ECONOMY OF

TOMORROW
Date: 24 December

2021
ENGINEERING ECONOMICS

CASE STUDY
Submitted To:
Ma’am Eliya Abbas Jafri
Engineering Economics

TITLE
“Economy of Tomorrow: A case study of Pakistan”

Group Members:
Mohammad Fahad
ME-1700

Muhammad Hamza Aamir

ME-1702

Muhammad Sameer Bin Muhammad Abrar

ME-1718

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Abstract:
This report is a brief highlight of our work on the case study of Pakistan,” Economy of Tomorrow”.
During a decade of high economic growth rates in Asia, Pakistan has not been able to profit from its
changing political environment since the restoration of democracy in 2008. Its external and internal
political conflicts in combination with the weak institutional framework have resulted in setting other
priorities than focusing on economic policy reforms. Consequently, low rates of saving and investment,
both from private and public sector, in infrastructure, industry, agriculture, and human development
have not created sufficient economic growth. The global financial and economic crises of recent years
with its multiple implications in the industrialized world, but now also increasingly visible in emerging
and developing countries – are of political nature. To overcome the economic crises and dangerous
national fragmentations with Pakistan, more coordinated and consolidated financial, economic, and
fiscal policies would be needed. Again, the problem derives from the lacking capability and will of the
political sphere, mostly in the hand of the nation-states, to deal a deregulated capitalism. At the same
time, politics have been driven by a permanent obsession to follow the assumed needs of the markets.
Here, past, and present macroeconomic development problems of Pakistan are comprehensively
discussed and how the actions to reduce the effects are helping further to worsen the economy.

Acknowledgment:
Our team would like to express our special thanks of gratitude to our project supervisor, “Ma’am Eliya
Abbas” who gave us the wonderful opportunity to carry out research work related to the economy of
Pakistan. To write this report we had to go through several websites, articles, and research papers, which
increased our knowledge on the topic and developed a sense of better understanding in the field.
Working on this report gave us a chance to work as a team towards a goal and improved our
management skills so it was all in all a great learning experience. In the end, we would like to express
our utmost gratitude to every member of this wonderful team, without their hard work and dedication
this report would not have been possible.

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Table of Contents
Introduction ............................................................................................................................................. 5
A ‘Good’ Society ................................................................................................................................ 5
1. General Macroeconomic Overview .................................................................................................... 6
1.1 Past Development of the Key Macroeconomic Indicators ............................................................ 6
1.1.1 Growth ................................................................................................................................... 6
1.1.2 Inflation ................................................................................................................................ 10
1.1.4 Employement ....................................................................................................................... 11
1.2 Present Macroeconomic Problems .............................................................................................. 11
1.2.1 Balance of Payments ............................................................................................................ 11
1.2.2 The Fiscal Position ............................................................................................................... 11
1.2.3. The Energy Sector............................................................................................................... 12
1.3 The Imf Program ......................................................................................................................... 12
1.3.1 The Extended Fund Facility ................................................................................................. 12
1.3.2 Economic Performance Under Program .............................................................................. 12
1.3.3 Impact on the Poor ............................................................................................................... 13
1.4 Likely Future Developments....................................................................................................... 14
1.4.1. Structural Reforms .............................................................................................................. 14
1.4.2 Economic Outlook ............................................................................................................... 14
1.5 Alternate Reforms ....................................................................................................................... 14
2. Income Distribution , Consumption Demand and Inclusive Development ...................................... 15
2.1 Past Developments ...................................................................................................................... 15
2.1.1 Income Distribution ............................................................................................................. 15
2.1.2 Employment ......................................................................................................................... 16
2.1.3 Women Participation In Employment.................................................................................. 16
2.1.4 Incidence of Poverty: ........................................................................................................... 16
2.1.5 Human Development ........................................................................................................... 17
2.2 Present Debate and Policies to Change Income Distribution...................................................... 17
2.2.1 Taxing the Rich .................................................................................................................... 17
2.2.2 Social Protection .................................................................................................................. 18
2.2.3 Privatization ......................................................................................................................... 18
2.2.4 Empowerment of People ...................................................................................................... 18
2.3 Likely Future Development ........................................................................................................ 18
2.3.1 Key Element of Inclusive Growth ....................................................................................... 19
2.3.2 Development Priorities ........................................................................................................ 19
2.3.3 Prospects for Rural Development ........................................................................................ 19
2.3.4 Prospects for Labour-Intensive Exports ............................................................................... 19

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3. Past Integration in to the World Market............................................................................................ 19

3.1 Past Integration Into The World Market ..................................................................................... 19
3.1.1 Degree of Openness ............................................................................................................. 19
3.1.2 Export Performance ............................................................................................................. 20
3.1.3 Growth in Import ................................................................................................................. 20
3.1.4 Home Remittance................................................................................................................. 21
3.1.5 Capital Inflows ..................................................................................................................... 21
3.2 Present Debate About Interation in World Market ..................................................................... 21
3.2.1 Trade with India ................................................................................................................... 22
3.2.2 Trade with China.................................................................................................................. 22
3.2.3 Trade with European Union ................................................................................................. 23
3.3 Likely Future Development ........................................................................................................ 23
4. Green New Deal and Benefits of an Ecological Focus ..................................................................... 24
4.1 Ecological Problems ................................................................................................................... 24
4.1.1 Water Shortage..................................................................................................................... 24
4.1.2 Deforestation ........................................................................................................................ 24
4.1.3 Air Pollution......................................................................................................................... 24
4.1.4 Natural Disasters and Climate Change ................................................................................ 24
4.2 Present Debate to Solve Ecologial Problems .............................................................................. 25
4.2.1 Takling Pollution and Environmental Change ..................................................................... 25
4.2.2 Green Economy and Growth................................................................................................ 25
4.3 Strategy And Coherence of Industrial Policies ........................................................................... 25
4.3.1 Power Sector ........................................................................................................................ 25
4.3.2 Generation Capacity............................................................................................................. 25
4.3.3 Power Consumption ............................................................................................................. 26
4.3.4 Manufaturing Sector ............................................................................................................ 26
4.4 Likely Future Developments....................................................................................................... 26
4.4.1 The New Energy Policy ....................................................................................................... 26
4.4.2 Industrial Development ........................................................................................................ 27
Conclusion ............................................................................................................................................ 27
Refernces............................................................................................................................................... 27

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INTRODUCTION
The new development model focuses on strong, inclusive, and long last lasting growth. While the Asian
countries are observed to have been growing fast, it has vulnerability to financial crisis, as in 1997. The
region has suffered so much damage due to natural disasters and inequalities have increased in most
countries. In addition, the blow to the economy in 2009 has showed the interdependence of regions in
an increasingly globalized world. The financial crisis originated from USA and Europe, but the
contagion effects have been felt by the most countries in Asia.
It is proposed to undertake country studies in European and Asian countries to see how these countries
are situated in terms of a ‘good society’.

