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7/31/2019 47453143 Lecture 6 Overview of Pakistan Economy
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Dr. Umar FarooqDr. Umar Farooq(Faculty Member)(Faculty Member)
DSDS--202/511: Rural Development Issues and Perspectives202/511: Rural Development Issues and Perspectives
Overview of Pakistan EconomyOverview of Pakistan Economy
Institute of Development StudiesInstitute of Development StudiesIQRA University, Islamabad CampusIQRA University, Islamabad Campus
IslamabadIslamabad
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FormatFormatInitial phase of Econ. Development (1947Initial phase of Econ. Development (1947--1958)1958)
Economic Development in 1960sEconomic Development in 1960s
Economic Development in 1970sEconomic Development in 1970s
Economic Development in 1980sEconomic Development in 1980s
Economic Development during 1990Economic Development during 1990--19971997
Economic Development between 1997 and 1999Economic Development between 1997 and 1999
Economic Development during 2000sEconomic Development during 2000s
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Initial Phase of Economic DevelopmentInitial Phase of Economic DevelopmentAt the time of independenceAt the time of independence
NonNon--existence of industrial sector and tradeexistence of industrial sector and trade ------ (previously Hindus)(previously Hindus)Majority of the population attached with agricultureMajority of the population attached with agriculture
Traders settled in KarachiTraders settled in Karachi
It was thought that the foreign trade sector would play anIt was thought that the foreign trade sector would play animportant role in the development of the countryimportant role in the development of the country
Bulk of primary agricultural commodities exported duringBulk of primary agricultural commodities exported duringKorean BoomKorean Boom
On import side, highly liberal policy adopted by offering variousOn import side, highly liberal policy adopted by offering variousincentivesincentives
To promote industrial sector, Pakistan Industrial DevelopmentTo promote industrial sector, Pakistan Industrial DevelopmentCorporation (PIDC) was set upCorporation (PIDC) was set up
Traders invested in textile by importing textile machinery. PIDCTraders invested in textile by importing textile machinery. PIDCtried to establish sugar, match and woolen and paper mills intried to establish sugar, match and woolen and paper mills inWest Pakistan. The Jute factories were installed East PakistanWest Pakistan. The Jute factories were installed East Pakistan
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Initial Phase of Economic DevelopmentInitial Phase of Economic DevelopmentAfter Korean War government imposed restrictions on importsAfter Korean War government imposed restrictions on imports
According to Pepnik, According to Pepnik, The rate of profit on industrial investmentThe rate of profit on industrial investmentwas so high that investor was in a position to meet the amount ofwas so high that investor was in a position to meet the amount ofhis investment in the period of one to two yearshis investment in the period of one to two years..
On the other side, agriculture sector was totally neglectedOn the other side, agriculture sector was totally neglected
The prices of agricultural commodities kept depressed in orderThe prices of agricultural commodities kept depressed in order
to ensure cheaper supply of raw products to infant industriesto ensure cheaper supply of raw products to infant industriesWith the passage of time, terms of trade went againstWith the passage of time, terms of trade went againstagricultureagriculture
As a result inefficient industries were established dueAs a result inefficient industries were established due
to highly protective policiesto highly protective policies
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Initial Phase of Economic DevelopmentInitial Phase of Economic DevelopmentA number of measures/events took place during 1950sA number of measures/events took place during 1950s
There was no clear cut strategy of economic development and planning inThere was no clear cut strategy of economic development and planning inthe countrythe country
Colombo and 1Colombo and 1stst five year plan was nothing more than the developmentfive year plan was nothing more than the developmentwishes written in the paperswishes written in the papers
The refugee settlement problem, the severe enmity with India as forcedThe refugee settlement problem, the severe enmity with India as forced
the country to divert maximum resources to defense.the country to divert maximum resources to defense.The political instability caused frequent change of the governments andThe political instability caused frequent change of the governments andstrong hold of feudals in the economic and political life of the countrystrong hold of feudals in the economic and political life of the countrywere serious obstacles in countrys developmentwere serious obstacles in countrys development
Unstable governments, corrupt administration and vested interestsUnstable governments, corrupt administration and vested interestsalways deprived the government from revenues.always deprived the government from revenues.
