A Social Accounting Matrix for the Economy of Khyber Pakhtunkhwa

This paper on designing the Social Accounting Matrix (SAM) for the economy of Khyber Pakhtunkhwa (KP), a province of Pakistan, using the most recently available micro-evidence based on 2015-16 data is a milestone, both for the policy makers as well as PEPRI itself. It is critical for policymaking at the sectoral level to adopt a bottom-up approach by focusing on heterogeneity. As such, this is the first attempt of its nature for any region of Pakistan. It will support the policymakers and implementers in developing and upgrading the province’s socioeconomic and environmental outlook vigorously. Accordingly, the study aims to bridge the gap between the data collecting agency and the policymakers by providing objective insight considering KP’s actual economic structure, by complementing the SAM with the rest of Pakistan and the global socioeconomic profile. It includes 61 sectors of activity, 12 factors of production, and 8 households group, allowing the tracing of direct and indirect effects of potential scenarios through production and consumption linkages and capturing distributional effects. This SAM highlights a series of relevant characteristics of the KP economy. The livestock, energy transport and financial and business activities are shown to be signi´Čücant contributors to the total domestic value added. For agricultural products, land and capital are the largest components of the value- added. Manufacturing activities depend heavily on formal capital, while labor and other capital are important for most services. Rural and urban households rely mostly on labor and capital as their income sources. It is further indicated from the KP SAM that the households significantly rely on non-resident income.