research paper on economy of pakistan

The World Bank In Pakistan

Pakistan has important strategic endowments and development potential. The increasing proportion of Pakistan’s youth provides the country with a potential demographic dividend and a challenge to provide adequate services and employment.

Pakistan’s strong post-pandemic recovery came to a halt in FY23 with large accumulated economic imbalances that resulted from the delayed withdrawal of accommodative policy, and a series of domestic and external economic shocks. Pressures on domestic prices, external and fiscal balances, the exchange rate, and foreign exchange reserves mounted amid surging world commodity prices, global monetary tightening, recent catastrophic flooding, and domestic political uncertainty. Confidence and economic activity collapsed due to import controls, periodic exchange rate fixing, creditworthiness downgrades, and ballooning interest payments. Poverty is estimated to have increased due to deteriorating wages and job quality, along with high inflation that eroded purchasing power, particularly for the poor.

Pakistan’s economy is estimated to have contracted in FY23, after two consecutive years of stellar growth. Overall, real gross domestic product (GDP) is estimated to have declined by 0.6 percent in FY23 after growing by 6.1 percent in FY22 and 5.8 percent in FY21. Floods caused heavy damage to crops and livestock, while difficulties securing critical inputs, including fertilizers, further slowed agriculture output growth. With 44 percent of poor workers relying on agriculture, weak agricultural performance had significant poverty impacts. Supply chain disruptions due to import restrictions and flood impacts, high fuel and borrowing costs, political uncertainty, and weak demand affected industry and service sector activity, and dampened private investment. Private consumption also shrank with weakened labor markets and surging inflation. This likely reduced the labor incomes of millions of workers, especially those who moved to lower-productivity informal jobs.

Economic growth is expected to remain sluggish and downside risks to the outlook will remain exceptionally high. The approval of the International Monetary Fund (IMF) Stand-By Arrangement (SBA) in July 2023 unlocked new external financing and averted a balance of payments crisis. Even with the SBA, reserves are expected to remain low, necessitating continued import controls and constraining economic recovery. Real GDP growth is projected to reach only 1.7 percent in FY24 and 2.3 percent in FY25. The agriculture sector is expected to recover on the back of higher production of important crops, including cotton and rice. Marginal easing of import restrictions is expected to support some recovery in the industrial sector, particularly large-scale manufacturing. Flow-on impacts from the strengthening agriculture and industrial sectors will support a revival in associated services sectors including wholesale and retail trade, and transport and storage. However, high inflation due to increasing domestic energy prices and continued depreciation is likely to keep economic activity subdued. Recovery in private investment and exports will be marginal in the absence of broader reforms. With the resumption of growth, poverty expected to decline to 37.2 percent in FY24.

The economic outlook and short-term macroeconomic stability are predicated on the robust implementation of the SBA, continued fiscal restraint and external financing inflows. Financial sector instability and policy slippages due to social tensions pose significant risks. Continued high inflation, localized insecurity, and weak growth increase vulnerability to falling into poverty and worsen the situation of the existing poor. More than 10 million people are currently just above the poverty line, and at risk of becoming classified as poor if the situation deteriorates. Without further reforms, risks will remain exceptionally high, economic activity will remain constrained by import controls and weak confidence, while low investment and exports will undermine medium-term growth potential.

A more robust recovery will require an ambitious medium-term reform agenda focused on fiscal consolidation and enhancing competitiveness , supported by strong political ownership and commitment. The reforms would include measures to increase revenues by broadening the tax base, including from closing exemptions and tapping increased revenue from agriculture, retail, and property. It would also entail measures to rationalize fiscal expenditures, such as by reducing wasteful and regressive subsidy spending, and to restore private sector confidence through business regulatory reform and reforms to state-owned enterprises, and to address inefficiencies and high costs in the energy sector.

Last Updated: Oct 04, 2023

The  Country Partnership Strategy  (CPS) for Pakistan for FY2015-20 is structured to help the country tackle the most difficult—but potentially transformational—areas to reach the twin goals of poverty reduction and shared prosperity.

The Pakistan team continues to engage with stakeholders on the next Country Partnership Framework (CPF). The CPF will draw from several analytical works, including Pakistan Systematic Country Diagnostic: Leveling the Playing Field , and the recently published Country Climate Development Report and Country Economic Memorandum .

The four results areas of the current CPS are:

Transforming the energy sector:  WBG interventions are supporting improved performance of the energy sector by supporting reforms and investments in the power sector to reduce load shedding, expand low-cost generation supply, improve transmission, improve governance and cut losses.

Supporting private sector development:  A mix of budget support, investments and analytical work supports improvements in Pakistan’s investment climate, in overall competitiveness, agricultural markets and productivity, and skills development. 