All the industrial development was based on heavy subsidies andAll the industrial development was based on heavy subsidies andconcessions awarded and industrial setup was confined to consumerconcessions awarded and industrial setup was confined to consumergoods, whereas the establishment of large industrial units in iron andgoods, whereas the establishment of large industrial units in iron andsteel sectors etc. were not taken placesteel sectors etc. were not taken place
There was a heavy reliance on the foreign aid and assistanceThere was a heavy reliance on the foreign aid and assistance
The social sector was completely ignoredThe social sector was completely ignored
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Over stressing industrialization over agriculturalOver stressing industrialization over agriculturaldevelopmentdevelopment
Heavy dependence on private sector for industrializationHeavy dependence on private sector for industrialization
Granting tax holidays to investors for the sake of industrialGranting tax holidays to investors for the sake of industrialdevelopmentdevelopment
Establishment of import substituting industriesEstablishment of import substituting industries
Ignorance of agriculture sectorIgnorance of agriculture sector
Depressing prices of agricultural productsDepressing prices of agricultural products
Installation of inefficient industrial structureInstallation of inefficient industrial structure
Greater emphasis on indirect taxes rather than direct taxesGreater emphasis on indirect taxes rather than direct taxes
Little regard to education, health, social welfare and humanLittle regard to education, health, social welfare and humanresource developmentresource development
Initial Phase of Economic Development:Initial Phase of Economic Development:Adopted ApproachesAdopted Approaches
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A
griculture sector share fall from 53.2% in 1949A
griculture sector share fall from 53.2% in 1949--50 to50 to45.8% in 195945.8% in 1959--6060
High growth targets in agriculture sector achievedHigh growth targets in agriculture sector achieved
The manufacturing sector share rose from 7.8% in 1949The manufacturing sector share rose from 7.8% in 1949--5050to 12% in 1959to 12% in 1959--6060
Annual imports increased from USD 276 Million in 1949Annual imports increased from USD 276 Million in 1949--5050to USD 379 Million in 1959to USD 379 Million in 1959--6060
Annual exports fell from USD 171 Million in 1949Annual exports fell from USD 171 Million in 1949--50 to USD50 to USD160 Million in 1959160 Million in 1959--6060
Loan burden rose from USD 0 in 1949Loan burden rose from USD 0 in 1949--50 to USD 145 Million50 to USD 145 Millionin 1959in 1959--6060
Population growth remained sustained at 2.5%Population growth remained sustained at 2.5%
The unstable political scenario culminated at taking up theThe unstable political scenario culminated at taking up the
government by General Ayub Khangovernment by General Ayub Khan
Initial Phase of Economic Development:Initial Phase of Economic Development:Achievements and NonAchievements and Non--AchievementsAchievements
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Tight economic measures taken byA
yub regimeTight economic measures taken byA
yub regimeMonetary policy tightenedMonetary policy tightened
Deficit financing reducedDeficit financing reduced
Imposing control over prices and profitsImposing control over prices and profits
Bureaucratic and technocrats control over decisionBureaucratic and technocrats control over decision
making process increasedmaking process increased
HarvardApproach adoptedHarvardApproach adopted ------ increased role ofincreased role ofprivate sectorprivate sector
Foreign assistance and loan was accorded inevitableForeign assistance and loan was accorded inevitable
Economic Development in 1960sEconomic Development in 1960s
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Strategy of increasing income of the rich people so that theyStrategy of increasing income of the rich people so that theyshould invest high profits into industrialization for achievingshould invest high profits into industrialization for achievinghigh industrial growthhigh industrial growth
Initial control over price, profits and imports abolished at laterInitial control over price, profits and imports abolished at laterstages. The number of imported goods on free list wasstages. The number of imported goods on free list was
increased.increased.Rather than adopting Export Bonus Scheme, MultipleRather than adopting Export Bonus Scheme, MultipleExchange rate system was followed to facilitate importersExchange rate system was followed to facilitate importers
IMF and WB pressurized for currency devaluation but notIMF and WB pressurized for currency devaluation but notacceptedaccepted
In the 3In the 3rdrd 55--years plan, priorities were given to export orientedyears plan, priorities were given to export orientedand import substituting industries. Agriculture sectorsand import substituting industries. Agriculture sectorsimportance recognized in the planimportance recognized in the plan
Neglecting social sector items like health, education, housing,Neglecting social sector items like health, education, housing,safe drinking water, communication, energy, water andsafe drinking water, communication, energy, water andsanitationsanitation
Economic Development in 1960s:Economic Development in 1960s:Adopted ApproachesAdopted Approaches
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Overall growth rate of GDP was 9.8% and GNP as 9.9%Overall growth rate of GDP was 9.8% and GNP as 9.9%Overall growth rate in agriculture sector was 9.5%Overall growth rate in agriculture sector was 9.5%
Overall growth rate in manufacturing was 11.3%Overall growth rate in manufacturing was 11.3%
Agriculture sector share further fell to 38.9%Agriculture sector share further fell to 38.9%
The manufacturing sector share further rose to 16%The manufacturing sector share further rose to 16%
Exports rose to USD 338 Mill. & imports to USD 690 Mill.Exports rose to USD 338 Mill. & imports to USD 690 Mill.
