PSSP Working Paper 032, “A Disaggregated Analysis of Productivity and Growth for Pakistan’s Large Scale Manufacturing Sector”, computes Total Factor Productivity (TFP) growth for Pakistan’s large scale manufacturing (LSM) sector for each five year period from 1970-71 to 2005-06. It covers LSM activity according to the 2 digit Pakistan Standard Industrial Classification (PSIC) 2007. The ‘Two Deflator Growth Accounting Framework’ is employed in the study to compute the sources of value added (VA) growth in the LSM sector, along with the ‘Sunrise-Sunset Approach’ for determining the concentration pattern of TFP within VA growth. This study aims to fill the gap of research on the issue of productivity measurement at the disaggregated level. Results show TFP contributed positively in all the study periods except for the most destabilized period of the nineties, and while analyzing the results of TFP growth for the 16 LSM subsectors, no evidence was found for the persistency of any particular subsector in attaining the highest TFP growth. Furthermore, in determining the concentration of TFP among various subsectors, it was found that only a small proportion of subsectors accounted for achieving the aggregate TFP growth for the whole LSM sector. The study thus describes the important role played by negatively productive subsectors in reducing the overall performance of the LSM sector. The contribution of physical capital is found to be the major source of VA growth throughout the study period, a result consistent with previous studies, while the contribution of labor to VA growth is found to be lowest and needs the special attention of policy makers.
Genetically modified, insect-resistant Bt cotton has been adopted extensively across Pakistan’s cotton-growing regions during the past decade, and prior studies have linked Bt cotton adoption to both reductions in on-farm production costs and increases in cotton yields. However, studies also suggest that there is much confusion in the market for Bt cotton seed, stemming largely from weak regulation and the dissemination of seed of unknown quality to farmers. The persistence of uncertainty in Pakistan’s market for Bt cotton seed may have consequences for cotton production, rural livelihoods, and Pakistan’s wider economy.
A recent journal article written by PSSP researchers aims to shed new light on Bt cotton in Pakistan. First, the article explores the technological, economic, and institutional aspects to Bt cotton, the history of its introduction in Pakistan, and the controversy that has accompanied it during the past decade. Second, the article characterizes cotton-producing households across several dimensions using household survey data collected in 2012. Third, the article examines areas for further policy-relevant research that could improve the capacity of cotton-producing households in Pakistan to realize greater benefits from Bt cotton cultivation.
Can more vigorous political competition significantly raise rural land values, or contribute to more robust land rental markets? Exploiting exogenous variation in the national popularity of Pakistan’s political parties during the 2008 elections, IFPRI discussion paper "The Effects of Political Competition on Rural Land: Evidence from Pakistan" shows that provincial assembly constituencies with greater competition between political parties had significantly higher land values and more active land rental markets four years later. A standard deviation decrease in a Herfindahl–Hirschman Index (HHI) of political concentration is associated with a 36 percent increase in land values, an 8 percentage point increase in the share of landowners renting out land, and an additional 4 percentage points of each landowner’s land being rented out. Land values appear to increase most among the poorest households, suggesting that benefits are greatest for those with the fewest resources to influence policy. Exploring potential causal mechanisms, we show that political competition leads to more stable and business friendly governance and institutions, better amenities, and greater provision of publicly provided goods. The effect of political competition on security is ambiguous, suggesting that political competition may decrease security along some dimensions and increase it along others.
The Competitive Grants Program of the Pakistan Strategy Support Program recently held the Fifth Research Competitive Grants Conference in two parts, with the first part being held in Islamabad, May 16-17, and the second part in Lahore, May 21-22. The third round of the CGP grants were awarded in June 2014. At the conference, 35 researchers presented their interim research reports to receive constructive feedback at this vital point in the project timeline. Many research assistants and co-investigators of the projects also participated in the conference.
The projects awarded through the Competitive Grants Program span across a wide spectrum of topics. Research areas focus on the primary development objectives as laid out by the Government of Pakistan’s Vision 2025. Illustrative topics from the 35 projects include evaluation of the impacts of alternative aggregate public infrastructure investments, rural livelihood diversification, and investments in public and private schools, demand side energy modeling, and assessments of the determinants of entrepreneurship and Pakistan’s estimated trade performance. Additionally, five selected projects from the second round of the CGP (selected from the 19 awarded in February 2013) presented the results from their final reports.