Reaching out to the underserved, neglected, and poor:  Investments support financial inclusion, micro, small and medium enterprises (MSMEs), women and youth (including through enrollment outcomes), fragile provinces/regions and poorer districts, social protection, and resilience and adaptation to the impact of climate change.

Accelerating improvements in service delivery:  At the federal and provincial levels the Bank supports increasing revenues to fund services and setting more ambitious stretch targets for areas that are not producing change fast enough (especially education and health). At a provincial level, this involves support to better service delivery in cities.

Cross cutting themes for the program include women’s economic empowerment, climate change and resilience, and regional economic connectivity.

The WBG has its third-largest portfolio of $14.8 billion in Pakistan ($10.8bn IDA, $3.8bn IBRD, $0.2mn in Trust funds and co-financings). The portfolio is supporting reforms and investments to strengthen institutions, particularly in fiscal management and human development. Partnerships are being strengthened at provincial levels, focusing on multi-sectoral initiatives in areas such as children's nutrition, education and skills, irrigated agriculture, tourism, disaster risk management, and urban development. Clean energy, and social/financial inclusion, both remain major priorities.

ENHANCING DISASTER RESILIENCE

Being one of the most vulnerable countries to climate change Pakistan is recurrently affected by catastrophes, including the unprecedented 2022 floods which affected an estimated 33 million people and resulted in US$14.9 billion in damages and US$15.2 billion in economic losses . Pakistan’s economy continues to suffer chronic strain from prevailing and likely future threats of hazards. Since the 2005 Pakistan earthquake, which led to nearly 73,000 deaths and caused damages to over 570,000 houses, the Bank has been supporting the Government of Pakistan in shifting to an anticipatory risk management approach. Initially, the Bank provided technical assistance to the government to highlight physical and fiscal risks from hazards, including risk assessments of federal and provincial capitals. In parallel, the Bank also used grant resources to build the capacity of Provincial Disaster Management Authority of Balochistan.

Following the floods of 2014, at the request of Government of Pakistan, the World Bank prepared the US$125 million IDA-funded Disaster and Climate Resilience Improvement Project (DCRIP) to support the restoration of flood protection infrastructure and strengthen government capacity to manage disasters and climate variability in Punjab. The project was successfully concluded in November 2021,achieving its intended development objectives and surpassing the targets for several key results indicators. DCRIP directly benefitted more than 8 million people, half of which are women. The project also repurposed US$7 million to support the Government of Punjab in the pandemic emergency response through procurement of personal protection and healthcare equipment.

In 2016, the Bank also prepared and delivered the US$100 million IDA-funded  Sindh Resilience Project  (SRP) to mitigate flood and drought risks in selected areas, and strengthen Government of Sindh's capacity to manage natural disasters. About 5.75 million people across the province have benefitted from project interventions till date. The drought mitigation component of the project, comprising construction of small groundwater recharge dams, has already started generating strong development impacts for the target communities. In 2021, the Bank approved an additional financing of US$200 million to scale up the small groundwater recharge dams component and set up an emergency rescue service for Sindh.

The Bank has also prepared and delivered the US$188 million IDA-funded Pakistan Hydromet and Climate Services Project which aims to strengthen Pakistan’s public-sector delivery of reliable and timely hydro-meteorological services and enhance community resilience to shocks. The Contingent Emergency Response Component (CERC) was activated under this project to disburse US$150 million in response to the 2022 floods to provide cash assistance to 1.3 million flood affected families.

Furthermore, as part of comprehensive emergency response and rehabilitation support for 2022 floods, the Bank delivered two emergency projects for the province of Sindh, which was disproportionately affected by the catastrophe. The US$500 million IDA-funded Sindh Flood Emergency Rehabilitation Project aims to rehabilitate damaged infrastructure and provide short-term livelihood opportunities through cash-for-work in selected areas of Sindh affected by the 2022 floods. The project will also strengthen the capacity of the Government of Sindh to respond to the impacts of climate change and natural hazards through expansion of the Sindh Emergency Rescue Service (Rescue 1122) and enhancing the preparedness of relevant line departments. The Project is expected to benefit 2 million people through rehabilitated infrastructure while short term livelihood support will be provided to 100,000 households.

Similarly, the IDA-funded US$500 million Sindh Flood Emergency Housing Reconstruction Project aims to deliver beneficiary-driven, multi-hazard resilient reconstruction of core housing units damaged or destroyed in the floods of 2022 in selected districts of Sindh. The Project will support the provision of an estimated 350,000 housing subsidy cash grants and strengthen the capacity of the Government of Sindh by providing technical assistance for the overall housing reconstruction program.