Loan burden rose to USD 2959 Million and debt servicesLoan burden rose to USD 2959 Million and debt servicesexpenses to USD 179 Million in 1969expenses to USD 179 Million in 1969--7070
Population growth rate increased to 2.93%Population growth rate increased to 2.93%
The rate of inflation was 4.1% in 1969The rate of inflation was 4.1% in 1969--7070Fall in agricultural production in 1965Fall in agricultural production in 1965--6767
Severe shortage of sugar in 1967Severe shortage of sugar in 1967--6868
Unequal distribution of income increased. Trickle down effectUnequal distribution of income increased. Trickle down effect
failedfailed
Economic Development in 1960s:Economic Development in 1960s:Achievements and NonAchievements and Non--AchievementsAchievements
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Fall ofAyub regime in 1969 and Gen. Yahya Khan took theFall ofAyub regime in 1969 and Gen. Yahya Khan took the
regime as Chief Martial Law Administratorregime as Chief Martial Law Administrator
War with India in 1971 and separation of East Pakistan onWar with India in 1971 and separation of East Pakistan on2020thth December 1971 under the leader ship of Z.A. ButtoDecember 1971 under the leader ship of Z.A. Butto
Z.A. Bhutto government toppled down on 5Z.A. Bhutto government toppled down on 5thth July 1977July 1977
Martial law period of General ZiaMartial law period of General Zia--ulul--Haq continuedHaq continuedduring 1970sduring 1970s
Challenges to Bhutto Government:Challenges to Bhutto Government:
To reconstruct the depressed and war affected economyTo reconstruct the depressed and war affected economy
To effectively deal with recessionary tendencies inTo effectively deal with recessionary tendencies inagricutlure and industrial sectorsagricutlure and industrial sectors
Search for new markets for textile sectorSearch for new markets for textile sector
Severe deficits in Balance of PaymentsSevere deficits in Balance of Payments
The IMFs strong pressure to devalue currencyThe IMFs strong pressure to devalue currency
Economic Development in 1970sEconomic Development in 1970s
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Introduction of Structural ChangesIntroduction of Structural Changes ------ Equality andEquality andequity is the corner stone of overall economic prosperityequity is the corner stone of overall economic prosperity
Drastic shifting from market economy to State CapitalismDrastic shifting from market economy to State Capitalism
Removal of regional disparities, unemployment, illiteracyRemoval of regional disparities, unemployment, illiteracy
Provision of basic health, water, education and recreation toProvision of basic health, water, education and recreation tomassesmasses
Slogan of From Growth to RedistributionSlogan of From Growth to Redistribution
Nationalization of banks, educational institutions, large scaleNationalization of banks, educational institutions, large scalemanufacturing units, ghee mills etc.manufacturing units, ghee mills etc.
