Pakistan Journal of Applied Economics

135-159

Authors: Rafat MAHMOOD* and Eatzaz AHMAD**

The study measures an overall import smuggling in Pakistan, using Monetary Approach covering the period from fiscal years 1973 to 2010. The results show a rising trend in import smuggling as a percentage of imports in the early period of analysis but it declines afterwards. The main factor responsible for such a trend is trade restrictions; the tariffs and other import restrictions were imposed in 1970s through mid- 1980s and were relaxed later. The study paves the way for further research in this avenue by employing new approach for measurement of import smuggling in Pakistan.

179-192

Authors: Bilal MEHMOOD*, Muhammad ALEEM* and Nabeel SHAHZAD*

It is well said that “transport is civilization”. Transport sector plays a pivotal role in social and economic life of a country. A properly established transport system with well-equipped infrastructure is considered an input in the production process. A proficient transport system contributes to the economic growth by snow-balling the area of division of labor and specialization, accelerating the movement of raw material from their production centers to the place of their usage; as a result, it also enables the trade of goods from their manufacturing center to consuming centers between countries. A usefulness of transportation is that it helps in maintaining balance between areas where there is a shortage and those with surplus by exporting goods from the areas where there is a surplus to those areas where there is a shortage of goods. It stimulates integration of markets all over the world by reducing distance between countries. In this manner, it increases the comparative advantage of economy in goods production, and thus, facilitates trade. Transportation plays a pivotal role in connecting markets and the people. Recently, the world saw the birth of global economy which brought the national markets of different countries closer andmerged into a single global market due to technological advancement in the global transportation. It is impossible to put an economy on the high growth trajectory with an inefficient transport system. Air-transport is one of the major modes of contemporary transportation besides road and sea transportation. It is also known as “Real World Wide Web”. Air-transport plays its role in many sectors which ultimately contribute towards the national income of an economy. According to the Air-Transport Action Group (ATAG) 2012, if air-transport was a country, it would rank 19th in the world in terms of GDP, generating about US$ 540 billion worth of products and services per year. From this we can infer that there is a substantial role of air-transport sector towards the service-sector and in the economic growth. Air-Transport Action Group (ATAG) 2012, further points out that over 56 million people were employed world-wide in airtransport and the related tourism in 2011. By 2026, it is forecasted that air-transport will contribute about US$ one trillion to the world GDP. Based on these facts, it can be argued that air-transport is a sector which is capable of generating employment, product and services, stimulating growth. Therefore, empirically investigating its impact on growth for different countries is a worth-while task. In this paper, the study of macroeconomic impact of this mode of transportation is undertaken. Across-country framework for analysis of relationship between demand for air-transport and economic growth is also constructed. The rationale for considering Asian countries is that the strongest air-travel markets are in Asia with India and China’s domestic markets growing at double the rates. Within Asia the international travel is also growing strong. The objective of the paper is to build limitations of existing empirical research. The paper examines the impact of air-transport on national income of Asian countries, while considering the concerns which were previously overlooked in the empirical research. The hypothesis is HA, where there exists a long-run causal relationship between air-transport and macroeconomic performance in Asian countries. Following Section I (Introduction), Section II deals with the review of literature available on air-transport and its role in macroeconomic performance. Section III presents the theoretical framework, while the methodology is developed in Section IV. Empirical analysis is examined in Section V, and finally dicussion on recommendations on air transport are presented in Section VI.

1-24

Authors: D.I. EYAREFE* and Gbenga P. SANUSI**

Education represents the bedrock of intellectual and citizen consciousness for development of any country. However, the success or failure of many education policies and programs rests on the level of funding and management, to a large extent. This study examines the level of funding and management under two different regimes in Nigeria; the civilian and military. The sources and associated problems with government funding of public higher institutions are identified as well as their possible imparts and implications. Descriptive Statistics and Ordinary Least Square (OLS) regression were employed in comparing the funding and management of education during the two regimes in Nigeria. The relationship between the government capital and recurrent expenditure on education and economic growth during the years under review, were equally established. The study reveals that though the funding of education is under the concurrent list in constitution, it has received less than the expected funds from both the federal and the state governments under the civilian and military regimes, especially the military government. Thus, the near total of the sector and the unimaginable loss of income to other nations collapsed, through immigration of Nigerians to other parts of the world for qualitative education and the teeming figure of the unemployed. To foster a more efficient and effective funding of education for a more robust higher learning institutions in Nigeria, the implementation of the UNESCO recommendations of twenty-six per cent of annual budget for the education sector is a necessary condition. Private corporations should be encouraged to increase their social responsibility to the education institutes.

45-66

Authors: Abdul HANNAN* and Hasan M. MOHSIN**

Natural resources are generally considered to be very important for development of any country. Sachs and Warner (1995) empirical study initiated a new debate in the field of economics that countries where natural resources are in abundance have slow growth than the countries which are resource deficient, called the resource curse hypothesis. Many studies have empirically tested this hypothesis and found mixed results. Most of the studies in literature have used primary products exports as a measure of resource abundance which is not very appropriate. This study extends the literature by using various proxies of resource abundance and has decomposed the total natural resource rent to oil, gas, and mineral rents. The study further includes various regions in the empirical analysis to find whether resource curse is region specific or not? Almost all possible channels of resource curse have been investigated. Empirical estimates by using panel data technique (within effect model) have also been provided. The results indicate that natural resources do not adversely affect economic growth directly in the large sample of 170 countries for the period 1991 to 2011. Regional analysis of resource curse hypothesis revealed that South Asia is the only region where resource curse exists with all types of resources because of low level of institutions. In all other regions, natural resource rents positively impact the economic growth.

119-233

Authors: Kaiser BENGALI*

Despite seven decades of independence of Pakistan, large parts of the country remain woefully undeveloped with poor infrastructure and limited income generating opportunities. Balochistan stands out in this respect. However, development is possible. Balochistan has a manageable population, comprising just 1.5 million families. At one job per family, Balochistan needs to provide just 1.5 million jobs. This is eminently feasible and it is possible to create an almost zero-unemployment economy in Balochistan. There are a number of theories of under-development and of growth. The theories that best fit Balochistan are ‘Big Push’ and ‘Unbalanced Growth’. The two theories postulate that the injection of a large project in any one sector creates an imbalance with respect to other sectors. However, the project performs the role of an ‘engine of growth’ and propels growth in other sectors. Balochistan is, as yet, a primary sector economy of Pakistan; more specifically, it is essentially a pastoral economy. As such, it is prudent for the province to concentrate scarce fiscal resources in selected sectors and aim to obtain maximum impact. More importantly, it is necessary to chart a vision and set a direction. A vision sets the direction, which – sequentially – enables a strategy to be formulated, a policy to be framed, plans to be drawn and, accordingly, schemes to be prepared and implemented. Today, the development process has been turned on its head. Schemes are prepared and (half) implemented without the context of a plan, a policy, a strategy, a direction, or a vision. The result is expenditure of billions of rupees in the name of development, without any meaningful development.