Correcting course
August 28, 2025
Nest month, Pakistan will complete the first year of its ongoing three-year IMF $7 billion programme, which is set to end in October 2027. The immediate objective of this Extended Fund Facility IMF programme — the 12th IMF programme for Pakistan in the last 35 years (only three were successfully completed) — was to continue the process of stabilisation started in July 2023 and, at the same time, undertake badly needed structural reforms to ensure sustainable future growth.
Today, the economy has stabilised and the threat of default is no longer looming, but the economic reform programme is still struggling to gain traction. However, the expectations of growth revival are deeply contested at a time when poverty and unemployment levels remain extremely high in the country and the emerging middle class faces serious threat of extinction.
Read more »Labels: Faculty, IMF, Publications
posted by S A J Shirazi @ 8/28/2025 08:44:00 AM,
Dashed hopes
June 16, 2025
With the real economy in a deep slump and macroeconomic indicators stable, how should we describe the current state of the economy and the direction in which we are heading?
According to the just released Pakistan Economic Survey 2024-25, whatever spin you may want to give it, the economy is in a deep downturn given the collapse of the crop sector and the drastic decline in incomes in rural areas, where almost 60 per cent of the population lives and where extreme poverty is concentrated.
Read more »Labels: Budget, Pakistan Economy, Publications
posted by S A J Shirazi @ 6/16/2025 09:07:00 AM,
Lahore Journal of Economics
March 18, 2025
The Lahore Journal of Economics (LJE) invites researchers, academics, policymakers, and analysts to submit original theoretical and empirical papers covering a broad range of topics in the social sciences.
Labels: Lahore Journal of Economics, Lahore School, Publications, Research
posted by S A J Shirazi @ 3/18/2025 09:01:00 AM,
Economic dilemma
February 03, 2025
In his recent address to parliament, the finance minister stated that he would resist any pressure to revive growth, presumably until the necessary reforms were completed and economic stability fully restored.
This firm stand, however, was questioned by some critics who asked why he was further building reserves based on high-interest commercial loans. Is this a sign that the economic stability the government claims it has achieved in a short period is simply a mirage?
Read more »Labels: Pakistan Economy, Publications
posted by S A J Shirazi @ 2/03/2025 09:26:00 AM,
The Management of the Pakistan Economy: 1947-2024
January 26, 2025
Dr Rashid Amjad, the author, is professor of economics at the Lahore School of Economics. He also spent 26 years with the International Labour Organisation (ILO) as Director Employment Policy. He has rich and diversified knowledge on the subject. So, when he says poverty declined during the first two decades of (2000-2019) and more things like that, we have to rely on his deep knowledge.
However, Dr Amjad makes it clear in the very beginning that he has written this book on the management of Pakistan’s economy 40 years after he last delved into the subject. His previously co-authored book with the late Dr Viqar Ahmed, published in 1984, was also on the same topic, but it only covered the period from 1947 to 1982.
Read more »Labels: Books, Lahore School, Management of Pakistan Economy, Pakistan, Publications
posted by S A J Shirazi @ 1/26/2025 10:46:00 AM,
Economic Growth
December 04, 2024
These are all positive developments. But will this trend continue? Most importantly, if it does will it ignite sustained high growth, or as is the case with many developing countries, will it end up in the low-growth equilibrium trap of macro stability without growth?