Primate monopolies abolished in the market for cheaperPrimate monopolies abolished in the market for cheaperavailability of consumer goodsavailability of consumer goods
Wage security and higher wages considered as source ofWage security and higher wages considered as source ofproductivity increase and employment generationproductivity increase and employment generation
AU
AU--turn by Zia governmentturn by Zia government
Economic Development in 1970s:Economic Development in 1970s:Approaches AdoptedApproaches Adopted
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Structural changes in the economy introducedStructural changes in the economy introduced
Shifting from Medium Term Development Planning to AnnualShifting from Medium Term Development Planning to AnnualDevelopment PlansDevelopment Plans
Introduction of reforms in the land, education, industrialIntroduction of reforms in the land, education, industrial
labor, banking and administration sectorslabor, banking and administration sectors
Under administrative reforms, civil services were controlledUnder administrative reforms, civil services were controlled
Under IMF pressure currency was devaluedUnder IMF pressure currency was devalued
Export Bonus Scheme Introduced and Multiple ExchangeExport Bonus Scheme Introduced and Multiple Exchange
Rate System abolishedRate System abolished
Support price system introduced in the agriculture sector toSupport price system introduced in the agriculture sector toincrease agricultural productionincrease agricultural production
Strengthening of trade unionsStrengthening of trade unions
Economic Development in 1970s:Economic Development in 1970s:Adopted ApproachesAdopted Approaches
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PPP tried to implement socialism with increased role ofPPP tried to implement socialism with increased role ofpublic sector.public sector.
Emphasis shifted from establishing consumer basedEmphasis shifted from establishing consumer basedindustries to installation of Steel Mill in the countryindustries to installation of Steel Mill in the country
In social sector, more emphasis laid on education, waterIn social sector, more emphasis laid on education, water
supply, water sanitation, electricity and road undersupply, water sanitation, electricity and road underPeoples Works ProgramPeoples Works Program
Introduction of Integrated Rural Development ProgramIntroduction of Integrated Rural Development Programto increase agricultural production in the countryto increase agricultural production in the country
National Development Volunteer Program (NDVP wasNational Development Volunteer Program (NDVP wasintroduced to address unemployment problemintroduced to address unemployment problem
Because of rising inflation, industrial workers andBecause of rising inflation, industrial workers andgovernment employees faced lot of problems. PPPgovernment employees faced lot of problems. PPPgovernment took no measures to control inflation and/orgovernment took no measures to control inflation and/or
compensating these affected sections of the societycompensating these affected sections of the society
Economic Development in 1970s:Economic Development in 1970s:PPP Governments Economic StrategyPPP Governments Economic Strategy
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Liberal import policy resulted in industrial expansionLiberal import policy resulted in industrial expansion
Due to nationalization policies, the role of private sectorDue to nationalization policies, the role of private sectorin industrialization fell rapidlyin industrialization fell rapidly
Diversion of resources from manufacturing toDiversion of resources from manufacturing topurchasing land and gold and constructing shoppingpurchasing land and gold and constructing shoppingplazasplazas
Sluggish industrial development affected agri. SectorSluggish industrial development affected agri. Sector
also. Frequent incidence of floods, insect attack, alsoalso. Frequent incidence of floods, insect attack, alsoaffected the sectoraffected the sector
Economic Development in 1970s:Economic Development in 1970s:Achievements and NonAchievements and Non--AchievementsAchievements
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Incentive to private sector to revive their confidenceIncentive to private sector to revive their confidenceReduced interest rate and economic control, deReduced interest rate and economic control, de--nationalizationnationalization
Ginning factories, flour mills, rice husking mills first returnedGinning factories, flour mills, rice husking mills first returned
Introduction of tax rebate to exporters, SetIntroduction of tax rebate to exporters, Set--up of Exportup of Export
Processing Zones for attracting local & foreign Pak. investmentProcessing Zones for attracting local & foreign Pak. investment
Subsidies on agricultural inputs (fert., pesticide, seed, tractors)Subsidies on agricultural inputs (fert., pesticide, seed, tractors)
The process of Islamization of Economy initiatedThe process of Islamization of Economy initiated
Introduction of Zakat system on 10Introduction of Zakat system on 10thth February 1979February 1979
Introduction of interest free banking in the form of PLS a/c.Introduction of interest free banking in the form of PLS a/c.