The flood emergency response projects have made satisfactory progress till date. US$ 160 million has been utilized for infrastructure rehabilitation, benefitting more than 3 million people, and about US$100 million has been committed for tranche-based cash grants for housing support to 160,000 beneficiaries.  Efforts are ongoing to ensure the inclusion of eligible beneficiaries and putting emphasis on infrastructure resilience in design standards, which represent important steps towards enhancing overall resilience and building back better.

The Bank has also launched the Country Climate and Development Report (CCDR) for Pakistan. The Pakistan CCDR provides analyses and policy recommendations on harmonizing efforts to achieve further economic growth and lower poverty rates, on the one hand, with the pursuit of a climate-resilient, low-carbon, and equitable development path, on the other. In light of the devastating 2022 heatwaves and floods and the country’s vulnerability profile, the CCDR strongly emphasizes the need to build long-term resilience. Further, it explores pathways for Pakistan to achieve deep decarbonization by 2050, and eventually reach net-zero emissions by 2070 without undermining its development ambitions.

Pakistan has made progress in mainstreaming the Sustainable Development Goals (SDGs) in national policies and strategies, however, there is a slow progress in improving health outcomes. According to the maternal mortality survey in 2019, the country’s maternal mortality ratio  was 186 deaths per 100,000 live births down from 276/100,000 live births in 2006-07. Large gaps exist across provinces with Sindh and Balochistan having twice the number of maternal deaths as compared to the national average. The country also has one of the highest infant and under-5 mortalities in the region (62 and 74 deaths per 1,000 live births, respectively). Twenty-two percent of the children born have low birth weight with variations across provinces.

On average, access to quality reproductive, maternal, newborn, child, and adolescent health with nutrition services in Pakistan is inadequate, with regional disparities. About 49 percent of pregnant women do not receive the recommended four or more anti-natal care (ANC) visits essential for a safe and healthy pregnancy outcome. With 33.8 percent of births outside of health facilities, the risk of maternal and infant mortality and morbidity is high. 42 percent of women of reproductive age in Pakistan have anemia due to poor nutrition. At 3.6 births per woman, Pakistan’s fertility rate is still relatively high, and except for Punjab, adolescent fertility has increased, and modern contraceptive prevalence rate (mCPR) has been low in the last decade at 25 percent. High fertility rate and teenage pregnancies contribute to poor maternal and child health outcomes which pose risks of death and illness.  Poor health affects all facets of women’s lives including delayed development milestones, education, learning skills and gainfully participating in the labor force.

Stunting rates for children under age 5 have dropped from 45% to 40.2% from 2013 to 2018. However, it is still high and large disparities exist among provinces. This prevalence varies from 36.4% in Punjab to 46.6% in Balochistan. The average annual rate of reduction since the last 2018 National Nutrition Survey has been estimated at only 0.5 percent, which is frighteningly slow to reach the national targets. Although the situation is worse in rural and poor households, more than 20 percent of under-5 children in the wealthiest income quintile are also stunted, meaning poverty is not the only driver of stunting.

Immunization coverage for children aged 12-23 months, increased considerably over the past 8-9 years from 54% in 2013 to 77% in 2022. In Punjab 89.6% of children are fully immunized while in Khyber Pakhtunkhwa, Sindh and Balochistan 61%, 69.2%, and 37.7% are respectively fully vaccinated.

The World Bank has been supporting the health sector in Pakistan through national and provincial projects. The National Immunization Support Project (closed in June 2022) had supported immunization of children across the country and the Pandemic Response Effectiveness Project (closed in June 2023) prepared to respond COVID-19 pandemic in Pakistan and strengthen national systems for public health preparedness. The National Health Support Program , approved in Fiscal Year 2023, supports the strengthening of equitable delivery and quality of essential health services at the primary level and the Sindh Integrated Health and Population Project , approved in Fiscal Year 2023, supports to improve quality health services in selected areas and restore and rehabilitate healthcare services impacted by floods. Provincial Human Capital Investment projects are being implemented in Balochistan, Punjab and Khyber Pakhtunkhwa and they aim to improve utilization of quality health targeted and social services to the poor and vulnerable population. The World Bank recently signed (September 2023) a Punjab Family Planning Program, with the aim to improve modern contraceptive prevalence rate (mCPR) in the province.

