Analysis of Pakistan’s

Industries
Ma’am Sadaf Alam

Assignment 1
Submitted By: Fizza Asghar Awan, Salman
Khan, Hira Iqbal & Muhammad Afzal.

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 Question 1

Briefly describe in bullet form the industrial policies of different eras and empirically
analyze the reasons of success and failure of these policies.

1st five year plan (1955-1960)

 The primary objectives were to increase the national income and per capita income in
order to create new employment opportunities, development of industries rise in the
production in agriculture sector along with improvement of living standards and
economic development.
 Different targets were set for income population, industrialization and renovation of the
railway tracks. Apart from that the number of students to be admitted in primary and
secondary school were decided beforehand 1 million and 144000 respectively.
 Financial guide was taken from the US

Successes

 Liaquat Ali Khan wanted to achieve peace for the country.

 National income was increased by 13%
 Increase in production of industries

Failures

 Decline in literacy rates

 Decline in exports
 Unemployment rate increased.
 Liaquat Ali Khan was died.

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2nd five year plan (1960-1965)

 The main objective of this plan was to improve the prior plan as much as possible; it was
almost same as the previous one with an addition of a few things.
 Progress in Industrial and science sector, improvement in transportation and agriculture
sectors was a major concern in this plan.
 Ayub Khan planned 10 year framework program in western and eastern Pakistan districts

Successes

 Increase in production of cotton, tea, salt, tubes and rubber tyres.

 Increase in manufacturing industries.
 Per Capita Income increased.
 Reforms for Education and new Economic policies were introduced and implemented.

Failures

 There was political instability.

3rd five year plan (1965-1970)

 The total budget allocated this time was 52000 Million, 22000 and 30000 to private and
public sector respectively.
 The primary objective was to improve health and transport sector along with the set-up of
new industries along with the enrollment of new students in public as well as private
educational institutions.
 There was no foreign transfer in the country due to banning of imports.

Successes

 New right of having passports for every citizen was introduced.

 Per Capita Income increased.
 Increase in production of food.

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Failures

 Fuel prices increased

 Political instability in the region
 Separation of East Pakistan from West Pakistan.
 Manufacturing industries decreased.

4th five year plan (1988-1999)

 This era was the era of economic and political instability. Four governments were
dismissed because they had charges of corruption against them
 In this time the industrial policy composed of three components i.e. deletion policy,
deregulation measures and privatization.
 This plan gave RS350 Billion to public sector and RS292 Billion to private sector

Successes

 Obtaining of foreign funds for strengthening of the military

 The economy was liberalized.

Failures

 Civil rights were ignored

 Increase in electricity shortages.

5th five year plan (1999-2008)

 3rd Martial Law was implemented by General Pervez Musharraf in December 1999
 Ties with China were made in the name of CPEC.
 Absolute pay per capita had settled

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Successes

 Women were empowered

 Increase in exports
 Increase in production of agriculture industry and manufacturing industry.
 Economy was seeing its growth

Failures

 Political instability
 Increase in terrorism

Question 2

Take any subsector of service sector and also discuss the effect of COVID on its growth and
tell why would you like to join the service sector in future?

Understanding Service Sector

The service sector, also known as the tertiary sector, is the third tier in the three sector economy.
Instead of the product production, this sector produces services maintenance and repairs,
training, or consulting. 
The service sector produces intangible goods, more precisely services instead of goods, and it
comprises various service industries including warehousing and transportation services,
information services, securities, and other investment services, professional services, waste
management, health care and social assistance, and arts, entertainment, and recreation.
Countries with economies centered on the service sector are considered more advanced than
industrial or agricultural economies. The service sector is the largest sector of the global
economy in terms of value-added and is especially important in more advanced economies.

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Remittance sector in Pakistan

Remittances are an important and growing source of foreign exchange for Pakistan. Remittances
have quadrupled in the last eight years to more than $22 billion in 2019.The recent increase in
the flow of remittances to Pakistan originates mainly from host countries in the Gulf.
Remittances flowing into Pakistan jumped 6 percent to an all-time high of $23.120 billion in the
full 2019/20 fiscal year as overseas workers were able to send money home after countries
started easing COVID-19 lockdowns around the world, central bank data.

