Inclusive Growth Strategies for Pakistan: Myth or Reality for Policymakers!

Syed Muhammad, Atif and Sardar, Mohazzam (2012): Inclusive Growth Strategies for Pakistan: Myth or Reality for Policymakers!

Abstract

The mantra of inclusive growth is taking over the public policy debates addressing poverty alleviation and sustained development in the developing world. In order to reduce poverty substantially, rapid pace of growth is not only necessary, but it should be sustainable in the long run and broad-based across sectors, nonetheless, inclusive of country’s labour force at large. Poverty and growth were much discussed and analysed in separation by policymakers in the previous decades. Inclusive growth strategy is an integration of these two strands of analyses implying relationship between the macro and micro determinants of growth. This paper examines the nature of relationship between the macroeconomic and social-development indicators by using a Multiple Regression Framework and Vector Auto Regression Model, as proposed by Toda-Yamamoto, is used to determine the direction of causality between the key macroeconomic variables of Pakistan over the period of 1997-98s to 2009-10. The paper critically examines Inclusive growth paradigm ─ for market led growth, and suggests its weaknesses which can be addressed through review of the pro-poor goals of economic policy of Post Washington Consensus (PWC). Finally, the paper urges to explore the myths and realities of inclusive growth strategies for policymakers in Pakistan to identify and prioritize the Pakistan specific constraints i.e. Low spending on health and education, promote growth in agriculture and rural development for sustained and inclusive growth.

• Item Type: MPRA Paper
• Language: English
• Keywords: Inclusive growth; development economics; Pakistan
• Subjects: E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C32 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes ; State Space Models; I - Health, Education, and Welfare > I2 - Education and Research Institutions > I28 - Government Policy

References

A.D.B. (2011), “Asian Development Bank Annual Report 2010”, Vol. 1, Available at: http://www.adb.org/documents/reports/annual_report/2010/adb-ar2010-v1.pdf, Accessed on: 13/10/2011, pg. 16

Ali, I. (2007). “Inequality and the Imperative for Inclusive Growth in Asia”. Asian Development Review, 24(2), pp. 1-16

Barro, R. J. & Sala-i-Martin, X. (2003). “Economic Growth”, 2nd Edition, Chapter-I, Cambridge: MIT Press, pp. 23-73

Baulch, B. & McCulloch, N. (2000). "Simulating the Impact of Policy upon Chronic and Transitory Poverty in Rural Pakistan". Econometrics, (43). EconWPA.

Besley, T. and Cord, L. (2006). “Delivering on the Promise of Pro-poor Growth: Insights and Lessons from Country Experiences”. Basingstoke: Palgrave Macmillan

Commission of Growth and Development, “The Growth Report: Strategies for Sustained Growth and Inclusive Development Report”. Avaiable at: cgd.s3.amazonaws.com/GrowthReportComplete.pdf, Accessed on: 04/10/2011, pg. 1

Dufour, J., Khalaf, L. and Kichian, M. (2005). “Inflation Dynamics and the New Keynesian Phillips Curve: An Identification Robust Econometric Analysis”. Bank of Canada Working Paper 2005-27

Elena, I. and Susanna, L. (2009). “What is Inclusive Growth?”. Available at: http://siteresources.worldbank.org/INTDEBTDEPT/Resources/468980-1218567884549/WhatIsInclusiveGrowth20081230.pdf, Accessed on: 04/10/2011

Ghosh, J. (2010). “Poverty reduction in China and India: Policy implications of recent trend”. DESA Working Paper No. 92

Gujarati, D. N. (2002). “Basic Econometrics”. Fourth Edition, Chapter-21&22. New York: McGraw Hill, pp.792-868

Kakwani, N. and E. Pernia. (2000). “What is Pro-poor growth?”, Asian Development Review, 18(1)

Kakwani, N., Shahid K. and Hyun H. S. (2004). “Pro-Poor Growth: Concepts and Measurements with Country Case Studies”. Working Paper #1 of the International Poverty Centre, Brasilia.

Khan, H. (1986). “Socio Economic Development of ASEAN: An International Perspective (Chapter-2)”. Singapore: Chopman Publisher, pp 13-28; and

Manly, B. F. J. (2005). “Multivariate Statistical Methods: A Primer”. 3rd Edition, Chapter-6, New York: Chapman and Hall/CRC, pp. 75-90

McKinely, T. (2009). Revisiting the dynamics of growth, inequality and poverty reduction. Centre for Development Policy and Research, SOAS, Discussion Paper No. 25/90.

Mazumdar, K. (1996). “An Analysis of Causal Flow between Social Development and Economic Growth: The Social Development Index”. Americal Journal of Economics and Sociology, 55(3), pp.361-383; and

Pakistan, Government of (2007). “Pakistan Economic Survey 2006-07”. Ministry of Finance.

Pakistan, Govt. of, (2010). “Economic Survey of Pakistan 2009-10”. Ministry of Finance.

Pakistan, Government of, (2011). “Pakistan Economic Survey 2010-11”. Ministry of Finance.

Ranis, G. (2004). “Human Development and Economic Growth”. Centre Discussion Paper No. 887, USA: Yale University.

Ravallion, M. (2004). “Pro-Poor Growth: A Primer”. Development Research Group: World Bank.

Ravallion, M. & Chen, S. (2003). “Measuring Pro-Poor Growth”. Economic Letters, (78), pp. 93-99.

Roderick, D. (2006). “Good Bye Washington Consensus, Hello Washington Confusion?”. Cambridge: Haravard University Press.

Saad-Filho, A. (2010). “Growth, Poverty and Inequality: From Washington Consensus to Inclusive growth”. DESA Working Paper No. 100, pg. 8-14

Schumpeter, J. A. (1975). “Capitalism, Socialism and Democeacy, Schumpeter”, Chapter VIII. NY: Harper and Row Pub.

Saleem, F. (2009). “Pakistan and the Global Financial Crisis, Centre for Research and Security Studies”. Available at: http://www.boell.de/downloads/economysocial/ Pakistan_Report_on_Economics_2_-Jan2009.pdf,Accessed on: 24/10/2011

Szirmai, A. (2005). “The Dynamics of Socio-Economic Development: An Introduction”, Chapter 5-7. UK: Cambridge University Press, pp. 141-248; and

Toda H.Y. and Yamamoto, T. (1995). “Statistical inference in vector autoregressions with possibly integrated process”. Journal of Econometrics, 66, 225-250

U. N. (2011). “Millennium Development Goals Report-2011”, Available at: http://www.un.org/millenniumgoals/11_MDG%20Report_EN.pdf, Accessed on: 17/10/2011.

Wolde-Rufael, Y. (2008). Energy consumption and economic growth: the experience of African countries revisited. Energy Economics, 31, 217-224.