Institutions like NIT, HBFC, ICP started working onInstitutions like NIT, HBFC, ICP started working on
Mudarba rather than interestMudarba rather than interest
Economic Development in 1970s:Economic Development in 1970s:Zia RegimeZia Regime--I (1977I (1977--80)80)
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Increase in exportsIncrease in exports6.4% growth rate in 19766.4% growth rate in 1976--77 to 6.5% in 197977 to 6.5% in 1979--8080
Increase in remittancesIncrease in remittances
The deficit in the Balance of Payments not decreasedThe deficit in the Balance of Payments not decreased
Budget deficit also increase, heavy deficit financingBudget deficit also increase, heavy deficit financingapproach adoptedapproach adopted
Gap between investment and saving sustained and levelGap between investment and saving sustained and levelof savings remained poorof savings remained poor
Private investment 4.73% of GNP in 1977Private investment 4.73% of GNP in 1977--78, 4.89% in 197978, 4.89% in 1979--8080
Private saving 11.25% of GNP in 1977Private saving 11.25% of GNP in 1977--78 to 9.05% in 197978 to 9.05% in 1979--8080
The share of large scale industries, 19.61% of GNP in 1976The share of large scale industries, 19.61% of GNP in 1976--77 to77 to15.08% in 197915.08% in 1979--8080
Low savings due to investment of remittance on luxuries andLow savings due to investment of remittance on luxuries andimported goods and increase in corruptionimported goods and increase in corruption
Economic Development in Zia Regime:Economic Development in Zia Regime:Achievements and NonAchievements and Non--AchievementsAchievements
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Private investment could not be boosted, because:Private investment could not be boosted, because:Higher costs of investmentsHigher costs of investments
High interest chargesHigh interest charges
Defective taxation systemDefective taxation system
Lower returns from investmentLower returns from investmentLimited market for many commoditiesLimited market for many commodities
Higher profits in commerceHigher profits in commerce
Tension between employers and employeesTension between employers and employees
Lack of facilities pertaining to infrastructureLack of facilities pertaining to infrastructurePerhaps greater demands for freedom by the investorsPerhaps greater demands for freedom by the investors
Sluggish industrial development affected agri. SectorSluggish industrial development affected agri. Sectoralso. Frequent incidence of floods, insect attack, alsoalso. Frequent incidence of floods, insect attack, alsoaffected the sectoraffected the sector
Economic Development in Zia Regime:Economic Development in Zia Regime:Achievements and NonAchievements and Non--AchievementsAchievements
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PeriodPeriod--II of ZiaII of Zia--ulul--Haq GovernmentHaq Government(1981(1981--85)85) ------ (Martial Law + Controlled(Martial Law + ControlledDemocracy)Democracy)
Prime Minister M. Khan JunejosPrime Minister M. Khan JunejosDemocratic Period (1986 to May 1988)Democratic Period (1986 to May 1988)
Prime Minister Benazir Bhuttos PeriodPrime Minister Benazir Bhuttos Period(Dec. 1988 to August 1990)(Dec. 1988 to August 1990)
Economic Development in 1980s:Economic Development in 1980s:Three Governments PeriodThree Governments Period
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Previous policies of building built private sectors confidencePrevious policies of building built private sectors confidenceto attract domestic investment continued. Two broadto attract domestic investment continued. Two broadcategories of inducements offered to private investorscategories of inducements offered to private investors
Measures to increase postMeasures to increase post--tax profits through offering tax holidays andtax profits through offering tax holidays andaccelerated depreciation allowancesaccelerated depreciation allowances
Facilitated utilization of capital like duty free imports of capitalFacilitated utilization of capital like duty free imports of capital
equipment and credit availability at low interest ratesequipment and credit availability at low interest ratesDespite these, the private sectors response was poor, especially inDespite these, the private sectors response was poor, especially inmanufacturing. Rather private sectors emphasis shifted to real estate.manufacturing. Rather private sectors emphasis shifted to real estate.
