LAHORE: Lahore School of Economics (LSE) Rector Dr Shahid Amjad Chaudhry said Pakistan’s economy is fundamentally strong due to its agricultural sector, but still has to work hard for macroeconomic growth because for 2021, the macroeconomic growth rate was 3.8%.
The largely private and public health sector in Pakistan provides services to around 35% of the population, which will grow to 65% within two months. These two projects will help alleviate poverty conditions in Pakistan.
He expressed these views while addressing the opening session of the recently held Third International Conference on Applied Development Economics. Similar to the first two editions of the conference in 2018 and 2019 which were a great success, the three-day event this year, was once again dedicated to bringing together policymakers, renowned researchers, academics and practitioners. from Pakistan and abroad to discuss topics relevant to developing countries such as business and entrepreneurship, labor, gender, poverty and social protection, health, education and governance and capacity institutional. The stimulating research presented at the conference was expected to disseminate and elicit interesting commentary, stimulate new research in this area, and help improve the research capacities of young researchers in the country.
Shahid Amjad also stressed that this international conference will shed light on the state of economic stability in developing countries, especially in the circumstances of Covid, poverty, underdevelopment and civil war that is ending in Afghanistan.
The plenary speech was given by Christopher Woodruff from the University of Oxford who discussed the impact of loans and grants on different micro-enterprises. He assessed whether the donor should provide grants or loans since the objective is to generate growth.
The idea he reflected is that with loans, the business only keeps returns that are greater than the principal and interest payments. However, this can narrow the category of investment and increase the risk that could prevent companies from borrowing. On the contrary, if the donor grants grants, companies realize the full gain of any investment, thus allowing them to invest in assets with longer returns.
This can also lead to no investment at all. However, everyone accepts the grants anyway. He also highlighted why grants and loans work differently for microenterprises. He developed a downside of subsidies that their effects are not always so great, and there is no evidence that they lead to truly dynamic and transformative growth in business.
He also mentioned several studies where the researcher found very high returns from grants but found no job creation. In addition, he spoke of a few studies where even an insignificant impact of the subsidies was found.
He concluded with the final thought that, for research promoting innovation, grants show high returns, but for the experiences of MFIs, they show a lack of dynamism. This is because MFI models indicate adjustments that make loans compatible with higher return investments.
On the second day, the plenary session chair was Naved Hamid and the speech was delivered by Victoria Baranov, Associate Professor, University of Melbourne, who discussed Maternal Depression, Parental Investment and Child Development .
She insisted that development economists should care about mental health, as depression and anxiety account for 8% of years lived with a disability, leading to the psychological poverty trap. She also added that poverty or negative economic shocks cause mental illnesses which can therefore affect economic decision making so as to reinforce poverty.
In her presentation, she highlighted this problem by explaining two studies where different randomized controlled trials were used, the first being the long-term impact of treatment for mental depression.
The second focuses on the role of biomarkers in intervention against maternal depression. The main results of the study using the first intervention are that the intervention improved the mother’s financial autonomy and parental investment. He also added that the women treated looked for more social support, had better relationships.
Copyright Business Recorder, 2021