Seminar in Economic Policy

Course Instructor
Dr. Aamir Hussain Siddiqui
(aamirhussain.vf@iobm.edu.pk)
0321-8980446
 Course Outline
Objective of the Course

To familiarize the students with current economic issues at the global and national
level.

The title indicates that the course is conducted through seminars by the faculty and
students.

Part-I: Global issues

Part-II: National level issues
 Contents:
No. Topics Chapter/Learning Outcomes Suggested Reading
etc.
1 Historical overview of Pakistan’s Economic SBP Annual Reports
Historical Overview development, Major challenges facing Pakistan’s Pakistan Economic Surveys
and Challenges economy Journal/Newspaper articles
facing: Dr. Wizarat FILP Ch.2 and 3

2 Role of Agriculture in Pakistan’s economy, Pakistan Economic Surveys

contribution of agriculture to GDP and labour Journal/Newspaper articles
Agriculture: force, availability of water, productivity and Dr. Wizarat, “Technological Change in Pakistan’s
taxation Agriculture, Pakistan Development Review,
Winter 1981 issue.

3 Role of Industry in Pakistan’s economic Sanjay Lall and John Weiss, Industrial
development, contribution of industry to GDP Competitiveness
Industry and labour force, industrial productivity, Global Competitiveness Report
competitiveness, and Profitability Dr. Wizarat RFIP Ch. 4 & 6-10.

4 Direct and Indirect taxes, major sources of Economic Survey

Fiscal Issues revenue, items of expenditure, fiscal deficit, SBP Annual Report
National Finance Commission Award

5 Financial Javed Ansari, Money and Banking in Pakistan

Management in Javed Ansari (2002) Implications of Central Bank
Pakistan Autonomy for Developing Countries, Pakistan
Journal of Administrative Sciences 7(1)
No. Topics Chapter/Learning Outcomes Suggested Reading
etc.
6 Hans Wolfgang Singer, PJAE Vol 11., No. 1 and 2
Policy Focus - I Structure Adjustment and Stabilization Policies Tetzlaff, PJAE Vol 11., No. 1 and 2
Killick Tony, PJAE Vol 11., No. 1 and 2
7 Policy Focus – II
Anti Trust Policy Srinivasan, Competition, Privatization and
Regulation, PDR, PSDE Conference 2003
8 Industrial Policy Park, Se-Hark (1995), PJAE Vol 11., No. 1 and 2
Policy Focus – III Ansari Javed, (2000) PBR, Vol. 2, No. 2

Mid Term
No. Topics Chapter/Learning Suggested Reading
Outcomes etc.
9 Globalization, World Joseph Stiglitz, Globalization and its Discontents,
Bank, IMF and WTO MHT Chapters 1-3
10 SGJ, Ch. 1, 6 and 10-12
Debt Problem GJ Ch. 1, 10-12
Ansari Javed Akber (2002) PBR, Vol 2. October
11 Ajit Singh et el. Corporate Governance, Competition The New
International Financial Architecture and Large Corporations in
Management of
Emerging Markets in Management of Capital Flows
Capital Flows Griffith Jones et al., The FOECD expericne with Capital Account
Liberalization, in Management of Capital Flows. UN publication
12 Auty Richard M., The political Economy of Resource Driven
Growth, Eurpean Economic Review May 2001, 45(4-6)
Natural Resources
and Development
Sachs, Jeffrey D, Warner Andre M., The Big Puch Natural Resource
Booms and Growth Journal of Development Economics June 1999
13 Conflict and Growth Murshed Syed, The Conflict Nexus and the poverty of nations, UN
Department of Economics and Social Affairs, Working Papers
2007
Olsson Ola, Conflict Diamonds, Journal of Development
Economics, March 2007
Final Exam
 Grading Scheme:
No. Exam/Activities Marks
1 Midterm exam 30
3 Final Exam 40
Presentation (10 marks)
4 Other Term Report (15 marks) 30
Quiz (05)
TOTAL 100
 Reading Materials:
The course will be taught through prescribing articles in various publication particularly
from research Journals and chapters from relevant books.

