Pakistan Journal of Applied Economics

79-101

Authors: Sofia ANWAR, Zakir HUSAAIN

This paper analyse the changing comparative advantage and competitiveness of cotton over time and its implications on the cotton sector and all the stakeholders in Pakistan, in an era of globalization. The data collected by the Agricultural Price Commission (APCom) on the cost of production of seed cotton for the period of 2002-2007 was used for the analysis. The financial and economic budgets were prepared separately to estimate profit-ability, value addition, comparative advantage and competitiveness of the cotton crop. The Policy Analysis Matrix (PAM) was the basic analytical framework. Policy distortions in the input and output market were also analysed through Nominal Protection Coefficient (NPC) and Effective Protection Coefficient (EPC). The Domestic Resource Cost (DRC) ratio was selected as a measuring tool for comparative advantage. The risk analysis was further carried out on the basis of risk prices of fertilszer (DAP and Potash) and cotton to assess the comparative advantage of the country in cotton production. The results show that Pakistan has a comparative advantage in the production of cotton at export parity price and can maintain competitiveness in the world cotton market. The textile industry of Pakistan can rely on cotton growers to supply sufficient amounts of raw material at competitive prices. In the free trade scenario, Pakistan is likely to maintain its competitiveness and gain more in the cotton market provided the developed countries follow the rules of the WTO. Ensuring quality improvement through efficient utilisation of all re-sources is essential to complete the value chain of the cotton sector and remain competative under different circumstances.

129-151

Authors: Ambreen FATIMA, Azhar IQBAL andHassan Mujtaba N. SALEEM

The study investigates the relationship between economic growth, government size, private consumption, private investment, exports and imports, using data from ten Asian countries for the period 1970 to 2001. Country-by-country and panel results based on ADF, Johansen, Panel Unit Root (IPS), and Panel co-integration [Larsson et al. (2001) tests are presented. ADF and Panel Unit Root (IPS) test results show that all the series are integrated of order one. After establishing that the series are integrated of order one, the study then tested the long run implications of the model with the help of the Johansen Co-integration technique. A long run relationship among the variables using the panel co-integration test over the entire period for the sampled countries was detected. The study concluded that in the long-run government size is an important determinant of economic growth in Asian countries included in the sample. The findings also indicate that in countries like India, Indonesia, Malaysia and Philippines, an increase in the size of the government promotes the growth process, while in countries such as Bangladesh, Korea, Pakistan, Singapore, Sri Lanka and Thailand growth in the size of the government retards economic growth in the long run.

1-18

Authors: Adeolu O. ADEWUYJ & Godwin AKPOKODJE*

This study investigates the impact of macroeconomic factors on private investment in the Economic Community of West African States (ECOWAS) sub-region of Africa during the period 1986-2006. The study employs panel data techniques of analysis covering 15 ECOWAS countries. The problem of endogeneity in model specification was addressed by constructing an alternative GMM estimator that combined the level and first difference specifications using lagged levels of variables as instruments. Empirical results indicated that macroeconomic instability hindered private investment in the ECOWAS. There is evidence that inappropriate macroeconomic policy management (fundamentals-real exchange and interest rates) contributed significantly to the poor investment performance. In the same vein, external debts constrained private investment in this African sub-region. The study concludes that progress towards macroeconomic stability, reduction of external debts and increased government investment would playa major role in stimulating private investment in the sub-region

35-58

Authors: Hammad BADAR & Qamar MOHY-UD-DJN*

The paper attempts to analyse the position of Pakistan, the province of Punjab, with respect to domestic support reduction commitments and to study its impact on the agricultural production of the Punjab. According to the findings of the study, Pakistan at present is in full conformity with the WTO regime on agriculture with a negative Aggregate Measurement of Support (AMS) value. The estimates of AMS for the Punjab depict the same trend. The estimated Cobb-Douglas type of agricultural production model for the Punjab established that the cropped area, agricultural labour, distribution of seed, budgetary expenditure on agricultural research and extension, land reclamation, and wheat price support contributed positively towards agricultural production, whereas the contribution of fertilser and expenditure on food trading services was found to be negative. The study suggests that Pakistan should explore and extend permissible Green Box support for agricultural and rural development of the country besides utilising the available cushion for support due to negative AMS value and de minimus criteria.