Read more »Labels: Pakistan Economy, Publications
posted by S A J Shirazi @ 12/04/2024 09:45:00 AM,
Reforms & the IMF
September 14, 2024
Labels: IMF, Publications
posted by S A J Shirazi @ 9/14/2024 05:28:00 PM,
Lahore Journal of Business
July 02, 2024
Full Text Articles, The Lahore Journal of Business, Volume 11, Issue 1, Apr - Sep 2023
Labels: Lahore Journal of Business, Lahore School, Publications, Research
posted by S A J Shirazi @ 7/02/2024 11:52:00 AM,
Out Migration Back to Peak Levels
June 10, 2024
Over 850,000 workers seek jobs abroad in 2023
The Pakistan Migration Report 2024, third in the series published biennially by the Centre on Migration, Remittances and Diaspora (CIMRAD), Lahore School of Economics, was launched on June 11, 2024. Ms. Mio Sato, Chief of Mission, IOM Pakistan was the Chief Guest at the launch event. The ceremony was held at Lahore School of Economics, Burki campus. Dr Shahid Amjad chaudhry, Rector Lahore School of Economics opened the proceedings of the ceremony.
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Labels: CIMRAD, GIDS, Pakistan Economy, Pakistan Migration Report, Publications
posted by S A J Shirazi @ 6/10/2024 05:28:00 PM,
Grapes of wrath
May 09, 2024
Dr Rashid Amjad
The thoughts of a small farmer?
But the harsh world that confronts us in the Punjab countryside today is very different. For the poor small farmers, who form the vast majority of the province’s nearly 5.5 million rural households with holdings of 12 acres or less, or for small tenant farmers, it is becoming clearer by the day that the government has no intention of purchasing wheat at the announced support price of Rs3,900 per 40 kilograms.
Read more »Labels: Agricultural Economics, Publications
posted by S A J Shirazi @ 5/09/2024 11:39:00 AM,
Reversal of roles
April 24, 2024
While the finance minister trudges through the corridors of the IMF and World Bank, engaged in applying for a longer, larger new loan programme even before the current one has ended, the provincial governments back home are flush with funds — to the extent that they never consider raising any revenues on their own or spending prudently what they have.
For this, we have the seventh National Finance Commission (NFC) award to thank, and later the 18th Constitutional Amendment, which everyone hoped would spark less contentious, more equitable growth. But these hopes were not realised because the federation kept up its old habits — spending this year Rs360 billion on subjects it had devolved to the provinces and running up huge fiscal deficits that led to unsustainable domestic and foreign borrowing, despite the looming threat of default. The provinces lost any incentive to raise revenues on their own or spend their resources wisely.
Read more »Labels: IMF, Publications
posted by S A J Shirazi @ 4/24/2024 09:47:00 AM,
Lahore Journal of Economics
April 27, 2023
The Lahore Journal of Economics, Volume 27, Issue 1, Jan - June 2022 is now available online here. This issue comprises the following articles:
Labels: Lahore Journal of Economics, Lahore School, Publications, Research
posted by S A J Shirazi @ 4/27/2023 04:17:00 PM,
Social Remittances and Social Change: Links between Home and Host Countries
February 22, 2023
The conference proceedings offered an insight into and stimulated thoughts about how the global society is transforming, as nation-state geographical borders continue to blur overtime. It brought into discussion implications for home country politics, improvements in demographic variables and women empowerment. It also raised a key question for future considerations of social remittances in terms of climate induced migration. As a future line of research, it was proposed during brainstorming session to conduct country comparative case studies in different migration contexts to better understand the complex issue of social remittances.
Dr. Peggy Levitt, Chair of Sociology Department, Wellesley College, US, in her keynote address talked about cultural globalization and the role of technological advancements. Where once the exchange of ideas was limited to occasional home visits by migrants, family members are now able to be a part of each other’s lives virtually on daily basis. Having studied migrant communities in Boston from Brazil, Ireland, Pakistan, and India, she reflected that for migrants over time, there is a growing disjuncture between how they perceived their home country and how it may have actually evolved. She termed it the “ossification effect”, where the home country is “frozen in time” in the migrants’ minds, while actually it has changed rapidly. She elaborated that age plays a role in the extent of compatibility and adaptability as migrants move. People who are able to spend more time in their home country and build strong social networks prior to migrating, are better able to implement their new ideas and practices in the home country. In comparison, those who go at an early age, not only found it more challenging to put through their ideas, but in some cases even struggled to understand the social rules necessary to get their ideas across.
