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Purpose Since 2004, Pakistan carried the banking sector under the umbrella of the Islamic financial paradigm, consequently the Islamic Banking Industry (IBI) placed an upright position in the banking and financial market of Pakistan. In this context, this study aims to analyze the effect of Shariah-compliant products of the IBI on the pace of economic growth in Pakistan. Design/methodology/approach The data set covered 13 Pakistani Islamic banks comprising four full-fledged Islamic banks and 9 conventional banks holdings standalone Islamic Branches, for the period 2004–2019. Considering nature of the empirical model and data set, the estimation was carried out with the Pooled Ordinary least squares estimation technique. Findings The findings of the study reveal that Shariah-compliant products have a positive effect on the pace of economic growth. This indication is based on the fact that five out of six Shariah-compliant products hold positive signs and are statistically significant. In addition, the empirical evidence shows that at large conventional financial sector signifies its role in the Shariah-compliant products and pace of economic growth nexus. Among the control variables, foreign direct investment, human capital, trade openness, inflation and private credit pose negative, whereas money supply and stock market capitalization have a positive effect on the pace of economic growth in Pakistan. Findings of the study points towards the fact that Shariah-compliant financing has great potential to enhance the economic growth of Pakistan therefore to touch the sustainable development goals (SDGs). Practical implications Having played a significant role in the growth process, Islamic bankers should portray a positive image of their industry to the government authorities. The government should design a public policy to encourage Islamic modes of finance at a macro level to increase the pace of economic growth and therefore SDGs realization. Originality/value Findings of the study present new insight into the application of Shariah-compliant products of IBI toward the realization of SDGs in case of Pakistan.

The study is an attempt to examine empirically the effects of oil price shock on current account imbalances. The analysis is carried out on the cross-country panel of 160 countries that are divided into three different groups base on their level of oil imports. The relationship between the oil price shock and current account imbalances is rigorously assessed using two different approaches. Firstly, the seemingly unrelated regression models are used to estimate the effects of oil price shock on current account imbalances with transmission channels namely trade, valuation, and wealth. Secondly, to examine the indirect effects of oil price shock three different mediator effects that direct, indirect, and total are estimated. The findings of the study reveal that for all three groups of countries the oil price shock pose a positive effect on the current account through the trade channel. Whereas, the current account of all three groups is negatively associated with oil price shock with the wealth channel. The valuation channel holds a mix results across country groups about the effect of oil price shock on the current account balances. In the case of low and major oil importer countries, oil price shock is negatively associated with the current account, whereas the current account of medium oil importer countries is improving with an increase in oil prices. The mediation analysis holds mix results across groups of countries. Keywords: Current-account imbalances; oil importing economies, seemingly unrelated regression; mediation effectsJEL Classifications: F4; F41DOI: https://doi.org/10.32479/ijeep.11044

The deficiency of secure and reliable electrical power is a constraint to firm performance and its competitiveness in developing countries. Several countries in the south Asian region face electricity shortages leading to frequent power outages. This study investigate the effect of power outages on the technical efficiency of firms in selected South Asian countries. The study employed the stochastic frontier approach to estimate the technical efficiency of firms. We use the OLS and Beta regression to estimate the effect of power outages on technical efficiency of manufacturing firms. The results of the study reveal that power outages reduce the technical efficiency of manufacturing firms operating in selected South Asian countries. These results are robust to the alternative empirical specifications and estimation techniques. Overall results suggest that South Asian countries should invest in the secure and reliable energy to amplify productivity growth and resulted competitiveness of firms in global market.Keywords: Technical Efficiency, Power Outages, Manufacturing Firms, South AsiaJEL Classifications: D21, D22, O12DOI: https://doi.org/10.32479/ijeep.10584

In existing literature there is a general consensus that the only effective and compelling approach for developing countries to enhance the capacity of their production units is by exposure to foreign technology. However, literature on the subject has outlined some conditions necessary to reap the potential gains of imported technology in their production process. For instance, it endorses that a country’s potential gain of imported technology revolves around the capacity of the production units of country to observe and capably utilize imported technology in their production process. In this context, this study aims to explore how Pakistan’s manufacturing firms incorporate imported technology in its production process. To meet the objective of the study, we collected data from 86 large scale manufacturing firms across the country to quantify the absorption capacity of manufacturing firms. The evidence seen from the field survey shows that, on average, 60% of the workers are technical workers, which is a good sign. Regarding the awareness of firms towards R&D the responses were surprising, as few firms were focusing on this critical component and most of the entrepreneurs are reluctant to invest in the R&D sector.

This study intends to test the presence of β-convergence in the global Environmental Performance (EP). For this purpose, spatial Green Solow model is used as the theoretical framework of the study. Data of 88 developed and developing countries for the periods 1978-2017 is used. The present study utilizes ecological footprint (EF) as a comprehensive Environmental Performance Indicator (EPI). For data analysis, spatial econometric techniques have been used. To explore the spatial dependence of EP, Moran's I statistic was used. For regression analysis, this study has made the use of Spatial Durbin Model (SDM). Findings of the study indicate that there is positive spatial autocorrelation in the EP of the countries which means countries with similar EP are clustered together. Results of SDM confirm the existence of β-convergence in the global EP. Physical capital was found to degrade environment while break-even investment (BEI) was found to improve it.