In attendance at the conference were a variety of key stakeholders, including representatives of the Planning Commission of Pakistan, USAID, and distinguished session chairs. This provided a great opportunity for the presenters, and all the researchers present, to interact with policy makers and get comments on how their projects could be improved and better target real outcomes.
PSSP Working Paper 031, “Pakistan’s Potential Trade and ‘Behind the Border’ Constraints”, empirically investigates the existence of institutional, socio-economic, and political constraints to Pakistani exports through a cross-sectional analysis employing a trade Stochastic Frontier Gravity Model. Aggregate data for 2006-08 and 2009-11 shows lower exports in the latter period. This is attributed to demand-suppressing effects emanating from the 2008 global financial crisis and supply-suppressing effects emanating from energy shortfalls and input constraints, due to floods, in Pakistan. The model estimation then demonstrates that behind the border constraints in Pakistan are statistically significant in explaining total exports during 2009-11. The estimation is also presented for four single-digit SIC categories of products for this period. Behind the border constraints are evident for SIC 0 (agriculture, forestry and fish products) and SIC 2 (manufactured products) that combined account for approximately 80 percent of Pakistan’s exports. The estimation results by country further demonstrate that behind the border constraints affect the pattern of trade through the non-realization of bilateral trade potential. In the post-financial crisis era, Pakistan needs to further develop its institutional capacity to promote competitive exports given the explicit and implicit beyond the border trade barriers it faces and work to remove political obstacles to regional trade.
PSSP Working Paper 030, “Religion, Land and Politics: Shrines and Literacy in Punjab, Pakistan”, empirically examines the impact of religious shrines on development. Compiling a unique database covering the universe of shrines across Pakistani Punjab, the authors explore whether the presence of holy Muslim shrines helps to explain regional variation in literacy rates. Results demonstrate that the presence of shrines adversely affects literacy only in regions where shrine-related families have a direct political influence. Shrines in these regions represent the confluence of three resources—religion, land and politics—that together constitute a powerful structural inequality with potentially adverse consequences for development. The paper also probes the determinants of political selection, and finds that shrines considered important in the British colonial assessment were more likely to select into politics in post-partition Punjab.
Aid Effectiveness in Poverty Alleviation in a Post-Conflict, Post-Disaster Situation: A Case Study of District Swat, Pakistan
PSSP Working Paper 029 “Aid Effectiveness in Poverty Alleviation in a Post-Conflict, Post-Disaster Situation: A Case Study of District Swat, Pakistan” aims at exploring the effectiveness of foreign aid within the 2005 Paris Declaration (PD) framework in a post-conflict and post-disaster zone. Focusing on the Swat region in the Khyber Pakhtunkhwa (KP) province in northern Pakistan, which witnessed unprecedented humanitarian crisis in the form of the 2009 militant insurgency and the 2010 floods, the key goal is to examine the effectiveness of donor-funded projects in rehabilitation and reconstruction. Using the 2005 PD doctrines, particularly the principles of ownership, alignment, and harmonisation, this research investigates to what extent aid donors and the Government of Pakistan (GoP) incorporated the PD commitments for making better use of foreign assistance. This research is an attempt to fill the gap regarding how the PD partnership commitments are interpreted and incorporated in the actual course of development and investigates the key factors that constrain the actual application of these principles in complex settings. While the case study focuses on District Swat in Pakistan, this research has broader implications for aid effectiveness in the post-PD landscape elsewhere, particularly in complex environments faced with man-made conflicts and natural disasters.