Dr. Ishrat Hussain in his comments emphasised that as a developing country, Pakistan based research in any field must link with the implications for poverty alleviation and human development. Weighing in on the recently re-emerged brain drain debate from Pakistan, he asserted it was an opportunity for Pakistani migrants to acquire new skills from host markets. Besides technical skills, social remittances in form of efficiency enhancing practices, principles and values can also contribute to increasing productivity of our local market and can even be exported to other migration destinations. Given the structure of Pakistani society however, he highlighted there seems to be a reverse pattern, where instead of bringing in change, there has been a trend in re-adoption of local ineffective practices, signalling negative social remittances.
The two-day event was organised into two sessions per days, where international participants presented their papers, following by an in-depth discussion and feedback from renowned migration researchers and experts.
Dr. Philippe Fargues, Founding Director of the Migration Policy Centre at the European University Institute, Italy, argued that international migration and reduction in fertility are inseparable parts of social change and human development. Where country-level socio economic indicators fail to establish this relationship, the non-tangible remittances in forms of ideas with family and friends in home country can explain the phenomenon better. Pakistan’s population is growing at a worrisome rate of 2.4% annually and it has a current total fertility rate of 3.6, putting a strain on our limited economic resources. Implications of social remittances to bring down fertility rate are worth exploring from policy point of view.
Dr. Anne White, Professor at University College London School, UK, discussed how social remittances impact the migration process itself. When migrants interact with other migrants in the host country, the exchange ideas have the potential to transform the ways migration takes places, such as an inclination towards personal networking instead of through employment agencies. This could make the process even less formal in developing countries.
Presentations by Dr. Bilesha Weeraratne, Head of Migration and Urbanization Policy Research at the Institute of Policy Studies, Sri Lanka and Mr. Froilan Malit, Jr., Ph.D Politics candidate at the University of Glasgow, UK, brought attention to the role of social media and technology in the transfer of social remittances to home countries. Dr. Malit discussed the case of Filipino diaspora in the Gulf countries on use of digital technology to impact the domestic electoral outcomes, and how their political preferences are impacted by the governance system in host countries. The study had significant relevance for Pakistan given our diaspora’s active participation in Pakistan’s recent political landscape; campaigning for change and a welfare based democratic independent system, similar to the Western countries, where around 3 million mostly high skilled Pakistan’s reside.
Using data from Pakistan Demographic and Health Survey, 2017-18, Dr Nasra Shah, Coordinator CIMRAD and Ms. Samar Quddus, Research Fellow, Lahore School of Economics, in their study found that women in the migrant household were twice more likely to make independent decisions on important household matters compared to non-migrant household. In this regard, family structure is a key variable such that woman autonomy is found six to seven times higher in households headed by female. The finds have development implications for Pakistan if these decisions translated into improved health and educational outcomes, even pulling families out of poverty.
Dr. Philip Martin, Professor Emeritus at the University of California-Davis, US and Mr. Manolo Abella, former Director, ILO discussed types of social remittances that arise from low skilled labour migration to higher wage countries. The analysis suggested that aspiration of improving their economic position at home leads migrants to increasing their investment in housing and land in their home countries, as well as the sense of improved well-being of families makes them investment in health and education. Search for better facilities also results in rural to urban migration. In Pakistan, where 53% of migrants in the last decade (and even before) have been low skilled, these proposed outcomes have consequences for management of our economy, provision of better basic health and education facilities and the need for planning to accommodate influx of internal migrants to urban cities.
Labels: CIMRAD, GIDS, Pakistan Economy, Pakistan Migration Report, Publications
posted by S A J Shirazi @ 2/22/2023 05:17:00 PM,
Why the IMF?