To boost economic growth, SAARC countries resorted to trade liberalization policies since mid-1980s, therefore, now it is high time to evaluate the outcomes of this outward-oriented trade regime. Available literature confined the potential gain with the trading country’s status of the financial sector development. This study therefore empirically investigates the complementarity between domestic financial sector and trade openness for its growth effectiveness in the case of SAARC region. The empirical analysis basis upon the panel of six SAARC countries, using panel co-integration technique for the period 1980-2014. The empirical estimates of FMOLS and DOLS indicate that countries holding relatively developed domestic financial sectors enjoy larger gains from trade openness, which finally translates into economic progress. To be exact, the country’s domestic financial sector plays a complementary role between openness and growth in SAARC countries. Results hence suggest that SAARC countries need to lay higher emphasis on the development of the domestic financial sector.

Maximization of wellbeing is the exceedingly targeted objective that conventional economics going forward. Keeping in view its central place, economists developed well-structured models and tools in order to measure and investigate wellbeing. In received literature, on the subject, various factors have been investigated that affecting wellbeing. However, wellbeing which is viewed from different approaches and is of a different form is not shaping equally with different types of factors. In this context, this study is an attempt to investigate how subjective wellbeing is affecting by social capital. The basic hypothesis is that “individual wellbeing moves parallel with its social capital”. The hypothesis is empirically tested using primary data set of 848 individuals collecting form Azad Jammu and Kashmir (Pakistan). The empirical estimates indicate that keeping other factors constant, an individual that embodied more social capital enjoy more wellbeing in their life. JEL Classification: B24, I30, C43

To prospect the query of asymmetry the data of 40 oil importing economies for period of 1990-2019 used in the analysis. All of the oil importing economies divided into 3 categories consisting of low, medium and high oil importing economy. The oil price shocks can lead to cross section to be correlated specifically oil importing panels this suspicion was realized by results the CD test of H. Pesaran (2004). The technique of dynamic common correlated effects (DCCE) by Chudik, et al. (2015) used for analysis. The results provided evidence of asymmetries for highest and lowest oil importing economies in long run. However, absences of asymmetry in short run for all oil importing nations.

Pakistan’s banking sector has been under Islamic financial paradigm since 2004. According to various studies, it is performing well in terms of efficiency, profitability, and growth. Limited focus is placed on its role in achieving Sustainable Development Goals (SDGs) of poverty eradication and economic growth—the basis for this chapter. The study uses Salam, Murabaha, Diminishing Musharakah (DM), Ijarah, and Istisna as dependent variables. Four fully fledged and five standalone branches of conventional banks were selected. It employs annual unbalanced panel data for 2004 to 2017. Based on the findings for Im, Pesaran, and Shin panel unit root test, Breusch-Pagan LM test, and Hausman test, random-effect (RE) estimation technique is applied. The results show that Islamic bank-specific and macroeconomic variables have significant impact on poverty reduction and economic growth implying that Islamic Banking Industry (IBI) has potential in the achievement of SDGs and therefore recommends for its promotion.

1. IntroductionRostow's (1960) last stage of economic growth1 is characterized by high mass consumption and a dominant services sector. However, most developing countries feature a dominant services sector despite being far removed from the high mass consumption stage. The literature on structural change tends to explain this phenomenon in terms of the complementary role of services in manufacturing value addition and growth, implying that the efficiency of both sectors moves in the same direction. These studies take into account the forward and backward linkages between the sectors. For instance, Blyde and Sinyavskaya (2007) argue that an increase in export manufacturing is strongly linked to the efficiency of the services sector, such that a 10 percent increase in services trading will create a 6 percent increase in commodities trading.Similarly, Zott and Amit (2010) show that a larger services sector improves value addition in manufacturing: it enables manufacturing firms engaged with the services sector to provide information to producers on market needs. This enlarges the scope of production, resulting in value addition and increasing sales and revenues in manufacturing. Agrawal, Ferguson, Toktay and Thomas (2012) argue that the integration of manufacturing and services strengthens value addition in the production chain. Miroudot, Sauvage and Shepherd (2013) hold that a well-equipped, advanced services sector can fuel growth in other sectors through input and output linkages.Numerous other studies have looked at sectoral interdependencies in explaining the complementarity between growth and value addition in services and manufacturing.2 Their central argument is that integration between the two sectors enhances knowledge creation and, therefore, product development and engineering, thereby adding value to the manufacturing sector. However, this study questions whether the same interdependency applies in the case of the South Asian Association for Regional Cooperation (SAARC) bloc, where the services sector has grown rapidly and before the manufacturing sector could mature. We ask if this presents an opportunity or a threat to value addition in manufacturing.The SAARC countries are very similar with respect to their age as independent economies. They have a common history and social structures, and many of the same economic fundamentals. In recent decades, indicators have pointed to the services sector as the driver of economic growth in most SAARC countries, accounting for about 55 percent of their GDP on average (World Bank, 2012). The employment share of the services sector increased from 20 percent in the 1970s to 45 percent in 2002 (World Bank, 2012). This is also associated with the region's weak industrial base: in the two major SAARC economies, India and Pakistan, the contribution of the industrial sector to GDP and employment is still below the world average.The rapid growth of services long before the manufacturing sector has had a chance to mature has created economic growth pitfalls for the SAARC economies. We test the hypothesis that, in this region, value addition in the services sector has crowded out value addition in manufacturing. The rest of the study is organized as follows. Sections 2 and 3 present our empirical model, datasets, sample and estimation technique. Section 4 examines the empirical findings and carries out robustness checks. Section 5 concludes the study.2. Empirical ModelWe estimate the following baseline model, which draws on Chang, Kaltani and Loayza (2009); Musonera (2007); and Borensztein, De Gregorio and Lee (1998):(ProQuest: ... denotes formula omitted.) (1)where VAMis the dependent variable, manufacturing value-added. On the right-hand side, VASit denotes services value-added, the variable of interest. Manufacturing value-added is the net output of the sector (the sum of all outputs less intermediate inputs) and comprises the value added in mining, large-scale construction, electricity, water and gas. …

