Fiscal Decentralisation in Pakistan
Fiscal decentralisation is considered to be an important policy weapon to achieve economic efficiency and to ensure effective governance through financial autonomy of provincial governments. It helps the smaller units of federation to take part in the economic development of country and provide opportunities to the central government to complete the national level tasks more efficiently. In Pakistan, resource distribution is done through the National Finance Commission (NFC) Award. All the provinces are given their share according the NFC award and the provinces distribute it through the Provincial Finance Commission (PFC). The aim of the present study is to identify the strengths and weaknesses of the current fiscal resource distribution system in Pakistan through a compilation of its historical trends. In addition, the study also intends to investigate the effects of current resource distribution policies on the economic growth of the country. For this purpose, time series data for 36 years has been used, covering the period 1974-2009. The econometric technique ARDL has been used for estimation. The results show a long-run relationship between fiscal decentralisation and economic growth of Pakistan. The FD mechanism adopted in Pakistan during the period has failed to produce optimum results. Poor provincial capacities to efficiently generate own resources as well as provincial dependence on federal transfers have negatively affected the long-run economic growth of Pakistan. Thus, the uni-criterion resource distribution mechanism failed to affect economic growth of Pakistan positively in the long run. It is therefore suggested to consider, evaluate, and choose from a range of other indicators of development and fiscal needs. The important variables, infrastructure, poverty, backwardness, revenue generation capacity, efficiency aspects, and inverse population density, likewise, should be reviewed, and the most appropriate of these should be taken into account to deal with the economic discrepancies of provinces through adequate resource transfer.
Volume (Year): 49 (2010)
Issue (Month): 4 ()
|Contact details of provider:|| Postal: |
Web page: http://www.pide.org.pkEmail:
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501.
- Hans-Martin Krolzig & David Hendry, 1999.
"Computer Automation of General-to-Specific Model Selection Procedures,"
Computing in Economics and Finance 1999
314, Society for Computational Economics.
- Krolzig, Hans-Martin & Hendry, David F., 2001. "Computer automation of general-to-specific model selection procedures," Journal of Economic Dynamics and Control, Elsevier, vol. 25(6-7), pages 831-866, June.
- David Hendry & Hans-Martin Krolzig, 2000. "Computer Automation of General-to-Specific Model Selection Procedures," Economics Series Working Papers 3, University of Oxford, Department of Economics.
- Hans-Martin Krolzig, 2000. "Computer Automation of General-to-Specific Model Selection Procedures," Econometric Society World Congress 2000 Contributed Papers 0411, Econometric Society.
- Danyang Xie & Heng-fu Zou & Hamid Davoodi, 1999.
"Fiscal Decentralization and Economic Growth in the United States,"
CEMA Working Papers
109, China Economics and Management Academy, Central University of Finance and Economics.
- Xie, Danyang & Zou, Heng-fu & Davoodi, Hamid, 1999. "Fiscal Decentralization and Economic Growth in the United States," Journal of Urban Economics, Elsevier, vol. 45(2), pages 228-239, March.
- Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-80, November.
- Phillips, Robert F., 1991. "A constrained maximum-likelihood approach to estimating switching regressions," Journal of Econometrics, Elsevier, vol. 48(1-2), pages 241-262.
- Pesaran, M.H., 1996.
"The Role of Economic Theory in Modelling the Long Run,"
Cambridge Working Papers in Economics
9612, Faculty of Economics, University of Cambridge.
- Pesaran, M Hashem, 1997. "The Role of Economic Theory in Modelling the Long Run," Economic Journal, Royal Economic Society, vol. 107(440), pages 178-91, January.
- Banerjee, Anindya, et al, 1986. "Exploring Equilibrium Relationships in Econometrics through Static Models: Some Monte Carlo Evidence," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 48(3), pages 253-77, August.
- Zhang, Tao & Zou, Heng-fu, 1998.
"Fiscal decentralization, public spending, and economic growth in China,"
Journal of Public Economics,
Elsevier, vol. 67(2), pages 221-240, February.
- Tao Zhang & Heng-fu Zou, 1996. "Fiscal decentralization, public spending, and economic growth in China," Policy Research Working Paper Series 1608, The World Bank.
- Tao Zhang & Heng-fu Zou, 2001. "Fiscal decentralization, public spending, and economic growth in China," CEMA Working Papers 58, China Economics and Management Academy, Central University of Finance and Economics.
- Jürgen Von Hagen & Massimo Bordignon & Bhajan S. Grewal & Per Peterson & Helmut Seitz & Matz Dahlberg, 2000. "Subnational Government Bailouts in OECD Countries: Four Case Studies," Research Department Publications 3100, Inter-American Development Bank, Research Department.
- Davoodi, Hamid & Zou, Heng-fu, 1998.
"Fiscal Decentralization and Economic Growth: A Cross-Country Study,"
Journal of Urban Economics,
Elsevier, vol. 43(2), pages 244-257, March.
- Hamid Davoodi & Heng-fu Zou, 1996. "Fiscal Decentralization and Economic Growth: A Cross-Country Study," CEMA Working Papers 98, China Economics and Management Academy, Central University of Finance and Economics.
- Iftikhar Ahmed & Usman Mustafa & Mahmood Khalid, 2007.
"National Finance Commission Awards in Pakistan : A Historical Perspective,"
Finance Working Papers
22181, East Asian Bureau of Economic Research.
- Ahmad, Iftikhar & Mustafa, Usman & Khalid, Mahmood, 2007. "National Finance Commission Awards in Pakistan: A Historical Perspective," MPRA Paper 5249, University Library of Munich, Germany.
- Iftikhar Ahmed & Usman Mustafa & Mahmood Khalid, 2007. "National Finance Commission Awards in Pakistan: A Historical Perspective," PIDE-Working Papers 2007:33, Pakistan Institute of Development Economics.
- Banerjee, Anindya & Dolado, Juan J. & Galbraith, John W. & Hendry, David, 1993. "Co-integration, Error Correction, and the Econometric Analysis of Non-Stationary Data," OUP Catalogue, Oxford University Press, number 9780198288107.
When requesting a correction, please mention this item's handle: RePEc:pid:journl:v:49:y:2010:i:4:p:419-436. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Khurram Iqbal)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.