The rise in remittances from the United Arab Emirates has been particularly strong bringing
remittances from that country close to the level of remittances from the United States.
Remittances from Saudi Arabia and other GCC countries tripled in 2019, while remittances from
the United States and Europe (including the United Kingdom) have only risen moderately.

Inflows in April 2019 from different countries

$427.8m $372.4m $269.6m $280m $175.4m $253.62m

Remittance that Pakistan received above these countries in total figures

$1.78billion

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Effects of COVID-19 on the Remittance Sector of Pakistan:

The spread of COVID-19, an unprecedented anomaly of our times, is so wide and rapid that even
most advanced economies are unable to respond to it quickly and appropriately. If this situation
persists longer, not only the global health system may collapse but also there are apprehensions
of large-scale socioeconomic meltdown.

Since the outbreak of COVID-19 and in the aftermath of strict lockdown in Wuhan city of China
in January this year, the world has started bearing the brunt of economic crisis. As the Corona
pandemic ripped through other parts of the world, particularly the Global North, its impact
become more severe. One of the reasons behind was the panic and fear that caused due to the
instant measures taken by the world government such as restriction in travel, social distancing
and self-isolation. This has slowed down the economic activities particularly related to the global
aviation industry, tourism, breakdown of supply chain for consumer goods, services, and
construction and manufacturing sectors. The world economy is in shock and there is hardly any
chance of its fast recovery. Currently, the actual COVID-19 impact on the global economy as
well as on migrant workers and remittance flows is not yet clear. However, there may be three
possible scenarios to understand the potential of remittance flows.

1. There is a possibility of job losses, unemployment and low wages for the migrants working in
the 'recession-hit' sectors such as construction, manufacturing, and services during and after the
COVID-19. This has happened during the economic recession of 2008 particularly in countries
that fall in the Global North (Bauer and Thant 2015). During this period, 05 to 10 per cent
decline in global remittance flows was observed. In the case of Pakistan, remittance flows were
not affected at least in the short-run – a decline in remittance from USA and UK during the
recession period was mitigated due to boom in GCC countries that resulted in the hiring of a
large number of migrant workers. However, Pakistan may face 10 per cent decline in its
remittance flows in case the global situation of the pandemic persists.

2. The second possible outcome of COVID-19 spread is the large influx of Pakistani migrant
workers from destination countries, particularly from GCC countries. In the 1990s, Pakistan
witnessed a large-scale return of migrants during the Iraq-Kuwait war (Ahmed et al. 2011).

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During this period, the share of remittance flows from GCC countries was reduced to about 19
per cent. Moreover, a steep decline was also observed in remittance flows during the economic
sanctions imposed by the Western world after Pakistan conducted nuclear tests in 1998 (Ahmed
et al. 2011). Currently, Pakistan has also shrunk its 30 per cent share in Saudi labor market – the
trend, which is continuing, may cause further significant decline in remittance flows in the future
(Plaza et al. 2019). In this regard, a modest-to-major decline in economic growth is likely in the
Global North. GCC region may trigger a large decline in migration flows, which may reach up to
30 per cent.

3. The third possible outcome of COVID-19 is it may hit severely the flow of remittances to
Pakistan if the geographic extent and spread of the disease prolongs. This may cause a sharp
decline in economic activities in migrant workers’ destination countries resulting in
unemployment, job losses and low wages besides the rising cost of living (including health,
education, accommodation as well as access to loans for businesses). Furthermore, the severe
economic recession in destination countries may compel the respective governments to introduce
even more strict policies to manage migration. They can reduce the number of migrant workers
and can also expedite their return to their home 3 countries. Under these circumstances, the
remittance flows may reduce to half from the current level.

Joining this service sector in the future:

Since this subsector of Pakistan has a lot of scope and potential, it will be ideal to join it in the
future. Foreign remittances have supported Pakistan through thick and thin, and always have
been the backbone of our economy. Joining it and being a part of this sector will ensure
prosperity for ourselves and the country as well.

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