Prepared by

M.Imran Sattar 2013-ag-3010 BSC(HONS.) Agri. & Resource Economics

PRESENTATION TOPIC:

Economic Growth Pattern Of Pakistan

OUTLINE: Introduction to Growth & Development Structural Changes in Pakistan Economic Growth in Different Eras World Economic Growth & Recessions Comparison of Indian & Pakistan Economy Problems of Pakistan”s Economy Solutions/Policies Conclusion

1. Introduction to Growth & Development

Totally different ConceptsEconomic Growth Development1. Increase in the capacity of an economy to

produce goods and services,compared from one period of time to another.

1. Multidimensional process involving major changes in social structures,popular attitudes and national institutions as well as the acceleration of economic growth, reduction of inequality and eradication of poverty.

2. Quantitative idea. 2. Qualitative as well as Quantitative.

3. Goal of Goverments. 3. Choice of people.

4. Risk of Environmental damage 4. Avoid such risks

Objectives of Economic growth Higher living standards More employment Higher incomesObjectives of Development To increase the availability & distribution of basic life

sustaining goods. To raise level of livings To expand the range of economic and Social ChoicesMeasurement Economic growth is measured as GDP Development is measured by HDI

1.1 How to measure Economic growth of a country overtime?Different Criterias are used to evaluate the Growth of a

Country.Some of them are as follows:1. Examine the history & process of development2. Examine that what was the potential of a country &

was that fulfilled or not?3. Make Comparison of a country with other Countries4. Examine the consequences & Results of economic

growth

2. Structural Changes in PakistanSr.No Indicator 1947-48 2014-15

1. Population(million) 30.0 191.7Urban population 6% 36%

2. Sectoral contribution to GdpAgriculture 53.2% 20.9%Industry 7.8% 20.3%Services 39% 58.8%

3. Sectoral Labour Force ContributionAgriculture 65.3% 43.5%Industry 9.5% 13.3%Services 25.2% 43.2%

4. Income(us $)Per capita Income 85 1512

Current Rankings of PakistanOut of 180 Nations6th Most populous Nation59th biggest Economy in terms of GDP27th in terms of purchasing power parity46th Poorest Nation in term of GNP per capita141th worst performer in term of HDI

Sr.No Indicator 1947-48 2014-155. Composition of Exports

Primary Commodities 99.2% 18%Manufacturing ------------------ 55%

6. EducationLiteracy rate 15% (1951) 58%Female literacy rate 12% (1951) 16%

Source:1.Federal Bureau of Statistics,Government of Pakistan2.Economic Survey Of Pakistan,2014-15

Econimic Growth Of Pakistan in Different Eras

1. Laying foundations (1947-58) Predominantly agrarian newly independent nation, with little industry, few

services and no manufacture. Decade of management and planning economic policy and planning witnessed the attempts of a bureaucracy to

keep Pakistan on its feet State sector as the private sector was still in embryo Million of Refugees Provision of basic necessities was the primary task First five-yearly plan based on theory of cost of production value Devaluation of PKR, India refused to Exchange in PKR

Korean war led to economic boom in local economy Assassination of Liaqat Ali Khan in October,1951 Five-yearly plan collapsed due to lack of funds & inadequate Staff Shortage of Consumer goods & Sharp fall in production due to

Monsoon floods in 1951-52 In 1953, PM Khawaja Nazimuddin ended five year plan Requested United States & Other friendly countries for assistance Revival of five-yearly plan by PM Muhammad Ali Bogra in 1955 Plan focused Agricultural Development & Development efforts in

less developed areas PM Huseyn Suhrawardy Of AWAMI LEAGUE gave priority to

Agriculture, Food & Social Development Average GDP growth rate remained 3%

The Decade of Development: 1958-1968

In October 1958, First Military Dictator, AYUB KHAN, assumed complete control of state 2nd Five year plan focused on Industrial