Since overseas workers’ remittances are the most important source of foreign exchange earnings in Pakistan, their contribution to economic growth has not been rigorously analysed. In this study, we attempt to investigate whether a country’s absorption capacity affects remittances’ response to economic growth or not. The absorption capacity is confined to the development of local financial sector that comprises three different components of financial development. The index of financial sector development is constructed through principal components analysis. To test our hypothesis, we used the autoregressive distributed lag-bound testing approach of co-integration, which is based on time-series data over the period from 1972 to 2011. Our empirical findings validate the hypothesis that the local financial sector development enhances the contribution of overseas workers’ remittances to economic growth in Pakistan.

This study is an attempt to analyze the role of political regimes in the effectiveness of foreign aid. In particular, we focus on the role of foreign aid in economic growth under democratic regimes. The empirical exercise is based on time-series data of the Pakistan economy over the period 1972–2011. To meet the objective of the study, an interactive term of democratic regime and foreign aid is used as a regressor in the growth equation. Our findings show that democratic regimes are harmful in the effectiveness of foreign aid as far as the economic growth of Pakistan is concerned. Moreover, the study suggests diminishing returns to scale of foreign aid as the assumption of a linear relationship between foreign aid and economic growth is relaxed. The other control variables such as physical capital and human capital enter the model in a significant way and with their expected signs in both the short and the long run. JEL Classification: F34, O4, O11, O43

Purpose – The purpose of this study is to determine whether the ethical attributes of workers or firms affect firms’ productivity or not. There is growing literature that establishes the fact that human capital attributes such as education, skill and experience matter for productivity growth. Design/methodology/approach – The authors develop a simple theoretical model where we incorporate the ethical attributes of workers. To support our hypothesis, the authors test that model empirically by using the data of 83 handicrafts firms from Azad Jammu and Kashmir, Pakistan. Findings – The empirical findings of this study substantiate the hypothesis that besides the traditional factors, the workers’ or the firms’ ethical attributes also increase firms’ productivity. Originality/value – The study is based on cross-sectional data and is entirely original in its purpose.

This study is an attempt to test the hypothesis “international trade contributes to economic growth through its effects on human capital accumulation.” To assess the hypothesis empirically, we employed the extended Neo-Classical growth model that reflects some features of the endogenous growth models. We thus ended up with a model in which the change in human capital is sensitive to change in trade policies. Unlike conventional approaches, the model serves to assess and determine the impact of international trade on the accumulation of human capital. The empirical analysis estimates dynamic panel growth equations by using a data-set of nine Asian countries, over the period 1972–2012. The overall evidence substantiates the fact that in countries under consideration, international trade enhances the accumulation of human capital and contributes to economic growth positively through human capital accumulation.

Drinking water is the basic need of human life. Safe drinking water is an essential component of primary health care and have vital role in poverty alleviation. There is positive correlation between increased national income and the proportion of population with access to improved water supply. An increase of 0.3 percent investment in household access to safe drinking water generates one percent increase in GDP. Whereas, provision of safe drinking water supply is an effective health intervention reduces the mortality caused by water-borne diseases by an average 70 percent. Inadequate drinking water not only resulted in more sickness and deaths, but also augments health costs, lower worker productivity and school enrolment [World Bank (1994)]. The World Health Organisation (WHO) estimate 1.8 million people in developing countries die every year from diarrhea and cholera, Out of these 90 percent are children under the age of five years. While 88 percent of diarrhoeal diseases are attributed to unsafe water supply, inadequate sanitation and hygiene [WHO (2004)]. The situation is not very different in Pakistan; the access to safe drinking water is estimated to be available to 23.5 percent of population in rural areas and 30 percent in urban areas. While every year 0.2 million children die due to diarrhoeal diseases [Rosemann (2005)].