Musleh-ud Din

Foreign aid, external debt and governance

This paper presents a theoretical model for governance. Specifically, the Ramsey-Cass-Koopmans growth model has been extended by incorporating governance in an open economy framework. Steady-state and short run analysis show that external debt and foreign aid do not affect the growth rate of consumption but have level impact on consumption. Foreign aid and governance encourage the economic growth but external debt creates a burden on the economy. Both Investment and saving are independent of external debt and thus the current account surplus. Foreign aid does not affect investment directly but it has a direct positive impact on the savings in the economy. Therefore, it is argued that improvements in the quality of governance will stimulate the output and consumption rapidly and it acts like a catalyst.

The Uruguay Round Agreement and Pakistan's Trade in Textiles and Clothing

The textile and clothing sector is of strategic importance to Pakistan, accounting for more than 50 percent of its manufactured exports. The phasing-out of MFA type restrictions and other trade barriers is generally expected to have positive effects on Pakistans exports of textiles and clothing in the long run. At the same time, However, the eroson of preferencial treatment embodied in the Multi-Fiber Agreements poses many challenges to textile and clothing industry in Pakistan. The emerging scenario of freer trade in textiles and clothing highlights the need to enhance competitiveness in this sector by improving product quality, efficiency of resource use, and productivity. Also, there is a need to advance in the reforms and liberalization of the economy, and to focus public policy towards addressing the structural problems of the textiles and clothing with a view to enabling it to compete better in the more competitive international market.