Figure 1

A ‘GOOD’ SOCIETY
The basic structure of a goof society is given in the above Figure 1. It combines social justice with
participation, sustainability, and high productivity increases. The aim is to achieve a ‘good society’ with
full capabilities for all.
This report entitled ‘Economy of Tomorrow’ is a case study of Pakistan. The first task undertaken is to
adapt the generic structure of a ‘good society’ to the Pakistan context in Figure 1.
The adaptation of the framework to the Pakistani setting adds the dimensions of social policy,
governance, institution, and the legal framework. It focuses as on Figure 1 on governance tools.
Strategic aims/objectives and on the normative vision.

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1. GENERAL MACROECONOMIC OVERVIEW

1.1 PAST DEVELOPMENT OF THE KEY MACROECONOMIC
INDICATORS
1.1.1 GROWTH
The new millennium started with Pakistan during sanctions imposed by the international community
following the nuclear tests which constrained growth to the low rate of 2 percent per annum. Soon after,
with Pakistan becoming an ally in the global 'war-on-terror' the economic situation changed for the
better with large aid inflows. The growth rate rose to reach a maximum of 9 percent (see Table 1.1.).
This was accomplished because of a boost in all sectors-industry, agriculture, and services. Investment
(both public and private) as a percentage of GDP, showed a big increase, being stagnant in the early
years of the new millennium.

The high growth in Pakistan coincided with economic boom in most Asian economies, with one major
difference. While growth spurt in the emerging economies continued unabated, growth in Pakistan
could not be sustained. In fact, it was followed by a period of near stagflation. For the last five years
GDP growth has averaged barely 3 percent per annum. Deep rooted economic issues have constrained
high and sustained growth in Pakistan including high levels of power outages, low rate of savings and
consequently inadequate investment not only by the private sector but also the public sector in
infrastructure, industry, agriculture and human capital; a weak industrial and export structure,
dominated by cotton based exports, due to trade policies that failed to promote diversification; an
ambivalent attitude towards the private sector; ineffective governance structure with weak public
institutions and rule of law, lack of accountability, high level of bureaucratic red-tapism and rampant
corruption.

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Important impediments to the revival in investment are the energy crisis along with the security
situation. These two factors have pulled back Pakistan's economic growth rate by about 2.5 percentage
points annually. Power outages have imposed a heavy cost on the economy of Rs.1400

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billion in 2011-12, equivalent to almost 7 percent of the GDP (see Table 1.4) as estimated by IPP.
This implies that the growth rate of the economy could have been significantly higher in the absence
of power The new millennium started with Pakistan during sanctions imposed by the international
community following the nuclear tests which constrained growth to the low rate of 2 percent per
annum. Soon after, with Pakistan becoming an ally in the global 'war-on-terror' the economic situation
changed for the better with large aid inflows. The growth rate rose to reach a maximum of 9 percent
(see Table 1.1.). This was accomplished because of a boost in all sectors-industry, agriculture, and

services. Investment (both public and private) as a percentage of GDP, showed a big increase, being
stagnant in the early years of the new millennium
The high growth in Pakistan coincided with economic boom in most Asian economies, with one major
difference. While growth spurt in the emerging economies continued unabated, growth in Pakistan
could not be sustained. In fact, it was followed by a period of near stagflation. For the last five years
GDP growth has averaged barely 3 percent per annum. Deep rooted economic issues have constrained
high and sustained growth in Pakistan including high levels of power outages, low rate of savings and
consequently inadequate investment not only by the private sector but also the public sector in
infrastructure, industry, agriculture and human capital; a weak industrial and export structure,
dominated by cotton based exports, due to trade policies that failed to promote diversification; an
ambivalent attitude towards the private sector; ineffective governance structure with weak public
institutions and rule of law, lack of accountability, high level of bureaucratic red-tapism and rampant
corruption.

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Important impediments to the revival in investment are the energy crisis along with the security
situation. These two factors have pulled back Pakistan's economic growth rate by about 2.5
percentage points annually. Power outages have imposed a heavy cost on the economy of Rs.1400

billion in 2011-12, equivalent to almost 7 percent of the GDP (see Table 1.4) as estimated by IPP. This
implies that the growth rate of the economy could have been significantly higher in the absence of
power load shedding.

1.1.2 INFLATION
Consequently, consumer price inflation averaged 12 percent annually during the three years, 2009-10
to 2011-12 (See Table 1.1). However, consumer inflation moderated to 11 percent in 2011-12 and
further dropped to 7.4 percent in 2012-13, (in part due to a change in base year of CPI from 2000-01 to
2007-08, with under-reporting in the inflation of house rent and gas prices). The overall public debt
which was brought down to 53 percent of the GDP in 2005-06 from a high of 74 percent has again shot
up to over 63 percent by 2011-12 (see Table 1.6).

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1.1.4 EMPLOYEMENT
The macroeconomic challenges will have to be surmounted if the GDP is to be put back on a high
growth trajectory of at least 6 percent, if Pakistan is to absorb productively its labor force, which is

increasing at almost 3 percent per annum (see Table 1.9). Currently 3.5 million workers are
unemployed. Given the demographic profile, Pakistan is witnessing a youth bulge; 230 million people
are projected to be looking for work by the end of 2050. If this youth is not gainfully employed, the
'demographic dividend' for Pakistan has the danger of becoming a 'demographic curse', given the rise
of militancy and extremism.

1.2 PRESENT MACROECONOMIC PROBLEMS

1.2.1 BALANCE OF PAYMENTS
Three issues dominate Pakistan's economic scenario- the fragile external account situation, the
burgeoning fiscal deficit, and the severe energy shortage. There is need to avoid a type of the financial
crisis like 2008 when the 'oil price shock' led to a hemorrhaging of the current account and a rapid
depletion of foreign exchange reserves. The currency depreciated sharply from Rs 60 to 80 per dollar
and stability was restored only after the release of a large tranche over $3 billion by the IMF under a
new Standby Facility in November 2008.
Currently some warning signals are visible. Though the current account was in surplus in the first
quarter, July to September of 2012-13, primarily due to a surplus in the services account arising from
the large payment from the CSF by the USA. The deficit rose precipitously to $2.3 billion in the next
three quarters of 2012-2013. This is not due to any worsening in the trade balance but to the emergence
of a deficit in services and a visible fall in home remittances. In the first two quarter of 2013-14, the
current account deficit has approached $1.5 billion.
1.2.2 THE FISCAL POSITION
Turning next to the fiscal position, in 2012-13 the fiscal deficit has been high at 8.0 percent of the GDP,
as massive subsidies have had to be given to tackle the problem of exploding circular debt in the power
sector. Another major development is the drying up of external resources to finance the deficit and
increasingly heavy reliance on domestic borrowing including deficit financing (printing of money) by
the SBP. Tax revenues have shown a very low buoyancy with a growth rate of 3 percent. Expenditure
growth has been high at 24 percent. The Federal budget for 2013-14 targets to bring the deficit down to
6.3 percent of the GDP (an adjustment of 2.5 percent of the GDP). This is to be accomplished through
an increase in tax revenues from Rs 2007 billion to Rs 2475 billion and a curtailment of current

