How did highly indebted poor countries become highly indebted? : reviewing two decades of debt relief

Economic growth, CO2 emissions, renewable waste and FDI relation in Pakistan: New evidences from 3SLS

Are there systematic political economy factors that shape preferences for foreign aid, a key component of American foreign policy? We analyze votes in the House of Representatives from 1979 to 2003 that would increase or decrease foreign aid by considering the political, economic, and ideological characteristics of legislators and their districts. To understand who supports and opposes foreign aid, we utilize theories of foreign economic policy preferences. By examining different types of aid policy, we show that domestic politics and especially the distributional consequences of economic aid can matter. The economic characteristics of a district and its left–right ideological predispositions influence support for aid in a systematic fashion over the nearly 25-year period. Stolper–Samuelson models along with political ideology can help explain legislators’ preferences toward aid.

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The political economy of u.s. foreign aid: american legislators and the domestic politics of aid

http://www.sigmaweb.org/publications/35066562.pdf

Managing Public Expenditure: A Reference Book for Transition Countries

Although fiscal adjustment was urged on developing countries during the 1980s to lead them out of economic malaise, considerable uncertainty remains about the relations between fiscal policy and macroeconomic performance. To illustrate how financial markets, private spending, and the external sector react to fiscal policies, the behavior of holdings of money and public debt, private consumption and investment, the trade balance, and the real exchange rate is modeled for a sample of ten developing countries. The studies find strong evidence that over the medium term, money financing of the deficit leads to higher inflation, while debt financing leads to higher real interest rates or increased repression of financial markets, with the fiscal gains coming at increasingly unfavorable terms. Consumers respond differently to conventional taxes, unconventional taxes, and debt financing, in ways that make fiscal adjustment the most effective means of increasing national saving. Private investment-but not private consumption- is sensitive to the real interest rate, which rises under domestic borrowing to finance the deficit. Contrary to the popular presumption, in some countries private investment increases when public investment decreases. There is strong evidence that fiscal deficits spill over into external deficits, leading to appreciation of the real exchange rate. Fiscal deficits and growth are self-reinforcing; good fiscal management Fiscal deficits and growth are self-reinforcing; good fiscal management preserves access to foreign lending and avoids the crowding out of private investment, while growth stabilizes the budget and improves the fiscal position. The virtuous circle of growth and good fiscal management is one of the strongest arguments for a policy of low and stable fiscal deficits.

/pdf/fiscal-deficits-and-macroeconomic-performance-in-developing-2b47pwdi36.pdf

Fiscal deficits and macroeconomic performance in developing countries

A case-study of Pakistan's economic development during the past fifty years, which demonstrates that the benefit of this development has predominantly affected a small class of the elite, while the majority of the population remains illiterate, poor, and backward.

Pakistan : the economy of an elitist state

THe world debt crisis of the 1980s, soon to drag into the 1990s, has launched a constellation of competing claims and conflicting alternatives. From 1986 to 1988 more than $100 billion in resources were transferred from the highly indebted countries to creditors in the industrial countries. By the end of 1989 the burden of the highly indebted countries will have reached about $500 billion, and debt service will consume almost a quarter of their export earnings. In January 1989 the World Bank organized a symposium that brought together a large number of development and financial practitioners and academics to discuss the behavior of the debtors, creditors, and the international community and the possible contribution of each to resolving the debt crisis. The eighteen chapters in this volume cover many aspects of the issue, with special emphasis on the relations among indebtedness, macroeconomic management, and growth and on the need for debt reduction. Subjects treated include the constraints on, and scope for, action; the relative merits of various mechanisms to reduce debt; and the ways to strengthen the debt reduction process. Several chapters analyze the implications of the recently announced Brady Initiation on the debt and debt-servicing reduction for the highly indebted countries - a topical issue of great current interest.

