Vol. 1, No. , August–September 2006

A Bimonthly Newsletter of the Institute of Development Economics, Islamabad q CHAIRMAN SENATE VISITS PIDE q PIDE’s HARD TALK Mr Muhammad Mian Soomro, Chairman, PIDE has developed a new forum called visited PIDE on August 24, “PIDE’s Hard Talk”. The first of them was held on 2006. Dr Nadeem Ul Haque, Director PIDE, Overcoming Water Scarcity in Pakistan: A Policy welcoming the chief guest said that we are Agenda on August 16, 2006. A panel of experts extremely grateful to Chairman Senate, Mr which consisted of Dr Sarfraz Khan Qureshi, Dr Muhammad Mian Soomro for his visit to the Zafar Altaf, and Prof. S. Hirashima, Dr Nadeem Ul PIDE. It is very important that politicians have Haque, who chaired the session, in his opening started taking interest in think tanks like the remarks, welcomed the panelists and several old PIDE. He said that Mr Soomro is a well-known PIDE staff members. Highlighted the important banker and he restructured the National Bank issue of water scarcity in Pakistan, Dr Haque said of Pakistan as head of the organisation and that it needs to be explored whether we would have now he is a successful leading politician. enough water in the coming years to meet our Addressing the faculty of PIDE, the needs or not? Every monsoon, the country is Chairman said that the formulation of strong flooded but after the rains, the rivers are dry. economic strategies at the institutional level is Newspapers are often reporting scenarios of a must to further improve the country’s coming water shortage. economic situation. He continued that besides Dr Sarfraz Khan Qureshi said that there has been a gradual decrease in per capita water the public sector, leading think tanks of the country must play their due role in research and national policy formation. He added that Contents the role played by the social scientists is imperative for the resolution of key social and q Chairman Senate Visits PIDE economic issues. The chairman further said q PIDE’s Hard Talk that institutes like the PIDE can play an important role in designing strategies for the q Research at PIDE economic prosperity of the country. q News at PIDE Concluding the address the Chairman said that interaction between the professionals working q Workshops and Conferences in the economic sector and the parliamen- q Nurturing Minds—PIDE Seminars tarians is essential for creating an under- standing in the preparation and implementation q Training at PIDE of economic strategies. He also stressed the q PIDE in the News need for collaboration between the Senate and the PIDE on its research agenda. availability which can constrain the future Dr Haque, in his closing remarks, noted growth of our country. There are two concepts of that the discussion once again revealed to us the water stress and water scarcity; and Pakistan is a important paradox of Pakistan’s policy-making. water scarce country. He pointed out that Economic research is very necessary and competition among the users of water is important yet we invest so little in such research. increasing over time. In the last 50 years, water The panelists have raised important issues on for irrigation has doubled but as a percentage of water management that could help keep places total usage, it has decreased. Industrial water like PIDE fully employed for many years. usage as well as municipal water usage has also Although PIDE intends to carry this burden, it is increased. Another competitive use is demand for too under-funded and under-staffed to do justice household use and sanitation. More significant to such huge agenda. than the issue of increased water supply is the q RESEARCH AT PIDE issue of efficient water management. In Pakistan water is being wasted and water-use efficiency is Perception Survey of Civil Servants not only low but declining over time. One of the The Development Strategies and solutions is the proper pricing of water. Governance section of PIDE is conducting a Dr Zafar Altaf focused on the agriculture study on civil service reform based on a sector of Pakistan with respect to the problem of perception survey of more than 400 civil servants water scarcity. He stressed the issue of equity in Pakistan. The survey addresses the recruitment and efficiency of water-use in the agriculture process; training; performance of evaluation; sector and said that it is hard to determine water promotions and transfers; job satisfaction; requirement for the whole country so we have to mobility; and reform process underlining the focus on the provincial requirements for water. civil service reform issues. Preliminary results of Dr Altaf said that water use has to be judicious, the survey will be presented in the upcoming but unfortunately, our society is not organised. PSDE meeting in . He stressed rural/farmer awareness through efficient and effective extension system and rural “Province-wise Growth Patterns in Human education as the farmers do not understand the Capital Accumulation” by Muhammad Sabir variables of agriculture. (National Expert, GRBI) and Zehra Aftab Dr Hirashima said that water supply (Research Fellow, PIDE) management is more important than the current Despite convincing evidence of disparities in trend of concentrating on increasing the water the provincial labour force no satisfactory measure supply. He said that if one knows the production of human capital stock at the provincial level function of rice/wheat, it becomes easy to use presently exists for Pakistan. This paper is water optimally; however, unfortunately this is motivated to fill the gap in policy analysis by not the case. In Pakistan when the subject of estimating the human capital index at the technical training is brought up, agriculture is provincial level from 1982-83 to 2003-04. The ignored entirely. If one has to introduce better accumulative human capital is estimated using the water management, we have to change the labour-income based methodology. The index is cultural practices of the farmers. Moreover, computed for the three sectors of the economy: young people must be taught to make better use Agriculture, Manufacturing and Services, by using of scarce resources. data from respective Labour Force Surveys.