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expenditures. However, these are already some worrying developments: 1) tax revenues which
materialized in 2012-13 have a shortfall of Rs 65 billion compared to the assumed amount (Rs 1937
billion instead of Rs 2007 billion); 2) salary increase announced for all federal government employees
is likely to cost an additional Rs 40 billion; and 3) deficit provincial budgets in 2013-14. These negative
factors will imply a higher deficit (around 7.3 percent of the GDP), unless development expenditure is
curtailed severely once again, thereby jeopardizing the process of revival of the economy.
1.2.3. THE ENERGY SECTOR
The new government has come up with a new Energy Policy. It has retired circular debt of Rs 480
billion to improve the rate of capacity utilization and is taking punitive action against theft of electricity
to reduce losses. Also, the Prime Minister has undertaken a successful visit of China and has got positive
response on infrastructure investments. These investments are necessary for the up gradation of existing
plants, conversion to more economical and sustainable fuel mix (currently more than half is on thermal),
and investment in additional generation capacity, especially renewable energy. However, important
issues in the power sector relating to financing of investments, regulatory framework, pricing policy
and distribution policy and curtailment of losses remain unaddressed which can dampen the
effectiveness of the energy policy to adequately tackle the shortage.

1.3 THE IMF PROGRAM

1.3.1 THE EXTENDED FUND FACILITY
The IMF was approached almost immediately by the newly induce d government in 2013 in view of
the low foreign exchange reserves of $6 billion (less than one month’s cover) on the 30th of June 2013.
These reserves had fallen by $4.8 billion in 2012-13. Given pending large debt-servicing obligations,
especially to the IMF of over $3.2 billion, there was the danger that the country could move sooner or
later to a situation of debt default, with major negative consequences on the economy. Therefore, the
Government essentially quickly adopted the strategy of 'taking a new loan to repay an old loan'. The
new loan was negotiated with the IMF in July 2013 as part of the Extended Fund Facility (EFF). This
facility focuses more on structural reforms and has better repayment terms than the Standby Loan
contracted in 2008.
1.3.2 ECONOMIC PERFORMANCE UNDER PROGRAM
Five months have elapsed since the signing of the agreement and two reviews have been completed.
The performance of the economy under the aegis of the Program has been mixed.

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At the end of the first quarter of 2013-14, there has been a shortfall in achievement of the foreign
exchange reserves target by over $1 billion. Exports have not grown as fast as anticipated and foreign
direct investment (FDI) has declined sharply. Inflows from donors have been substantially lower than
expected (see Table 1.12). It appears that the presence of the Fund program has not contributed
sufficiently to bolstering confidence in the markets.

1.3.3 IMPACT ON THE POOR

We take up the issue of whether the IMF program has a 'human face'. The exclusive focus on
stabilization, before economic revival, means that growth will not rise significantly above 3 percent in
2013-14. The restraint on growth is likely to be the consequence of a major cut back in the size of the
national PSDP, crowding out of the private sector due to lower access to credit and higher interest rates,
and the negative impact on production of the higher burden of indirect taxes. The consequence is that
the growth in incomes and employment will be limited.
On top of this, the rate of inflation is projected to get back to a double-digit rate due, first, the larger
depreciation of the rupee, second, the hike in electricity and gas tariffs and in POL prices and, third, the
increase in GST rate. Lower growth in income, higher unemployment, and rapid increase in prices,
especially of food items, will have a negative impact on the level of poverty in the country.

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1.4 LIKELY FUTURE DEVELOPMENTS

As highlighted above, the process of growth in Pakistan has been severely constrained by several non-
economic and economic factors. Some observers have characterized this as the 'Perfect Storm'. The
fundamental question is whether Pakistan can get out of this situation in the next few years.
Of immediate urgency is to manage the external payments position of the country to avoid a potential
default situation. Pakistan has reached agreement with the IMF on access to the EFF over the next three
years of $6.6 billion.
1.4.1. STRUCTURAL REFORMS
The structural reform agenda over the next three years includes the following:
i) Restructuring of loss-making public entities like PIA, Pakistan Railway, Pakistan Steel Mills
(PASMIC), etc., followed in some cases by privatization.
ii) Privatization of some GENCOs and DISCOs in the power sector.
iii) Reinforcement of the autonomy of SBP and imposition of limits to borrowing from the Central
Bank.
iv) iv) Strengthening of the functions of regulatory agencies like NEPRA, OGRA, CCP, etc.
v) Creation of a secondary market for Government Securities.
vi) Rationalization of the import tariff structure, with lower maximum tariff, reduction in number
of slabs to possibly four and elimination of SROS.
vii) vii) Broadening of the tax base of the Provincial Sales Tax on Services.
viii) Steps towards deregulation to reduce the costs of doing business in Pakistan.
ix) ix) Consensus in the CCI on the generation of cash surpluses by the Provincial Governments.

1.4.2 ECONOMIC OUTLOOK

The original macro-economic framework for 2013-14 under the IMF program is highlighted in Table
1.13. The fund has recently revised upwards the GDP growth projection to 3.1 percent, while the
average rate of inflation is expected to higher at 10 percent. A comparison between the baseline and the
Program scenario reveals that in the absence of the Program Pakistan would have had difficulty in
meeting its external debt obligations by end-June 2014.

1.5 ALTERNATE REFORMS

As highlighted above, if one or more projections of inflows do not materialize then the foreign exchange
reserves position will remain vulnerable. The fund may insist on even faster deprecation of the currency,
especially through larger purchases from the spot market. This increases the danger of even more
inflation, putting thereby a larger burden of the adjustment process on the people.
How can this situation be avoided? The time has come to contemplate some genuine 'home grown'
reforms especially as part of contingency planning. In the event, the strategy of short-term expansion
of exports of goods and services fails then the alternative may have to be a policy of import compression.
Already, exports in the first six months of 2013-14 have grown by only 3 percent. Reserves have fallen
to $3.4 billion by the end of December 2013, over $2.6 billion less than at the start of the year.
All in all, the IMF Program has not contributed yet to bolstering confidence and the rupee has
depreciated by over 6 percent. Pakistan has to safeguard its position and remain ready to implement
'home grown' measures of the type mentioned above if the situation arises when the targets are not
achieved, and more action is needed. If, however, Pakistan comes close to achieve the IMF projected
level of $ 9.4 billion by end June 2014, the more vigorous efforts can be made in 2014-15 to achieve a
strong revival of the economy.

