Prevalence of Relative Poverty in Pakistan

The conceptual basis of poverty in Pakistan remained limited to absolute notion of poverty which has been criticised on the grounds that it minimises the range and depth of human needs. The paper broadens the discussion on poverty and poverty measurement by examining the prevalence of relative poverty in Pakistan. Based on the moderate relative consumption poverty line of Rs 775 per capita per month, the prevalence of relative poverty was at 40.7 percent in 2001-02. On the other hand, half of the population was below the income-based moderate relative poverty line, implying that 77.5 million individuals were poor in Pakistan. At the province level, the results suggest the highest prevalence of urban poverty in the NWFP, followed by Sindh, Balochistan, and Punjab. On the other hand, rural Sindh was the poorest region in the country, followed by the NWFP and Balochistan. The trends implied by the concept of relative poverty suggest a more rapidly increasing trend in relative poverty because of rising income inequality. As a result, gains in income accrued to the richest at the expense of the poorest and the middle income groups, implying that the rich got richer and the poor got poorer over the last 15 year. These results suggest that adverse distributional outcome may be due to the pursuance of stabilisation and adjustment programmes within the framework of the “Washington Consensus” which put too much emphasis on removing macroeconomic imbalances and enhancing economic growth while giving no consideration to equity and poverty. While economic growth alone is not enough for poverty reduction, there is a need to raise PRSP spending in order to pursue an effective poverty reduction strategy with a focus on redistributive policies. While the country has already made a commitment to attain the Millennium Development Goals, economic policies need to be expansionary. Poverty reduction strategy should be based on the policies of building up the assets of the poor and increasing the demand for those assets. An expansion of health and education for the low-income households and measures that increase the relative prices of agricultural commodities and the wages of unskilled labour should be part of new poverty reduction strategy. Focusing on agrarian strategies, especially those also favouring rural industrialisation, can lead to more egalitarian growth. Rapid expansion of labour-intensive exports may contribute to faster growth in employment. Policies to support this should favour labour-intensive techniques, e.g., by not subsidising capital and by securing more credit for small enterprises.

Trends in Inequality in Pakistan between 1998-99 and 2001-02

Although there has been a much debate on poverty in Pakistan in recent time, the discussion on inequality remained limited. Poverty and inequality are closely linked—for a given mean income, the more unequal the income distribution, the larger the percentage of the population living in income poverty. Thus, incomes at the top and in the middle of the distribution may be just as important to us in perceiving and measuring poverty as those at the bottom. It is, thus, important to monitor the whole income distribution rather than merely the bottom of distribution. The issue of income inequality in Pakistan has been important in the policy discussions since the early 1960s. Since then, a number of attempts have been made to estimate the income or expenditure inequality using the Household Income and Expenditure Survey (HIES) data. However, a perception of increasing absolute poverty in Pakistan has shifted the focus of studies from inequality (or relative poverty) to absolute poverty. Consequently, a number of attempts have been made by various authors/institutions to estimate the poverty in Pakistan in the 1990s. The debate on trends in poverty during the 1990s—an era of stabilisation and structural adjustment has been wide-ranging in Pakistan. However, there is no discussion on the changes in income distribution from the policy and institutional reforms. World Bank (2003); FBS (2001) and Kemal (2003) are only three exceptions. While the former two studies report Gini Coefficients in their studies on absolute poverty in Pakistan without explaining its variations over time, the latter study is a comprehensive review on the income distribution in Pakistan. It is this context that guided the author to evaluate the trends in inequality in Pakistan using the most recently available household data sets—PIHS 1998-99 and 2001-02. The results for the year 2001-02 are being presented for the first time, which should be useful to

Role of Growth and Inequality in Explaining Changes in Poverty in Pakistan

Changes in the extent of poverty are affected not only by growth in the mean income but also by changes in the distribution of income. The effect of these two factors can be separately measured by decomposing the total change in poverty. In this context, this paper uses new tools to quantify relative contribution of growth and inequality using the latest available household survey data. The findings of this paper suggest that the role of inequality remained important in mitigating the adverse effects of growth on poverty during the first period, 1998-99 to 2001-02. Alternatively, the role of growth has been fundamental in reducing absolute poverty in the second period, 2001-02 to 2004-05. Poverty would have been further reduced, had the distribution not worsened during this period. The policy implication is that while pursuit of growth as a strategy is important for poverty reduction in Pakistan, the contribution of redistribution in favour of the poor should not be ignored if the effect of growth on poverty reduction is to be enhanced. Thus, the major challenge is to pursue a poverty reduction strategy that is based on growth with redistribution.Poverty, Inequality, Economic Growth, Pakistan

