Pakistan Journal of Applied Economics

1-23

Authors: Hafiz A. PASHA & Mir Anjum ALTAF*

This paper sets up a choice theoretic, dynamic optimization model in a life cycle setting, within which a temporary international migrant attempts to maximize a lifetime utility function. The choice variables are consumption at each point in time and the period of stay abroad. Determinants of the latter choice are the time stream of benefits and costs associated with migration. Benefits consist primarily of the jump in income levels. Costs comprise, first, of initial job-search and travel costs, second, of higher living costs abroad and, third, of 'psychic' costs due to family separation and cultural alienation. The model is applied to a data set of 417 Pakistani workers in Saudi Arabia. The impact of income 'shocks' of varying magnitude on planned lengths of stay abroad is simulated. It appears that the decline in wages has to be substantial, over 50 per cent, before, more or less, immediate large-scale return migration can commence to Pakistan.

41-60

Authors: Razaq A. OLOPOENIA

Despite the unprecedented inflow of foreign exchange into the Nigerian economy during the period of the oil boom in the seventies, the economy has been experiencing a balance of payments crisis and a recession since early 1982. While the glu t in the world oil market is often blamed for these problems their genesis is perhaps best sought within the context of the fiscal indiscipline and the exchange rate policy which characterized policy makers’ response to the oil boom. This paper examines the effects of these policy responses on certain macro-economic variables during the period 1972- 1984. It is observed that the evolution of these variables indicates that the Dutch Disease syndrome emerged during this period . Real output hardly grew ; real agricultural output declined ; non-oil exports, especially agricultural exports, lost competitiveness as a result of real exchange rate appreciation . The non-oil sector became more and more dependent on imports and a balance of payments crisis was imminent even before the 1982 oil market bust. It is argued that these developments could be directly traced back to the budgetary operations of the government through which the oil boom affected the rest of the economy. The policy of nominal exchange rate appreciation also contributed to the events which eventually led to an external debt crisis in the eighties. All of these happened because of the failure to make appropriate policy choices.