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“Public-private Wage Differentials, Preference apply the more recent econometric technique, for Public Sector Jobs and Unemployment namely “bound testing approach to co- Duration in Pakistan” by Asma Hyder integration” to examine the underlying link (Research Fellow, PIDE) between trade, finance and economic growth.

This paper exploits responses on the stated “Basel Accord II: Implications for Pakistan’s preferences for public sector jobs among a Banking Sector” by Musleh-ud Din (Chief of sample of the unemployed in Pakistan to inform Research, PIDE) and Muhammad Idrees on the existence of public sector job queues. The Khawaja (Research Associate, PIDE) empirical approach allowed job preference to influence the unemployment duration. The The objective of the paper is to identify and potential wage advantage an unemployed examine the implications of the Basel Accord II individual would enjoy in a public sector job was for the domestic economy in general and the found to exert no independent influence on the banking sector in particular. The study will also stated preference indicating that fringe benefits identify the role of regulatory authorities like the and work conditions are perhaps more important Central Bank and Securities and Exchange considerations. The stated preference for a public Commission of Pakistan and credit rating sector job was found to be associated with higher agencies, vis-à-vis Basel Accord II. uncompleted durations. q NEWS AT PIDE “Money and Inflation: Evidence from IMF and World Bank Annual Meeting— Pakistan” by Ather Maqsood Ahmed (Member, Singapore 2006 CBR) and Wasim Shahid Malik (Research Dr Nadeem Ul Haque visited Singapore for Associate, PIDE) the 2006 Annual Meetings of the Boards of It is well-known that the effect of money Governors of the International Monetary Fund supply changes transmits into output and inflation, and the World Bank Group. In addition to this, though with some lags. If this hypothesis cannot be he also attended the special research workshop rejected empirically then we can say that monetary initiated by the National University of Singapore, factors play an important role in determining Singapore Centre for Applied and Policy inflation. Whether this happened in Pakistan is the Economics (NUS-SCAPE) in cooperation with key objective of this study. The second objective is the World Bank and the Institute of Policy to estimate the central bank’s money reaction Studies. In the conference Dr Nadeem chaired function. If there is inflation above some target the session on ‘China, India, and the level then—How does the central bank counter it? International Financial System’. —is an important question to be discussed. PIDE Employees as PhD Scholars “Trade, Finance and Economic Growth in On 16th August, 2006, PIDE bade farewell Pakistan” by Abdul Qayyum (Associate to five of its employees leaving for their PhDs on Professor, PIDE) and Muhammad Arshad Khan Fulbright and HEC scholarships. Mr Muhammad (Research Associate, PIDE) Ali Kemal (Research Economist); Mr Hasan The paper examines the joint impact of Muhammad Mohsin (Research Economist); and trade and financial liberalisation policies on the Mr Omer Siddique (Staff Economist) left for economic growth of Pakistan. In this context, we USA on Fulbright. Ms. Hina Nazli (Research