Survival of Newly Founded Businesses: A Log-Logistic Model Approach

Based on a longitudinal data base we test the "liability of adolescence" hypothesis which states that new firm hazard rates follow an inverted U-shaped pattern. That is, the hazard rate is low for the initial period; the end of adolescence is marked by a hazard maximum, from which then rate declines monotonically. We use a log-logistic model which shows that the "liability of adolescence" argument describes the hazard rates of new establishments for all two and three-digit industries fairly well. Further, the rate shows that the desegregation of industries matters, and considerable differences are found within and across two and three-digit low-, moderate- and high-tech industries. In assessing the effect of market environment conditions on risk we find that risk tends to be elevated in a relatively large number of two-digit low- and high-tech industries in the presence of scale economies, but it is substantially reduced in moderate-tech industries. By contrast, the hazard rate tends to be reduced for quite a large number of three-digit low-, moderate- and high-tech industries in comparison with the two-digit industries, indicating a longer adolescence. The influence of start-up size in reducing the hazard rate is apparently similar between two and three digit low-, moderate- and high-tech industries. The impact of market growth on the risk of failure is not much different for both two and three-digit low-, moderate- and high-tech industries. That is, market growth tends not to reduce the risk exposure. R&D intensity exerts influence interchangeably on the risk of failure confronting new establishments within the two and three-digit low-, moderate- and high-tech industries. ZUSAMMENFASSUNG - (Überleben von Neugründungen: Ein log-logistisches Modell) Basierend auf Längsschnittdaten testen wir die Hypothese der "Liability of Adolescene". Diese besagt, daß die Risikorate einem umgekehrten U-förmigen Verlauf folgt. Das bedeutet, daß die Risikorate in der Anfangsphase niedrig ist; das Ende der "Adolescence" durch ein Maximum der Risikorate bestimmt wird, welche danach monoton abfällt. Das log-logistische Modell stellt die Ergebnisse für alle zwei- und dreistelligen Industrien am besten dar. Ferner zeigen die Ergebnisse, daß das Niveau der Aggregation eine große Rolle spielt und bemerkenswerte Unterschiede zwischen und innerhalb zweistelliger und dreistelliger low-, moderate- und high-tech Industrien zu finden sind. Bei der Einschätzung des Effekts von Charakteristiken der Marktumgebung auf das Risiko finden wir, daß das Risiko dazu tendiert, in einer relativ großen Anzahl von zweistelligen low- und high-tech Industrien erhöht zu werden, wenn Skalenerträge vorliegen, sich jedoch substantiell in moderate-tech Industrien verringert. Im Gegensatz dazu tendiert die Hazard Rate zu einer Verringerung für eine recht große Zahl von dreistelligen low-, moderate- und higt-tech Industrien im Vergleich mit zweistelligen Industrien, was auf eine längere "Adolescence" hindeutet. Der Einfluß der Anfangsgröße auf die Verringerung der Hazard Rate ist offensichtlich ähnlich in zwei- und dreistelligen low-, moderate- und high-tech Industrien. Der Einfluß des Marktwachstums auf das Risiko ist nicht zu unterschiedlich für zwei- und dreistellige Industrien. Das bedeutet, arktwachstum tendiert nicht zu einer Verringerung des Risikos. Die FuE-Intensität übt einen Einfluß auf das Risiko sowohl in zwei- und dreistelligen low-, moderate- und hightech Industrien durch Neugründungen aus.airlines; market structure and pricing; econometric and statistical methods; special topics

Nonadiabatic Time-Dependent Spin-Density Functional Theory for strongly correlated systems

We propose a nonadiabatic time-dependent spin-density functional theory (TDSDFT) approach for studying the single-electron excited states and the ultrafast response of systems with strong electron correlations. The correlations are described by the correlation part of the nonadiabatic exchange-correlation (XC) kernel, which is constructed by using some exact results for the Hubbard model of strongly correlated electrons. We demonstrate that the corresponding nonadiabatic XC kernel reproduces main features of the spectrum of the Hubbard dimer and infinite-dimensional Hubbard model, some of which are impossible to obtain within the adiabatic approach. The theory may be applied for DFT study of strongly correlated electron systems in- and out-of-equilibrium, including the important case of nanostructures, for which it leads to a dramatic reduction of necessary computational power

Small Business Mortality in Germany: A Comparison Between Regions and Sectors

Does geographic region or industry differences matter more in determining the likelihood of survival ? To answer this question, we compare the exit rates of new business firms for two German cities across a broad range of manufacturing and non-manufacturing sectors. Based on all business firms registrations and deregisterations for Berlin and Munich between 1981 until 1988, the variation in exit rates is hypothesized to be the result of differences in size, legal form and industry type (i.e., manufacturing or non-manufacturing). We find that geographic region and industry differences both play a significant role in influencing the death probability. Furthermore, the results show that size and legal form influence the exit rate in a similar manner, but industry effects are substantial across regions and within sectors. ZUSAMMENFASSUNG - (Sterberisiko von Kleingewerbeunternehmen in Deutschland: Ein Vergleich zwischen Regionen und Branchen) Üben regionale Faktoren oder Industriecharakteristika einen stärkeren Einfluß auf die Überlebenswarscheinlichkeit von Unternehmen aus? Um diese Frage zu beantworten, vergleichen wir Austrittsraten von neugegründeten Unternehmen des verarbeitenden und nichtverarbeitenden Gewerbes in zwei deutschen Städten. Die Untersuchung basiert auf den Firmenanmelde- und abmeldedaten für Berlin und München zwischen 1981 und 1988. Die Forschungshypothese lautet: Die Sterberaten werden durch die Unternehmensgröße, die Rechtsform und durch den Industrietyp (verarbeitendes bzw. nichtverarbeitendes Gewerbe) beeinflußt. Wir fanden heraus, daß die regionalen Faktoren und die Industriemerkmale einen signifikanten Einfluß auf die Sterbewahrscheinlichkeit haben. Außerdem zeigen die Ergebnisse, daß die Unternehmensgröße und die Rechtsform einen Einfluß auf die Austrittsraten haben, aber die Industrieeffekte sich erheblich nach den Regionen und den Wirtschaftssektoren unterscheiden.