However, standard books which give a good summary of important issues are:

Recommended Texts:
1. The rise and Fall of Industrial Productivity in Pakistan (RFIP) by Dr. Shahida Wizarat
3. Fighting Imperialism: Liberating Pakistan (FILP), by Dr. Shahida Wizarat
4. Globalization and its Discontents, by Joseph Stiglitz
5. Pakistan Economic Survey 2018-19
6. Money and Banking in Pakistan, by Javed Akbar Ansari

Journal Papers:
7. UNCTAD, Trade and Development Report (TDR)
8. Global Competitiveness Report by World Economic Forum
9. Pakistan Business Review, (IoBM research journal)
10. Pakistan Journal of Applied Economics
11. International/National Research Journals.
12. PhD thesis/M.Phil thesis by Aamir H. Siddiqui/Mirza Aqeel Baig.
Basis of Economic Issues
 What is Economics in General?
• Economics is the science of scarcity.
• Scarcity is the condition in which our wants are
greater than our limited resources.
• Since we are unable to have everything we
desire, we must make choices on how we will
use our resources.
• In economics we will study the choices of
individuals, firms, and governments.
choices
Economics is the study of _________.
Scarcity Means There Is Not Enough For Everyone

Government must
step in to help
allocate (distribute)
resources

10
Every society must answer three questions:
1. What goods and services should be
produced?
2. How should these goods and services be
produced?
3. Who consumes these goods and services?
The way these questions are answered
determines the economic system
An economic system is the method used by a society to
produce and distribute goods and services.
11
Economic Systems
1. Centrally Planned (Command) Economy
2. Free-Market Economy
3. Mixed Economy

12
 Centrally Planned Economies
In a centrally planned economy (communism), the
government…
1. owns all the resources.
2. decides what to produce, how much to produce and
who will receive it.

Examples: Cuba, North Korea, former Soviet Union

Why do centrally planned economies face

problems of poor-quality goods, shortages
and unhappy citizens?
NO PROFIT MEANS NO INCENTIVES!!
13
 Advantages and Disadvantages
What is GOOD about What is BAD about
Communism? Communism?
1. Low unemployment: 1. No incentive to work
everyone has a job harder
2. Great Job Security: the 2. No incentive to innovate
government doesn’t or come up with good
go out of business ideas
3. Equal incomes means 3. No competition keeps
no extremely poor quality of goods poor.
people 4. Corrupt leaders
4. Free Health Care 5. Few individual freedoms
14
 Characteristics of Free Market
1. Little government involvement in the economy.
(Laissez Faire = Let it be)
2. Individuals OWN resources and answer the three
economic questions.
3. The opportunity to make PROFIT gives people
INCENTIVE to produce quality items efficiently.
4. Wide variety of goods available to consumers.
5. Competition and Self-Interest work together to
regulate the economy (keep prices down and quality
up).
15
 The Invisible Hand
The concept that society’s goals will be met as
individuals seek their own self-interest.
Example: Society wants fuel-efficient cars…
• Profit-seeking producers will make more.
• Competition between firms results in low prices, high
quality and greater efficiency.
• The government doesn’t need to get involved because
the needs of society are automatically met.

Competition and self-interest act as an invisible

hand that regulates the free market.
16
 Mixed Economy
In a truly free market economy, the government
would not be involved at all
There would be no laws to protect workers form
unfair bosses
There would be no rules to make sure that credit
cards were properly protected

Many societies have chosen to have some rules to

protect consumers, workers, and businesses (MIXED)
These rules reduce the freedoms that businesses
have, but they also protect the workers and
consumers
 Mixed Economy
• Market + Command = Mixed
• There are no pure command or market economies.
– To some degree, all modern economies exhibit
characteristics of both systems and are often referred to
as mixed economies.
– Most economies are closer to one type of economic
system than another
• Businesses own most resources and determine
what and how to produce, but the government
regulates certain industries
 Mixed Economy
• Who decides what to produce?
– businesses
• Who decides how to produce goods and
services?
– Businesses, but the government regulates certain
industries
• Who are the goods and services produced for?
– consumers
 Capitalism Socialism Communism
(Market economy) (mixed economy) (Command economy)

Ownership and •Individuals control •Basic means of production

control Government owns means
means of production owned and managed by of production
•Market determines government
Government determines
what goods will be •Private ownership, with
sold at what price what goods will be sold at
regulation, of businesses
what price
Competition •Competition keeps
prices low and Cooperation stressed No competition, lower
quality high over competition quality goods

Standard of •high standard of •high standard of living Goal is equality for

Living living and economic and economic security everybody, enforced by
security •High taxes provide free the government
•Individuals free to
earn profits, but may health care and
risk losses education
 Which Economic System Is Best?
• Market system has proven to be best because
it promotes the goals of growth, freedom, &
efficiency
– Citizens are free to own their own property and
use it in the most efficient and profitable way
• Command and Traditional systems
sometimes offer more security, but are not
nearly as strong in efficiency, growth,
freedom, and environmental quality