Impact of Institutional Quality on Trade Performance of Small and Medium Enterprises in Pakistan

The trade economy is dependent upon the institutional quality of the country. It affects the ease of doing business in the economy. It is plausible to think that, how institutional quality can affect the trading performance of Pakistan. Small & medium enterprises (SMEs) are playing the role of the backbone of the trade sector in Pakistan. Contribution SMEs can be significantly improved, by improving the supporting macroeconomic indicators. This paper studies the short-run and the long-run association between SME trade growth and cost of production, relative prices, and Institutional quality in Pakistan. It also examines the Environmental Kuznets curve (EKC) hypothesis, between SME trade growth and institutional quality in Pakistan. This study utilizes secondary data, which is taken from multiple secondary sources, including the SMEDA, Pakistan Economic Survey, and world development indicators. The biannual data is assembled up for 38 observations from (2000 to 2019). This study uses Auto Regressive Distributive Lag (ARDL) bound testing method to examine the short run and long run connections between SMEs’ trade growth and macro-economic variables, like; relative prices, Cost of production. Gross Domestic Product, exchange rate, and institutional quality. These variables are selected from the available literature. The study finds that the short-run response of SMEs trade is not significant, but it significantly responds to macro-economic indicators in long run. The institutional quality has a non-linear relationship with SMEs trade growth. This indicates that the pollution heaven hypothesis holds valid even for the case of institutional quality and SMEs trading performance. The study focuses on the optimality of institutional quality for the optimal performance level of SMEs in Pakistan.

Oil Discovery in Uganda and its Impacts on Poverty and Inequality: A Computable General Equilibrium Model Analysis

Discovery of natural resources like oil in developing countries has mixed impacts on the economy. At best, it is positive, at worst negative and in the middle, insignificant or none at all. Such mix up in the impacts has been explained empirically in terms of technical challenges in fiscal, monetary and other decisions. Utilizing a Computable General Equilibrium model and the Uganda Social Accounting Matrix 2007, this study attempts to establish the possible impact of the country’s oil on households. Three simulations are performed on production, absorption and export of oil. Thereafter, the results are analyzed using Distributive Analysis Statistical Package (DASP) software to establish their effects on households’ poverty, inequality and welfare. Generally, the simulations show that the discovery reduces both poverty and inequality. Specifically, in comparison to the baseline simulation, oil production, absorption and exports reduces absolute poverty, poverty gaps and severity. Further, the simulation results show that production, absorption and export reduce the Gini coefficient, implying a reduction in inequality. Other measures of inequality, notably Thiel L, T and S produce similar results and conclusions across simulations like that of the first measure. In the context of welfare, we note that the Hoover Index, and other welfare measures such as HI, TL and TT show significant changes. These measures show an improvement in households’ welfare for production, absorption and exports. The equivalent variation of individual households shows a positive effect on welfare except the urban farm households. By and large, the findings confirm the spillover effects of oil on all sectors of the economy with the exception of manufacturing and services. Further, we observe a positive impact of all the simulations on GDP, calculated by expenditures approach, exports, imports and private consumption; whereas a negative effect is noted for GDP, calculated by income and output approach, investment, government surplus and balance of payment position. This study recommends the managers of the economy to pay special attention to inject a reasonable portion of oil rent in those sectors which positively contribute to the economy, diversify the non-oil exports and above all boost private consumption.