January 02, 2023
Indeed, going for support to the IMF is a country’s worse economic nightmare as implementing its standard prescription of strong stabilisation measures, backed by tough economic reforms, inevitably results in economic misery for the poor and the newly emerging middle class. However, without its support and ‘letter of confidence’, many countries face the threat of default as programme lending from IFIs (World Bank, Asian Development Bank) is dependent on their green signal and without it global financial markets punish you with unaffordable high rates of interest.
Pakistan has been under a dozen IMF programmes over the last 30 years of which only two have been successfully completed. Both sides blame the other — the IMF that we have never followed through promised reforms and our economic policymakers that the cost is far too high and the benefits a distant mirage.
Read more »Labels: IMF, Pakistan Economy, Publications
posted by S A J Shirazi @ 1/02/2023 10:32:00 AM,
Against heavy odds
August 17, 2022
With the country reaching its 75th anniversary, there has been much doom and gloom as the economy passes through another downturn triggered by its recurring trade imbalance and debt crises. Yet, it is important to remind ourselves that notwithstanding its near-insurmountable challenges, the economy has achieved some remarkable successes — even if it has not realised its full potential.
Pakistan has increased its per capita income from around $100 in 1950 to (a vastly underestimated) $1,750 in 2022. Starting with a non-existent modern manufacturing sector, it has built one up thanks to an earlier generation of dynamic entrepreneurs and traders, many of whom had migrated from India. It today contributes 15 per cent of GDP. Literacy rates have increased from overall 15pc to 70pc for males and 50pc for females, with significant growth in higher education in recent years.
Labels: Pakistan Economy, Publications
posted by S A J Shirazi @ 8/17/2022 02:22:00 PM,
Pakistan Migration Report 2022
July 01, 2022
According to the report, it is unlikely that the surge in remittances witnessed during 2020 and 2021 will sustain. While the shift in inflows from informal to formal channels and the new initiatives during Covid-19 period were able to increase the average monthly inflows to around USD 2,500 million, the impact of these factors has been diminishing and inflows are slowing down. Deteriorating economic conditions and political environment discourages investment-oriented inflows, the report warns that this aspect demands consideration given the over reliance on these inflows.
Labels: CIMRAD, GIDS, Pakistan Economy, Pakistan Migration Report, Publications
posted by S A J Shirazi @ 7/01/2022 09:02:00 AM,
Bad macroeconomics
June 28, 2022
Indeed, this lack of understanding has led the economy to move in stop-go economic cycles at regular intervals; in fact, the growth cycles have become more frequent, resulting in the significant lowering of average growth since 1988. Why has this happened?
As to the factors behind the growth slowdown, there is broad agreement — low levels of saving and investment and lack of political will to carry out basic structural reforms to increase revenues, break the stranglehold of monopolies, and foster competition and productivity growth, including the removal of trade barriers. In the absence of reforms, the challenge then is to manage the economy within the resulting structural constraints which impose limits on sustainable growth.
To take an example: in 2008, the economy faced a severe foreign exchange crisis, with strong concerns of default. In came the IMF to suggest a sharp reduction in the fiscal deficit to stabilise the economy. It projected that the economy would slow down after stabilisation measures to 3.5 per cent. In fact, it crashed to 0.5pc with unemployment rising sharply and food inflation standing at 21pc (as subsidies were slashed). This was the worst ‘hard landing’ we had ever witnessed.
The macroeconomic framework under which the budget of the new coalition government has been prepared appears to be suffering from the same malaise. It wanted to match the PTI’s impressive growth performance of near 6pc over the last two years but saner counsel prevailed and it opted to target a growth rate in 2022-23 of 5pc. The government will be lucky if it achieves 3.5pc to 4pc on the current policy package. In all probability, this rate will fall even further after the stabilisation squeeze it has agreed to with the IMF. Inflation, too, will be much higher than the targeted 11.5 pc and may rise to near 20pc in the next six months. Interest rates will rise further. Ambitious revenue targets will dampen growth and cause inflation to escalate.
