IDEAS home Printed from https://ideas.repec.org/a/eme/ijsepp/v36y2009i1-2p93-104.html
   My bibliography  Save this article

Human development, public expenditure and economic growth: a system dynamics approach

Author

Listed:
  • Muhammad Azeem Qureshi

Abstract

Purpose - It is now widely recognized that human development (HD) and economic growth (EG) are intertwined in two‐way feedback processes either leading to an upward spiral of development or a poverty trap. This concept is used to overcome one of the limitations of a previous study by Qureshi which assumes exogenous gross domestic product (GDP). With endogenous GDP formulation, the impact of public expenditure on HD and EG in Pakistan is examined. Design/methodology/approach - System dynamics approach is used to model, identify and help manage the development path of HD and EG in Pakistan given alternative policies for public expenditure on HD and EG. For this purpose the model endogenously determines path of population cohorts, and education, health and economic indicators. Findings - The simulation results suggest that the current level of public expenditure on HD is extremely low and any further decrease will have irreversible negative impact on HD and economic indicators, even if the resources so saved are effectively invested in EG. Further, higher public expenditure on EG may neither result into better HD indicators nor economic indicators. On the contrary, higher public expenditure on HD not only improves HD indicators but also supplements EG. The results of this study conform to the results of earlier research and challenge the very basis of fiscal policy in Pakistan which has continually ignored HD over decades. Research limitations/implications - The model boundary excludes possible causal links of public expenditure, HD and income distribution. Identification and inclusion of these causalities may improve understanding of perpetuating asymmetric income distribution in Pakistan its role in HD and EG trade‐off. Practical implications - This paper suggests reorientation of fiscal policy in Pakistan and to anchor it to HD by allocating more public funds. Originality/value - The unique characteristic of this model is explicit modelling of population cohorts in a two‐way feedback relationship with economic development considering the delays and non‐linearities involved in this process.

