Dario Debowicz

Indus Basin of Pakistan : Impacts of Climate Risks on Water and Agriculture

This study, Indus basin of Pakistan: the impacts of climate risks on water and agriculture was undertaken at a pivotal time in the region. The weak summer monsoon in 2009 created drought conditions throughout the country. This followed an already tenuous situation for many rural households faced with high fuel and fertilizer costs and the impacts of rising global food prices. Then catastrophic monsoon flooding in 2010 affected over 20 million people, devastating their housing, infrastructure, and crops. Damages from this single flood event were estimated at US dollar 10 billion, half of which were losses in the agriculture sector. Notwithstanding the debate as to whether these observed extremes are evidence of climate change, an investigation is needed regarding the extent to which the country is resilient to these shocks. It is thus timely, if not critical, to focus on climate risks for water, agriculture, and food security in the Indus basin of Pakistan.

Structural Change in Argentina, 1935–1960: The Role of Import Substitution and Factor Endowments

This paper investigates structural change in Argentina between 1935 and 1960, a period of rapid industrialization and of relative decline of the agricultural sector. This has been the subject of a long-running debate that has exercised Argentine economists throughout the twentieth century, and remains politically salient today. It has been argued that this this relative decline of agriculture was due to the policies of import-substituting industrialization (ISI). This was also the period, however, that directly followed the closing of the land frontier, resulting in a declining land-labor ratio as the population continued to grow. We use a stylized, dynamic three-sector computable general equilibrium (CGE) model of the period to analyze the respective effects of ISI policies and the observed changes in factor endowments on the structure of the economy. We find that the declining land-labor ratio was more important than ISI in explaining relative stagnation in agriculture. ISI gave a substantial boost to manufacturing but primarily at the expense of nontraded services, rather than of agriculture.

A Disaggregated and Macro-consistent Social Accounting Matrix for Pakistan

AbstractThis paper provides future researchers of economic structure with a model for building a social accounting matrix (SAM), that is, a unique countrywide database for use in structural analysis, and applies this model to the empirical investigation of the economic structure of Pakistan. Our proposed approach to building SAMs is motivated by an information theoretic approach to estimation that takes a Bayesian view of the efficient use of information: “Use all the information you have, but do not assume any information you do not have.” The methodology used to develop this SAM, unlike previous approaches, ensures that it is perfectly consistent with the national accounts. The SAM provides a high degree of detail on the economic structure of the country, with 51 sectors of activity, 27 factors of production, and 18 household groups, allowing the tracing of direct and indirect effects of potential scenarios through production and consumption linkages and the capture of distributional effects. Output multipliers in Pakistan, accounting for supply constraints, range from 1.1 to 1.4, and shocks to livestock and industry have the largest spillover effects. These shocks lead to income changes that differ significantly across domestic socioeconomic groups, a direct result of the heterogeneity in the generation of income of these groups that our countrywide database captures. JEL Classification:E160, E170.

Antipoverty Transfers and Inclusive Growth in Brazil

The paper examines the growth of antipoverty transfers in Brazil and their role in securing inclusive growth. Since the turn of the century, Brazil has managed to combine improvement in its growth performance, by the standards of recent decades, with substantial, and arguably unprecedented, reductions in poverty and inequality. There is considerable interest in the mix of economic and social policies responsible for inclusive growth in Brazil, including from countries in Africa. Since the mid-1990s, the emergence of large scale programmes providing direct income transfers to household facing extreme poverty and vulnerability have provided a focus for poverty reduction strategies in Brazil. They include non-contributory pensions, like Previdencia Social Rural and the Beneficio de Prestacao Continuada, and human development conditional transfer programmes like Bolsa Escola and Bolsa Familia. Antipoverty transfers are credited with a sharp reduction in extreme poverty and with having contributed to a reduction in inequality and social exclusion. Arguably, they have also strengthened political support for pro-poor policies. This paper provides a comprehensive assessment of the role of antipoverty transfers in securing inclusive growth. It examines their design, implementation, outcomes, and sustainability. It also sketches their potential relevance to African countries. There a growing literature covering recent developments in social assistance in Brazil. The paper contributes to the literature it in several respects. First, the huge interest in conditional cash transfers globally has concentrated attention on Bolsa Familia, but the other components of social assistance are important too and are covered in the paper. Second, very little attention has been paid outside Brazil to the rich discussion and debate around the conceptual and normative frameworks supporting the development of social assistance, and social policy more broadly. The paper addresses this gap. Third, research into the effectiveness of social assistance in Brazil has produced a wealth of information on the aggregate impact of each of the component programmes. This paper assesses this literature while paying special attention to the distribution of the outcomes across municipalities in Brazil and the role socio-economic and capacity condition. Fourth, the paper will pay close attention to the sustainability of social assistance in Brazil, especially the budgetary and political sustainability issues. Fifth, the paper discusses the relevance of Brazil’s antipoverty transfers to African countries, including South-South international cooperation.

