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This study investigates the external economies of scale in the manufacturing sector of Pakistan. The Return to scale is a property of the production function that indicates the relationship between proportionate change, in all inputs and resulting change in output. Returns to scale are applicable only in the long run, since all inputs are being changed. The estimated value of the coefficient of returns to scale at aggregate level is 1.017. It means that one percentage point change in all input quantities results in 1.017 percent change in output. It turns out that manufacturing sector of Pakistan is characterized by almost constant returns to scale at aggregates and disaggregate level.

This paper studies the impact of changes in the external balance of a developing economy (Pakistan). We explain that the economic growth achieved during the past decade is highly dependent on the improvements in external balance. Between 2001 and 2007 Pakistan has benefited from, an increase in the inflow of remittances, foreign assistance from bilateral and multilateral sources, and a relatively stable exchange rate. This was also complimented by growth in the real sector. The GDP grew at an average of 6 percent from 2001 to 2007. During the same time period the investment to GDP ratio increased from 17 to 23 percent. After 2007 this performance came under pressure due to external price shocks. The increase in import price of petroleum, raw materials and other manufactured goods has the potential of reducing the growth performance, impacting the competitiveness of the economy and thereby threatening the gains achieved during the past years. We integrate a 33 sector CGE model with a detailed microsimulation model to study the effects of changes in foreign savings and import prices faced by Pakistan. A 50 percent increase in foreign savings leads to an increase in imports and a decrease in exports. Main sectors facing a decline in exports are textile, leather, cement and livestock. Changes in prices seem pro-poor as food and oil prices decline. Those factors of production that gain under this change are agricultural wage labor and non-agricultural unskilled wage labor. The later indicating a change in favor of urban poor. The increase in import prices of petroleum or industrial raw material leads to a reduction in exports. The prices impact the crop sector adversely. Return to land and profits to farm owners increase showing a change in favor of agricultural asset owners. Poverty and inequality increase. peer-reviewed

Pakistan has been experiencing robust economic growth for the past few years. The macroeconomic position as exhibited by the real sector growth, fiscal indicators and external balance has reasonably improved. However the big question remains; will Pakistan be able to sustain these growth levels? Preserving the momentum becomes difficult when growth is consumption-based. Prosperity if measured by the increased sale of consumer durables gives a partial impression of the underlying economic changes. Promoting luxuries at the opportunity cost of necessities does not promote a pro-savings attitude at the national level and has deeper sociological consequences as well. Pakistan being a small open economy has limited or no control over the consumer or producer price levels. The vulnerability of the economy is again being tested in the face of global energy price increases and food shortages. We try to revisit the stop-go cycle of economic growth in Pakistan, the missing link between sources of growth and meso-micro level development and the knee-jerk reaction type(s) that we adopt as an answer to every economic crises.

This paper studies the welfare impact of changes in the external balance of a developing economy (Pakistan). We explain that the economic growth achieved during the past decade is highly dependent on the improvements in external balance. After 2001, Pakistan has benefited from, an increase in the inflow of remittances, foreign assistance from bilateral and multilateral sources, and a relatively stable exchange rate. This was complimented by growth in the real sector. The GDP grew at an average of 7 percent from 2002 to 2007. During the same time period the growth in per-capita income was around 13 percent in dollar terms. This performance however has come under pressure due to the rising inflation, slowing down of global economy and external price shocks. The increase in import price of petroleum, raw materials and other manufactured goods has the potential of reducing the growth performance, impacting the competitiveness of the economy and thereby threatening the gains achieved during the past seven years in reducing the poverty levels. We study using a CGE-microsimulation model the effects of changes in import prices faced by Pakistan. Also provided in the simulation exercise is an analysis of increase in foreign savings that are usually prescribed for developing economies in order to augment the domestic savings and channelling investment towards developments in infrastructure and social sectors.

This paper reviews the recent work on the application of the CGE-microsimulation models. The discussion focuses on the various linking methodologies and how they can impact our results.

This paper provides an overview of competing and supplementing methodologies for modelling the regional economic dynamics. The discussion provides a primer on how regional CGE, Econometric, Input-Output and SAM based models work towards capturing the region-specific, interregional and multiregional production, consumption and factor market patterns. An analysis of virtues and limitations of these alternate methodologies suggests that it may be the considerations such as the data collection/compilation, expected output, research objectives and costs involved that may determine the choice of modelling framework. Several existing regional models constructed for other countries and their characteristics are summarized along with the specific discussion on regional economic impact analysis in Ireland and how one could move towards constructing an Irish prototype.

This paper carries out a survey of CGE and Microsimulation models used in the evaluation of issues related directly or indirectly to incomes distribution. Different model structures are discussed which have been employed for country-specific, multi-country and region-specific studies. The paper considers the relevance of a relatively recent approach in modeling_linking CGE frameworks with microsimulation models, for the incomes distribution and poverty analysis. Finally we discuss the practical application of this methodology along with a detailed picture of some active CGEmicrosimulation models. peer-reviewed