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Assignmnet 4
Assignmnet 4
ECONOMIC CHALLENGES
TO THE
Contents INDUSTRIAL
SECTOR OF PAKISTAN
INTRODUCTION:........................................................................................................................ 3
Definition of Economy:.............................................................................................................. 3
ROLE OF INDUSTRIES:...........5
Course Title:
MAJOR
Pakistan Studies INDUSTRIES OF
MINOR
HUM111 INDUSTRIES OF
Submitted by:
Ali Hussein PAKISTAN:...............7
SECTOR
Submitted to: OF PAKISTAN:........8
FA18-BSE-057
SOLUTIONS TO
Registration No.:
IMPROVE Aiman Sartaj ECONOMY
Submitted by:
CHALLENGES:......13
HUM111
CONCLUSION:......................................................................................................................... 17
Course Code:
Pakistan Studies
REFERENCES:......................................................................................................................... 19
Course Title:
INTRODUCTION:
In 1947, Pakistan had 30 million people with per capita income of 100$. Agriculture accounted
for almost 50% of economic output with hardly any manufacturing, as all industries were located
in India. Therefore, it was unable to feed 30 million people and was dependent on PL-480
imports from the USA. From thereon, Pakistan has come a long way. Today with 170 million
people, our per capita income in 2008 was 1000$ which was ten times more. Pakistan is the
third largest exporter of rice in the world and producing enough food grains to feed its people. 3
million tons of rice is exported every year by Pakistan which is surplus to our requirements.
Pakistan is also one of the five major textile producing countries in the world. So if we measure
in relation to where we were vis-à-vis structure of economy, agriculture has come down from
50% to 20%. Agriculture is not only crops, within agriculture there has been a significant
change. Livestock, dairy, mutton, beef, poultry and similar other products is 50% of agriculture
output in Pakistan. Pakistan also produces third largest quantity of milk in the world. So within
agriculture sector, there is a change i.e. major crops are only 36% of agriculture value added
and 14% are minor crops, fisheries, orchards, fruits and vegetables. Thus, we are moving in a
direction where the same land and same resources are being used more efficiently in order to
produce more. As a contrast, agriculture is only 2.5% in the US having a population of 300
million, out of which they not only feed the entire population, but also export to the rest of the
world. Therefore, it is important to understand that when it is said that agriculture is
producing/contributing more, it is the productivity of agriculture rather than the share of
agriculture in GDP. Manufacturing and industry now account for 25% of the income; when we
recall there was not even a single industry worth its name at the time of partition. So if we look
where we were and where we are, I think the justification for Pakistan in terms of betterment of
economic conditions of Muslims in this part is very strong. But where we have failed is that we
have not lived up to our potential. In 1969, Pakistan exports of manufactured goods were higher
than the combined exports of Indonesia, Malaysia, Philippines and Thailand. In 1960’s Korea
emulated Pakistan in its five years planning process. The tragedy is that even a country such as
Vietnam which was completely devastated by the war has now overtaken Pakistan. Ten years
ago, India which was way behind Pakistan (till 1990’s) is now way ahead. As an economist and
student of globalization, the biggest challenge is: how can we organize ourselves to reach that
position where at least we can be running not at the nine second a mile but at least ten second
a mile 3 race which is going on in the global economy.
Definition of Economy:
An economy is the large set of inter-related production and consumption activities that aid in
determining how scarce resources are allocated. This is also known as an economic system.
Economics is on the one side a study of wealth; and on the other and more important side, a
part of the study of man.” According to Marshall, wealth is not an end in itself as was thought by
classical authors; it is a means to an end—the end of human welfare.
Economic development first became a major concern after World War II. As the era of European
colonialism ended, many former colonies and other countries with low living standards came to
be termed underdeveloped countries, to contrast their economies with those of the developed
countries, which were understood to be Canada, the United States, those of western Europe,
most eastern European countries, the then Soviet Union, Japan, South Africa, Australia,
and New Zealand. As living standards in most poor countries began to rise in subsequent
decades, they were renamed the developing countries.
There is no universally accepted definition of what a developing country is; neither is there one
of what constitutes the process of economic development. Developing countries are usually
categorized by a per capita income criterion, and economic development is usually thought to
occur as per capita incomes rise. A country’s per capita income (which is almost synonymous
with per capita output) is the best available measure of the value of the goods and services
available, per person, to the society per year. Although there are a number of problems of
measurement of both the level of per capita income and its rate of growth, these two indicators
are the best available to provide estimates of the level of economic well-being within a country
and of its economic growth
ROLE OF INDUSTRIES:
● Major industries of country contribute greatly to the economy of that country.
● They are usually in the formal sector and are usually registered.
● They employee a larger number of employees
● They are usually large and important industries of a country.
● They usually contribute to GDP of a country.