Ethiopia's Growth and Transformation Plan: A Computable General Equilibrium Analysis of Alternative Financing Options

Under the Plan for Accelerated and Sustained Development to End Poverty (PASDEP), implemented from 2005/06 to 2009/10, Ethiopia achieved rapid economic growth and laid a foundation for future growth by making substantial investments in infrastructure and human capital. Regardless of the financing strategy, the high TFP and GDP growth rates under the GTP imply high average income growth for both poor and rich households, in both rural and urban areas. Because the GTP involves a greater concentration of investment in non-agricultural sectors than did PASDEP, growth of incomes of urban households is higher in the GTP than under PASDEP. Conversely, income growth of the rural poor is slightly lower under the medium growth scenario with domestic savings (10.0 percent) than under a continuation of PASDEP growth and investment (10.6 percent). Thus, this analysis shows that if the GTP investment and sectoral growth targets are achieved, real incomes of the poor in Ethiopia would rise substantially. The base simulations indicate that real incomes of the poor rose under PASDEP from 2005/06 to 2010/11. Under GTP, this real income growth would be accelerated, provided there is sufficient foreign savings or mobilization of domestic savings to achieve the targets. Nonetheless, the simulations also suggest that agricultural growth will still be crucial for raising incomes of Ethiopia’s rural poor. Thus, investments that raise agricultural productivity will need to continue in order to ensure that the rural poor share in the substantial projected benefits that would result from achieving the high economic growth targets of the GTP.

Structural Change in Argentina, 1935-1960

This paper investigates structural change in Argentina between 1935 and 1960, a period of rapid industrialization and of relative decline of the agricultural sector. This has been the subject of a long-running debate that has exercised Argentine economists throughout the twentieth century, and remains politically salient today. It has been argued that this this relative decline of agriculture was due to the policies of import-substituting industrialization (ISI). This was also the period, however, that directly followed the closing of the land frontier, resulting in a declining land-labor ratio as the population continued to grow. We use a stylized, dynamic three-sector computable general equilibrium (CGE) model of the period to analyze the respective effects of ISI policies and the observed changes in factor endowments on the structure of the economy. We find that the declining land-labor ratio was more important than ISI in explaining relative stagnation in agriculture. ISI gave a substantial boost to manufacturing but primarily at the expense of nontraded services, rather than of agriculture.

Exchange rate misalignment and economic development: the case of Pakistan

Abstract Recent findings in the economic growth literature suggest that developing countries need to keep a devalued exchange rate to stimulate their long-run economic growth. In light of this view, we assess the alignment of the real exchange rate of Pakistan, a developing country where sustained economic growth has proved to be elusive during the last two decades. After finding that the Pakistan rupee has been significantly and increasingly overvalued in real terms from 2005 – significantly above the over-valuation detected by International Monetary Fund (IMF) –, we simulate the general equilibrium effects of an eventual re-alignment of the Pakistani real exchange rate with economic fundamentals, and find that realignment would not only lead to a sizable increase in the relative size of the tradable sector - where productivity increases tend to be faster – but also to an associated re-distribution of income in favor of the urban poor and the (relatively disadvantaged) rural households. These findings reinforce recent arguments in the growth literature, and suggest the need for the Pakistani government to achieve – and sustain – a devalued exchange rate to boost its economic development prospects.

Poverty, Income Distribution and CGE Micro-Simulation Modelling: Does Individual Behaviour Matter?

This paper aims to contribute to the shared goal of assessing the distributional consequences of macroeconomic shocks and policies. It does so by looking into the domain of applicability of the different microsimulation approaches used at present in combination with macroeconomic CGE models. In this context, the microsimulation approach that is used is not always clearly defined and justified (Boccanfuso, Decaluwe et al. 2008). Frequently used approaches are illustrated here considering the distributional effects of the significant capital outflows faced by the Argentinean economy at the end of its Currency Board Regime. It is found that behavioral microsimulations, by accounting for the role of individuals’ heterogeneity on their employment status, allows us to throw light on significant distributional effects that other approaches do not allow us to see. However, the straightforward ‘non-parametric’ approach leads to distributional results not significantly different, consistently with Herault (2010) finding. Contrasting the existing approaches against Orcutt (1957) vision, a possible direction for future research is suggested.