations, on the other

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