Some reasons of reluctance of private sector were:Some reasons of reluctance of private sector were:Uncertainty of Buttos future between 1977Uncertainty of Buttos future between 1977--79 and Zias79 and Zias
apprehensions regarding transfer of power by Zia to civiliansapprehensions regarding transfer of power by Zia to civiliansShortly after Buttos execution, Soviet invasion on Afghanistan createdShortly after Buttos execution, Soviet invasion on Afghanistan createdregional instabilityregional instability
Movement for restoration of democracy started in the countryMovement for restoration of democracy started in the country
After MRD failure, decision of controlled Martial law by inductingAfter MRD failure, decision of controlled Martial law by inductingcivilians in governmentcivilians in government
Fear of nationalization continuedFear of nationalization continued
Economic Development in 1980s:Economic Development in 1980s:PeriodPeriod--II of Zia Govt. (1981II of Zia Govt. (1981--85)85)
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Fear of nationalization continuedFear of nationalization continued
Despite insistence from industrialists, banks were not deDespite insistence from industrialists, banks were not de--nationalizednationalized
Islamic reforms increased the power of banks to intervene by new companyIslamic reforms increased the power of banks to intervene by new companyordinance in 1984ordinance in 1984
Taxation structure remain unchanged and discouraged big investorsTaxation structure remain unchanged and discouraged big investors
Energy crisis also played significant role in discouraging investmentEnergy crisis also played significant role in discouraging investment
A dramatic increase in remittances from the Middle East due to delinkingA dramatic increase in remittances from the Middle East due to delinkingof rupee with dollar in January 1982. By 1984, remittances became theof rupee with dollar in January 1982. By 1984, remittances became thelargest source of foreign exchange earningslargest source of foreign exchange earnings
Due to high remittances, living style abruptly changedDue to high remittances, living style abruptly changed
Due to rapid urbanization and rise in income, the demand for electricityDue to rapid urbanization and rise in income, the demand for electricityincreased. Energy supply increased at 11% visincreased. Energy supply increased at 11% vis----vis demand increase by 24%.vis demand increase by 24%.Investment in real estate also played a role in it.Investment in real estate also played a role in it.
Good weather conditions gave high agricultural yieldsGood weather conditions gave high agricultural yields
Resulted in record production of four major crops, i.e. wheat, cotton, rice andResulted in record production of four major crops, i.e. wheat, cotton, rice andsugarcane in 1981 & 1982sugarcane in 1981 & 1982
SelfSelf--sufficiency in wheat achievedsufficiency in wheat achieved
Agricultural Prices Commission established in 1983Agricultural Prices Commission established in 1983
DeDe--rationing of wheat and sugar from ration depotsrationing of wheat and sugar from ration depots
Economic Development in 1980s:Economic Development in 1980s:PeriodPeriod--II of Zia Govt. (1981II of Zia Govt. (1981--85)85)
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1977 land reforms also cancelled1977 land reforms also cancelled
Provision of basic health, water, education and recreation to massesProvision of basic health, water, education and recreation to masses
Economic Problems Faced:Economic Problems Faced:
Low saving potentials. Domestic saving rate fell to 5.4% in 82Low saving potentials. Domestic saving rate fell to 5.4% in 82--8383
Shortages in energy sector developed. NonShortages in energy sector developed. Non--construction of Kalabagh damconstruction of Kalabagh dam
Rapid urbanization and rise in income, the demand for electricityRapid urbanization and rise in income, the demand for electricityincreased. Energy supply increased at 11% visincreased. Energy supply increased at 11% vis----vis demand rise by 24%vis demand rise by 24%
Since 1980, both industrial and domestic consumers faced electricitySince 1980, both industrial and domestic consumers faced electricityshortageshortage