Sources: Pakistan Demographic & Health Surveys 2006-07 , 2012-13 & 2017-18 , Maternal Mortality Survey 2019 , National Nutrition Survey 2018 , Third-Party Verification Immunization Coverage Survey 2022

Actions to Strengthen Performance for Inclusive and Response Education (ASPIRE) is a 5-year US$200 million program that became effective in August 2020. The program is aimed at enhanced targeting of COVID-19 education response, generating improved learning opportunities for out-of-school children (OOSC) and at-risk students, and enabling stronger federal-provincial coordination and management. To date, the Ministry of Federal Education and Professional Training (MoFEPT) and the provincial education departments have achieved four Disbursement-Linked Results (DLR): adoption of National School Health and Safety Protocols, approval of National Education Response and Resilience Plan, provision of distance learning kits to 50,000 students across the country, and provision of hygiene and cleaning kits to 20,000 public schools nationwide. The activities planned in in FY23 mostly focused on construction and rehabilitation, communication campaigns, teachers training, multi-modal programs, and specific intervention related to Out of School Children (OOSC). The ASPIRE program has also been successful at leveraging the Inter-Provincial Education Ministerial Conference (IPEMC) and the Technical Steering Committee (TSC) platforms for improved coordination between the Federal and Provincial Education Departments.

Pandemic Response Effectiveness in Pakistan project (PREP) , initiated in April 2020, was closed in June 2023. Different donor organizations extended their support in the form of grants and loans to overcome the pandemic situation all over the world, especially to support the education sector. PREP was a US$187 million project of which US$17 million is the education component. The education component introduced distance-learning activities and the development and implementation of plans to ensure the continuity of learning including remote learning options, at all levels of education. These included TV /radio broadcasts, virtual networks of teachers, and other means of distance delivery of academic content at primary, secondary and higher secondary levels. The key activities that are being procured under PREP included: i) Teleschool initiative through Allama Iqbal Open University (AIOU), ii) Content procurement for Teleschool, iii) Strengthening of E-Taleem portal including Virtual Teacher Training (VTT) and Learning Management System (LMS) modules, iv) Development of VTT Training Modules/Courses v) Smart classrooms vi) Procurement and distribution of hand-held devices vii) Communication campaign viii) School on wheels, and ix) the monitoring and evaluation activities.

Data and Research in Education (DARE) is a US$10 million Bank Executed Trust Fund (BETF) provided by the Foreign, Commonwealth & Development Office alongside the ASPIRE program. The project supports Pakistan education sector’s response and recovery by providing technical assistance to the Federal Government, in order to strengthen the education data infrastructure and coordination mechanisms between the federal and provincial governments, enhance evidence-based decision making and improve targeting of programs to reduce inequality and gender-gap. The main components under DARE include strengthening the provincial-Federal education data management processes, enhancing sector coordination on student learning outcomes and improvement of sector monitoring, evaluation and decision making by supporting policy research and impact evaluations.

COVID 19 Response, Recovery, and Resilience in Education Project (RRREP)   - a Global Partnership for Education funded grant of US$19.85 million was successfully closed in November 2022. The project ensured learning continuity through a) broadcasting the digital content on National TV and Radio which reached around 2.7 million children across 58 lagging districts in Pakistan; b) contributed to the evolving EdTech ecosystem at the Federal level by enhancing the Ministry’s digital content library (6000 lessons for grades K-12) and mapping them to the National and Provincial Student Learning Outcomes; and c)  providing adequate infrastructure for the delivery of digital content. Moreover, to ensure safe school reopening post COVID-19, around 1.8 million children in over 12,000 primary schools received sanitizing and hygiene kits, as well as learning materials to lower barriers for re-enrollment and attendance. The Bank has also supported the government’s communication campaign on safe school practices as well as re-enrolment campaigns to encourage families to send their children back to schools once schools re-opened. The project also supported National strategic policy dialogue on strategies to mainstream Out of School Children (OOSC).

Under the 5-year Higher Education Development in Pakistan (HEDP) the World Bank supports research excellence in strategic sectors of the economy, improved teaching and learning and strengthened governance in the higher education sector. The project has been successful in bringing some key reforms in the sector, including: introduction of an Undergraduate Education Policy which established the criteria for Associate Degree and transition of all Bachelor’s Degree programs from two-years to four-years; research capacity development by providing competitive research, innovation, and commercialization grants, such as the Rapid Research Grants, for research on critical COVID-19 related topics and Innovative Seed Fund to support startups and entrepreneurs; expansion of digital connectivity and remote learning systems to ensure continuity of education during COVID-19 and capacity building trainings of faculty, especially females under the newly established National Academy for Higher Education. HEDP closes on June 30, 2024.