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Economist) went to Canada and Mr Rizwan ul two important themes “Financial Sector Haq (Staff Demographer) to the Netherlands on a Reforms” and “Higher Education”. The request HEC scholarship. for proposals was widely advertised among member institutes and South Asian scholars in all National Consultation on MDG Costing the five countries of the region. (Pakistan) 42 proposals were received as a result of On 19 September, 2006, national the SANEI VIII call for proposals. Out of these, consultation on Millennium Development Goals 15 proposals were from Nepal, 14 from Pakistan, (MDG) costing was held in Marriott. The event 9 from India, 1 from Sri Lanka, 2 from was organised by the Ministry of Finance, Bangladesh and 1 was collaborative in nature. Islamabad. The exercise covered costing of three The proposals were allotted to the RAP members broad areas i.e. health, education, and water and by the chairman SANEI for review and sanitation, and financing of these areas at the comments. domestic level, development partners support, and out-of-pocket expenditure for 2015 MDG q WORKSHOPS AND CONFERENCES targets. CITIES Conference Mr Faheem Jehangir Khan, Research PIDE is organising a conference on ‘Cities Economist, PIDE, presented his research work and Urban Issues’ in November, 2006. The on the costing of water and sanitation sector conference aims to address the many inter- 2007-2015. Moreover, the financing analysis was related aspects of cities in Pakistan through a also presented at the consultation, done by Dr number of research papers and case studies. A. R. Kemal and Mr Faheem Jehangir Khan. Participants with a variety of backgrounds and experiences, including urban planning, National Conference on Urban Poverty architecture, law, urban economics and National Conference on Urban Poverty, a representatives from city/district governments, joint effort of the National Urban Poverty are expected to contribute to a multi-faceted and Alleviation Programme-UNDP and Agha Khan holistic understanding of cities and urban life in University, was held on August 28-29, 2006 in the country. . Dr Nadeem Ul Haque gave the keynote speech on ‘Overview: Current and Future AGM-PSDE Conference Government Programmes for Improving The 22nd Annual General Meeting and Livelihoods in Urban Areas’ on this occasion. Conference of the Pakistan Society of Speakers at the seminar said that urban poverty Development Economists (PSDE) will be held in could not be effectively checked unless pro-poor Lahore, for the first time in the history of the policies were made, income opportunities were PSDE. The theme for this year is ‘Governance’. increased and quality of life was improved. The organising committee of PSDE, under the stewardship of Dr Nadeem Ul Haque SANEI Updates (President, PSDE) and Dr Rehana Siddiqui Like in the previous rounds in the eighth (Secretary, PSDE) met on September 01, 2006 to round, SANEI opened up the competition to all discuss the plan of action. Members of the branches of social sciences. Promoting policy- organising committee consist of Dr Muhammad relevant research, proposals were invited on the Iqbal, Mr Muhammad Framurz Khan Kiani, Mr

