Analysis of Pakistani Industries

Topics: International economics, Macroeconomics, Current account Pages: 14 (5793 words) Published: December 31, 2012

Economic History of Pakistan

Submitted to: Sir Saeed Ahmad Butt
Submitted by: Dil Muhammad
Roll No: 0487-BH-HIS-10
Department: History
Semester: FIFTH (5th)


Title Page Introduction 3

Gross Domestic Product 3

Inflation 6

Unemployment 8

Balance of Payments 10

Foreign Trade 13

Exchange Rates 15

Conclusion 16 References 17

At partition in 1947, the new government lacked the personnel, institutions, and resources to play a large role in developing the economy. To rise from such a state surely is a great task, especially when one’s borders are also insecure. Since then Pakistani officials have sought a high rate of economic growth in an effort to lift the population out of poverty. Rapid industrialization was viewed as a basic necessity and as a vehicle for economic growth. For more than two decades, economic expansion was substantial, and growth of industrial output was striking. In the 1960s, the country was considered a model for other developing countries. Rapid expansion of the economy, however, did not alleviate widespread poverty. In the 1970s and 1980s, although a high rate of growth was sought; greater attention was given to income distribution. In the early 1990s, a more equitable distribution of income remained an important but exclusive goal of Government policy.

The disruptions caused by partition, the cessation of trade with India, the strict control of imports, and the overvalued exchange rate necessitated immediate action on the part of the government. Government policies afforded liberal incentives to industrialization, while public development of the infrastructure complemented private investment. Some public manufacturing  plants were established by government holding companies. Manufacturing proved highly profitable, attracting increasing private investments and reinvestment of profits. Except for large government investments in the Indus irrigation system, agriculture was left largely alone, and output stagnated in the 1950s. The broad outline of government policy in the 1950s and early1960s involved squeezing the peasants and workers to finance industrial development. Much of the economy, and particularly industry, was eventually dominated by a small group of people, who were largely traders who migrated to Pakistan's cities, especially Karachi, at partition. These refugees brought modest capital, which they initially used to start trading firms. Many of these firms moved into industry in the 1950s as a response to government policies. Largely using their own resources, they accounted for the major part of investment and ownership in manufacturing during the first two decades after independence. Between 1947-1952 Pakistan’s average GDP was just 3%, however, in 1952, Korean War broke out and the overall demand of goods increased worldwide and Pakistan benefitted from it significantly with its GDP increased at a whooping rate of 9.4%. After Korean War ended there was a worldwide recession. However, Pakistan was the sole exporter of Jute at that time and Pakistan’s conditions didn’t get worse. Till 1958 Pakistan maintained an average GDP of 3%.If one examines Pakistan...

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