We are heading for another hard landing. It will take all the finesse the finance minister can muster to get the IMF to soften its stance — which, unfortunately, it rarely does. What it will agree to are additional resources to cushion the impending stagflation in the form of well-targeted direct income support measures through BISP. The government should use these safety nets effectively.
To what extent is the current macroeconomic predicament the result of economic policies followed by the previous PTI government? To be fair to the PTI when it was in government, it handled the Covid-19 pandemic extremely well and cushioned its economic impact — a fact that was internationally recognised. Its economic policies to reignite growth helped revive it to over 5.5pc in 2020-21. Prudently, it targeted a growth rate of just over 4.5pc for 2021-22 to prevent the economy from overheating.
What it did not foresee — as most other countries — was the post-Covid super-consumer boom that was fast unravelling. Early signs of the economy overheating were not picked up by the IMF and World Bank which projected a growth rate of 4pc for 2021/22 — still below the sustainable growth projected by some studies of 4.5 pc.
In fact, the economy grew by near 6pc and the binding economic constraint to sustainable growth — the foreign exchange constraint — had entered with full force. Here, the State Bank of Pakistan must shoulder much of the blame because it allowed the foreign exchange reserves position to fall to precarious levels. Although the central bank had started raising interest rates, its cheap credit policy, which pumped in imports at an alarming rate, had been maintained for too long. The sudden change in government meant a loss of international confidence, even among Pakistan’s close friends, who refused to roll over their deposits. We now face (not for the first time) a full-blown debt repayment crisis, with the dollar rising to unprecedented levels in past weeks, which the new government is desperately trying to douse.
What then are the key lessons to learn so that we can move towards prudent macroeconomic management? First, convince the IMF not to impose prior conditions that will result in a very hard landing and to agree to a gradual and not sudden compression in aggregate demand. Second, have better coordination of the fiscal and monetary policy while respecting State Bank autonomy. Third, and most important, start rebuilding your foreign exchange reserves especially by attracting new foreign investment. In future, draw a red line below which the foreign exchange reserves must not be allowed to fall.
The writer is professor of economics at the Lahore School of Economics and former vice chancellor of the Pakistan Institute of Development Economics.
Published in Dawn, June 17th, 2022
Labels: Macro-Economy, Pakistan Economy, Publications
posted by S A J Shirazi @ 6/28/2022 05:37:00 PM,
Covid-19 Crisis & Asian Migration Launched
December 10, 2021
He was speaking as a Chief Guest at the launch of book “Covid-19 Crisis & Asian Migration” edited by Dr Nasra M Shahat at the Lahore School of Economics, Burki Campus. Dr Azam Amjad Chaudhry, HoD and Dean of Faculty of Economics, Lahore School of Economics opened the proceedings of the launch. Dr Ishrat elaborated that Japan and Europe were facing a decline in population growth which would materialise into shortage of labour. Pakistan that has a growing population and labour force, which can make up for the shortage in these economies but the ability to exploit that opportunity rests on being able to identify the relevant sectors and building the required skill sets. He raised important questions for future policy and research. Talking about Saudi Arabia, host to the largest Pakistani migrant workers, he drew attention towards the implications of liberalisation happening in the country on the outflows of migrants from Pakistan and the living conditions of all migrant workers in general. Especially since the liberalisation in the context of migration would mean a shift away from the current kaffala (sponsorship) system.
The book contributes to enhance our understanding of migration dynamics and related issues that emerged in the wake of the pandemic. It contains opinions from leading experts and scholars on returnee management initiatives taken by home countries, host countries’ strategies to facilitate migrant workers and ways to improve governance of migration. It covers case studies of Bangladesh, Malaysia, Nepal, Pakistan, the Philippines, Singapore, and Sri Lanka to highlight the impacts of the pandemic.
