Aggregated and Compact Disaggregated Financial Social Accounting Matrices for Pakistan

Abstract

This paper constructs the aggregated and compact disaggregated financial social accounting matrices for Pakistan for the year 1999/2000. The extension of the SAM on financial side and inclusion of information on flow of funds is an important contribution of this study to the existing literature on social accounting matrices. A number of key characteristics of the real and financial sides of the economy are derived from the direct inspection of the financial social accounting matrices for Pakistan. The estimates of the SAM show a high share of agriculture sector in capital income, which is a reflection of land ownership structure in Pakistan. Similarly, there is a low share of wages in total factor income, which reflect that most of the workers in Pakistan are self employed and their income is recorded as capital income. The estimates of goods for domestic and export markets show that bulk of the gross domestic product was consumed domestically and only 16 percent was exported to the world market in the year 1999/2000. Furthermore, 58 percent of the total physical investment was made by the government and the contribution of non-financial firms in total physical investment was only 13 percent. During the same period the non-financial firms reduced their borrowing from the banking system which reflect uncomfortable environment for business activities in the year 1999/2000. A low share of non-financial firms in total physical investment and reduced borrowing of private firms reflect weak investors? confidence, which requires special attention of the policy makers in Pakistan.