Structural Adjustment, Industrialisation, and Export Promotion

The main objective of this paper was to explore if trade liberalisation has ushered in the large scale de-industrialisation that is feared by some to follow in its wake and whether it has been successful in enhancing export promotion. We relied on several different kinds of evidence to demonstrate that de-industrialisation has not coincided with the intensive structural adjustment period while export growth has. However, both industrialisation and export promotion in Pakistan have been below potential, below the mean for low income countries and have not even kept pace with progress in this regard in the low income country group. We were not able to establish, possibly due to the paucity of time-series observations, that either industry or exports generated positive externalities for or used resources more productively than the rest of the economy.

Has Aid Helped in Pakistan?

This paper has a two-fold objective: first, to examine the terms on which Pakistan receives aid and whether its debt situation is sustainable, and second, to examine the impact of aid and debt on economic growth. It is found that there is little encouraging that can be said about how the terms on which Pakistan has received aid over time have changed, and its current debt situation is not sustainable. Also reported is the analysis done elsewhere which shows that aid has a negative (Granger) causal impact on GDP, and aid has a robust negative impact on economic growth after controlling for supplyside shocks. We provide various reasons for this negative association.

Structural Adjustment, Industrialisation, and Export Promotion

The main objective of this paper was to explore if trade liberalisation has ushered in the large scale de-industrialisation that is feared by some to follow in its wake and whether it has been successful in enhancing export promotion. We relied on several different kinds of evidence to demonstrate that de-industrialisation has not coincided with the intensive structural adjustment period while export growth has. However, both industrialisation and export promotion in Pakistan have been below potential, below the mean for low income countries and have not even kept pace with progress in this regard in the low income country group. We were not able to establish, possibly due to the paucity of time-series observations, that either industry or exports generated positive externalities for or used resources more productively than the rest of the economy

Muhammad Nejatullah Siddiqui. Issues in Islamic Banking: Selected Papers, Leicester: The Islamic Foundation. 1983 , I 52pp.Author and Subject Indexes.

The book under review is a compilation of the author's articles and lectures that highlight the prominent developments in the literature on the subject of Islamic banking and inform the reader of the current state of debate on it. One of the earliest and main contributors to this topic is the author himself. The focus of this review will mainly be on "Economics of Profit-Sharing", which is the title of the fourth chapter of the book and is among his latest contributions. This chapter is a significant contribution as it is the first attempt to formalise the concept of profit sharing into an analytical model and, therefore, demands closer scrutiny. However, in the remaining chapters of the book, the author has drawn attention to some of the fine points made in the literature on this topic. Since some of these points appear to be controversial to me, I will briefly discuss them before moving on to the analytical chapter of the book

Has Aid Helped in Pakistan?

This paper has a two-fold objective: first, to examine the terms on which Pakistan receives aid and whether its debt situation is sustainable, and second, to examine the impact of aid and debt on economic growth. It is found that there is little encouraging that can be said about how the terms on which Pakistan has received aid over time have changed, and its current debt situation is not sustainable. Also reported is the analysis done elsewhere which shows that aid has a negative (Granger) causal impact on GDP, and aid has a robust negative impact on economic growth after controlling for supplyside shocks. We provide various reasons for this negative association

An Assessment of the Priorities and Efficiency of Pakistan's Public Sector Educational Expenditure

Expenditure on education is very often justified on the grounds that it is the means of providing equality of opportunity. Actually, at least two related factors prevent each child from getting an equal chance to flourish academically. Firstly, in a dual system of education, elite private schools coexist with the often substandard government schools (urban and rural) and private schools. Entrance into the elite private schools is based on influence or wealth. The recipients of this schooling are prepared for better careers, with acquired ability and contacts paving the way

An Estimate of the Shadow Wage Rate in Pakistan

In the past few years, increasing attention has been given to the methods by which investments in developing countries should be appraised. Benefit-cost analyses, based on market prices and costs, do not indicate whether an investment would be profitable from a social point of view. The methods of project evaluation developed in the past decade suggest ways in which private costs and benefits can be adjusted to reflect positive or negative externalities and to eliminate the effects of distorting taxes and subsidies which influence private decisions but which do not affect an investment's fundamental economic value. One item in an investment's cost for which the market value is widely believed to be unrepresentative of its social value is labour. Much of develop¬ment theory has been built around the notion that labour is misallocated, largely because it is mis-priced. Urban labour commands a wage above its equilibrium price because of the effects of unions, minimum wage legislation and other institutional rigidities. For institutional reasons as well, rural labour is paid a wage which is in excess of its marginal contribution to agricultural output. Determining the social opportunity cost of labour is consequently essential to the proper evaluation of investment in both rural and urban areas

Profit and Loss Sharing: an Economic Analysis of an Islamic Financial System.

Several Muslim countries are attempting to operate either individual banks, or their entire banking system, without the use of interest. This experiment--which follows the recent "resurgence" of Islam--is based on the prohibition of riba in the Qur'an. Riba has been defined as a appropriation of value without the return of "socially legitimate" countervalue, as ascertained according to Islamic Law. Riba has been broadly interpreted to ban several transactions, such as drawing rent on agricultural l and or interest from savings accounts. Muslim economists have sought to revive medieval Islamic financial transactions and to embody them within the operation of modern banking. Profit and loss sharing (P.L.S.) is the major financial instrument designed for this purpose. As applied to productive loans, P.L.S. differs from debt financing in that a specified percentage share of profit is due the lender only if the venture financed by these funds is profitable. Unlike equity financing, participation in a P.L.S. contract implies no ownership rights, and the borrower has no discretion in determining a profit distribution policy once a contract is established. This dissertation contains five chapters and a conclusion. Chapter One establishes the context by discussing the political economy of an Islamic system. Chapter Two reviews the alternative institutional frameworks for P.L.S. and the ethical underpinnings of related economic issues: indexation, capital gains, speculation, reserve banking, and nationalised banking. Chapter Three analyses the feasibility of a banking system based entirely on P.L.S. and illustrates the consequent working of the market for loanable funds. Chapter Four discusses P.L.S. as an alternative tenure arrangement to renting and sharecropping. Chapter Five reviews some evidence on the implementation of P.L.S. in various countries. The analytical chapters in this dissertation indicate that in the absence of interest, profit shares would equilibrate the market for loanable funds and also reflect the opportunity cost of capital. The economic pros and cons of implementing P.L.S. have been discussed in the dissertation. However, Islamic proponents of interest-free banking are primarily concerned with the ethical and social benefits of P.L.S. rather than with any economic advantage.Ph.D.EconomicsUniversity of Michiganhttp://deepblue.lib.umich.edu/bitstream/2027.42/159406/1/8314306.pd

Estimating the Social Cost of Using Agricultural Land in the Punjab

Pakistan, like any developing country, must regularly divert some of the scarce agricultural land to an alternative use—to another crop, to a site for a reservoir or a plant for processing agriculture's output, or to industrial, com¬mercial or housing purposes. This paper is an exercise in estimating he social cost of releasing agricultural land in the Punjab for use in another activity. It will, hopefully, serve as a model for planners and policy-makers who are con¬fronted with specific projects requiring cost-benefit analysis. For example, Pakistan's Fifth Five-Year Plan calls for construction of numerous sugar mills, sites for which will require an estimated 100 acres of agricultural land per mill. The-cost of using this land for sugar refining may be expressed in terms of the net value of the agricultural output foregone. Similarly, if cane cultivation > is extended to provide input for the refineries, its cost must be evaluated by the value of the crops which are foregone