The World Bank supported Punjab with an reform program through the  Punjab Education Sector Project-III program (US$300 million), which closed  in June 2022. The Bank also supports interventions in the education sector in Punjab through the Human Capital Investment project (US$200 million, with US$30 million supporting strengthening and scale-up of early childhood education in 11 districts in South Punjab). The project supports the development of a 2-year early childhood education (ECE) curriculum and strengthening of ECE services in Punjab. Currently a minimum of 11,000 ECE classrooms meet new quality standards, which include the presence of a trained teacher and caregiver as well as a kit with instructional material. In addition, content for teaching and learning materials is being updated to ensure alignment with evolving curricula and standards.

The 5 year Sindh Early Learning Enhancement through Classroom Transformation (SELECT) project of $155 million, financed in part by the Global Partnership for Education grant ($55 million) supports the Sindh Education Sector Plan & Roadmap (SESPR) 2019–2024, focusing on 12 of 29 districts in Sindh, with the lowest performance on educational outcomes. Prioritized areas under SELECT include foundational literacy; teaching quality; classroom and provincial assessments improving access to elementary schools and enhancing the school learning environment, including in 250 flood-affected schools; proactive dropout mitigation (especially for girls) and transition from primary to secondary schooling through the development of a student attendance monitoring and redress system; and improved school and district-level governance which contribute to the achievement of its targets.

Balochistan

The Balochistan Human Capital Investment Project (BHCIP), which became effective in 2021, is implemented together with the health sector. The education component (US$17.75 million) focuses on the improved utilization of quality education services in selected refugee hosting districts. BHCIP funds the rehabilitation of schools and upgrading of primary schools to middle and high schools, merit-based hiring of additional teachers and strengthening of the education sector stewardship. To date, BHCIP has initiated the procurement of supplies for schools, including basic furniture, ECE classroom materials, science, and IT laboratory equipment. The project also aims to improve student assessment and teacher training across the province by supporting the Balochistan Assessment and Examination Commission and Provincial Institute of Teacher Education. Use of data for decision making and schools’ capacity to contribute to generating reliable data is another important element of the project that strengthens governance at school and district levels.

Khyber Pakhtunkhwa

In March 2021, the Government of Pakistan approved the US$200 million Khyber Pakhtunkhwa Human Capital Investment Project (KPHCIP) – a five-year project that aims to improve the availability, utilization, and quality of primary healthcare services and elementary education services in 4 districts of Khyber Pakhtunkhwa. The districts were selected because they have some of the highest refugee populations in the province. This financing includes a grant of US$62.5 million from the IDA18 regional sub-window for refugees and host communities (IDA-18 RSW). The education component (US$115 million) of the project will focus on improving the availability, utilization and quality of education services in selected districts for all children, especially refugees and girls. US$15M from the education component are being reallocated for flood rehabilitation and reconstruction in the original districts as well as 9 additional flood-affected refugee-hosting districts. A project restructuring is underway to accommodate flood response activities.

OPERATING IN CONFLICT AREAS

In the aftermath of the militancy crisis in 2009 in Pakistan, the Multi-Donor Trust Find (MDTF) for Khyber Pakhtunkhwa (KP), Federally Administered Tribal Areas (FATA), and Balochistan was established in August 2010 to support the reconstruction, rehabilitation, reforms, and other interventions needed to build peace and create the conditions for sustainable development. Round I of MDTF projects was implemented from August 2010 to March 2017 and focused on helping the provinces come out of the crisis and take strides towards conflict prevention and peacebuilding. Subsequently, Round II commenced in April 2017 and continues the drive towards reconciliation, peacebuilding and enhancing state- citizen trust by focusing on three pillars: (i) Growth and Jobs Creation; (ii) Improved Service Delivery; and (iii) Policy Reforms and Improved Governance.

The MDTF has approximately $283 million in net resources.

As of September 30, 2023, approximately US$252.1 million (99% of allocated funds) has been disbursed for government-executed activities, and approximately US$24.5 million (97% of allocated funds) for World Bank-executed activities.

The MDTF will close after over a decade long engagement on December 31, 2023. The work of the MDTF was particularly important after the passage of the Thirty-First Amendment to the Constitution by the National Assembly on May 24, 2018, which has merged the seven agencies of FATA with the province of Khyber Pakhtunkhwa.

The MDTF helped address an array of challenges faced in its target areas including the COVID-19 emergency. This included procurement of 55 ventilators, 19,000 N-95 masks, 1,500 canes for sanitizers, 25,000 gloves, 10,000 face shields, 1 million surgical masks, 60,000 viral transport medium kits, and five automated RNA extraction machines. Moreover, the ERKP project supported small and medium enterprises (SMEs) impacted by COVID-19 through provision of matching grants (MGs).  