1977 Land Reforms Cancelled.1977 Land Reforms Cancelled.
Private sector role reduced. No commendable response from privatePrivate sector role reduced. No commendable response from private
sectorsectorSoviet invasion after Bhuttos hanging faced. Influx of refugeesSoviet invasion after Bhuttos hanging faced. Influx of refugees
MRD agitation + fear of reMRD agitation + fear of re--nationalization + unchanged taxationnationalization + unchanged taxationstructure discouraged investmentstructure discouraged investment
Banks were not denationalizedBanks were not denationalized
Social sector suffered at the expense of defense, debt servicingSocial sector suffered at the expense of defense, debt servicing
Economic Development in 1980s:Economic Development in 1980s:PeriodPeriod--II of Zia Govt. (1981II of Zia Govt. (1981--85)85)
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PM Junejos Democratic Government 1986PM Junejos Democratic Government 1986 May 1988May 1988Five points program initiatedFive points program initiated
Establishment of Islamic democratic systemEstablishment of Islamic democratic system
Reduction in unemploymentReduction in unemployment
Removal of illiteracyRemoval of illiteracy ------ adult literacy programsadult literacy programsEradication of corruption, injustice and other social evils from theEradication of corruption, injustice and other social evils from thesocietysociety
Strengthening of national prestige and integrityStrengthening of national prestige and integrity
Establishment of National Taxation Reforms CommissionEstablishment of National Taxation Reforms Commission
to increase collectionto increase collectionFor further denationalization, Regulation commission setFor further denationalization, Regulation commission setup in 1985 which recommended deregulation of edible oilup in 1985 which recommended deregulation of edible oiland fertilizer unitsand fertilizer units
Slight improvement in balance of paymentsSlight improvement in balance of payments
Economic Development in 1980s:Economic Development in 1980s:Approaches Adopted by Junejo RegimeApproaches Adopted by Junejo Regime
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PM Benazir Bhutto Govt. Dec. 1988 toA
ug. 1990PM Benazir Bhutto Govt. Dec. 1988 toA
ug. 1990Zia died on 17Zia died on 17--88--1988, new elections held, PPP win1988, new elections held, PPP winCircumstances facedCircumstances faced
Uncertain political situation in the countryUncertain political situation in the country
Ethnic conflicts and strife in Karachi and HyderabadEthnic conflicts and strife in Karachi and Hyderabad
Unexpected floods during September in Punjab and SindhUnexpected floods during September in Punjab and Sindh
New industrial policy announced in April 1989 with newNew industrial policy announced in April 1989 with newincentives to attract investment.incentives to attract investment.
Under the Chairmanship of PM, an investment board wasUnder the Chairmanship of PM, an investment board wassetup to supervise investment decisions.setup to supervise investment decisions.
Low agriculture growth due to low production of crops likeLow agriculture growth due to low production of crops likewheat, pulses and chilies in early years but goodwheat, pulses and chilies in early years but goodproduction of cotton.production of cotton.
Adhoc approach in planning was followedAdhoc approach in planning was followed
Benazir Bhuttos dismissed on 6Benazir Bhuttos dismissed on 6thth August 90August 90
Economic Development in 1980s:Economic Development in 1980s:Approaches Adopted by BB RegimeApproaches Adopted by BB Regime--II
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Nawaz Sharif PeriodNawaz Sharif Period--II ------ Nov. 1990Nov. 1990 --April 1993April 1993
Benazir Bhutto 2Benazir Bhutto 2ndnd PeriodPeriod Oct. 1994Oct. 1994 -- Nov. 97Nov. 97
Nawaz Sharif 2Nawaz Sharif 2ndnd PeriodPeriod Feb. 97 to Oct. 99Feb. 97 to Oct. 99
Economic Development in 1990s:Economic Development in 1990s:
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Lot of economic and social reforms announcedLot of economic and social reforms announced
Economic reforms announcedEconomic reforms announced
Privatization and deregulation policyPrivatization and deregulation policy
Export policyExport policy
Taxation policyTaxation policy
Policy of selfPolicy of self--sufficiencysufficiency
Industrial policyIndustrial policy
Policy for exchange and system of paymentsPolicy for exchange and system of payments
Privatization of nationalized commercial banksPrivatization of nationalized commercial banks
A number of new banks opened (Soneri Bank, Cres Bank, Mehran Bank,A number of new banks opened (Soneri Bank, Cres Bank, Mehran Bank,Bank of Bolan, Khyber Bank, Askari Commercial Bank, BankAlBank of Bolan, Khyber Bank, Askari Commercial Bank, BankAl--HabibHabibetc.)etc.)
