Association of Applied Economists-AERC

17/02/2025

AERC International Conference 2025
Shaping the Economic Future of the Country: Trends and Insights for Tomorrow (SEFC-TIT)
📅 February 11-12, 2025
The Applied Economics Research Center (AERC) International Conference 2025 served as a crucial platform for policymakers, economists, and development experts to discuss Pakistan’s economic future. Under the theme “Shaping the Economic Future of the Country: Trends and Insights for Tomorrow (SEFC-TIT),” the conference focused on key structural, fiscal, and environmental challenges facing the nation.
Key Discussions and Insights:
🔹 Socialism vs. Capitalism & Institutional Reform – Dr. Kaiser Bengali advocated for socialist economic principles, arguing that capitalism prioritizes profit over societal well-being. He also criticized inefficiencies in government organizations, calling for the closure of inactive institutions and the elimination of redundant agencies to prevent further economic crises. Additionally, he stressed the importance of delinking basic food items from the dollar, advocating for enhanced domestic production of wheat, sugar, and oil to mitigate reliance on volatile global markets.

🔹 Climate Policy and Energy Transition – Dr. Shahida Wazar emphasized the urgent need to reduce carbon emissions by shifting away from highly polluting energy sources. She urged Pakistan to align with global climate agreements such as the Paris Agreement and called for greater investment in hydropower (dam construction) and nuclear energy as sustainable alternatives.
🔹 Human Capital and Fiscal Reforms – Najy Benhassine, World Bank Country Director for Pakistan, highlighted Pakistan’s human capital crisis, noting that 40% of children under five suffer from stunted growth, To address this, he stressed the need for fiscal space expansion through better tax collection, removal of costly exemptions, and taxation of under-taxed sectors such as real estate, agriculture, and retail. He also emphasized privatizing loss-making public enterprises, cutting inefficient subsidies, and reducing fiscal overlaps between federal and provincial governments.
🔹 Economic Competitiveness & Market Reforms – Benhassine further advocated for a dynamic, open economy, urging market distortion corrections, increased competition, and policy predictability. He pointed to agriculture sector transformation, energy efficiency improvements, and stronger local government financial autonomy as key areas for sustainable economic progress.

The AERC International Conference 2025 reinforced the critical need for economic restructuring, climate resilience, and human capital investment to steer Pakistan towards a sustainable and competitive future.

08/02/2025

03/09/2024

Abhijit Banerjee
The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2019

Born: 21 February 1961, Mumbai, India
Affiliation at the time of the award: Massachusetts Institute of Technology (MIT), Cambridge, MA, USA
Prize motivation: “For their experimental approach to alleviating global poverty

07/08/2024

Happy Birth Day
To
Elinor Ostrom
The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2009

Born: 7 August 1933, Los Angeles, CA, USA
Died: 12 June 2012, Bloomington, IN, USA

Affiliation at the time of the award: Indiana University, Bloomington, IN, USA; Arizona State University, Tempe, AZ, USA
Prize motivation: “for her analysis of economic governance, especially the commons”

06/08/2024

02/08/2024

Experts term Electricity and IPP’s issues as Principal-Agent Problem

Pakistan's power sector is grappling with a classic principal-agent problem, where the interests of consumers – serve as the principals- are being compromised by the actions of energy bureaucrats, policymakers, and Independent Power Producers (IPPs) which are playing the role of the agents. Consumers, who bear the ultimate burden of electricity costs, have entrusted these agents to manage the power sector efficiently and ensure affordable electricity. However, the self-serving interests of these agents have led to a surge in electricity tariffs, betraying the trust of the principals and perpetuating a cycle of inefficiency and exploitation in the power sector. This was a conclusion of a study prepared by Dr. Fauzia Sohail, Research Economist of Applied Economics Research Centre (AERC), University of Karachi, which was presented during a media briefing today on 1st August at AERC
Dr. Fauzia further briefed that the conflict of interest is evident in the continuous and frequent rise in electricity tariffs, which have become a regular phenomenon in Pakistan. The complex tariff structure and multiple slabs, apparently designed to encourage efficient energy use, have instead led to confusion and hardship for consumers.
The study has exhibited that the increased electricity prices compelled poor households to cut their spending on commodities other than necessities. Results show that for low-income households, a Rs.1000 increase in electricity expenditure is accompanied by a 1.24 percentage point decrease in food expenditure.
The study further concluded that the fixed capacity payment and take-or-pay agreements ensure that IPPs receive a guaranteed payment regardless of actual power generation, passing the burden of inefficiency to consumers. The contractual obligations have effectively tied the hands of policymakers, forcing them to prioritize the interests of IPPs over those of consumers and the environment, and perpetuating a cycle of expensive power purchases that is crippling the economy.
The study proposed renegotiations of terms and conditions or maybe Nationalization of IPPs; privatization of DISCOS and reforms in KE’s power generation and distribution obligations.
Dr. Aamir Siddiqui, Research Economist of AERC stated that the surplus electricity should be exported to Afghanistan, where only 20 percent of the total demand is met through domestic supply while 80% of electricity is imported from neighboring countries. However, if Pakistan pays capacity charging without producing any electricity, why they will be interested in exporting the surplus generation to Afghanistan?
Mr. Sabir renowned economist associated with the Social Policy Development Centre, informed the audience that the issue is more technical than financial. The flow of electricity from the northern part to the southern part is very limited. This compels the Punjab province to have more IPPs in their province which made a substantial price difference. The government should concentrate on removing the technical obstacles.
The event was attended by a large gathering of faculties of the University of Karachi, students, and journalists

02/08/2024

Aerc on IPPs and K-electric

The Applied Economics Research Center of the University of Karachi in collaboration with the Ataleeq Foundation arranged a discussion on the challenges

29/06/2024

David Card
The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2021
Born: 1956, Guelph, Canada
Affiliation at the time of the award: University of California, Berkeley, CA, USA
Prize motivation: “for his empirical contributions to labour economics

26/06/2024

Angus Deaton
The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2015
Born: 19 October 1945, Edinburgh, Scotland
Affiliation at the time of the award: Princeton University, Princeton, NJ, USA
Prize motivation: “for his analysis of consumption, poverty, and welfare”