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Faheem Jehangir Khan, and Ms. Amara Saeed. Seminar 2006: 23. What Works in Education Initially, the organising members were assigned by Dr Faisal Bari (Visiting Fellow, Mahbub ul tasks to raise funds for the event and to line up Haq Human Development Centre) the logistics and invitations. On Wednesday, 2nd August, 2006, Dr Bari It is envisaged that the Quaid-i-Azam Lecture presented his research-in-progress that will be delivered at the Punjab University investigated if there are schools in the larger auditorium. However, the Alama Iqbal Lecture will system that still deliver quality. There were case be held at Government College University. Few studies, from across Pakistan, from across the Cultural programmes and events will also be public and private sector identified and included in the upcoming conference. researched by a team of researchers from various institutions. The talk mainly focused on Panel Meeting on Civil Service Reforms researchers/audiences reactions to the Panel meeting on civil service reforms (CSR) preliminary findings. was held on 6th September, 2006. The agenda of the meeting included: finalising of CSR draft Seminar 2006: 24. Development and Governance report; discussion on policy paper for the 22nd in Pakistan AGM-PSDE; and the perception survey of civil by Mr Javed Ahmed (Executive Director, Cavish servants. Chaired by Nadeem Ul Haque, the Development Foundation) participants at the meeting were Tasneem Noorani; On Wednesday, 9th August, 2006, Javed Tauqir Shah; Zahid Saeed; Saeed Qureshi; Arslan Ahmed, through his paper, presented the success Subuctageen; and Musleh-ud Din. of donor efforts to understand the problems of poor governance. The paper attempted to find Impact of Various Macroeconomic Indicators models/theories of changes that can contribute to on Poverty improve governance and the effectiveness of PIDE is organising a consultation seminar institutions and explore the question of whether on “Impact of Various Macroeconomic donor programmes are based on a sound Indicators on Poverty” in October, 2006, which understanding of the basic issues underlying poor is based on ‘Macroeconomics on Poverty’ study governance and weak institutions in Pakistan. by the United Nations Development Programme. Experts from all over Pakistan will be taking part Seminar 2006: 25. Stock Market Liberalisation in this consultation. in Pakistan by Dr Fazal Husain (Visiting Fellow, PIDE) q NURTURING MINDS – PIDE SEMINARS On Wednesday, 10 August, 2006, Dr Fazal Nurturing Minds is a weekly seminar series presented his study that investigates the aimed at intellectual contributions and characteristics of the Pakistani equity market, stimulating development discourse. The seminars particularly the impact of liberalisation of the are open to policymakers, researchers, planners, market in the early 1990s. The analysis indicated practitioners, educators, individuals from public significant developments in the stock market in and private organisations, and students. The Pakistan after liberalisation. These developments series also encourages the latest and diverse do not seem to influence the economy, in research approaches. general. The market is integrated with major

PIDE FOCUS, 1:3 5 regional and international capital markets. There objectives and goals, the current scenario and is clear evidence that the Pakistani market is proposed a strategy for the way forward. The affected by other markets in the long run. presentation focused on the knowledge of ICT for development; worldwide initiatives; Seminar 2006: 26. Impact of Export Subsidies globalisation and localisation of technologies; on Exports of Pakistan and, the current status of knowledge of ICT for by Dr Nadeem Ul Haque and Mr M. Ali Kemal development of the future of ICT in the world. (Director, PIDE and Research Economist, PIDE) On Friday, 11 August, 2006, a combined Seminar 2006: 29. Without Water: Economics of research carried out by Dr Nadeem Ul Haque and Supplying Water to 5 Million More Australians Mr Ali Kemal was presented. The paper looked by Dr Muhammad Ejaz Qureshi (Senior at the long-term and short-term impact of export Economist and Policy Analyst, CSIRO) promotion and the export subsidies on exports of On Wednesday, 6 September, 2006, Dr Pakistan. Muhammad Ejaz Qureshi shared his research findings on the economics of meeting the needs Seminar 2006: 27. Unprepared, Unwilling and of 5 million Australians using a CGE Unfit: The Muslim in the Age of Information (Computable General Equilibrium) Regional Technology Australian (TERM) Model. by Dr Naheed Zia Khan (Associate Professor, University for Women) Seminar 2006: 30. Economy, Policy and On Wednesday, 23 August, 2006, Dr External Shocks in Pakistan Naheed presented her paper that reflects on some by Dr Pervez Hasan (Chairman, Working Group of the intricacies of the age of globalisation; on External Sectors, Ministry of Finance) critically reviews the interaction of the On Thursday, 7 September, 2006, Dr socioeconomic, politico and cultural phenomena Pervez Hasan, in his lecture, discussed the role of prevailing in the Islamic world; and, makes an external economic shocks, notably the ever rising effort to argue that in many ways the modern international oil prices and the earthquake world still appears to be moving along the calamity, in the sharp deterioration of the current centuries old divisive lines and, in the age of the account of the balance of payments. The lecture Information Technology revolution, the outlined the importance of developing clear crosscultural understanding and bridging is more strategies to handle both positive as well as warranted than desirable. negative external economic shocks.

