Causes of Industrial Backwardness In Pakistan | CSS Pakistan Affairs

Notes

The causes of industrial backwardness in Pakistan are varied and complex. The Government
of Pakistan since 1947 is trying to develop industries and infrastructure facilities for the
growth of industrial sector, yet it has not achieved success to the desired extent. In the last
over three decades the main obstacles which have slowed and retarded industrial
development in Pakistan are as follows:

Table of Contents

Political Instability:
Lack of Capital:
Limited Market:
Peoples’ Liking to Foreign Goods:
Under Utilization of labors’ Potential:
Communication and Transportation:
Technical Know- How:
Energy Crisis:
Economic Restrictions:
Lack of Modern Technology:
New Competitors:
Low Foreign Investment:
Granting MFN Status to India:
High interest Rate:

Political Instability:

The first and the foremost cause of the backwardness of the industry has been the political
instability which has led to instability of policies. Each successive government unveils its
own policies and disposes of all policies of previous government after it takes over. In the
wake of such negligence from government’s part, the industrial sector is suffering a great
setback.

Lack of Capital:

Furthermore the lack of capital is a major hurdle in attaining self-sufficiency in industrial

sector. Every industry requires a large sum of capital to keep its wheel moving. But due to
the lack of capital and loan facilities the progress of industry is lingering.

Downloaded from www.csstimes.pk | 1

 Causes of Industrial Backwardness In Pakistan | CSS Pakistan Affairs
Notes

Check Also: Agriculture of Pakistan | CSS Pakistan Affairs Notes

Limited Market:

Limited market is also the major cause of industrial decline. Pakistan manufacturing sector
have high costs, low labor productivity and inefficient production processes. There is a
threat by the Chinese and Indian manufacturers to gain most of the market share. Owing to
government’s indifference, our domestic markets have not expanded to an extent to
accommodate the home-made goods.

Peoples’ Liking to Foreign Goods:

Moreover our peoples’ liking to foreign goods is also giving a severe blow to our industry.

Under Utilization of labors’ Potential:

The proper utilization of the capabilities of the labor plays a very vital role in the progress of
the industry. By fully utilizing labor capabilities the production can be improved and
increased. But unfortunately, under-utilization of labors’ potential on right place is causing a
great loss and industry is lagging behind to compete with the world.

Communication and Transportation:

Communication plays a very important and vital role in industry’s progress. If

communication is in disorder, industry fails to survive. Due to lack of transportation and

Downloaded from www.csstimes.pk | 2

 Causes of Industrial Backwardness In Pakistan | CSS Pakistan Affairs
Notes

absence of basic infrastructure like roads, water supply, sanitation and proper disposal of
waste water and solid wastes, our industry is lagging behind. Lack of basic infrastructure
along with the expensiveness of means of transportation and communication is also
contributing to industrial failure.

Check Also: Irrigation System of Pakistan | CSS Pakistan Affairs Notes

Technical Know- How:

The significance of technical knowledge to industry cannot be negated. Industrial progress

is dissatisfied in the absence of workers equipped with technological knowledge. The
scarcity of such technically experienced labor force makes the journey towards
industrialization challenging.

Energy Crisis:

Energy crisis is further a bolt from blue for our industry. Our country is starving in
electricity, oil and gas which are the most essential requirements to run industry. In spite of
having vast resources of gas, oil, coal etc. our country is unable to provide uninterrupted
supply of fuel to industry which is creating havoc to this sector.

Economic Restrictions:

Economic restrictions imposed by donor countries and lack of effective exploitation of the
World Market are also contributing to our industry’s failure.

Lack of Modern Technology:

To a large extent, all segments of the textile sector from cotton cultivation to manufacturing
of garments lack modern technology.

APTMA has highlighted that the Pakistan textile industry faces tough competition from the
Indian, Bangladeshi and Chinese textile industries through modern equipment and
machinery. The inability to timely modernize the equipment and machinery has led to the
decline of Pakistani textile competitiveness.

Check Also: CSS Pakistan Affairs Notes | Power Resources of Pakistan

New Competitors:

Pakistan is facing new competitors (Bangladesh, Vietnam and Turkey) in industrial sector.

Downloaded from www.csstimes.pk | 3

 Causes of Industrial Backwardness In Pakistan | CSS Pakistan Affairs
Notes

Though we cannot avoid competition but we can always stay ahead of them by reforming
our strategies and educating our entrepreneurs so as to move one step forward in every
aspect.

Low Foreign Investment:

Low foreign and local investment is a matter of concern. Due to terrorism and security
concerns in Pakistan the foreign investors are reluctant to invest in industries so that net
foreign investment in Pakistani industries is only 0.5% of GDP. Not only local businessmen
but also foreign investors are not ready to set up new industries and make investments.
They are reluctant to invest their time and money in the country which is lacking in basic
infrastructure and where law and order situation is deteriorating day by day. All these
things are acting as repellent for industrialists and in turn industrial development.

Granting MFN Status to India:

Granting MFN status to India will negatively affect the domestic industry of Pakistan as the
industry will have to face tough competition in the terms of price and quality. The imported
finished products from India will be available at lesser price as compared to our
domestically produced items. The major reason is our high cost of production which
includes cost of energy, raw material, cost of capital and high wage rate as a result of
inflation. However the better option can be the import of raw material, modern technology
and equipment for lowering the cost and quality of our own products and thus increasing
the exports and becoming competitive in the local market as well.

High interest Rate:

Bangladesh, India and China enjoy comparatively low interest rates than Pakistan. The high
interest rates increase the cost of capital that is a discouraging factor for the businessman
and future entrepreneurs. This also demotivate the foreign direct investment.

Check Also: CSS Pakistan Affairs Notes | Natural Resources of Pakistan

Please Share your comments using Facebook ID

Downloaded from www.csstimes.pk | 4

Causes of Industrial Backwardness In Pakistan | CSS Pakistan Affairs
Notes

Downloaded from www.csstimes.pk | 5