Labels: Books, GIDS, Publications
posted by S A J Shirazi @ 12/10/2021 03:47:00 PM,
Engineering firms struggle for funds
February 14, 2021
The light engineering firms of the country are facing hurdles in securing financing for modernising their businesses, which is causing a drop in the amount of export orders secured from the global markets.
Many firms, located primarily in central Punjab, have upgraded their units and machineries.
The light engineering industries dealing with mammoth amount of export orders have invested in technology and innovation far more than their non-exporting peers, however, they are still struggling for innovation opportunities.
This was the crux of a research conducted by the Innovation and Technology Centre, Lahore School of Economics on engineering firms in four cities of Punjab ie Lahore, Sialkot, Gujrat and Gujranwala.
These cities are often referred to as the ‘Golden Triangle’ of the province because majority of the light engineering firms are located in this area.
The purpose of the survey was to observe the degree, quality and impact of innovation activities on the performance and profitability of the innovating firms.
The survey included both export-oriented and non-export-oriented firms.
Analysis of data from surveyed firms revealed that half of the export-oriented companies were shipping 50-100% of their output abroad with a majority of the firms exporting to Asia followed by Europe.
The data also showed that most of the export-oriented firms were medium in size while majority of the non-export-oriented firms had small scale establishments.
According to the study, all exporting firms reported that they had innovated meaning that they had invested in new machinery/equipment in the past 10 years. Half of these firms reported that they were planning to introduce a new technology over the next 12 months.
A massive share of exporting firms upgraded their facilities during the last one to five years while a large amount of non-exporting firms introduced modernisation between five to 10 years ago.
The most frequently bought machines by export-oriented entities in the light engineering sector included verma machines/drill machines. On the other hand, most of the non-exporting firms preferred to buy lathe machines to be installed at their facilities.
In addition to this, most of the exporting firms had purchased their last four innovations from abroad whereas non-exporting firms had bought their last four innovations from Pakistan.
Nearly half of the firms that export had adopted state-of-the-art machinery while most of non-exporting companies reported that they had adopted already established machinery/software.
Majority of both exporting and non-exporting firms said that the major source of funding for their innovations related activities was done by utilising their own internal resources (equity).
The data also revealed that a large number of exporting firms from the light engineering sector modernised by developing new business models and marketing techniques. On the flip side, most non-exporting firms that innovated developed technologies alongside new business models and marketing techniques to innovate.
The incentives to innovate are particularly important for firms.
When asked about the major drivers for initiating innovations in the survey, majority of exporting and non-exporting firms said it was the pressure to improve quality followed by the desire to expand market share.
Most of the exporting firms reported that as a result of innovation, their revenues spiked, quality of products improved and need for retraining their employees increased.
In case of non-exporting firms, innovation enhanced revenues but it did not reduce the cost of production by a significant amount, however, the quality of their output improved.
The two greatest barriers faced by both exporting and non-exporting entities while trying to upgrade were lack of financing and lack of innovation opportunities.
Thus, it can be said that more incentives for innovation could be offered by enhancing sources of funding for firms in form of aid from the government and assistance of financial institutions, the survey concluded.
Also published in The Express Tribune, February 14th, 2021.
Labels: Lahore School, Publications, Research
posted by S A J Shirazi @ 2/14/2021 01:53:00 PM,
Growth versus stability
January 05, 2021
Dr Rashid Amjad
At a recent meeting of the Monetary and Fiscal Policy Coordination Board, the Planning Commission purportedly argued for three vital policy changes that lie at the heart of the current economic policy stance of the government. The first to reduce further the interest rate; the second to hold the exchange rate at near its current rate (Rs160) and not allow it to be dictated by market forces alone; and the third to pursue supporting fiscal policy measures to stimulate the nascent economic recovery seen in the last few months and led by large-scale manufacturing and the construction sector.
Labels: Pakistan Economy, Publications
posted by S A J Shirazi @ 1/05/2021 10:07:00 AM,
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