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2. INCOME DISTRIBUTION , CONSUMPTION DEMAND

AND INCLUSIVE DEVELOPMENT
2.1 PAST DEVELOPMENTS
2.1.1 INCOME DISTRIBUTION
Income distribution is the
smoothness or equality with
which income is dealt out among
members of a society. If
everyone earns the same amount
of money, then the income
distribution is perfectly equal.
An equal income distribution is
important for the growth of any
society because of its relevance
to efforts to reduce poverty.
There is a massive difference
between the income distribution
in Pakistan. According to report,
the income distribution in our
country is Around
30(31.6).Another international parameter for the study of income distribution is Gigi coefficient. The
Gini coefficient measures the degree of concentration in a country’s income distribution. A value of 0
percent represents perfect equality, while 100 percent represents the total concentration of income.
Pakistan has a Gini coefficient of 30 percent, signaling low inequality overall.

The NHDR report 2020 launched by the United Nations Development Program (UNDP) and authored
by renowned economist Dr. Hafiz A Pasha released on 6 April mentions the idea of the two different
Pakistan’s evokes images of the country’s richest and poorest groups – one with a multitude of
opportunities to pursue quality education, secure responsive health care, and live off generational
wealth; and the other, without even the bare minimum. Overall, the total privileges enjoyed by
Pakistan’s most powerful groups amounted to Rs2,660 billion in 2017-2018, equivalent to 7 percent of
the country’s GDP.

These privileges can be broken down into favorable pricing, lower taxation, and preferential access.
The corresponding cost of social protection programs estimated by Pasha (2019) was just Rs624 billion.
Therefore, diverting just 24 percent of these privileges to the poor could double their benefits. To
alleviate inequality, redistribution of benefits along these lines is a crucial first step.

The overall share for the poorest income quintile is 14.2 percent, compared to 37.2 percent for the
richest quintile. Fortunately, the distribution of public expenditure is less unequal and contributes to
reducing inequality. But attempts are urgently needed to increase this contribution by raising basic
social services’ share in public expenditure, increasing cash transfers, and widening the coverage of
pension schemes.

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2.1.2 EMPLOYMENT
If we look the employment market of Pakistan, then we will see a large amount of difference between
the demand and opportunities. The labor force is expanding annually at the growth rate of 3%.Due to
this reason, the unemployment is increasing gradually. The unemployment rate in 2020 is 4.65%.

2.1.3 WOMEN PARTICIPATION IN EMPLOYMENT

Women have huge contribution
in the economy of the country.
The percentage of women labor
force in 2020 is around 25%.In
Pakistan, women work primarily
in the home or on the farm but
their participation in work
outside these areas, particularly
in formal employment, is
extremely low. So, women labor
force must have to be increased
for a better economy. Their
participation must have to be
equals to men.
2.1.4 INCIDENCE OF
POVERTY:
The incidence of poverty is the key indicator of lower trends in the tail of income distribution. Pakistan
successfully reduces the poverty from 80s to 2008 and from 2002-2008 it has been noted that the
incidence of poverty has sharply declined. The poverty percentage in 2010 is 37% and still it is around
this rate.

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2.1.5 HUMAN DEVELOPMENT

Human development means to expand the richness of human lives. Pakistan stood at very low in Human
development index. In 2020, we fall two notches from 152 to 154. The HDI index of Pakistan Is around
0.5 over the several years which is very low among other developing world.

2.2 PRESENT DEBATE AND POLICIES TO CHANGE INCOME

DISTRIBUTION
BY the past years, several policies have been made. A successful public policy requires emphasis on
governance without which service delivery cannot be ensured. The devolution of power,
decentralization of administrative authority, de-concentration of management functions, diffusion of
the power, distribution of resources through the mechanisms that facilitate equitable, transparent and
predictable transfers to local governments, access to justice, police reforms, civil service reforms, pay
and pension reform, capacity building, procurement reforms, anti-corruption strategy, anti-money
laundering law, and freedom of information can go a long way in improving governance and better
delivery of social services for the poor are the major elements of the PRSP governance strategy.
2.2.1 TAXING THE RICH
The country is in the grip of twin deficits, making it difficult to balance both its fiscal and external
accounts. This is hardly a new challenge for Pakistan, since its macroeconomic vulnerabilities resurface
every few years, forcing it to seek an external bailout. In 2008, Pakistan had to seek emergency
assistance from the International Monetary Fund (IMF) soon after a political transition took effect from
Pervez Musharraf’s military rule to a civilian government. Six years later, during declining global oil
prices, the next elected government under Nawaz Sharif also signed up to an IMF program. And once
again, three months after assuming power, Pakistan’s newly elected government is desperately trying
to shore up its foreign reserves and stave off a potential economic collapse.

Financing the
deficit through
unrestrained
borrowing means
that the economic
burden is also
being shifted to
future generations.
And the prevailing
arrangement
systematically
disincentivizes
productive activity
in the real
economy.

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Pakistan has a persistently low tax-to-GDP ratio (currently at 10 PERCENT of GDP) – lower than its
neighbors, India and Bangladesh, and countries with comparable income levels. The taxation structure
is complex, inefficient, regressive, overly reliant on indirect taxes and defined by multiple exemptions.

Pakistan’s Federal Board of Revenue (FBR), for example, regularly issues exemptions on duties and
tariffs. By one estimate, in 2011 more than half of the total number of tariff lines were subjected to such
tax exemptions.

Agricultural incomes have also practically evaded direct taxation even though the agricultural sector
still contribute more than 20 percent of national GDP and remains an important employer. The principal
beneficiaries of such exemptions are the politically influential landed classes.

Over the past two decades, the booming urban real estate sector has emerged as another untouchable
for tax collectors. Although real estate is associated with capital flight from Pakistan (their profits are
often invested properties in Dubai, London, and Toronto), urban property is only lightly taxed, and the
capital gains made through real estate transactions remain hugely undertaxed.