Suggested Citation

  • Muhammad Azeem Qureshi, 2009. "Human development, public expenditure and economic growth: a system dynamics approach," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 36(1/2), pages 93-104, January.
    • Handle: RePEc:eme:ijsepp:v:36:y:2009:i:1/2:p:93-104
    DOI: 10.1108/03068290910921217
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/03068290910921217/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1108/03068290910921217/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1108/03068290910921217?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hafiz A. PASHA*, 1995. "POLITICAL ECONOMY OF TAX REFORMS: The Pakistan Experience," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 11, pages 129-154.
    2. Zeba A. Sathar, 1992. "Child Survival and Changing Fertility Patterns in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 31(4), pages 699-713.
    3. Hafiz A. Pasha & M. Asif Iqbal*, 1994. "Taxation Reforms In Pakistan," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 10, pages 47-75.
    4. Qazi Masood AHMED, 1998. "STRUCTURE OF PUBLIC FINANCES: Historical Perspectives and Future Prospects," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 14, pages 89-105.
    5. Azra Aziz, 1994. "Proximate Determinants of Fertility in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 33(4), pages 727-742.
    6. Streeten, Paul, 1994. "Human Development: Means and Ends," American Economic Review, American Economic Association, vol. 84(2), pages 232-237, May.
    7. Nancy Birdsall & David Ross & Richard Sabot, 1993. "Underinvestment in Education: How Much Growth has Pakistan Foregone?," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 32(4), pages 453-499.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Matteo Pedercini & Santiago Movilla Blanco & Birgit Kopainsky, 2011. "Application of the Malaria Management Model to the Analysis of Costs and Benefits of DDT versus Non-DDT Malaria Control," PLOS ONE, Public Library of Science, vol. 6(11), pages 1-12, November.
    2. Susan Randolph & Elizabeth Kaletski, 2018. "Securing Economic and Social Rights: Obstacle or Handmaiden to Growth?," Economic Rights Working Papers 26, University of Connecticut, Human Rights Institute.
    3. A. Sardi & E. Sorano, 2021. "Dynamic Performance Management: An Approach for Managing the Common Goods," Papers 2102.04090, arXiv.org.
    4. Shashank Gupta & Shalini Gupta, 2017. "Modeling economic system using fuzzy cognitive maps," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 8(2), pages 1472-1486, November.
    5. Hsin-Pei Hsueh & Chien-Ming Wang & Cheng-Feng Wu & Fangjhy Li, 2019. "Investigation of the Co-Movement Relationship between Medical Expenditure and GDP in Taiwan-Based on Wavelet Analysis," IJERPH, MDPI, vol. 16(24), pages 1-9, December.
    6. Alberto Sardi & Enrico Sorano, 2019. "Dynamic Performance Management: An Approach for Managing the Common Goods," Sustainability, MDPI, vol. 11(22), pages 1-22, November.
    7. Bryane Michael, 2018. "What does Brunei teach us about using Human Development Index rankings as a policy tool?," Development Policy Review, Overseas Development Institute, vol. 36(S1), pages 414-431, March.
    8. Rossana Guerra Sousa & Edilson Paulo & João Marôco, 2017. "Longitudinal Factor Analysis of Public Expenditure Composition and Human Development in Brazil After the 1988 Constitution," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 134(3), pages 1009-1026, December.
    9. Diogo Ferraz & Enzo B. Mariano & Daisy Rebelatto & Dominik Hartmann, 2020. "Linking Human Development and the Financial Responsibility of Regions: Combined Index Proposals Using Methods from Data Envelopment Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 150(2), pages 439-478, July.
    10. Sugeng Setyadi & Saharuddin Didu & Lili Indriyani & Ananda Kurnia Fitri & Anita Wiidiastuti, 2023. "Modeling Life Expectancy in Indonesia Using System GMM Model," Review of Applied Socio-Economic Research, Pro Global Science Association, vol. 25(1), pages 83-98, June.
    11. Yun-Hsun Huang & Yan-Jiang Lai & Jung-Hua Wu, 2022. "A System Dynamics Approach to Modeling Groundwater Dynamics: Case Study of the Choshui River Basin," Sustainability, MDPI, vol. 14(3), pages 1-19, January.
    12. Minhas Akbar & Ammar Hussain & Ahsan Akbar & Irfan Ullah, 2021. "The dynamic association between healthcare spending, CO2 emissions, and human development index in OECD countries: evidence from panel VAR model," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(7), pages 10470-10489, July.
    13. Sangaran Vijesandiran & Priyatharsiny Selvarasa, 2018. "Effects Of Fiscal Policy On Human Development In Sri Lanka: An Empirical Analysis," Journal of Smart Economic Growth, , vol. 3(3), pages 1-36, December.
    14. Datola, Giulia & Bottero, Marta & De Angelis, Elena & Romagnoli, Francesco, 2022. "Operationalising resilience: A methodological framework for assessing urban resilience through System Dynamics Model," Ecological Modelling, Elsevier, vol. 465(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Muhammad Azeem Qureshi, 2008. "Challenging trickle‐down approach," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 35(4), pages 269-282, March.
    2. Goletsis, Y. & Chletsos, M., 2011. "Measurement of development and regional disparities in Greek periphery: A multivariate approach," Socio-Economic Planning Sciences, Elsevier, vol. 45(4), pages 174-183, December.
    3. Muhammad Ashfaq Ahmed, 2020. "Pakistan: Withholdingisation of the Economic System—A Source of Revenue, Civil Strife, or Dutch Disease?," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 59(3), pages 469-516.
    4. Tomer, John F., 1996. "Good habits and bad habits: A new age socio-economic model of preference formation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 25(6), pages 619-638.
    5. Elizabeth Stanton, 2007. "The Human Development Index: A History," Working Papers wp127, Political Economy Research Institute, University of Massachusetts at Amherst.
    6. Micaela Naledi Monyela & Charles Shaaba Saba, 2024. "Trade openness, economic growth and economic development nexus in South Africa: a pre- and post-BRICS analysis," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-18, December.
    7. A. R. Kemal, 2005. "Macroeconomic Management: Breaking out of the Debt Trap," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 10(Special E), pages 45-62, September.
    8. Davis, Graham A., 1995. "Learning to love the Dutch disease: Evidence from the mineral economies," World Development, Elsevier, vol. 23(10), pages 1765-1779, October.
    9. K.P. Kannan & N. Vijayamohanan Pillai, 2004. "Development as a right to freedom: An interpretation of the 'Kerala Model'," Centre for Development Studies, Trivendrum Working Papers 361, Centre for Development Studies, Trivendrum, India.
    10. Beraldo, Sergio & Montolio, Daniel & Turati, Gilberto, 2009. "Healthy, educated and wealthy: A primer on the impact of public and private welfare expenditures on economic growth," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(6), pages 946-956, December.
    11. Ewa Lechman, 2013. "Human Poverty – Measuring Relative Deprivation From Basic Achievements. A Comparative Study For 144 World Countries In The Time Span 1990-2010," GUT FME Working Paper Series A 11, Faculty of Management and Economics, Gdansk University of Technology.
    12. Akhtar Hasan Khan, 1997. "Education in Pakistan: Fifty Years of Neglect," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 36(4), pages 647-667.
    13. Sari, I. & McDougall, C. & Rajaratnam, S. & Park, C.M.Y., 2017. "Women’s empowerment in aquaculture: Two case studies from Indonesia," Monographs, The WorldFish Center, number 40703, April.
    14. Andrés Rodríguez-Pose & Eduardo I. Palavicini-Corona, 2012. "Does local economic development really work? Assessing LED across Mexican municipalities," Papers in Evolutionary Economic Geography (PEEG) 1224, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Nov 2012.
    15. Stephen Morse, 2013. "Bottom Rail on Top: The Shifting Sands of Sustainable Development Indicators as Tools to Assess Progress," Sustainability, MDPI, vol. 5(6), pages 1-21, May.
    16. Suri, Tavneet & Boozer, Michael A. & Ranis, Gustav & Stewart, Frances, 2011. "Paths to Success: The Relationship Between Human Development and Economic Growth," World Development, Elsevier, vol. 39(4), pages 506-522, April.
    17. World Bank, 2009. "Pakistan - Tax Policy Report : Tapping Tax Bases for Development - Full Report," World Bank Publications - Reports 3100, The World Bank Group.
    18. Motkuri, Venkatanarayana, 2003. "Child Deprivation: An Extended Approach to Child Labour," MPRA Paper 53052, University Library of Munich, Germany.
    19. Peter Lawrence & Jeremy Meigh & Caroline Sullivan, 2002. "The Water Poverty Index:an International Comparison," Keele Economics Research Papers KERP 2002/19, Centre for Economic Research, Keele University, revised Mar 2003.
    20. Farhad Noorbakhsh, 1999. "Standards of living, human development indices and structural adjustments in developing countries: an empirical investigation," Journal of International Development, John Wiley & Sons, Ltd., vol. 11(1), pages 151-175.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:ijsepp:v:36:y:2009:i:1/2:p:93-104. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.