Messages for the Role of Governance and Institutions in Economic Performance.pdf

7/29/2019 Messages for the Role of Governance and Institutions in Economic Performance.pdf

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22nd Annual General Meeting of the PakistanSociety of Development Economists: Messages

for the Role of Governance and Institutions inEconomic Performance

Karim Khan

Staff Economist

Pakistan Institute of DevelopmentEconomics, Islamabad


2/19

Pakistan Society of DevelopmentEconomists (PSDE)

z An Autonomous Body

z A Forum for Academics and Policy Makers

z Organizes Conferences and Seminars


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22nd Annual General Meeting of PSDE

z PC-Lahore-19th-22nd December

z Theme: Governance and Institution

z 14 Thematic Sessions and Panel Discussions+3Technical Session+3 Plenary Session along with

Inaugural and Business Sessions


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Why Government and Institutions?

z Commerce and manufactures can seldom flourish long inany state which does not enjoy a regular administration ofjustice, in which the people do not feel themselves securein the possession of their property, in which the faith ofcontracts is not supported by law, and in which theauthority of the state is not supposed to be regularlyemployed in enforcing the payment of debts from all thosewho are able to pay. Commerce and manufactures, in

short, can seldom flourish in any state in which there isnot a certain degree of confidence in the justice ofgovernment.

(Adam Smith: Wealth of Nations)


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What is Government and Institutions?

z Governance is defined as the traditions and

institutions that determine how authority is

exercised in a particular country.

z Institutions can be defined as formal and

informal rules and their enforcement mechanismthat shape the behaviour of individuals and

organizations in a society.


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What is Good Governance and QualityInstitutions?

z Effective Rule of Law

z Adequate Protection of Property Rights

z Absence of Corruptionz Well-advised policy making Serving General

Interest

z Create Incentives Structure


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What is Good Governance and QualityInstitutions?

A wise and frugal government, which shall restrain men

from injuring one another, which shall leave them

otherwise free to regulate their own pursuits of industry

and improvements, and shall not take from the mouth of

labor the bread it has earned. This is the sum of good

government.

(Thomas Jefferson)


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Debate on the Determinants of Growth

z Solows Growth TheoryLabour, Capital and

Technological Development

z Geography---Climate, Access to an Ocean Port,Distance of Country from the Worlds Major

Trading Centers Affect Growth

z Institutions and Policy Environment affectGrowth


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PSDE 22nd AGM on The Role ofGovernance and Institutions

z Lubnas Paper History of the Debate

Geography Hypothesis (Climate, Geology,

Topography) directly affect economic performance.

Institutions SchoolThe effect of Geography of

economic performance is through its effect on

institutions.


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PSDE 22nd AGM on The Role ofGovernance and Institutions Cont.

z Adeel Malik and Jonathan R. W. Temple paper

An empirical study on the role of institutions

and geography. Uses Index of institutional quality or high quality

governance of Kaufmann (1999) and Tropical climate.

Confirms the role of geography and institutions.


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Corruption and Income Inequality by Eatzaz Ahmad and Aman

z CorruptionGrowth and Income Distribution

z

Corruption

Income Inequality

AdverseEffect on GrowthIncrease Poverty

z PoliciesReduce CorruptionImprove Income

Distribution


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Good Governance and Income inequality by Saima Shafique and RashidaHaq

z Social Welfare with Economic Growth and Lowerinequality

z Public Sector plays an important role but its efficiency islower.

z Growth is positively related with income distribution

z Good governance would improve growth and Growthimproves income distribution.

z Good Governance---Efficiency of Public Institutions andminimizing corruption


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Governance and Pro-poor Growth by Rashida Haq and Uzma Zia

z Pakistan has lowest score in the governance

indictors

z Poor Does not Benefit Proportionately from

the economic growth

z

Good Governance

the reduction of Povertyand Income Inequality


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Which Institution are relevant than others in inequality mitigation byDawood

z Good quality institutions reduce inequality

z Political Stability is more important thandemocracy in the mitigation of inequality.(Dawood)

z

Social and Legal institution work together witheconomic institution in the mitigation ofinequality.


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Institutions, Economic Growth and the Role of Social Capital by Amir

Mehmmod and Ming Yu

z Institutions Social Capital Reduction in

Transaction Cost and Increased Efficiency

Economic Growth

z Institutions Social Capital discrimination

against outsiders may prohibit flexibility andcreativity Economic Growth


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Public Policy Training and Civil Service Reforms by Anjum Khurshid

z International experience of civil service reforms

should be a guide to local service reforms.

z Adherence to the principles of merit and increase

investment on civil service training as key

contributors to policy process and good

governance.


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z Devolution or Decentralization in Pakistan

(Thematic SessionMohd. Naeem Ul Haq and Riaz Khan)

z

Benefits enhanced public service delivery, higher growth, lower

poverty, better macroeconomic management and better

governance, participatory development, transparency.


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Conclusion

Good governance and quality institutions are

viewed as establishing an incentive structure that

reduces uncertainty and promotes efficiency

hence contributing to stronger economic

performance. Therefore, developing sound

institutional framework would be very much

beneficial for the economy of Pakistan.


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THANK YOUfor your Patience

Messages for the Role of Governance and Institutions in Economic Performance.pdf

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