Seminar 2006: 28. E-Village Seminar 2006: 31. Concurrence between Period by Adeel Ghayur and Ammar Jaffri (Executive Fertility and Contraceptive Prevalence Levels in Director, H2O Power Limited & Project Pakistan Director, National Response Center for Cyber by Ghulam Yasin Soomro (Senior Research Crimes) Demographer, PIDE) On Wednesday, 30 August, 2006, Adeel On Wednesday, September 13, 2006, Yasin Ghayur and Ammar Jaffri presented an Soomro presented his findings based on various introduction to the concept of E-Village, its surveys. Different surveys have revealed that

PIDE FOCUS, 1:3 6 fertility has declined from 6.3 to 4.4 life time factors constricting the growth of Domestic births per women but has generated skepticism Commerce such as the lack of educated and due to the fact of a marginal reported increase in trained human resource, physical infrastructure, contraceptive prevalence in an environment of a frequent changes in government policies etc. The declining trend in breast-feeding levels in desired future state of Domestic Commerce, Pakistan. The problem of silent use and the entailing professional urban management, secure estimation of consistency between the and transparent property rights, privatisation of contraceptive use and the Total Fertility Rate was city centre government land, improvement in the discussed by the application of the Bongaart’s legal and judicial system was also discussed. Model and its variants. q TRAINING AT PIDE Seminar 2006: 32. Money Laundering and PIDE had recently conducted a training Terrorist Financing vis-à-vis International project on Gender Main Streaming (GMS) to Financial Regime equip the professionals, the academicians, and by Syed Azhar Hussain Shah (Assistant Vice the policymakers with the latest tools that help in President, NBP) building the capacity of government officials to mainstream gender in government policies, On Wednesday, September 20, Mr Azhar’s plans, programmes, and projects in all areas of presentation focused on the present mechanism, development. means and impact of money laundering and the Three training courses on Gender Analysis role of the International Financial Regime to curb and Project Appraisal for the mid and high-level money laundering with reference to its federal government officers (i.e. BPS 19 and 20) legislation, operational, regulatory and other and one training course for the government measures at different levels. The impact of officers dealing with the basic level (i.e. BPS 17 various measures taken by Pakistan’s and 18) were arranged with the collaboration of policymakers in controlling money laundering at Planning and Development Division and the the banking, corporate, business and United Nations Development Programme under organisational etc. level was also highlighted. the GMS programme in the first quarter of 2005-

06. The senior level courses were conducted on Seminar 2006: 33. Awake the Sleeper Within: September 18-19, September 4-5, and August 9- Releasing the Energy of Stifled Domestic 10, 2006 with the participation of 36, 32, and 36 Commerce officers, respectively. The basic level course was by Dr Nadeem Ul Haque (Director, PIDE) offered on August 21-25, 2006, attended by On Wednesday, September 27, 2006, Dr thirty-eight officers. Nadeem highlighted the significance of one of the forgotten sectors of Pakistan—Domestic q PIDE IN THE NEWS Commerce. The economy is a system that needs “Mr Muhammad Mian Soomro, Chariman, to work as a whole with domestic and external Senate of Pakistan visits PIDE” by Media trade supporting each other. Stifling domestic Committee (PIDE), appeared in The NEWS, The markets while trying to push the external sector, Nation, Pakistan Observer, Daily Express, Jang, as has been done in Pakistan, results in lopsided Ausaf, Nawa-e-Waqt, and Business Recorder, development. The presentation focused on the August 25, 2006.

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PIDE’s HARD TALK on “Overcoming Water Scarcity in Pakistan: A Policy Agenda.” Business Recorder, Dawn, The NEWS, August 17, 2006. Two Days Course on “Gender Analysis in Planning and Appraisal.” The NEWS, August 10, 2006. “Domestic Commerce for Pro-poor Growth” by Nadeem Ul Haque, appeared in Business Recorder, August 02, 2006.

Editorial Team Faheem Jehangir Khan Research Economist Syeda Izzah Waqaar Visiting Associate

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