The Impact of Structural Adjustment on Income Distribution in Pakistan A SAM-based Analysis

Zafar Iqbal, Rizwana Siddiqui


Domestic poverty and income distribution are closely related
to the state of the economy, which is linked with internal and external
economic policies. Since 1988, under the rubric of structural adjustment
programme (SAP), Pakistan has made use of fiscal, monetary and trade
policies to correct her macro economic imbalances. It is hard to
substantiate with proof that these programmes protect the poor. A number
of studies have found that income distribution has been getting worse
during the adjustment period in Pakistan.1 For example, Kemal (1994);
Jaffery and Khattak (1995) and Anwar (1996) found that SAP accompanied
with rising income inequality and poverty in Pakistan. But these studies
are restricted as they did not employ an adequate methodology to assess
the impact of structural adjustment reforms on income distribution.2
This paper, however, uses a simple static fixed-price SAM-based
framework to analyse distributional outcome of incomes for rural and
urban households. This methodology is useful because social accounting
matrix (SAM) represents the whole economy and it does not need a large
data set.

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