Anti Money Laundering Mechanism: An Application of Principal-Agent Model for Pakistan

In this paper anti money laundering policy of the international financial regime is analyzed in principal agent model perspective. The strategy of the principal for formal agents is deliberated for global financial stability. This strategy encompasses incentive and dis-incentive for cooperation of formal agent. Formal agent by cooperating with principal may induce dis-incentive for informal agent. All the integrating stake holders make decision on the basis of comparison of present value of marginal cost of non-cooperation and present value of returns from cooperation. As the desired objective of the principal is to minimize transaction of money through informal channels therefore it has to include informal agents and clients in the strategy. The successful anti money laundering strategy can only be evolved by the cooperation of all the stakeholders.International Financial Regime, Principal Agent model and Money Laundering

Earthquake 2005: Some Implications for Environment and Human Capital

Loss of human capital in the form of skills and experiences is one of the outcomes of any natural hazard such as earthquake, drought, famine, and floods. Generally such losses have many implications for further growth of individuals, communities and nations. Disaster management and risk assessment has established a new need to constitute a paradigm of planning frameworks to develop modules for dealing with interactive rehabilitation and reconstruction activities. However, such management still lacks due attention in perspective of the remedy of human capital loss particularly in environmental management. This paper discusses the post-disaster situations with respect to human capital flow and stock losses and some of their implications and suggests some measures to apply in the earthquake-affected areas of Azad Kashmir and NWFP.

Convergence Model of Governance: A Case Study of the Local Government System of Pakistan

The future of devolution plan in Pakistan may be analysed in view of our Convergence model. This model views stability of the local Govt. system drawn on Devolution Plan 2001. It claims that as there would be more volatile and non-committed (floating) number of agents in the political market and governance system, there is more probability of divergence; i.e. the system will remain unstable. Contrary to that more is the systematic trend in political market and governance system more is the probability that the convergence in the system occurs and that in turn leads to stability of the over all system. In this ‘Convergence’ Model different types of agents have been highlighted on the basis of their political ffiliation and being in competition as ruling elite and/or their allies and non-ruling elite and/or their allies. The agents have interactive relationship horizontally and vertically with other agents i.e. either they are ally or otherwise. The composition of this structure of the agents and clients is based on the principle of bottom top pproach i.e. Union council’s members, Nazim and their political competitors, Tehsil council and Nazim, District Nazim and his allied district assembly members and their political competitors, Member provincial Assembly and their political rivals, Member National Assembly/Senator, and their political rival and the ruling political elites, Provincial Government and their political rivals, and Political elites ruling Federal Government and their political rivals.

Algebraic Representation of Social Capital Matrix

This paper proposes a mathematical model based on a Boolean algebra involving a 4×4 social capital matrix [Shah (2008)], that emerges through interaction within and across individuals, communities, institutions and state. The framework provides a coding system for the existence or otherwise of various categories of social interaction. The model illustrates that social interaction can be neatly described in a format that facilitates the interpretation of social intra- and interactions among the four types of players in generating economic activity.Social Capital (Matrix), Linear Space, Interactive Systems, Boolean Algebra

Algebraic Representation of Social Capital Matrix

This paper proposes a mathematical model based on a Boolean algebra involving a 44 social capital matrix [Shah (2008)], that emerges through interaction within and across individuals, communities, institutions and state. The framework provides a coding system for the existence or otherwise of various categories of social interaction. The model illustrates that social interaction can be neatly described in a format that facilitates the interpretation of social intra- and interactions among the four types of players in generating economic activity.Social Capital (Matrix), Linear Space, Interactive Systems, Boolean Algebra

Incompatibility of Laws and Natural Resources: A Case Study of Land Revenue Laws and Their Implications in Federal Areas of Pakistan

Better rule of law would generate economic growth, which would in turn build constituencies for democratic reforms [Root and May (2006)]. Consider prisoners dilemma, to Law and Economics Scholars, the inevitability of prisoner’s dilemmas arising to block potentially efficient exchanges explains the need for and consequently the adoption of contract law. When the law enforces contracts, it permits the participants in a potential prisoners’ dilemma the option of escaping the dominant strategy equilibrium of non-cooperation, which prevents the achievement of efficient exchanges, by permitting the parties to effectively pre-commit to future cooperative behavior. Mutual pre-commitments can produce the efficient cooperate-cooperate equilibrium. The existence of contract law then tends to foster efficient cooperative behaviour. Institutions are considered to provide the mechanisms by which individuals can resolve social dilemmas [Steins (1999)]. They are sets of rules that people have created in order to control/regulate the behavior of people using a natural resource. Several layers of institutions are important for institutional development and economic performance. These layers, from the slowest moving to the fastest moving are: human motivations and social institutions, political institutions, legal institutions and private institutions [Azfar (2006)]. Institutions perform their role to frame rules, procedure and enabling environment for implementation of rules. Rights of individuals are recognised and recognised through institutions as well

Governance of Money Laundering: An Application of the Principal-agent Model

Money laundering has an element of a bate for one individual and a tool of exploitation for another individual and carries an externality (positive or negative) for the society. Its multifarious nature is analysed in perspective of Principal-Agent-Client Model of Provan and Milward (2001). Model of Network Evaluation by Provan and Milward (2001) is originally used for health and social sector; however this model is extended and applied for governance of money laundering. In this model we evaluate the affectivity of the network of money transaction with the objective function to minimise transaction of money through money laundering by making laws and procedure and get these implemented through agents. As there is involvement of multiple stakeholders, therefore, evaluation of network effectiveness is made at three levels i.e. at community level to analyse: community, the network itself and the network’s organisational participants. These levels are of interest to three major constituents of money transaction network such as principal, agent, and clients