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Structural Adjustment and Poverty: The Case of Pakistan

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  • Tilat Anwar

    (Allama Iqbal Open University, Islamabad.)

Abstract

Despite the external shocks in the 1980s, the economy continued to grow at a respectable rate. However, increasing internal and external imbalances caused an economic crisis in 1988 and lead to an implementation of a medium term structural adjustment programme within the framework of the IMF and the World Bank. Neither theory nor existing evidence gives a conclusive verdict about the effects of adjustment policies on poverty. Hence, the paper examines the actual changes in absolute poverty during the period of adjustment. The actual changes in the distribution have been examined from two comparable household income and expenditure surveys (HIES) for 1987-88 and 1990-91, spanning the period of adjustment. Evidence suggests that the stylised facts of structural adjustment policies are consistent with actual changes in the absolute poverty. The first order stochastic dominance test suggests that not only the absolute poverty incidence but also the intensity and severity of poverty increased significantly by all poverty lines and poverty measures over the period of adjustment. Structural adjustment created new poor in urban areas amongst the low income groups (mainly Clerical and Sales workers) whose real wages were eroded over the period. Poverty also increased unambiguously among self-employed (smallholders in the informal sector) and unemployed who seems to have been affected adversely by the overall economic contraction. Though, the government has the priority to achieve the fiscal balance, it should seek to ameliorate the most distressing cost arising in the short run. Excessive reliance on demand management in scale or speed is counter-productive for adjustment. Adjustment strategies need to account for the trade-off between shortterm gains and long-term benefits foregone.

Suggested Citation

  • Tilat Anwar, 1996. "Structural Adjustment and Poverty: The Case of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 35(4), pages 911-926.
  • Handle: RePEc:pid:journl:v:35:y:1996:i:4:p:911-926
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    File URL: http://www.pide.org.pk/pdf/PDR/1996/Volume4/911-926.pdf
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    References listed on IDEAS

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    1. Atkinson, A B, 1987. "On the Measurement of Poverty," Econometrica, Econometric Society, vol. 55(4), pages 749-764, July.
    2. Demery, Lionel & Addison, Tony, 1993. "The impact of macroeconomic adjustment on poverty in the presence of wage rigidities," Journal of Development Economics, Elsevier, vol. 40(2), pages 331-348, April.
    3. S.M. Naseem, 1973. "Mass Poverty in Pakistan. Some Preliminary Findings," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 12(4), pages 317-360.
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    Cited by:

    1. Zafar Iqbal & Rizwana Siddiqui, 1999. "Distributional Impact of Structural Adjustment on Income Inequality in Pakistan: A SAM-based Analysis," MIMAP Technical Paper Series 1999:02, Pakistan Institute of Development Economics.
    2. Talat Anwar & Sarfraz K. Qureshi & Hammad Ali, 2004. "Landlessness and Rural Poverty in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 43(4), pages 855-874.
    3. Zafar Mahmood, 1998. "A Social Sector Strategy for Pakistan," PIDE-Working Papers 1998:163, Pakistan Institute of Development Economics.
    4. Zafar Iqbal & Rizwana Siddiqui, 1998. "The Impact of Structural Adjustment on Income Distribution in Pakistan A SAM-based Analysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 37(4), pages 377-397.
    5. Faiza Amjad & Naheed Zia Khan, 2004. "External Determinants of Growth and Growth Projections: SAARC and Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 43(4), pages 737-755.
    6. Anwar, Tilat, 2002. "Unsustainable Debt Burden and Poverty in Pakistan: A Case for Enhanced HIPC Initiative," WIDER Working Paper Series 053, World Institute for Development Economic Research (UNU-WIDER).
    7. Talat Anwar, 2005. "Prevalence of Relative Poverty in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 44(4), pages 1111-1131.
    8. Talat Anwar, 2004. "Recent Macroeconomic Developments and Implications for Poverty and Employment in Pakistan: The Cost of Foreign Exchange Reserve Holdings in South Asia," ASARC Working Papers 2004-14, The Australian National University, Australia South Asia Research Centre.
    9. Munir Ahmad, 2003. "Agricultural Productivity, Efficiency, and Rural Poverty in Irrigated Pakistan: A Stochastic Production FrontiermAnalysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 42(3), pages 219-248.
    10. Siddiqui, Rizwana & Iqbal, Zafar, 1999. "TARIFF REDUCTION AND FUNCTIONAL INCOME DISTRIBUTION IN PAKISTAN: A CGE Analysis," MPRA Paper 6141, University Library of Munich, Germany.
    11. Talat Anwar, 2010. "Role of Growth and Inequality in Explaining Changes in Poverty in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 49(1), pages 1-17.
    12. Shaikh, Salman, 2013. "Global Competitiveness: Challenges & Solutions for Pakistan," MPRA Paper 53796, University Library of Munich, Germany.

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