Developlment, Advancement in Literature and Science Average GDP growth rate jumped to 6% By 1969 manufacturing Exports were higher than the

exports of Thailand, Malaysia & Indonesia combined Manufacturing & Agriculture sector grew at 9% & 4%

respectively Income inequality, Wealth Concentrated in 22

families of West Pakistan,Fuelled resentment among Bengalis

1965 Indo-Pak War over Kashmir FDI declined, Economc Constraints imposed on Pakistan 3rd Five year plan, ocused on enhancing Capabilities of Private

Sector Devastation of Farming Class Awami League Swept the 1970s Election in East Pakistan Martial law imposed by Yahya Khan Civil War ended in Emergence of Independent state of

Bangladesh

Table: GDP of Pakistan from 1958-1968Year

1958

1959

1960

1961

1962

1963

1964

1965

1966

1967

1968

GDP

5.47 O.88

4.89 6.01 7.19 6.48 9.38 7.56 3.08 6.79 6.49

Source: Federal Bereau of Pkistan

The bad luck years: 1971-77

Reasons of Badluck Loss of East Pakistan Large Devaluation Oil Price Shock in 1973 Devastating Floods in 1974 Cotton Crop Failure Large Scale Nationalization Income inequality & inflation

accelerated (16%)

Achievements Foundations for Future growth

& Development Basic industries were setup Base for Capital good industry Middle east Boom Illeberal economic policies Foreign Exchange Reserves

doubled due to Devaluation Establishment of Port Qasim,

Pakistan Steel Mills & HMC

The Second Military Government: 1977-88

Zia Ul Haq’s era, is often regarded as a period of great purge and growth of state-sponsored religious traditionalism

Compaign to Overthrow the Soviet Union in Afghanistan Large inflow From United States Establishment of Shariah Courts 5th Five year Plan Focused to improve living Standard of

pooresr segment of Population Increased Defence expenditures Flood of Rufugees from Afghanistan in 1979 Sharp increase in International Oil prices in 1979-80

Industry liberalized & Balance of Payment kept under Control

Self-sufficient in all Basic food Stuffs except Edible Oils 6th Five year plan was Designed to tackle following

Problems: Low investment & Saving ratio Low Agricultural Productivity Heavy reliance on imported energy Low Spending on Health & Education

Average GDP growth rate remained 6.6% Fiscal Deficit increased to 8% of GDP Approach to IMF for Assistance in 1988

Third Democratic Era (1988–1999) Democracy returned again in 1988 after the general

elections which were held after the death of General Zia-ul-Haq Peoples Party back into the power politics Loss of Pakistan’s Credibility & Investor’s Confidence High Agriculture Growth & Low manufacturing growth Nawaz Sharif implemented IMF’s Privatization & liberalization

program Nawaz Sharif Ordered Nuclear Tests in 1998

“Today, we have settled a score and have carried out six successful nuclear tests"

(Prime minister Nawaz Sharif announcing the tests on May 30, 1998)

In October 1999, Democratic Government Overthrown by General Pervez Musharaf

The Reforming Hundreds, 1999-Onwards 9/11 ATTACKS, Pakistan Frontline State in War against Terror Large inflow of Capital from United States Expasionary Fiscal & Monetary policy During Shaukat Aziz’s Government All Revenue targets were

met 1st Time in History of Pakistan Economic Indicator Of Failure

Illiterate adults 57% Illiterate female adults 72% Population below poverty line 34% Without access of health services 45% Without access of safe water 12% Without access to sanitation 39% Malnourished children 38%

2008 elections, PPP came into Power No Sustainable Economic PolicieS High rise in Unemployment & Corruption Tight Monetary Policy did not encourage

Private Sector During PPP Government average GDP Growth rate

Stood at 2.8% 2013 Election, PML(N) Came into Power Higher Remittances & Consumer Spending

are pushing Economic growth Seven year High Growth rate of 4.24% Unemployment reduced to 6%

4. World Economic Growth & Recessions

Reasonable to Think about World Economy Impact On National Economies Economic Historian identified distinct Periods of