2.2.2 SOCIAL PROTECTION

Pakistan’s social protection system and offers actionable recommendations for making the system more
effective and inclusive. Its analytical assessment of the social protection landscape in Pakistan examines
ongoing flagship programs and the strategies that underpin them. The study aims to serve as a starting
point for developing a roadmap for the implementation of Sustainable Development Goal (SDG) target
1.3. Requiring “social protection systems and measures for all” (universal social protection) SDG 1.3
is among the SDG targets that the Government of Pakistan has prioritized for implementation. This
study builds on the ILO’s Mapping Social Protection Systems in Pakistan (2019).
2.2.3 PRIVATIZATION
Privatization Pakistan has also decided to implement an ambitious privatization program. One of the
structural benchmarks in the IMF Program to be met by September 30, 2013, is as follows:

privatization by CCI' The Cabinet Committee of Privatization, chaired by the Finance Minister, has
decided to focus on different forms of privatization in some cases) of the following 31 state-owned
entities: i) Transport Sector: Pakistan Railway and Pakistan International Airlines (PIA) ii) Companies
in the Oil and Gas Sector: Oil and Gas Development Company (OGDC), Pakistan Petroleum Ltd. (PPL),
Pak-Arab Refinery (PARL), Pakistan State Oil (PSO), Sui Southern Gas Company Ltd. (SSGCL) Sui
Northern Gas Pipelines Ltd. (SNGPL) Hi) Power Sector: Islamabad Electricity Supply Company
(IESCO), Gujranwala Electricity Supply Company (GESCO), Lakhra Power Plant iv) Financial Sector:
National Bank of Pakistan (NBP), First Women Bank (FWB), Small and Medium Enterprises Bank,
National Investment Trust (NIT), National Insurance Company Limited, Pakistan Reinsurance
Company Ltd, State Life Insurance Corporation (SLIC) and House building Finance Corporation v)
Twelve others.

2.2.4 EMPOWERMENT OF PEOPLE

The 18" Amendment of the Constitution took a major step forward in the process of empowerment of
the people by incorporating Article 140A which states: 'Each Province shall, by law, to establish a local
government system and devolve political, administrative and financial responsibility and authority to
elected representatives of local governments.

2.3 LIKELY FUTURE DEVELOPMENT

The big issue at this time is can Pakistan achieve inclusive and sustainable growth in years to come?
Pakistan has entered a new IMF program through the EFF for a period of three years. Who is going to
bear the burden of structural adjustment? The rich or the poor? What happens if the program falters and
Pakistan runs into a financial crisis?

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2.3.1 KEY ELEMENT OF INCLUSIVE GROWTH

We first identify the key elements of inclusive growth. This requires, first, a focus on areas and sectors
where the poor live and work. Second, the sectoral pattern of growth has to be labor-intensive in
character such that there are employment opportunities for the expanding labor force. Third, more
resources need to be allocated during the process of growth to goods and services which the poor
consume. Fourth, priority has to be placed an enhancing human capability. The overall rate of economic
growth may be considered as a necessary but not a sufficient condition for inclusive development.

The implications are that the emphasis should be on rural development, both on-farm and off-farm, on
food security, on labor-intensive services, manufacturing, construction, and exports and on public
expenditure on education and health. The primary focus has to be on alleviation of poverty. This also
requires a program of social protection for the vulnerable groups, who are outside the mainstream of
the economy.

2.3.2 DEVELOPMENT PRIORITIES

The next question is which sectors will receive priority in development allocations over the next few
years. Clearly, the greatest emphasis will be on the power sector. Substantial investments, up to 3
percent of the GDP, are required annually not only for rehabilitation of the present system but also for
changing the fuel mix and for expansion of capacity of power generation, as per the recently announced
Energy Policy. If, in addition, some of the mega projects in transport and highways, promoted by the
Prime Minister, are implemented then in the presence of limited development funds, there is a real
danger that allocations to other sectors will be 'crowded out', especially to education and health.

The likelihood of a large cutback in the Development Program has increased given the emphasis on
fiscal deficit reduction in the IMF program. Nevertheless, if loadshedding is incrementally eliminated
by 2017, then in the presence of adequate excess capacity in manufacturing, there could be quick
response in terms of higher output and employment, consequently absorbing a major part the currently
unemployed and thereby reducing poverty.

2.3.3 PROSPECTS FOR RURAL DEVELOPMENT

What is the future for agriculture and rural development? More recently, the agricultural sector has run
into supply constraints due to lack of increase in irrigation water, substantially higher prices of fertilizer
and shortage of electricity for operating tube wells. Consequently, the production of wheat has fallen in
2012-13 by over 6 percent and atta prices has shot up by almost 20 percent. Cotton output has been
stagnant. Traditionally, the PML-N has focused more on industry and trade, given its urban vote back.
It remains to be seen what the official response to further deterioration of food security in the country
will be.
2.3.4 PROSPECTS FOR LABOUR-INTENSIVE EXPORTS
Exports Labor-intensive exports, especially of agricultural commodities and textiles, hinge on the
prospects for world trade. The last two years have witnessed stagnation in the volume of exports by
Pakistan, especially to the USA and EU. Efforts are being made to diversify the destination of exports.
This will depend partly upon the extent to which trade is liberalized in South Asia under SAFTA,
following the granting of MFN status to India. Trade with countries like China, Afghanistan, the Middle
East, and Iran has the potential for growing rapidly, subject to the presence of larger export surpluses.

3. PAST INTEGRATION IN TO THE WORLD MARKET

3.1 PAST INTEGRATION INTO THE WORLD MARKET
3.1.1 DEGREE OF OPENNESS
Over the years, the export of Pakistan would not increase as other developing world increase their
exports. There are a variety of factors for the dismal export performance of Pakistan, including poor
governance, low productivity, high cost of production, obsolete technology etc. But most important
factor is the government's improper policies and lack of vision for long-term export promotion.

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3.1.2 EXPORT PERFORMANCE

The government has recently taken a major step of reducing electricity tariff by three rupees per unit
for industrial sector. It is also working on launching of E-Commerce Framework under which exporters
can sell their products in the world through internet. Pakistan needs to capitalize on exportable services
and products requiring minimal infrastructure and investments. For example, there is a growing global
demand for software and IT solutions. It is easier to establish a software house than to set up a
manufacturing unit. Analysts predict global Software Engineering Market to develop at an 11.72%
CAGR between 2016 – 2022. We accredit the vigorous growth of the software market to the growing
demand for automation from different industries to enhance their program manufacturing processes and
design quality.
3.1.3 GROWTH IN IMPORT
If we turn to growth of imports, it is expanding at a rapid pace. The import of Pakistan is 50 million per
year. Pakistan imports includes most of Mineral fuels including oil: US$10.3 billion (22.5% of total
imports),Electrical machinery, equipment: $4.6 billion (9.9%),Machinery including computers: $4.1
billion (8.9%),Iron, steel: $3.2 billion (6.9%),Animal/vegetable fats, oils, waxes: $2.25 billion
(4.9%),Plastics, plastic articles: $2.17 billion (4.7%) etc. .So, there is a huge difference between the
import and export which causes economic harm to our country over the years.