Textile Industry:
The Textile industry in Pakistan is the largest manufacturing industry in Pakistan. Pakistan is the
8th largest exporter of textile products in Asia. This sector contributes 8.5% to the GDP. In
addition, the sector employs about 45% of the total labor force in the country (and 38% of the
manufacturing workers). At present, there are 1,221 ginning units, 442 spinning units, 124 large
spinning units and 425 small units which produce textile. The Textile industry in Pakistan is the
largest manufacturing industry in Pakistan. Pakistan is the 8th largest exporter of textile
products in Asia. This sector contributes 8.5% to the GDP.
Agriculture industry:
Agriculture constitutes the largest sector of our economy. Majority of the population, directly or
indirectly, dependent on this sector. It contributes about 24 percent of Gross Domestic Product
(GDP) and accounts for half of employed labor force and is the largest source of foreign
exchange earnings. It feeds our whole rural and urban population. Realizing its importance,
planners and policy makers are always keen to have reliable area and production statistics of
agricultural crops well in time. Policy makers primarily need accurate and timely statistics for
the important crops such as wheat, cotton, rice, sugarcane, maize etc.
In 2005, Pakistan produced 21,591,400 metric tons of wheat, more than all of Africa
(20,304,585 metric tons) and nearly as much as all of South America (24,557,784 metric tons),
according to the FAO. The country was expected to harvest 47 to 64 million tons of wheat in
2015. Pakistan has also cut the use of dangerous pesticides dramatically.
Mining industry:
Mining is an important industry in Pakistan. Pakistan has deposits of several minerals including
coal, copper, gold, chromite, mineral salt, bauxite and several other minerals. There are also a
variety of precious and semi-precious minerals that are also mined. These include peridot,
aquamarine, topaz, ruby, emerald, rare-earth minerals bastnaesite and xenotime, sphene,
tourmaline, and many varieties and types of quartz. The Pakistan Mineral Development
Corporation is the responsible authority for the support and development of the mining industry.
Gemstones Corporation of Pakistan looks after the interests of stake holders in gemstone
mining and polishing as an official entity. Baluchistan province is the richest in mineral
resources available in Pakistan. While recently Sindh discovered coal deposits in Thar. Khyber
Pakhtoon khwa is rich in gems. Most of the mineral gems found in Pakistan exist here. Apart
from oil, gas and some mineral used in nuclear energy purposes which comes directly under
federal control mining of other minerals is provincial issue. Currently around 52 minerals, are
mined and processed in Pakistan. Khewra salt mines are second largest salt mines in the world.
Sugar Industry:
Sugar Industry is an agro-based industry, which provides employment to the landless rural
population and has a great impact on the economy of the country. it has become the second
largest industry after the Textiles sector. The sugar industry is totally dependent on this raw
material although sugar in the northern areas is also made from sugar beet. Sugarcane is a
labor-intensive crop. It requires about 134 man-days/hectare. Sugarcane cultivation provides
partial and seasonal employment to 3.9983m people approximately, which is about 12.14% of
the total agricultural labor force.
The general perception of the sugar industry as minting money is not a correct perspective in
the prevailing situation. First of all, it has a seasonal production spell for a period of five months
from November to March. Keeping production flow smoothly coordinated with storing and
maintaining orderly schedules of supplies throughout the year are really complex issues to
tackle.
MINOR INDUSTRIES OF PAKISTAN:
In Pakistan, cottage or household industries hold an important position in rural set-up and are
usually know as minor industries .Most villages are self-sufficient in the basic necessities of life.
They have their own carpenters, blacksmiths, potters, craftsmen and cotton weavers. Many
families depend on minor cottage industries for income. Minor industries have also gained
immense importance in cities and towns. There is great demand for hand-woven carpets,
embroidered work, brassware, rugs and traditional bangles. These are also considered
important export items and are in good demand in international markets.
Sports Industry:
There is an industry to manufacture everything so is for sport’s goods and this is one of those
industries that earn great revenue each year because of the popularity of every sport. In
Pakistan almost all sports related items are produced but the famous products are soccer ball,
cricket bat, cricket ball, tennis ball and some other items too. Sports industry of Pakistan has
even manufactured the soccer ball for the FIFA World cup of the year 1994; this shows that how
demanding the sports industry of Pakistan is in the world market of sports goods. The sports
industry of Pakistan lies in the city of Sialkot which is a part of the province of Punjab. All the
items of sports of the best quality are manufactured in the city of Sialkot and sports industry in
Sialkot is the main factor of Sialkot’s economy as it earns great profit from it due to the high
demand of sports good in international market.
o Cloth Sector :
There are three different sub-sectors in weaving viz, Integrated, Independent Weaving Units,
and Power loom units. There is investment in the shuttle-less looms both in integrated and
independent weaving sector. This trend is likely to intensify in the country. The power loom
sector modernized and registered a phenomenal growth over the last two decades. The growth
of power loom sector is due to favorable government policies as well as market forces. The
production in Non-Mills Sector is not reported and therefore is estimated. The Table 3.4 shows
production and export of clothing during the period under review.
