MAJOR ISSUES IN

PAKISTAN ECONOMY
Lec#1
Economy
• The large set of inter-related production and consumption
activities that aid in determining how scarce resources are
allocated

• All activities related to production, consumption, and trade

goods and services in an area
Types of Economy
• Market based: allows goods to flow freely through in
market. This type has a tendency to naturally balance
itself as price of one sector for an industry rise due to
demand

• Command based: political agent , which controls the price

and distribution of goods
Assessing Pakistan's development
• How to evaluate the performance for almost more than six
decades?
• How we can claim that Pakistan today is far better than it
was in 1947?
• What should b criteria of a country to evaluate its growth?
• Look at its history and than evaluate?
Structural changes
• Pakistan in 1947 and now in 21st century

• Pakistan after 1971

• Changes in Pakistan’s key economic structure

Five Decades

• Pakistan’s economy in five decades

Laying the foundation (1947-58)
• In 1947, Pakistan was agrarian, undeveloped newly
independent country with little industry, few services and
no infrastructure

• Main concern was one of survival, where adverse

international condition and domestic situation.

• Million of refugees
Continued..
• The bureaucracy tried to keep Pakistan on its feet
• The primary task was to build an economy
• Private sector had no capital to lead an industrial
revolution
The Decade of Development (1958-68)
• If we examine Pakistan’s economic growth, 1960’s stands
out as the decade with best performance
• The rate of growth in 60’s and 80’s seems to be close in
most of the categories
• Significant leaps were made in industrial and agricultural
production
• In large scale manufacturing 20% growth rate was seen
Continued…
• Critics point out agriculture sector in central Punjab and
industry in Karachi
• Social sectors were neglected
• There was no increase in real wages and social equity
was of little concern
• Private sector was strengthened and controlled
bureaucratically
The bad luck years (1971-88)
• Nationalization was major cause for downward
• The economic loss of east Pakistan
• The devaluation of Pakistani rupee by 120% in 1972
• However Bhutto’s policies laid the foundation for future
growth and benefitted the economy
The Second military Govt.(1977-88)
• Civil-military bureaucracy played important role
• High industrial growth came in by Bhutto’s policies under
public sector investments
• The soviet invasion and Pakistan role for USA also helped
to grow economy
The era of structural adjustments(1988-
onwards)
• After the death of General Zia, democratic govt. came in
power
• Policies of Benazir Bhutto and Sharif's govt.
• In 1999, General Musharraf came in power and process
of liberalization, openness, privatization and market
friendliness
• World after September 11