Precise Estimates of the Unrecorded Economy

Kemal, M. Ali; Qasim, Ahmed Waqar

doi:10.30541/v51i4iipp.505-516

Cited by 15 publications

(15 citation statements)

References 9 publications

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“…Different studies estimate that the size of the underground economy in Pakistan is about the same as that of the formal economy. See for instance, Kemal and Qasim (2012).…”

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confidence: 99%

Reverse Capital Flight to Pakistan: Analysis of Evidence

Mahmood¹

2022

pdr

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Capital flight from Pakistan has remained one of the major concerns of policy makers, mainly because of the nature of private capital outflows; that is, whereas private citizens hold a large amount of foreign assets, the country’s burden of foreign debt continues to grow. Capital flight over and above normal levels raises serious concerns. Capital flight induces foreign donors to demand repatriation of private capital held abroad in return for their support. Previous studies have largely ignored the fact that illegal capital flow is a two way phenomenon. Private citizens’ foreign capital is brought into the country when time is opportune. Using the measure of trade misinvoicing, this paper finds that between 1972 and 2013 the (net) reverse capital flight in Pakistan was of the order of about $30 billion. To explain this phenomenon, the paper examines the evolution of Pakistan’s exchange and trade control regimes in four phases. It is found that reversed capital flight increased during liberal regimes when both current and capital accounts were liberalised, meaning that in the absence of strong regulatory bodies, private citizens could manipulate trade and exchange laws. The paper offers some specific policy recommendations to restrict cross-border movement of capital through illegal channels. JEL Classification: F21, F32, H26

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“…Different studies estimate that the size of the underground economy in Pakistan is about the same as that of the formal economy. See for instance, Kemal and Qasim (2012).…”

mentioning

confidence: 99%

Reverse Capital Flight to Pakistan: Analysis of Evidence

Mahmood¹

2022

pdr

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“…This reflects not only the fact that a larger portion of national output is being consumed rather than invested, but also that a large part of remittances and income generated from the undocumented economy (estimated at 80 to 90 percent of the documented economy) (see Kemal & Qasim, 2012) are driving these higher levels of consumption.…”

Section: Resilience During the Economic Downturn: 2007/08 To 2012/13mentioning

confidence: 99%

Pakistan’s Growth Spurts and Reversals: A Historical Perspective

Amjad

2014

LJE

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“…There have been multiple estimates for the informal sector of Pakistan (Ahmed & Ahmed, 1995; Ahmed & Hussain, 2008; Arby et al, 2010; Aslam, 1998; Gulzar, Junaid, & Haider, 2010; Iqbal, Qureshi, & Mahmood, 1998; Kemal, 2003; Kemal, 2007; Kemal & Qasim, 2012; Kiani, Ahmed, & Zaman, 2015; Mughal, Schneider, & Hayat, 2018; Shabsigh, 1995; Yasmin & Rauf, 2003), yet most of the studies are limited to measuring the informal sector only. However, Shabsigh (1995) explored the relationship between fiscal deficit and informal sector, while Yasmin and Rauf (2003) and Kemal (2007) attempted to explore the nexus between informal and formal sectors.…”

Section: Introductionmentioning

confidence: 99%

How Informal Sector Affects the Formal Economy in Pakistan? A Lesson for Developing Countries

Mughal

Schneider

2020

South Asian Journal of Macroeconomics and Public Finance

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We explore the interaction of the informal sector with the formal economy for a developing economy, that is, Pakistan. Estimation results are obtained via autoregressive distributed lag (ARDL) bounds testing approach, which show a significantly positive effect of the informal sector in the long run whereas a negative impact of informal sector is found in the short run. We also present dynamic simulations to show the effect/contribution in terms of revised GDP per capita if the informal sector is accounted for in official statistics. The novelty of results is the varying effects of the informal sector across two time horizons that can have serious policy implications for developing and transition economies with large informal sectors. Although, the findings of this article enrich our understanding on the behaviour of the informal sector, they further fuel the debate associated with eradication of the informal sector. Efforts to curb informal activities may burden the low-skilled workforce in this sector and increase corruption opportunities in bureaucracy in the absence of institutional reforms. On the contrary, it makes the formal sector policy design and implementation a challenging task. JEL Classification: E26, H26, K42, O17

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Precise Estimates of the Unrecorded Economy

Cited by 15 publications

References 9 publications

Reverse Capital Flight to Pakistan: Analysis of Evidence

Reverse Capital Flight to Pakistan: Analysis of Evidence

Pakistan’s Growth Spurts and Reversals: A Historical Perspective

How Informal Sector Affects the Formal Economy in Pakistan? A Lesson for Developing Countries

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