The MDTF continues to achieve results towards under its three results areas of (i) Enhanced productivity and job creation (through entrepreneurship and skilled labor); (ii) Improved livelihoods and access to basic services; and (iii) Enhanced transparency and accountability in public service delivery, and effective resource management.

microcredit recipients received support through the Second Pakistan Poverty Alleviation Fund

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Impact of Worker Remittances on Economic Growth of Pakistan: Analysis of Pakistan s Economy

2014, Journal of Business Research - Turk

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waqas bin dilshad

Pakistan like other developing countries in the world is known for its high migration and workers’ remittance. In general it is considered that workers’ remittances are the important source for external finance and economic growth but many studies conducted on the same topic revealed some positive, negative and neutral responses of workers’ remittances toward economic growth. It is also argued that the high migration rate in any country represents the poor economic conditions of that country. This study identifies the impact of workers’ remittances on economic growth of Pakistan by analyzing time series data of twenty two years from 1991 to 2012. Regression model has been used to identify the relationship between the variables. The results conclude that there exist a significant positive relationship between workers’ remittances and economic growth in Pakistan and it has been recommended for policy implication that Pakistan should encourage and motivate the flow of workers’ remittances and adopt such policies that insist remitter to send money through proper channels so that these flows can be utilized in a better way for economic growth and development.

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Purpose: The purpose of this research is to analyse the impact of remittance on economic growth in context of Pakistan. Pakistan ranks eighth among remittance receiving countries. An improved understanding of this relationship can support policy makers.  Methodology: The data for this study is collected from World Bank Data website from 1976 to 2018 for Pakistan. Economic growth proxied by GDP per capita growth is independent variable (DV) and Remittance, Household consumption, foreign direct investment, gross capital formation and trade as percentage of GDP as dependent variable (DV) . OLS method and Granger Casualty Test is used to analyse the data. Findings: The study results show that remittance has both long term and short term significant positive impact on economic growth. Both OLS and Granger Causality confirm long-term relationship between remittance whereas short term relationship is only established by Granger Causality test. Practical implications: The outcomes of t...

IAEME PUBLICATION

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Remittances are an essential component of human life in the age of globalization, and the primary aim of this study is to examine the effect of international remittances on economic growth in a developing and an emerging economy like Pakistan. The time series data from 1976 to 2019 used in this study and apply different time series estimation techniques. The remittance data comes from State Bank of Pakistan and in US$ million while Economic Growth or GDP data comes from world development indicators, World Bank and in current US$. The results confirms that both short-run and long-run association exist between remittances and economic growth in Pakistan. Thus, results show that, the remittance flows to Pakistan have a positive impact on Individual Pakistani as well as on macroeconomic scenario of Pakistan. The results parameters stability tests, CUSUM and CUSUMQ confirms the stability of parameters. Government should adopt such policies that encourage overseas Pakistanis to send remittances through official channel.

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The objective of this study is to look into the impact of remittances on economic growth in Pakistan. Pakistan came in tenth in terms of remittances collected. Policymakers can benefit from a better understanding of this link. For the purposes of this study, Pakistan data was obtained from the World Bank's Economic Data website between 2001 and 2019. Economic growth is proxies by the independent variable (IV), GDP per person growth, and remittances. According to the test known as the Augmented Dickey Fuller (ADF and the least squares approach, remittances have both immediate and long-term significant effects on the growth of the economy. Policymakers might use the outcomes of this study to design future migrant labor management measures. Over time, Pakistani foreigners have sent more money home as remittances. Money transfers to Pakistan grew from a value of $19.9 billion in 2020 to a total of $31.9 billion in 2021, based on data from the State Bank of Pakistan, suggesting a...

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Remittances are considered as the cash inflows to the economy and are imperative international source of revenue for most of the less developed countries (LDCs). For data analysis, the Ordinary least square estimation technique was employed to the time series data for the years 1981 to 2010. This research comes with the conclusion that level of GDP is positively associated with the worker's remittances and the findings also support the optimistic view of remittances. It is suggested that govt. should take serious steps and proper measures to utilize the workers' remittances so, that the economy will be on the right track towards the development.

Journal of Advance Public Policy and International Affairs (JAPPIA)

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The study targets the impact of personal remittances on economic growth in case of Pakistan for the time period 1980-2014. For this purpose, Foreign Direct Investment (FDI) and Human Capital are used as control variables. Using Augmented Dickey Fuller (ADF) and Philips-Peron (PP) unit root tests, all the variables came stationary at order one or I (1). Johansen Cointegration showed a long run relationship between personal remittances, FDI, human capital and economic growth. The results showed a positive long run impact of personal remittances, FDI and human capital on economic growth of Pakistan. Similarly, ECT (-1) term was -0.04 and also significant. Granger causality also showed a unidirectional causality running from personal remittances to economic growth. Moreover, the diagnostic tests showed normality of residuals, no autocorrelation and stationarity of residuals at level. Government should formulate such policies that encourage remittances in Pakistan by formulating reliable and efficient transfer mechanism to cheap transfer cost.