PSSP Working Paper 028 “Economic Evaluation of Different Irrigation Systems for Wheat Production in Rechna Doab, Pakistan” investigates the factors responsible for low water productivity in Pakistan and demonstrates various irrigation techniques farmers could use for its improvement. A comprehensive questionnaire was designed, and 230 farmers were interviewed in a cotton-wheat area, a mixed crop area, and a rice-wheat area in Rechna Doab, Punjab, Pakistan. This survey found that the majority of farmers expressed major concerns about shortages of canal water, energy, and fertilizer. These issues were the main factors affecting their land and water productivity. Field experiments were conducted at the above mentioned sites. The results indicated that drip irrigation was the most efficient irrigation technique. Drip irrigation was 98% efficient, and water savings were 40% better when compared with that under conventional irrigation. The perforated pipe irrigation technique was also relatively better and averaged 77% efficiency with water savings of 18%. Gross margin for the drip irrigation system was found to be higher than for perforated pipe in the same area. And drip irrigation also shows a benefit cost ratio (BCR) of 1.69 and an internal rate of return (IRR) of 36%. For perforated pipe irrigation, gross margins were also higher than the conventional irrigation method in the first year of production in all districts. The BCR ranged from 1.88 to 2.39 depending on site conditions, and was found to be profitable at all discount rates in all the districts. The IRRs for perforated pipe were 187%, 277%, and 197% at the three different sites. These findings suggest that flexible irrigation techniques, in response to crop water requirements, can improve land and water productivity.
PSSP Working Paper 27 “Urban open spaces for adolescent girls: An assessment for Islamabad and Rawalpindi, Pakistan” examines the health and wellbeing of children and their access to urban open spaces. Urban open spaces are valued for their health, social, economic, and environmental benefits. Outdoor physical activity is important for the wellbeing of youth, while playfulness is crucial for creativity and innovation. It is observed that in Pakistan the access of adolescent girls to public open spaces and school playgrounds is restricted, but there has been no prior scientific study. This research has studied the impediments in four planned and un-planned localities of Islamabad and Rawalpindi. The restrictions on girls are pervasive and become more severe upon their attaining puberty. The values of city and local parks as adolescent-girl-friendly spaces (AGFS) have been assessed. The project has developed AGFS designs for parks and playgrounds, and tested the preferences of the target beneficiaries. Adolescent girls prefer creative play spaces with loose materials and cycling over fixed play fixtures. Institutional and programmatic interventions are proposed on the basis of the findings and consultations.
Effects of Livestock Diseases on Dairy Production and Incomes in District Faisalabad, Punjab, Pakistan
PSSP Working Paper number 023 “Effects of Livestock Diseases on Dairy Production and Incomes in District Faisalabad, Punjab, Pakistan” estimates the prevalence of key livestock diseases in district Faisalabad and evaluates the effects they have on livestock productivity and farm incomes. All five tehsils of district Faisalabad are included in the study. Three categories of farmers were formed on the basis of the adult animal units (buffaloes and cows): small (1-3 animals), medium (4-6 animals), and large farmers (greater than 6 animals). Particular focus of the study is on the negative consequences on milk production and farm incomes due to mastitis, Parturient Hemoglobinuria, Foot and Mouth Disease (FMD), and tick infestations. The morbidity/incidence rate, mortality rate, and case fatality rate of each disease is determined. The economic losses associated with these diseases are estimated, and the economic returns on controlling these diseases are calculated in the form of benefit-cost ratios. These results are put in overall farm income perspective by reporting the share of livestock income in total farm income and policy recommendations are given.
Results show a large share of the milk production in the livestock sector comes from large farmers despite the presence of large numbers of small farms. The analysis of diseases shows that the morbidity rate of tick infestation and FMD is high both in buffaloes and cows, and significant economic losses are being caused by these diseases due to reduced milk production, weight loss, and abortion. The economic losses caused are proportional to the scale of farming; i.e. the greater the farm size, the higher are the losses. However, on a per animal basis the losses are generally higher for small and medium farms than for large farms. The share of livestock income in total farm income is around 50 percent which makes this sector vital to the survival of the farming community, especially the small farmers. However, the gross margins from dairy for small and medium farmers are only around 5 percent of the total gross farm margins (with the other 95 percent coming from crops), while the gross margins from dairy for large farmers are around 40 percent of their total. The return on controlling these livestock diseases is sufficient to motivate the farmers to move in this direction, and the vast room for improving margins acts as a strong motivating force as well. Yet, when it comes to the treatment of livestock diseases, many farmers rely on traditional methods rather than seeking proper veterinary advice for their animals, which is detrimental to their incomes and the development of the national dairy business.