World Trade:
In 1990s, the share of Pakistan in the world trade is .2%, which remains now, .12%. This thing
indicates that our share in world trade is shrinking year by year. While if we look at the share of
India in world trade then we come to know that it has doubled its share in world trade till 1990-
2010 by .7%-1.4%.our exports are limited in some sectors like textile, wheat and rice. Our
exports are limited to only some countries, like, U.S, U.A.E, and Australia etc. As our share in
the world economy is shrinking year by year, so, it encourages us to import more and export
less. This is presenting great challenge to Pakistan economy.
Political Stability:
The general curving topic is that for a powerful economy we ought to have political steadiness,
peace and security. The Armed Forces of Pakistan merit appreciation for what they have done
in Malakand Division to achieve strength to the extent the peace circumstance is concerned.
The sooner the nation is disposed of this picture of political flimsiness, poor peace circumstance
and instability, whereby speculators from everywhere throughout the world dither in coming to
Pakistan and contribute, we won't almost certainly gain any ground in this nation. In 2007,
Pakistan was a standout amongst the most loved nations among the global speculator network.
A multiyear bit of paper was glided which a bond for Pakistan to be paid in 2037 and Pakistan
was got multiple times over membership at a value which was just 300 premise focuses over
the US treasury. Not very many nations can profess to have that sort of believability with
universal reserve directors. In any case, in two years' time we have missed that vessel. Hence,
it is basic that we continue the voyage which has been hindered by sustaining a steady, secure
and tranquil political condition.
Nuclear Technology:
Nuclear technology be properly used in this regard. No doubt, this technology contributes very
low quantity. But Pakistan should try to get maximum benefit of it.
This all is possible when there is strong system of checks and balances.
If the energy crisis is solved, it would not only facilitate the local industrialists but also foreigners.
Similarly, latest technology must be introduced to our industrial sector. Concerted efforts will
have to be made towards moving the industry into a higher technological orbit to produce value-
added goods that are competitively priced in the international markets. To enable industrialists
to up-grade their technology, import of new machinery and equipment should be exempted from
import duty and sales tax. In addition, keeping in view that not all manufacturers may have the
necessary resources to invest in brand new machinery and equipment, import of second-hand
machinery may be allowed.
Skilled Laborers:
In addition to latest technology our industry needs skilled laborers to run modern machinery.
Without skilled laborers modern machinery would be of no use to run our industry. For his,
technical institutions, on the basis of the modern industrial needs, be established. In these
institutions, experienced teachers be engaged. These teachers can train laborers through
modern scientific techniques cater to the requirement of our industry. Last but not least,
industrialist must be given loans on easy installments so that they could extend their business
keeping in view the moderns demands of globalizations.
Provision of electricity:
We should create power by those assets which are inexhaustible. Government should mindful
the general population to purchase those merchandise which are vitality proficient. Government
should mindful individuals to control light utilization. Government ought to enable individuals to
actualize little plants on their homes for creating power for their selves. A ceaseless observing,
reconnaissance and review of both Hydro and Thermal Power age units. An outsider
administrative consistence of Independent Power Producers (IPP's) on a never-ending premise.
Checking of stock so burglaries and pilferages are avoided of heater oil which has prompted
lower quantities of intensity age. Inconvenience of exacting money related punishments on
inability to lead vitality reviews and poor execution of influence plants. Change over to less
expensive powers to chop down the power age rates and resulting expulsion of appropriation.
Development of new dams on the keep running of the stream in order to guarantee that there
are no floods during rainstorm and the nation is set up to battle the water war set by India on
Pakistan.
Economic revival of State Owned Enterprises:
The Economic survey of Pakistan reports that during FY12 and FY13 the power Shortage
became so severe that it wiped out 2% from the country’s GDP. Agriculture, Manufacturing as
well as Services sector performed below their capacity”. In addition to the energy crisis, the
below par performance of State Owned Enterprises has been a major concern. The shady
privatization of these state owned enterprises in the past have actually led to worsening of
economy and if the country goes for another string of poorly executed privatization, the ethical
standing of the government would be lowered but the quality of life of the country would be
lowered beyond repair. Decline in Foreign remittances, depletion of reserves, and stagnant tax
collections all suggest that the economy needs more careful review and constant watch. If left
unattended the fiscal deficit will increase and result in lowering of GDP. The government should
increase the privatization in those sectors which are not in more profits or which have fewer
investments from public. If government wants to increase the profits of such kind of institutions
then it may privatize these sectors. Government should also do privatize the railway sector.