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The international remittance is one of the important sources of foreign exchange earning in the country. Recently, Pakistan received over $4 billion as foreign remittances in 2006. The flows of funds through foreign remittances serve as a cushion balance of payment and foreign reserves. The paper investigated the determinants of international workers' remittances in Pakistan. The time series data was used to identify determinants of the international remittances in Pakistan. The stationary properties of each time series were investigated and each were found to be integrated of order one. Therefore, Cointegration and vector error correction models were used to establish the long run and short run relationship among the included variables in the research. The real remittances in Pakistan were found positively related with real GDP, real growth rate and unemployment rate and were negatively related with real wage rate, literacy rate and spread rate of banks in Pakistan. Based on re...

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This empirical research paper focuses on establishing a relationship between external determinants and economic growth of Pakistan economy. Empirical analyses are carried out with time series econometric techniques using data over the period of 1977-20104. The main finding is that external determinants such as foreign remittances, foreign direct investment, and foreign imports matter from growth perspective. Foreign remittances and foreign direct investment have a significant positive role in the growth process of Pakistan economy. Further, it is found that foreign imports have adversely influenced the economic growth of Pakistan economy. The study recommends that policy makers shall take appropriate steps to increase the inflow of both foreign remittances and foreign direct investment in order to achieve the long run economic growth.

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Cultivating Entrepreneurial Minds: Unleashing Potential in Pakistan’s Emerging Entrepreneurs Using Structural Equational Modeling

• Published: 02 April 2024

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• Ahmad Bilal 1 ,
• Shahzad Ali 1 ,
• Muhammad Haseeb Shakil   ORCID: orcid.org/0000-0002-3192-0497 2 ,
• Muhammad Mukarram 1 &
• Sayyed Zaman Haider 3  

This research aims to analyze the impact of institutional elements, including students’ exposure to entrepreneurship education, faculty support for students’ development of entrepreneurial skills, and the prevalence of an entrepreneurial mindset, on undergraduate students’ propensity to engage in entrepreneurial behavior. Additionally, the study considers the entrepreneurial mindset as a moderator and institutional backing as a facilitator. The research focused on a selection of private, middle-ranking universities in Lahore, Pakistan. A web-based survey was conducted, and 384 participants were chosen for the partial least squares structural equation modeling (PLS-SEM) analysis. All hypotheses regarding both direct and indirect connections were confirmed by the data. Furthermore, except for one, hypotheses regarding the moderating relationship of institutional support showed significant moderation. This study provides new insights into how universities can enhance entrepreneurial culture through a comprehensive teaching and mentoring program that considers institutional support. It serves as a guide for private, middle-class institutions aiming to cultivate an entrepreneurial spirit among their business students. The researcher’s contribution to the existing literature includes a focus on the entrepreneurial mindset in the context of private higher education institutions in Lahore, Pakistan. The study employs entrepreneurial institutional factors, entrepreneurial attitude as a mediating variable, and institutional support as a moderating variable to foster a growth mindset among students, distinguishing it from previous research.

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Ahmad Bilal: conceptualization, data curation, methodology, and writing original draft. Shahzad Ali: concept, data collection, data handling, methodology, and analysis. Muhammad Haseeb Shakil: corresponding author, refining the concept, data handling, and data analysis. Muhammad Mukarram: writing, reviewing, and editing the final draft. Sayyed Zaman Haider: revision, review, and editing of the final draft.

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Bilal, A., Ali, S., Shakil, M.H. et al. Cultivating Entrepreneurial Minds: Unleashing Potential in Pakistan’s Emerging Entrepreneurs Using Structural Equational Modeling. J Knowl Econ (2024). https://doi.org/10.1007/s13132-024-01898-w

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When it comes to global economic governance, less can be more if you want increased cooperation, stability, and equitable growth

HKS Professor Dani Rodrik says his new paper shows that a “light model” of international trade governance can reduce U.S.-China tensions and lead to more equitable prosperity worldwide.

In an era of great power rivalry and escalating tensions between the United States and China, how should global economic policymakers approach governance to foster greater cooperation, reduce conflict, and promote equity and shared prosperity? Tread lightly, says Harvard Kennedy School Professor Dani Rodrik . In a new paper in the Journal of Government and Economics titled " How to smooth U.S.-China economic relations for the benefit of the global economy: A light model of global economic governance ," Rodrik argues for a less-is-more approach that emphasizes transparency and restricts trade rules to those that are truly necessary. Recent history, he writes, has shown that heavy-handed, one-size-fits-all global economic governance has disadvantaged developing countries and empowered nativist, populist politicians in regions that suffered job losses due to globalization. Rodrik is the Ford Foundation Professor of International Political Economy and co-director of the Reimagining the Economy project at HKS 

Q: In your paper, you argue for a “light” model of global economic governance to smooth U.S.-China economic relations and benefit the global economy. What measures does a light economic governance model include and what does it exclude? 

