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Economic Development
Economic Development
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Economy of Pakistan Notes
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Economy of Pakistan Notes
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Economy of Pakistan Notes
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Economy of Pakistan Notes
1. Natural Resources
Natural resources are one of the three main factors of
production the other two are labor and capital. Natural
resources include area of land, forests, rivers, climate and
mines. If a country is rich in better quality of all natural
resources, it will develop economically at a fast speed.
2. Capital Formation
It is the process of adding net physical capital stock of an
economy. Capital formation creates productive potential
for future production. Capital formation has three stages
namely
savings
financial institutions and capital market for
mobilization of savings
act of investment in machinery and buildings.
3. Specialization
Output is greater as a result of specialization.
Specialization enables an economy to use its scarce
resources more efficiently, thereby producing larger
volume of goods and services. It increases the rate of
economic development of a country.
4. Technology
Inventions and innovations reduce manufacturing and
distribution costs. Technological progress serves to
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Economy of Pakistan Notes
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Economy of Pakistan Notes
2. Political Stability
Strong and stable Governments can prepare five-year
development plans, they can enforce monetary and fiscal
policies and change social attitudes and institutions, which
may be progressive one. The frequent changes in Govt.
setup results in the lack of concrete economic policy
decisions.
3. Administrative Efficiency
Educated, trained, skillful and hardworking Govt. officers
can push development of a country at a very fast speed,
whereas untrained administration of a country retards the
economic development.
4. Economic Freedom
Private ownership of resources and maximum freedom to
deploy these resources in line with profit signals create
strong incentives to work hard. If every body is allowed to
participate in economic activity, then due to competition
the rate of economic development will increase.
5. Right of Private Property
Private ownership of the means of production results in
the increase in supply of goods and services. In order to
own and accumulate profit and property, people work
hard, thus trade and business activity flourishes.
Economic Development
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Economy of Pakistan Notes
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Economy of Pakistan Notes
1. Cotton
Cotton is not only an export-earning crop but also provides
raw material to the local textile industries. Pakistan is one
of the largest cotton producing and consuming countries in
the world. Under the WTO post quota scenario, the
country appears to have the potential of becoming a
leading force in the worldwide cotton and textile market
place. There is also growing realization in the country that
future gains in value added from cotton are only possible
through qualitative improvement in raw cotton. Cotton
accounts for 8.6 percent of the value added in agriculture
and about 1.9 percent in GDP.
Factors responsible for the decline in cotton production
include:
Excessive rain at the time of sowing.
High temperature at flowering stage.
Late wheat harvesting resulting in decline of area
under the crop.
Pest attack in some cottons growing areas of Punjab
and Sindh.
2. Rice
Rice is an important food cash crop. It is also one of the
main export items of country. It accounts for 5.7 percent of
the total value added in agriculture and 1.2 percent to
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Economy of Pakistan Notes
GDP. Area and production target of rice for the year 2006-
07 were set at 2575 thousand hectares, 0.2 percent higher
than the target and 4% higher than last year. The size of
the crop estimated at 5438 thousand tons, 2.0 percent
lower than the last year and 4.5 percent lower than the
original target.
3. Sugarcane
Sugarcane crop serves as a major raw material for
production of white sugar and gur. Sugarcane crop is
highly water-intensive and an important crop. Sugar
production in the country mostly depends on this crop,
though a small quantity of sugar is also produced from
sugar beet. Its share in value added of agriculture and
GDP are 3.5 percent and 0.7 percent respectively.
The higher sugarcane production is the result of increase
in area, timely rains and judicious application of fertilizer,
improvement in cultural practice, better management and
attractive prices offered by the millers.
4. Wheat
What is the main staple diet of country’s population and
largest grain crop of the country. It contributes 14.4
percent to the value added in agriculture and 3.0 percent
to GDP. Area and production target of wheat for the year
2006-07 were set at 8459 thousand hectares and 22.5
million tons respectively. Wheat was cultivated on an area
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Economy of Pakistan Notes
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Economy of Pakistan Notes
Importance of Industries
Industries play a dominant role in the economic
development of a country. Western countries enjoy all
comforts and luxuries of life due to higher productivity of
goods and services in their countries. This is due to
industrialization. Unfortunately there were no industries
when Pakistan came into being but now wit the efforts of
Govt. and the people there is an improvement in this
regard however more is required to be done.