Growth in World Economy 1850-1914, Period of Rapid Growth Advances in Transportation and Communication fueled

the growth of Trade 1914-1945, Period of Slow Growth Two World Wars and a Global Recession

1945-1973, Global age for World Economy Rapid increase in Output especially International Trade Golden AGE Ended in 1973 with Rapid increase in Oil Prices 1973-1993, World Economy grew at Slow rate (2—3%) 1993-Onwards, World Economy Growing Between 3-5% Widespread Use of Information Technology & Economic Freedom Trade GROWTH RATE Sensitive to Economic Growth rate Slow growth rate Is Drag on INTERNATIONAL TRADE Financial crisis of 2008-2009 Financial Stabilization programs were timely Started Increase in Money Supply upto 35% Now Goverments facing Problem of Spurring growth with so much

Debt

Table 4.1:- World GDP growth and Population growth

GDP GROWTH RATE POPULATION GROWTH RATE

1990-1999

2013 1990-1999

2013

2.5% 2.9% 1.0% 1.113

Source: CIA WORLD FACTBOOK

5.Comparison 0f Economy of Pakistan & India

Both achieved Independence in 1947 India was much Advanced in Resource endowment, potential

Output & growth LIFE MAGAZINE, Jan 5, 1948 Predicted Economic Collapse of

Pakistan Today INDIA is 9th largest, & Pakistan is 46th largest economy in

the world PAKISTAN one of the few developing Countries that achieved an

average annual growth rate 5% Over the six Decades Incidence of Poverty in Pakistan declined from 40% to 24%

5.1Salient Features of Pakistan Economy

A Country with 30 million people in 1947 Couldn’t feed itself, Not Only able to fulfill the Domestic needs of 190 millions People but also Exporting

The per Capita Income has expanded almost 15 folds Agriculture Production has risen Five times One of the Leading Exporter of Textiles Discovery of Natural gas in 1950s(32 billion cubic feet

generation) Per Capita Electricity generation has reached 10,160 Kwh

compared to 100 in 1947 Road & Highway Network has increased more than Five times

INDIA’S Economic Achievements Can be divided into Two distinct Phases i) 1947-1990 ii) 1990-OnwardsFirst Phase 1947-1990: Heavy Reliance On Public Sector Regulated & Protected industrial sector Inefficient Agriculture & lower Trade Ratio Several institutions of Higher Education, Science & Technology were

established Low Annual Growth rate of 3.5% Poverty Remained high & StagnantThe Second Phase 1990-Onwards:

Remarkable Results of Liberalisation program Recording 8-9% annual Growth Rate Rising Exports of Goods & Services Poverty Declining

CURRENT STATUS OF BOTH ECONOMIES: INDIA’S Private Sector is Surprisingly More Successful Than

Pakistan Several Indian Companies have acquired Status of MultiNational

Corporations Human Development is Quite Dismal in Both Countries India way Ahead of Pakistan in Basic & applied Scientific Research &

Technology Main Problems Of Both Countries are:

Poor State of Infrastructure Weak delivery of Basic Public Services Lack of access by the poor Corruption & Political interference Internal Security Problems War against Terror

6. Problems of Pakistan’s Economy We Consume More & Save less

Import More & Export less High Fiscal Deficit & Inflation Share in World trade is Shrinking Badly lag in Social Indicators Energy & Water Shortage Governance & implementation Crisis Law & Order Situation

7. Policies/Solution to Improve Economy

Change in National Psyche & Mindset Building up of Human Capital Use of Technology Efficient Utilization of Young Labour Force Good Governance

8.Conclusion Pakistan’s Economic growth is no Exception compared

to Other South-East Asian Countries Pakistan’s impressive Economic Growth always

Contrasted with its Dismal Performance in Social Sector

Building Human Capital is Need of Time No Lack Of Skills, We have Genious People working in

Every field in Different International Institutions Letus Devolve Powers To the People At Grassroot

Level, then there would be surely much better allocation & Utilization

ANY QUESTION?

Thank You