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3.1.4 HOME REMITTANCE

Home remittance is playing a vital role in Pakistan
economy. Remittance inflows can contribute
significantly to a country's economic well-being. ...
Pakistan remittances serve as a catalyst for investment
in the country, which in turn induces a cycle of growth-
promoting production, exports, consumption, income,
and further investment in turn. Remittances in Pakistan
averaged 3373.42 USD Million from 2002 until 2021,
reaching an all-time high of 8035 USD Million in the
third quarter of 2021 and a record low of 906 USD
Million in the third quarter of 2003.Most of the
Remittances has been received from the Middle East.

3.1.5 CAPITAL INFLOWS

Capital inflow is the amount of capital coming into a
country, for example in the form of foreign investment.
Capital Flows in Pakistan averaged -1388.21 USD
Million from 2003 until 2021, reaching an all-time high
of 1620 USD Million in the first quarter of 2003 and a record low of -6463 USD Million in the second
quarter of 2021.The foreign Direct Investment in Pakistan over the years is shown in graph on next page

3.2 PRESENT DEBATE ABOUT INTERATION IN WORLD MARKET

Pakistan survived the experience of the sanctions imposed on it in 1998 surprisingly well. Economic
growth remained positive, in a year when many other Asian countries were recording negative growth.
Inflation did not accelerate significantly, as was anticipated by most external forecasters. The current
account deficit declined further, so that Pakistan's short-run balance of payments position remained
viable once lending by the IMF and World Bank was resumed and debt had been rescheduled by the
London and Paris Clubs. Exports have been declining throughout the fiscal year 1998-99, normal capital
inflows have almost dried up, and the country's weak credibility and policy uncertainties have
discouraged foreign direct investment and productive investment in general

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3.2.1 TRADE WITH INDIA

Given their tumultuous
relationship, trade between the
neighbors has always been linked
to politics. So, India’s exports to
Pakistan fell around 16 per cent to
$1.82 billion in 2016-17 from
$2.17 billion in 2015-16. Despite
continuing tensions, trade between
the two countries grew marginally
in subsequent years; Indian
exports rose nearly 6 per cent to
$1.92 billion in 2017-18, and then
by around 7 per cent to $2.07
billion in 2018-19. Imports from
Pakistan, though much less in
volume, also increased by 7.5 per
cent to $488.56 million in 2017-18
from $454.49 million in 2016-17.
Growth of imports from Pakistan
slowed to around $494.87 million
in 2018-19 — an increase of around 1 per cent – before political relations entered a deep freeze in 2019.
In 2018-19, cotton ($550.33 million) and organic chemicals ($457.75 million) accounted for around
half of Pakistan’s imports from India. Other major Pakistani imports from India that year included
plastic ($131.19 million), tanning/dyeing extracts ($114.48 million), and nuclear reactors, boilers,
machinery, and mechanical appliances ($94.88 million). India’s major imports from Pakistan in 2018-
19 were mineral fuels and oils ($131.29 million), edible fruits and nuts ($103.27 million), salt, sulfur,
stone and plastering materials ($92.84 million), ores, slag, and ash ($17.18 million) and raw hides and
leather ($16.27 million).
3.2.2 TRADE WITH CHINA
Pakistan's exports to China in 1st quarter of year 2021 is impressive. $888 million as compared to 2020
Q1 $526 million. An increase of 69%. Pakistan is already enjoying zero duties on exports of 724
products to China under the first free trade pact signed between the two countries in 2006. After
implementation of the second pact, Pakistan has been now allowed to export more than 1,000 products
to China with zero duties. The new facility is particularly benefiting the agriculture, leather,

confectionary items, and biscuits product sectors as well. In 2019, Pakistan also signed an agreement
with China to use Chinese currency for bilateral trade to get rid of the dollar burden in $15 billion
bilateral trade. According to official data, Pakistan and China's bilateral trade volume grew to some
$15.6 billion in the 2019 fiscal year, up from $2.2 billion in 2005. The two longtime allies are also
partners in the multi-million-dollar China-Pakistan Economic Corridor (CPEC), part of China's Belt
and Road Initiative, an ambitious project to connect Asia with Africa and Europe via land and maritime
networks to boost trade and stimulate economic growth. The $64 billion mega-project signed in 2014

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aims to connect China's strategically important northwestern Xinjiang province to the Gwadar port in
southern Pakistan through a network of roads, railways, and pipelines to transport cargo, oil, and gas.

3.2.3 TRADE WITH EUROPEAN UNION

From 1 January 2014 Pakistan benefits from generous tariff preferences (mostly zero duties on two
thirds of all product categories) under the so-called GSP+ arrangement aiming to support sustainable
development and good governance. To maintain GSP+ Pakistan has to keep ratification and effectively
implement 27 core international conventions on human and labor right, environmental protection and
good governance

▪ The EU is Pakistan's second most important trading partner, accounting for 14.3% of Pakistan's
total trade in 2020 and absorbing 28% of Pakistan's total exports.
▪ In 2020, Pakistan was the EU's 42nd largest trading partner in goods accounting for 0.3% of EU
trade.
▪ Pakistani exports to the EU are dominated by textiles and clothing, accounting for 75.2% of
Pakistan's total exports to the EU in 2020.
▪ Pakistan's imports from the EU are mainly comprised of machinery and transport equipment
(33.5% in 2020) as well as chemicals (22.2% in 2020).
▪ From 2010 to 2020, EU27 imports from Pakistan have almost doubled from €3 072 to €5 537
million. The growth of imports from Pakistan has been particularly fast since the award of GSP+
(€5 515 million in 2014).

textiles and clothing account for over 80% of Pakistan's exports to the EU. While the textiles and
clothing industry are the backbone of Pakistani exports, relying so heavily on one product category
carries risks for Pakistan. Trade diversification would play an essential role in this respect. The granting
of GSP+ preferences in 2014 should stimulate Pakistan's efforts towards diversification.

▪ As a result of GSP+, more than 78% of Pakistan's exports enter the EU at preferential rates.
▪ Around 80% of the textiles and clothing articles imported to the EU from Pakistan enter the EU
at a preferential tariff rate. Around a quarter of these imports are bed linen, table linen and toilet
and kitchen linen.

