Inter-Governmental Funds Flows in Pakistan: Are they Reducing Poverty?

Abstract

The purpose of this paper is to see whether any link can be found between the inter-governmental fiscal transfers and the deprivation index in the districts of Pakistan. The data for the study was collected from 98 districts of four provinces of Pakistan for the year 2003 and 2007. The results of the study shows the transfers have reduced deprivation across the board but unable to solve disparity issue. In fact the results show the extreme inequality (ratio of maximum to minimum) has increased over time but average disparity (coefficient of variation) gives mixed results. Keywords: Fiscal Federalism, Horizontal Inequity, Vertical Inequity, Intergovernmental Fiscal Transfer.