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LAHORE: Rector Lahore School of Economics (LSE) Dr Shahid Amjad Chaudhry said that Pakistan's economy is fundamentally strong due to its agricultural sector however, it still has to work hard for macroeconomic growth as for 2021 the macroeconomic growth rate was 3.8%.

The health sector in Pakistan, largely private and public sector provides its services to around 35% of the population which is going to jump to 65% in a time span of two months. These two projects will help to ease the poverty condition in Pakistan.

He expressed these views while addressing the opening session of Third International Conference on Applied Development Economics, held recently. 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 devoted to bringing together policy makers, renowned researchers, academics and practitioners from within Pakistan and abroad to discuss relevant themes for developing countries such as, firm & entrepreneurship, labour, gender, poverty and social protection, health, education, and governance and institutional capacity. The thought-provoking research presented at the conference was hoped to disseminate and invite interesting feedback, stimulate further research in this domain and be instrumental in improving research capabilities of young researchers within the country.

Shahid Amjad also highlighted that that this international conference will shed light on the state of economic stability in developing countries especially under the circumstances of Covid, poverty, underdevelopment, and civil war which is ending in Afghanistan.

The plenary address was delivered by Christopher Woodruff from University of Oxford who discussed the impact of loans and grants on different micro enterprises. He evaluated whether the donor should give grants or make loans given the aim is to generate growth.

The idea he reflected is that with loans, the enterprise keeps only the returns in excess of principal and interest payments. However, it may restrict the class of investment and increase the risk which might keep the enterprises from borrowing. On the contrary, if the donor makes grants, the enterprises realize the entire gain of any investment which, therefore, allows them to invest in assets with longer returns.

This can also lead to no investment at all. However, either way, everyone accepts the grants. He also highlighted why do grants and loans result in different outcomes for micro enterprises. He elaborated a downside of grants that their effects are not always so large, and there is no evidence that they lead to truly dynamic, transformative growth in enterprises.

He also mentioned multiple studies where the researcher found very high returns of grants but found no employment generation. Additionally, he talked about a few studies where even an insignificant impact of grants was found.

He concluded with the final thought that, for research fostering innovation, grants demonstrate high returns but for MFI experiments they show a lack of dynamism. The reason is that the MFI models are pointing to tweaks that make loans compatible with higher return investments.

On the second day chairperson for plenary session was Naved Hamid and the session was address 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 because depression and anxiety account for 8% of years lived with a disability which leads to the psychological poverty trap. She also added that poverty or negative economic shocks cause mental illness which can hence affect economic decision-making in ways that reinforce poverty.

In her talk, she highlighted this issue by explaining two studies where different randomized control trials were used, first of them is the long-term impact of treating mental depression.

The second is about the role of biomarkers in maternal depression intervention. Key findings from the study employing the first intervention are that the intervention improved the mother's financial autonomy and parental investment. It also added that the treated women sought more social support, had better relationships.

Copyright Business Recorder, 2021


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