3.3 LIKELY FUTURE DEVELOPMENT

With the pandemic, the Government has been focused on managing the repeated COVID-19 infection
waves, implementing a mass vaccination campaign, expanding its cash transfer program, and providing
accommodative monetary conditions to sustain economic growth. The 39-month IMF-Extended Fund
Facility (IMF-EFF) is likely to resume in FY22 with the 6th Review mission expected in October 2021.
Key reforms supported by the EFF include domestic revenue mobilization, the reduction of power
sector arrears, electricity subsidy reform and more central bank operational autonomy, all of which are

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expected to strengthen long-term growth. Due to low-base effects and recovering domestic demand,
real GDP growth (at factor cost) is estimated to have rebounded to 3.5 percent in on the production side,
supported by strong large-scale manufacturing, industrial activity is projected to have rebounded after
contracting for two consecutive years. Similarly, the services sector that accounts for 60 percent of
GDP, is estimated to have expanded, as generalized lockdown measures were increasingly lifted. In
contrast, agriculture sector growth is expected to have slowed, partly due to a near 30 percent decline
in cotton production on account of adverse weather conditions. The current account deficit narrowed
from 1.7 percent of GDP in FY20 to 0.6 percent in FY21 as robust remittance inflows offset a wider
trade deficit. Foreign direct investment decreased, while portfolio inflows increased with the issuance
of US$2.5 billion Eurobonds. Overall, the balance of payments surplus was 1.9 percent of GDP in
FY21, and the official foreign exchange reserves rose to US$18.7 billion at end-FY21, the highest since
January 2017 and equivalent to 3.4 months of total imports. Accordingly, the Rupee appreciated by 5.8
percent against the U.S. dollar over the FY, while the real effective exchange rate rose by 10.4 percent.

4. GREEN NEW DEAL AND BENEFITS OF AN

ECOLOGICAL FOCUS
4.1 ECOLOGICAL PROBLEMS
Pakistan is facing number of serious environmental problems some of them are emerging water scarcity,
rapid deforestation, rising water/air/land pollution and increasing natural disasters.
4.1.1 WATER SHORTAGE
The country’s fresh water supply is primarily fed by rivers flows which are fed by the snow melting
from Hindukush, Karakorum, and Himalayan mountains. In 2021, the government of Pakistan’s Sindh
province received 5.38 million acre-feet (MAF) of irrigated water, which is a 35 per cent decline in its
share in provincial allocation. Under the 1960 Indus Waters Treaty between India and Pakistan,
Pakistan gave up its control over three eastern tributaries of the Indus River, which is one of the root
causes of the water crisis. Pakistan can only store 10% of the average annual flow of its rivers, which
is far below the world average storage capacity of 40%.Pakistan’s first National Water Policy in
2018 does not pay enough attention to water sensitive urban designs, risk management against natural
hazards and trade in water-intensive crops.
4.1.2 DEFORESTATION
Pakistan had a 2018 Forest Landscape Integrity Index mean score of 7.42/10, ranking it 41st globally
out of 172 countries. Pakistan is the second country’s the rate of deforestation in Asia. According to the
experts, forests should cover at least 25% of the total area of the country but unfortunately in Pakistan
only 5.7 pc of land ,or around 4.54 million hectares under forests cover. The forests play a very
important role in agriculture and farming. The help regulate the atmosphere. They absorb carbon
dioxide and give out oxygen. Cutting and burning of trees lead to ever greater quantities of carbon mono
oxide being released. Deforestation may lead to more rapid silting of dams, reservoirs, and canals. It
increases vulnerability to floods.
4.1.3 AIR POLLUTION
Air pollution is a major problem confronting Pakistan, with cities like Lahore and Karachi ranking
among the most polluted worldwide. ... Air quality is considered safe if the AQI is under 50. An AQI
of between 100 and 150 poses a potential risk to children and people with heart and lung disease.
4.1.4 NATURAL DISASTERS AND CLIMATE CHANGE
Pakistan is prone to natural hazards such as drought, floods, heat waves, extreme cold, and earthquakes.
According to the Climate Risk Index 2021, Pakistan ranks eighth for countries most affected by extreme
weather events between 2000 and 2019. Pakistan has experienced a series of hazards in recent years.
Drought-like conditions, which began in late 2018 and continued through 2019, affected five million
people with 2.1 million people targeted for humanitarian assistance. This was followed by a winter
emergency affecting one million people across much of the western part of the country. In September
2020, the Government declared a national emergency due to heavy monsoon rains that triggered major
floods in Sindh Province and affected an estimated 2.4 million people.

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4.2 PRESENT DEBATE TO SOLVE ECOLOGIAL PROBLEMS

4.2.1 TAKLING POLLUTION AND ENVIRONMENTAL CHANGE
In 1997, then-government enacted the Pakistan Environmental Protection Act to safeguard,
conserve, rehabilitate and improve the environment of Pakistan through sustainable development
measures and pollution control, among others. The Pakistan Environmental Protection Council,
which was first established in 1984, was also reconstituted following the enactment of the 1997
legislation. Its main function is to supervise the implementation of the Pakistan Environmental
Protection Act. Pakistan's government is addressing climate change with projects like tree planting,
electric mobility, and campaigns to reduce emissions.

There are 359 industrial units contributing to pollution in Lahore that are being monitored now. The
zigzag technology was introduced for brick kilns some years ago and 33% of the brick kilns have
already been converted to the technology The government has also been working to promote electric
energy and mobility to reduce overall emissions and improve air quality. The government aims to have
150 buses powered with electric batteries. Pakistan is doing its best to tackle deforestation. The
government planted over 1 billion trees. In 2014, the total forested area of the province was just 20%,
now it is 26%.
4.2.2 GREEN ECONOMY AND GROWTH
With the ratification of an IMF bailout on May 12, Pakistan has now embarked on a difficult journey
towards long-term economic stability. Some principal indicators suggest the extent of the pain: Inflation
is expected to run around 18 percent in 2019–20. The Pakistani rupee has fallen significantly against
the dollar, eroding national buying power, and the IMF projects a further fall, to 198.8 rupees per dollar,
a 47 percent decline, by 2023. For a nation whose average income per capita is roughly $1,500 per year,
this means carnage.
At this moment of economic decision, Pakistan has an opportunity to follow the green path. No longer
are we an agricultural nation as of old. The largest share of Pakistan’s economy, 61.2 percent, is now
in services, while industry and agriculture make up less than 40 percent. The Asia Foundation in
Pakistan has been encouraging coordinated thinking about the water, energy, and food sectors to
alleviate the current policy incoherence among the nation’s many environmental stakeholders.
4.3 STRATEGY AND COHERENCE OF INDUSTRIAL POLICIES
4.3.1 POWER SECTOR
Pakistan has two integrated public sector power utilities, the Water and Power Development Authority
(WAPDA) and the Karachi Electric Supply Corporation (KESC). WAPDA supplies power to the whole
of Pakistan except the metropolitan city of Karachi, which is supplied by KESC. The system of
WAPDA and KESC are interconnected through 220 kV double circuit transmission lines. The country
has a total installed generating capacity of about 19522 MW. The installed capacities owned by various
agencies operating in the country. These are:
Water & Power Development Authority(WAPDA): 11327 MW Karachi Electric Supply Corporation
(KESC): 1756 MW ƒ Pakistan Atomic Energy Commission (PAEC): 462 MW ƒ Independent Power
Producers (IPPs): 5977 MW
4.3.2 GENERATION CAPACITY
Between 1984/85 and 2004/05, Pakistan’s total installed power generating capacity increased nearly
fourfold, from 5229 MW to 19,522 MW, for details see Annex-1. Thermal power plants contributed
64% of that total, while hydroelectric power plants accounted for 33%, and Pakistan’s two nuclear
power plants produced 3% of the total.

