messages for the role of governance and institutions in economic performance.pdf
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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
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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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PSDE 22nd AGM on The Role ofGovernance and Institutions Cont.
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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PSDE 22nd AGM on The Role ofGovernance and Institutions Cont.
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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PSDE 22nd AGM on The Role ofGovernance and Institutions Cont.
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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PSDE 22nd AGM on The Role ofGovernance and Institutions Cont.
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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PSDE 22nd AGM on The Role ofGovernance and Institutions Cont.
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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PSDE 22nd AGM on The Role ofGovernance and Institutions Cont.
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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PSDE 22nd AGM on The Role ofGovernance and Institutions Cont.
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
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