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Impact of political stability on the reserves of pakistan

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Impact of political stability on the reserves of pakistan

2. 2. Associative
3. 3. Inferential</li></ul>Descriptive statistics portray individuals or events in terms of some predefined characteristics. Associative statistics seek to identify meaningful interrelationships between or among data. Inferential statistics seek to assess the characteristics of a sample in order to make more general statements about the parent population, or about the relationship between different samples or populations. <br />In Our Study we will use Associative statistics to identify meaningful interrelationships between Pakistan Reserves and key environmental factors that affected Pakistan in last 50 years<br />XmR Charts<br />One of the most widely used control charts is the XmR chart, first developed by Schwartz.  This chart is particularly useful when there is only one observation in each time period.  <br /> <br />The purpose of constructing any control chart, including XmR chart, is to see if the variation is due to chance or to changes in the process.  Every process exhibits some variation in outcomes.  Controlled variation is stable and consistent over time. This variation is due to chance or inherent features of the process.  Uncontrolled variations are points outside the limits and these observations cannot be due to chance. They represent a change in the process that is affecting outcomes. <br /> <br />Control charts are also used to visually tell a story. Any control chart, including XmR chart, has a set of common elements:  <br />X-axis shows time periods <br />Y-axis shows the observed values <br />UCL line shows the Upper Control limit <br />LCL line shows the lower control limit <br />Values outside the control limits mark statistically significant changes and may indicate a change in the underlying process. We have implemented the XmR chart for the data analysis<br />Results<br />The following table contains the Calculated Inflated reserves in US dollors for last 50 years<br />S NoYearReserves In US\$ (Millions)InflationYearly InflationCompound InflationInflated Reserves In US\$ (Millions)XMoving Range In US\$ (Millions)mR11961261.303.201.0357.0014,893.8121962269.32(0.08)1.0055.2314,875.1418.6731963307.83(1.31)0.9955.2817,015.582,140.4341964254.235.041.0556.0114,239.352,776.2251965230.343.881.0453.3212,282.651,956.7061966208.453.871.0451.3310,700.251,582.4071967165.498.631.0949.428,177.872,522.3881968258.391.901.0245.4911,754.843,576.9791969332.931.141.0144.6514,863.863,109.02101970194.534.311.0444.148,586.986,276.88111971198.505.241.0542.328,400.52186.46121972323.806.211.0640.2113,020.584,620.06131973590.2815.541.1637.8622,348.749,328.16141974688.5025.441.2532.7722,560.71211.97151975563.0024.041.2426.1214,707.107,853.61161976684.1411.861.1221.0614,408.52298.58171977715.709.091.0918.8313,475.59932.93181978795.949.031.0917.2613,737.01261.421919791,144.056.591.0715.8318,108.804,371.792019801,567.779.061.0914.8523,281.985,173.182119811,455.329.911.1013.6219,816.313,465.672219821,812.789.371.0912.3922,457.252,640.942319832,682.855.271.0511.3330,388.117,930.852419841,610.439.651.1010.7617,327.1313,060.982519851,429.444.531.059.8114,025.813,301.312619861,464.873.291.039.3913,749.93275.892719871,440.844.521.059.0913,093.31656.622819881,192.699.621.108.6910,369.842,723.462919891,302.258.591.097.9310,328.9540.893019901,046.436.451.067.307,643.692,685.273119911,219.7913.061.136.868,369.99726.303219921,523.7910.061.106.079,248.05878.063319931,995.458.701.095.5111,003.901,755.853419943,715.8312.891.135.0718,851.547,847.643519952,527.5413.871.144.4911,358.927,492.623619961,307.468.371.083.955,159.906,199.033719971,794.5113.381.133.646,534.831,374.943819981,625.687.531.083.215,221.221,313.623919992,117.475.861.062.996,324.721,103.504020002,087.1724.891.252.825,888.98435.744120014,218.137.891.082.269,529.533,640.554220028,795.802.461.022.0918,417.938,888.4043200311,815.604.441.042.0424,146.495,728.5544200410,718.177.751.081.9620,972.903,173.5945200511,109.367.031.071.8220,174.95797.9446200612,878.0210.461.101.7021,851.511,676.5647200715,798.077.651.081.5424,267.792,416.274820089,024.0116.261.161.4312,876.5511,391.2449200913,606.1222.741.231.2316,700.053,823.50<br />Table 1: Pakistan reserves 1960 to 2009; X and mR <br />Process (X) Chart <br />Chart 1: Process (X)<br />Chart 2: Moving Range(mR)Moving Range (mR) Chart <br />Calculated Values for XmR Chart<br /><ul><li>Process Average X=14439.59
4. 4. Upper Control Limit (UCL)=23563.59
5. 5. Lower Control Limit (LCL)=5315.59
6. 6. Average mR =3430.08
8. 8. During the period 1973-1984 we have seen all the data points above the average, this appears to because of the following factors:
9. 9. New Constitution of Pakistan that lead to political stability
10. 10. US aid for support in Afghan war
11. 11. Year 1983 has the highest inflated reserves value in the history of Pakistan; this may be due to extensive US foreign aid.
12. 12. The period 1985-2000 saw all data points below the average except for the year 1994, this appears to be because of the political instability and post afghan war effects.
13. 13. 1994 appears to be an exception in this period, this may because of the extensive listing of public companies in stock exchange in the previous three years (around 42%). This resulted in increased level of confidence in overseas Pakistanis which caused more remittances.
14. 14. The Political stability appears to be the reason for consistent growth and stability of Reserves in the period 2002-2007
15. 15. In 2008 the reserves are minimum in last mentioned period (2002-2008), the key again appears to be political instability and judicial crisis that resulted in major fall in foreign remittances.</li></ul>Moving Range (mR) Chart<br /><ul><li>The reserves have the maximum growth in the following four years:
16. 16. 1973 – Pakistan appearing as leading Islamic state in Islamic countries
17. 17. 1983 – Afghan war support from US
18. 18. 2002 – Pakistan became the front line state for war on terror which resulted in foreign support
19. 19. Due to political instability and power shifting to democratic-political forces there is a major fall in reserves and foreign remittances in 2008.</li></ul>Conclusion<br />The political instability and other social events are seen to have an effect on the country’s reserves. It has become evident that there is a link between the two variables. An association is seen between the political factors and the increase and decrease of the reserves. <br />At macro level this study fits in with the socio-economic factors of Pakistan. This study can help the country’s leadership to be more aware of the political factors and there economic impacts. <br />Another outcome is that the study needs to be made more detailed and broader, in order to full capture the economic state. The other important indicators of economy need to be identified and studied to present a true picture of Pakistan’s economy. <br />References<br /><ul><li>Edgardo E. Zablotsky, Political statbility and economic growth. A two way relation, 1996
20. 20. Muhammad Younis, Xu Xiao Lin, Yahya Sharahili, Santhirasegaram Selvarathinam, Political Stability and Economic Growth in Asia, 2008
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