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4.3.3 POWER CONSUMPTION

With the sole exception of fiscal year 1998/99, power consumption has grown steadily in recent years.
Between 1990/91 and 2003/04, total
consumption increased by more than 84%,
from 31 TWh to 57 TWh. Again, with a
single exception - fiscal year 1990/91 – the
domestic sector was the consumer group
with the largest proportion of
consumption, followed by industry and
agriculture, for details see Annex-3. The
demand for electricity will continue to rise
in the years to come. An average annual
increase of 7% has been postulated. The
generation capacity and demand forecast
are shown in the graph.
4.3.4 MANUFATURING SECTOR
Pakistan's manufacturing sector is dominated by textiles, FBT (food, beverages, and tobacco), Coke &
Petroleum, and Pharmaceuticals. The manufacturing sector is made up of three 'parts': Large Scale
Manufacturing (LSM), Small Scale Manufacturing (SSM), and slaughtering. Large Scale
Manufacturing at 9.73% of GDP dominates the overall manufacturing sector, accounting for 76.1% of
the sectoral share followed by Small Scale Manufacturing, which accounts for 2.12% of total GDP and
16.6% sectoral share. The third component, slaughtering, accounts for 0.94% of GDP with 7.4%
sectoral share. The manufacturing sector is 12.79% of GDP and employs 16.1% of the labor force.
The manufacturing sector was hard-hit by the COVID-19 outbreak and subsequent lockdown(s).
Mobility restrictions resulted in labor problems, while the international supply chain disruption
depressed natural resource imports. The LSM sector, most reliant on these two factors, contracted
10.12% as a result. The SSM managed to grow by 1.50%, not as badly reliant or affected by these
factors, while the slaughtering sector grew as normal. In FY21, when restrictions were relaxed or
removed, the sector rebounded with 9.29% growth. This was largely the result of the Temporary
Economic Refinance Facility (TERF). As a result, Pakistan recorded $14.4B textile exports; the highest
ever.
4.4 LIKELY FUTURE DEVELOPMENTS
4.4.1 THE NEW ENERGY POLICY
In August 2020, the Pakistan government formally approved the Alternative and Renewable Energy
Policy 2019. The new policy aims to boost the share of electricity generated from renewable sources
from around 5 per cent at present to 20 per cent by 2025 and 30 per cent by 2030.
1. The recent introduction of net-metering legislation for solar installations allows
consumers to sell power to the grid.
2. Around 1000 MW of wind power has also been developed over the last few years.
3. The National Electric Vehicles Policy launched last year also promotes the large-scale
adoption of electric vehicles to combat urban air pollution and provides incentives to
jumpstart the local electric vehicle manufacturing industry
4. Pakistan currently imports almost a third of its energy resources in the form of oil,
LNG, and coal. An import-driven energy policy is not sustainable for Pakistan as it
contributes to long-term energy insecurity, exposing the economy to energy price
shocks and the risk of inflation.
5. Thanks to infrastructure and energy projects built under the China–Pakistan Economic
Corridor (CPEC), Pakistan has managed to plug the energy shortfall that has plagued
the country for several years.

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6. Amid an energy crisis resulting from chronic power shortages throughout the last
decade, Pakistan pushed for enhanced coal power capacity by firing up local and
imported coal projects. But since 2017 the government has reconsidered this approach
and disallowed any new imported coal projects.
Pakistan has a tremendous opportunity to cost-effectively tap its abundant solar, wind and hydropower
resource potential. The shift to renewable will have multiple benefits for Pakistan, including reduced
cost of electricity and improved energy access and energy independence.

It will also create opportunities to establish new industries in the renewable energy supply chain and
develop human capital through job creation

4.4.2 INDUSTRIAL DEVELOPMENT

Industrial Production in Pakistan averaged 4.98 percent from 1990 until 2021, reaching an all-time high
of 67.60 percent in April of 2021 and a record low of -39.80 percent in April of 2020. Pakistan Industrial
Production - values, historical data, and charts - was last updated in December of 2021.

CONCLUSION
Beyond the lacking political capacities and the existing public discourses lies a crisis of economic
thinking and understanding. The majority of influential economic thinkers, largely following a neo-
classical school of thought, have not been able to prevent or even predict the ongoing financial and
economic crises. Most of the countries on the globe are now sharing similar challenges, despite very
different starting points: to find ways to build up a socially inclusive, financially stable, and ecologically
dynamic economy. Hence, new economic concepts are urgently needed, to define policy instruments
oriented towards the needs of a growing global population. Ultimately, the economies should create full
opportunities for all, making the economic and financial markets an instrument of policy making rather
than a goal in itself. To achieve forward-looking economic models, one has to understand the political
economy of reforms, in every specific context. Very often the coalitions maintaining the status quo have
built up very powerful networks with direct or indirect influence on the processes of policymaking. To
change, platforms for the discussion of reform agendas have to be established; new alliances including
diverse stakeholders have to be created. Alternative narratives and long-term visions with the ability to
convince different groups of society are needed for winning public debates and building up political
pressure on decision-makers. In the end, the way towards the Economy of Tomorrow is a political
struggle.

REFERNCES
1. https://www.eastasiaforum.org/2019/11/30/smarter-strategies-for-sharing-south-asias-
rivers/
2. https://water.muet.edu.pk/wp-content/uploads/2019/03/National-Water-Policy.pdf
3. Forest Landscape Integrity Index - Wikipedia
4. Pakistan to Accept $6 Billion Bailout From I.M.F. - The New York Times (nytimes.com)
5. Average exchange rate likely to be Rs172.53 by June 2020 (tribune.com.pk)
6. Pakistan GDP per Capita, 1960 – 2021 | CEIC Data
7. Pakistan Bureau of Statistics (pbs.gov.pk)
8. www.aedb.org/images/Draft_ARE_Policy_2019_-_Version_2_July_21_2019.pdf
9. https://www.eastasiaforum.org/2020/05/13/the-renewable-energy-transition-is-coming-to-
asia/

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