Pakistan Journal of Applied Economics

71-82

Authors: Qazi Masood AHMED & Noor-ul-HASSAN*

An attempt has been made to explore the determinants of public investment in agricultural extension services in Pakistan. We find empirical support for the efficiency model as against the interest group model in agricultural extension services. The study concludes that medium size farmers demand more agricultural extension services as against large and small farmers. Moreover, owner operators also demand more agricultural extension services as compared with tenants. We also find that education in Pakistan can complement agricultural extension services due to low education level of the farmer.

101-108

Authors: Salim CHISHTI & Akhtar LODHI*

the study based on 20 thusabd school age children, of which a little more than half attend school, identifies the factor which influence the decision-making with regard to sending the child to school. Using Heckmans procedure of selectivity bias correction, it also estimates the demand for education. An important finding of the study is that investment in female education is one of the most important factors in increasing the literacy rate.

M. Kabir HASSAN*

Authors: 43-58

The third world brain drain problem contains elements of economic, social and political complexities. The neo-classical economic theory may, therefore, be deficient in explaining brain drain. A number of studies have focused on the effects of brain drain rather than the causes. Moreover, data availability was a problem in previous studies. This paper is concerned with a dis aggregated analysis of the determinants of immigration of engineers and scientists to the U.S. from the third world countries. Attempt has been made to explain the third world professional immigration to the U.S. with a variant of Arrow-Capron model (1959). This analysis supports the view that labor market shortages explain the immigration of engineers and scientists to the U.S. An immigrant income taxation proposal may be effective in compensating the third world countries and in stopping professional immigration.

19-41

Authors: Mohammad AHMED*

This paper surveys major issues in the financial repression literature. A theoretical discussion of sources of imperfections in capital market and financial repression is presented. Important conclusions from the survey are presented for LDC policy makers in terms of impact on investment and savings variables. Based upon the former, a framework is developed in which a significant link between financially repressive policies and financial 'looting' is highlighted. A heuristic discussion of conditions under which financial '˜looting' takes place is provided. The end result, and cost to the economy. is 'paper' investment and concentration of economic power.

71-101

Authors: Ashok PARIKH*

The estimation and forecasting of trade shares is attempted in a world framework for major trading countries on the basis of data on bilateral flows for the period 1965 – 1980 for manufactures and chemicals [Standard International Trade Classification (SITC), (5) to (8)J . The assumptions of separability and homotheticity are made to obtain an operational Hickman-Lau model from Armington's approach in which products are distinguished not only by their kind but by their place of production. The problem of heteroscedasticity is encountered and estimates of elasticities of substitution are obtained using the most general form of the mode1. The results are compared with the Gana, Hickman, Lau, and Jacobson (1979) study. The estimates of substitution elasticities based on 1965“ 1980 data are lower than the ones obtained using 1960- 1970 data and it is argued that the flexible exchange rate (and the agents' responses) could be responsible for low substitution elasticities when the period after 1973 is included.

125-129

Authors: A. Hafeez SHAIKH* & Asad ZAMAN**

The availability of computer packages has put a variety of econometric techniques within the reach of nearly everyone. The sophisticated mathematics and modern technology required lends a magical quality to these tools. One has the feeling that if only one could pronounce the right magic word (or, use the right regression technique) all econometric problems would disappear. The truth, as one learns from experience, is far from this fantasy . Because strong assumptions are made by econometric theory, it is not at all uncommon for the most sophisticated of techniques to generate the crudest of errors. Therefore it is extremely important to understand : a) The overall limitations of econometric techniques: what can and cannot be done; and b) factors not included in the model (such as politics, strikes, outliers) which may influence results.

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.

91-143

Authors: Shahid N. ZAHID & Syed Sajjad HYDER

The main concern of this paper is the effect of relative price changes on the agricultural sector during 1973-84. Various terms of trade indices have been calculated. The first is the ratio of the prices received by agriculture for its produce to the prices paid by agriculture for consumer goods. The second is the ratio of the prices received for agricultural output to prices paid for agricultural inputs. Both these indices have been calculated using domestic and international prices. Adjustment have also been made to account for changes in per capita incomes overtime. To analyse regional differences in the terms of trade, indices have been calculated at both the national and provincial levels. Two important conclusions have emerged from the results. First, there is not much difference between the term. of trade under regulated (pre-1977) and de-regulated (post-1977) price regimes. Second, regional inequalities in the agricultural sector have not reduced significantly over the period under consideration.

163-178

Authors: Pradurnna B. RANA*

Fueled by the adverse conditions in the current international economic environment, the debate concerning the relative merits of development strategies based on import-substitution or export-oriented policies, is starting anew. This paper re-estimates Feder's (1982) model using data from fourteen Asian LDCs during 1965·1982 and finds that, although the social marginal factor productivities in the export sector declined significantly in the post-1973 period providing some support for the elasticity pessimism argument, they were, nevertheless, higher than in the non-export sector. This suggests that despite the deterioration of the international economy, reallocation of the export sector from the non-export sector could have increased growth rates.

207-215

Authors: Eshya MUJAHID-MUKHTAR & Hanid MUKHTAR

Nagy's estimation reveals a very high rate of return to research and extension in Pakistan's agriculture. This work demonstrates that this was due mainly to a mis-specified model, with the research and extension variable picking up the effect of omitted variables, namely water and fertilizer. Due to their importance in agriculture, it was not surprising to note that the inclusion of water and fertilizer results in a considerably lower rate of return to research and extension than shown by Nagy . at times even pushing it to a negative value.