The overall manufacturing sector continued on its strong
positive trend during the current fiscal year 2006-07.
Overall manufacturing recorded and impressive and broad
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Economy of Pakistan Notes
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Economy of Pakistan Notes
Disadvantages of Privatization
1. Increase in Tax Evasion
Private sector generally tries to avoid payment of taxes.
Thus privatization of enterprises will result in the decrease
of tax income.
2. Concentration of Wealth
Privatization of large industrial units and services sector
such as banks and insurance companies will increase
concentration of wealth in private hands. It means only
rich people will reap the fruits of industrialization and the
society will be divided between “haves and have-nots”.
3. Exploitation by Private Sector
Privatization will result in exploitation by rich people. They
may charge more prices for their goods and services.
They may terminate workers to reduce cost of production.
Thus different types of exploitation may be started and the
concept of welfare state for Pakistan will be jeopardized.
4. National Security Endangered
Telecommunication, Civil Aviation (Airlines) and railways if
privatized then it would be a security risk for the country.
Natural Resources
National resources are backbone for the industrial
development of a country. These resources play a
dominant role in accelerating in the pace of progress and
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Economy of Pakistan Notes
2. Petoroleum
Petroleum or Crude, oil is used in transport, power-
generating stations, in iron and steel furnace Petroleum is
known as black liquid gold. Of the total requirement only
40 percent is produced with the country and the rest is
imported from abroad. Crude oil is found at Jhelum,
Rawalpindi, Badin, Attock and Mianwali.
3. Coal
Coal is used in thermal power station and in furnaces for
making bricks. About 80 percent of cement industry has
now switched over to indigenous coal from furnace oil that
has saved considerable foreign exchange being spent on
the import of furnace oil. Quality of coal is not very good. It
is available at Dandot, Makerwal, Harnai, Lakhra (Sindh).
The coalfield in the Sindh province has huge coal
resources of about 175 billion tones. In view of the
anticipated shortfall of electricity and other energy
resources during the next 10 years, the maximum
utilization of coal would be required in power generation
and gasification. To ascertain commercial viability of
mining coal from Thar (Sindh), German consultants have
completed a mining feasibility on a specific block in Thar
Coalfield.
The coalfields in the Sindh province have coal resources
estimated at 175 billion tones. Due to high cost of
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Economy of Pakistan Notes
8. Fertilizers.
9. Plastic material.
10. Paper Board
11. Iron ore and steel.
12. Pharmaceutical products.
Imports of Pakistan
Pakistan’s imports are also highly concentrated in few
items namely, machinery, petroleum and petroleum
products, chemicals, transport equipment, edible oil, iron
and steel, fertilizer and tea. These imports accounted for
73% of total imports during 2006-07. Among these
categories machinery, petroleum/petroleum products and
chemicals accounted for 53.4% of total imports.
Direction of Imports of Pakistan
Pakistan’s imports are highly concentrated in few
countries. Over 40 percent of them continue to originate
from just seven countries namely, the USA, Japan,
Kuwait, Saudi Arabia, Germany, UK and Malaysia. Saudi
Arabia is emerging as major supplier to Pakistan followed
by the USA and Japan. The shares of USA and Japan,
with some fluctuations, exhibited a declining trend
because of the shift in the import of machinery/capital
goods and raw materials to other sources. On the other
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Economy of Pakistan Notes
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Economy of Pakistan Notes
Telephone
Radio Broadcasts
Television
Information Technology-Computer
Importance of Transport and Communications
1. Helps in the expansion of internal and foreign trade.
2. Increases employment opportunities.
3. Increases government revenues.
4. Develops unity and brotherhood among the people.
5. Helps in the improvement of law and order situation.
6. Stabilizes the price level.
7. Reduces cost of production of goods.
8. Helps in the expansion of education.
9. Maintains the sound defense of the country.
10. Develops the political awareness.
Importance of Road Transport
Road transport is backbone of Pakistan’s transport
system, accounting for 90 percent of national passenger
traffic and 96 percent of freight movement. Over the past
ten years, road traffic, both passenger and freight, has
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