Dealing with the debt crisis

Economic and social outcomes in Pakistan over the last sixty years are a mixture of paradoxes. The economic growth rate has averaged 5 percent annually since 1947--a feat achieved by very few countries. Politically, however, the interplay of religious fundamentalism, sectarianism, ethnic cleavages and regional economic disparities has made the country volatile and unstable. Various East Asian countries that were behind Pakistan in the 1960s have surged far ahead in most economic and social indicators. Pakistan has thus been unable to realize its potential. It is usually believed that economic growth can take place only in the presence of political stability, but the Pakistani case contradicts conventional wisdom. In order to explain these paradoxes and contradictions, this article attempts to address the following questions: How can a country that has suffered from political volatility and instability for such a long period achieve high economic growth? * Have periods characterized by stable authoritarian regimes in Pakistan provided the means for long term economic performance? * Have external influences, particularly the United States, played a constructive role? Despite sharing a common historical, cultural and social milieu, Pakistan and India have pursued different paths since independence in 1947. Both countries have done reasonably well in improving their economies and reducing absolute poverty levels. India has, however, emerged as a stable and vibrant democracy while Pakistan has spent half of its post-independence years under military dictatorships and is currently struggling to quell an Islamic insurgency in the northwest part of the country. The democracy-development nexus appears to be well entrenched in the case of India, while it is faltering in Pakistan. A great deal of recent literature has suggested that China and India are the typical representatives of authoritarian and democratic regimes, but fewer attempts have been made to resolve this puzzle in the case of India and Pakistan, two countries that are more akin to each other and share a common legacy. In order to address these questions it is useful to revisit the essential dimensions of Pakistan's economic and political history, a history which can be divided into six distinct periods: * The Flat Fifties, 1947 to 1958 * The Golden Sixties, 1958 to 1969 * The Socialist Seventies, 1971 to 1977 * The Revivalist Eighties, 1977 to 1988 * The Muddling Nineties, 1988 to 1999 * The Reforming Hundreds, 1999 to 2007 PERIOD h THE FLAT FIFTIES, 1947 TO 1958 (1) Pakistan came into existence as a moth-ridden country at the time of the partition of India. The British-controlled provinces of Punjab and Bengal were each divided into two parts. East Punjab and West Bengal formed part of modern-day India; West Punjab and East Bengal, along with three other provinces, together formed Pakistan. The physical separation between eastern and western Pakistan, with Indian territory in between, put Pakistan at a serious disadvantage from its inception. The foundation of an authoritarian streak in the polity was laid fairly early in Pakistan's history. After the death of the first prime minister, Liaquat All Khan, and the ascent of bureaucrat Ghulam Mohammed to the office of Governor-General, the supremacy of politicians in the political order was lost. (2) In February 1953, martial law was imposed in Lahore to quell the anti-Qadiani movement. (3) Prime Minister Khwaja Nazimuddin was dismissed by the governor general. Scholar Keith Callard termed this a "governor-general's coup. (4) He observed that three major conventions--the impartiality of the governor general, cabinet and party solidarity and the role of legislature as the maker and sustainer of government--had been destroyed or gravely weakened. Pakistan's ambassador to the United States, Mohammed Ali Bogra, was foisted as the new prime minister and six of the nine ministers of the dismissed cabinet joined the new government. …

The Role of Politics in Pakistan's Economy

A case-study of Pakistan's economic development during the past fifty years, which demonstrates that the benefit of this development has predominantly affected a small class of the elite, while the majority of the population remains illiterate, poor, and backward

Pakistan: The Economy of an Elitist State

The ‘new growth theory’ has been highly influential in explaining the differences in the economic performance of developing countries. Economic backwardness is highly linked to low labor efficiency and training, deficient supplies of entrepreneurship and slow growth in knowledge. The countries that have surged ahead, on the other hand, are characterized by high level of human capital accumulation where the educated labour force has raised the level of output and the rate of growth over a sustained period of time. Stern (2001) argues that Education takes center stage in any discussion of development strategy for two reasons. First, the quantity and quality of education influences strongly the labor force, governance and the workings of most institutions. Thus it is a key determinant of the investment climate. Firms, both domestic and foreign, are more eager to invest when they know that they will be able to draw on a skilled workforce to make that investment productive. Second, universal access to basic education is essential for ensuring that all segments of society will benefit from macroeconomic growth. Studies confirm that the productivity benefits of education are large-just one additional year of education can increase productivity in wage employment by 10 percent even after controlling for other factors. Skill development through education has been identified as a key determinant of comparative advantage and manufacturing export performance. In Pakistan, it has been shown that districts with a higher literacy level have a higher level of development (SPDC 2003).

Ishrat Husain

Papers

Pakistan : the economy of an elitist state

Dealing with the debt crisis

The Role of Politics in Pakistan's Economy

Pakistan: The Economy of an Elitist State

Education, employment and economic development in pakistan