Because if the government privatize the railway sector then it will be able to collect private
investment .by the privatization of railway the workers of railway try to work more efficiently
because of the fair of firing from job and railway works more efficiently. The further benefit of
privatization is that people are begun to invest their money.
Use of Technology:
The technology is spreading like a rapidly spreading fire. What number of individuals five years
prior could have believed that even in a communities and towns of Pakistan, one would access
to cell phones. 95 million Pakistanis have cell phones today. You can utilize this innovation so
as to give those financial administrations, data on atmosphere/climate, agribusiness
augmentation, wellbeing, training and so forth. It is an incredible asset which can jump a ton of
time which we have squandered. Utilizing innovation especially the data/correspondence
innovation for the improvement of social and monetary issues of Pakistan is something which
should be done however it is impossible the manner in which we have compartmentalized this
into various services. An increasingly all-encompassing and complete methodology that sends
innovation for neediness decrease must be set up. Technological advances have significantly
improved operations and lowered the cost of doing business. Currently, as an example, just a
few technicians controlling robotic systems can operate an entire manufacturing plant, and
innovative inventory systems are capable of supplying needed parts within a short time for
assembly. Advancements in the computer industry, coupled with advancements in
telecommunications, have increased job opportunities and strengthened economic growth.
All physical barriers to communication over distances have been properly overcome by the
internet. In a similar way, manufacturing and consumer goods companies have developed
online links to their suppliers and customer support. Suppliers can keep track of production line
efficiencies through automated systems and can more efficiently ship parts and materials to the
required locations, reducing inventory and downtime. In addition to that ecommerce and online
banking capabilities have also helped reduce the cost of doing business. The impact of
technology economy in the market is very significant, infusing even the measurement of the
market economy. Some of the largest indexes known in the market, such as the Dow Jones
Industrial Average (DJIA) and the S&P 500, have changed. Tech powerhouses like Apple,
Google, and Amazon, whose stocks are valued much higher than those of many long-time
industrial members, are replacing large industrial super companies. Apple, with its high market
capitalization, accounts for such a large share of the DJIA, for example, that any hiccup in its
quarterly earnings can move the entire index, situation that was once done by other large
corporations such as GM and Caterpillar. Technology has an amazing power of permeate
companies. An important measurement of the technology economy is the observing the
Worldwide IT.
CONCLUSION:
The industrial sector and energy are directly proportional/inter-dependent on each other.
Without one sector the other is of no value. Therefore, to beat the time it is necessary that
Pakistan’s both sectors be brought at the level required by the developed countries of the world.
We have very experience of China and India having the world largest population are emerging
as powerful countries in the world. The reason behind that they have come to know how policies
be made and be implemented. Therefore, Pakistan needs to follow their way of emergence. If
Pakistan can borrow money from world countries then why not their policies for the betterment
of the country. Firstly, the government should focus on other resources besides water. For
example wind, nuclear, tidal, solar etc.
Secondly, the four provinces of the country are said to be the limbs of Pakistan. They should
work together for the welfare of the country. For example, the proper utilization of natural
resources lying in different parts of the country and the royalty over them to be paid by centre to
promote inter-provincial harmony.
Thirdly, proper implementation of Indus Basin Treaty as signed in 1960. The World Bank played
its role as arbitrator between India and Pakistan. Therefore, India should be pressurized from
World Bank to abide by the treaty.
Further, nuclear technology be properly used in this regard. No doubt, this technology
contributes very low quantity. But Pakistan should try to get maximum benefit of it.
This all is possible when there is strong system of checks and balances.
If the energy crisis is solved, it would not only facilitate the local industrialists but also foreigners.
Similarly, latest technology must be introduced to our industrial sector. Concerted efforts will
have to be made towards moving the industry into a higher technological orbit to produce value-
added goods that are competitively priced in the international markets. To enable industrialists
to up-grade their technology, import of new machinery and equipment should be exempted from
import duty and sales tax. In addition, keeping in view that not all manufacturers may have the
necessary resources to invest in brand new machinery and equipment, import of second-hand
machinery may be allowed.
In addition to latest technology our industry needs skilled laborers to run modern machinery.
Without skilled laborers modern machinery would be of no use to run our industry. For his,
technical institutions, on the basis of the modern industrial needs, be established. In these
institutions, experienced teachers be engaged. These teachers can train laborers through
modern scientific techniques cater to the requirement of our industries.
REFERENCES:
Industries of Pakistan by Hanan Falak, US
The Strategy of Economic Development by Albert Hirschman
The Theory of Economic Growth by W Arthur Lewis
Wikipedia, Industries of Pakistan
Issues in Pakistan's Economy Third Edition
A Political Economy Perspective by S. Akbar Zaidi
Zaidi, S. A. (2005). Issues in Pakistan’s Economy. Oxford University Press Karachi,
Pakistan.
UK Essays. November 2018. Imports And Exports On The Economy Of Pakistan
Economics Essay.