The basic distinction is between addressing the most egregious policy barriers at the border—especially beggar-thy-neighbor policies—versus a more ambitious agenda of trying to remove all obstacles to the flow of trade and finance even if these encompass domestic regulations. My colleague Robert Lawrence has called this the difference between “shallow integration” and “deep integration.” So countries might negotiate over import tariffs or export restrictions, but industrial policies or financial regulations, for example, would remain largely outside the remit of global rules or trade agreements.

Q: What evidence is there that more intensive global governance and trade rules—a “heavy” or “deep integration” model—have been unnecessary or counter-productive? 

The deep integration model had two undesirable side effects. First, it made it harder for developing countries to engage in industrial policies or other structural policies to diversify and upgrade their economies and to shelter themselves from the destabilizing effects of short-term capital flows, because of real (or self-imposed) constraints on their policy autonomy. It was countries such as China who disregarded such constraints and made full use of industrial policies and capital controls that performed the best. Others who followed the deep integration model and relied on trade agreements and openness to foreign capital as their sole growth strategy, such as Mexico, did quite poorly. 

Second, it prevented policy makers in advanced economies from taking seriously and addressing the adverse labor market effects of growing imports from China and elsewhere. During the 1970s and 1980s, before globalization got supercharged, it was common for countries to put up informal trade barriers—typically “voluntary” export restrictions administered by exporting countries—which limited the shock. These were safety valves for the trade system, and even though economists complained about “protectionism,” such measures did the job of regime maintenance (in the words of our late colleague John Ruggie). After the 1990s, policymakers’ response to these dislocations was to shrug their shoulders and tell the losers this is how globalization worked and there was nothing to be done. This was one of the key failings of mainstream politicians, which in turn empowered the populists. We have plenty of evidence now that regions that lost jobs to imports from China or Mexico became the breeding grounds for the nativist populists.

“The future of the global economic order depends first and foremost on how the bilateral relationship between the U.S. and China will evolve.”

Dani rodrik.

Q: One of the main building blocks of the light governance model is what you call a “transparency-enhancing process for policymaking.” What is that process and why is increased transparency important? 

In an interdependent global economy, it is inevitable that many policies that target national economic well-being as well as domestic social and environmental priorities will have some undesirable side effects on other nations. This is the case, for example, when nations engage in policies to fix important market failures or address national security concerns. Often such policies are needed and legitimate, and trade partners have to be permissive and understanding. Such policies have to be distinguished from those that are explicitly beggar-thy-neighbor—that is, policies that generate benefits at home because of the harms they produce for other nations.  

If we are going to live in a world where national policymakers have greater autonomy to address domestic priorities, as I think we have to, it will be important for them to communicate their motivations both to their domestic audiences and to other governments. This is to build trust and mutual understanding. For example, when the United States imposes export controls on “sensitive technologies” or imposes restrictions on Chinese investments on U.S. soil on the basis of national security, we need much better explanation on (a) what the national security objective really is, and (b) how the export or investment in question undermines the objective. Otherwise, national security can turn into a blanket justification for all kinds of policies that either do not really address national security or (as in the case of the U.S.) take too expansive view of it.

Q: How would a light governance model smooth U.S.-China relations? And how would it work in the context of the current slowdown in what had been China’s robust growth over the last three decades? 

It would be a good first step if each side were to give up on hypocrisy and recognize the similarity of their approaches. The United States continues to criticize China for allegedly pursuing mercantilist and protectionist policies and violating the norms of a “liberal” international order. For their part, Chinese policymakers accuse the United States of turning its back on globalization and waging economic warfare on China. Neither side seems to be aware of the irony that the United States has taken a page from the Chinese playbook, while U.S. departures from the “liberal order” are readily recognizable to Chinese policy makers from their own practices.   

Q: How would a light economic governance model achieve an overall global economic benefit? 

The future of the global economic order depends first and foremost on how the bilateral relationship between the United States and China will evolve. So anything that smooths this critical relationship would be very good news for the world economy. Second, as these two powers build a certain degree of trust and understanding, this would also contribute to an environment where they play a positive role in providing critical global public goods (such as decarbonizing the world economy and global public health).    

Photograph by STR/AFP/Getty Images

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