115 industrial units of cement, ghee, chemical, light engineering and115 industrial units of cement, ghee, chemical, light engineering andceramics were privatized in three phasesceramics were privatized in three phases
Inviting private investment in production of electricity, air services,Inviting private investment in production of electricity, air services,
construction and telecommunicationconstruction and telecommunication
Economic Development in 1990s:Economic Development in 1990s:Nawaz Sharif GovernmentNawaz Sharif Government--II
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Foreign private investment attracted by measures like:Foreign private investment attracted by measures like:
Foreigners and Pakistanis working abroad can invest in any industryForeigners and Pakistanis working abroad can invest in any industrywithout prior permission except defense, ammunition, currency andwithout prior permission except defense, ammunition, currency andalcohol sectorsalcohol sectors
Foreigners can even purchase 100% shares of any projectForeigners can even purchase 100% shares of any project
Any foreigner can take profits to his country or closes his businessAny foreigner can take profits to his country or closes his business
without permission from State Bank of Pakistan. This was notwithout permission from State Bank of Pakistan. This was notapplicable to seas, air and insurance companiesapplicable to seas, air and insurance companies
Any foreigner can get loan from any foreign money market forAny foreigner can get loan from any foreign money market forinvestment in Pakistaninvestment in Pakistan
Those Pakistani working abroad can open their accounts in theThose Pakistani working abroad can open their accounts in the
country in the form of foreign currencies.country in the form of foreign currencies.Every body can invest without any permission and no body will askEvery body can invest without any permission and no body will askabout the source of investment who invest till 30about the source of investment who invest till 30thth June 1992. InvestorsJune 1992. Investorsin urban areas given tax holiday for 3 years and rural areas for 5 yearsin urban areas given tax holiday for 3 years and rural areas for 5 years
The machinery imported for installation in backward regions will beThe machinery imported for installation in backward regions will begiven 100% concession in custom duty and 50% for installation ingiven 100% concession in custom duty and 50% for installation in
urban areasurban areas
Economic Development in 1990s:Economic Development in 1990s:Nawaz Sharif GovernmentNawaz Sharif Government--II
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Growth rateGrowth rateSaving and InvestmentSaving and Investment
Price levelPrice level
Foreign trade and BOPForeign trade and BOP
Government revenuesGovernment revenues
BankingBanking
Economic Development in 1990s:Economic Development in 1990s:Achievement/NonAchievement/Non--Achievement of Nawaz GovernmentAchievement of Nawaz Government--II
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Pervaiz Musharraf Government (1999Pervaiz Musharraf Government (1999--2008)2008)
Zardari Government (2008 to date)Zardari Government (2008 to date)
Economic Development in 1990s:Economic Development in 1990s:
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At the time of independence, agriculture sector contribution
At the time of independence, agriculture sector contributionwas highly substantialwas highly substantial
Agricultural commodity prices were very lowAgricultural commodity prices were very low
Sectoral terms of trade were against agriculture sectorSectoral terms of trade were against agriculture sector
Policy makers emphasis was on industrial developmentPolicy makers emphasis was on industrial development
From 1947From 1947--58, average agriculture sector growth rate was58, average agriculture sector growth rate was2.8% vis2.8% vis----vis industrial sector growth as 9.6%vis industrial sector growth as 9.6%
Prices of imports remained high due to protection of importPrices of imports remained high due to protection of importsubstituting industriessubstituting industries
TOT of agriculture sector in terms of industrial sector wasTOT of agriculture sector in terms of industrial sector wasless than 2/5less than 2/5
According to Professor Lewis, in 1950s, industrial sector wasAccording to Professor Lewis, in 1950s, industrial sector wasgrown at the expense of agriculture sectorgrown at the expense of agriculture sector
The low input low output syndrome led to increase prices ofThe low input low output syndrome led to increase prices of
agricultural goodsagricultural goods
Performance of Pakistan Agri. Sector:Performance of Pakistan Agri. Sector:Period From 1947 to 1958Period From 1947 to 1958
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Major shift of irrigated agriculture from rainfall canalMajor shift of irrigated agriculture from rainfall canalirrigation system to reservoir based canal irrigation systemirrigation system to reservoir based canal irrigation system
Initiation SCARP project further increased water availabiltyInitiation SCARP project further increased water availabiltyat farm gateat farm gate
Investment in agricultural education, research and extensionInvestment in agricultural education, research and extension
was also increasedwas also increasedAs a result agricultural production increased at 4.1% perAs a result agricultural production increased at 4.1% perannumannum
Increase in agricultural income lead to agriculturalIncrease in agricultural income lead to agriculturaldevelopment along with increasing demand for industrialdevelopment along with increasing demand for industrial
goodsgoods
The use of agricultural machinery increased due to subsidizedThe use of agricultural machinery increased due to subsidizedprovision of tractorsprovision of tractors
Performance of Pakistan Agri. Sector:Performance of Pakistan Agri. Sector:Period From 1959 to 1969Period From 1959 to 1969
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