ECONOMIC HISTORY of Pakistan.

1. `
ECONOMIC HISTORY
The only suitable manner in which a country can be evaluated is to examine its
history and to look at how certain features have evolved through certain
processes and the direction in which these developments have taken place. The
story of development is more important than a mere comparison of numbers at
the beginning with those at end.
Probably the most striking factor that is in a manifested in a view of Pakistan in
2013 as compared to 1947 is that Pakistan today is less than half of country it was
in 1947.in 1947 55% of Pakistan’s population lived in what was then east Pakistan
making it the majority province in terms of population. Despite its majority the
eastern wing was economically discriminated against and exploited .a section of
the ruling elite of the western wing of Pakistan become the oppressors and
exploiters of the east Pakistani people leading to their eventual secession after a
long and painful war of liberation ending in 1971.the contribution made by east
Pakistan to Pakistan economy and society was huge, though never fully
recognized or appreciated by west Pakistani's.
In 1947 Pakistan had every right to be called an agricultural country because at
that time major share of Pakistan's gross domestic product was from agriculture
which contributed around 53% compared to 7.8% from manufacturing and 11.9%
from retail trade. More than 65% of Pakistani labor force worked in agriculture
and almost all of Pakistani exports consisted of primary products, essentially
agricultural commodities like jute, tea, which not surprisingly originated from East
Pakistan.
Pakistan is no more an agrarian country as agriculture contributes on 21% of GDP
and 45% of labor force is employed in this sector now. Manufacturing sector has
grown as its share in GDP is now25%.services sector has dominated all other
sectors and contributing more than half of the county's GDP. Nature of exports
has also changed as now Pakistan is exporting manufacturing products.

2. `
Laying the foundation 1947-58:
In 1947 Pakistan was indeed a predominantly agrarian, underdeveloped, newly
independent nation, with little industry few services, and no infrastructure.
The primary task of the government .attempts to restructure the economy and to
ensure that it was on a strong footing could be undertaken only after the initial
political and economic shocks had been dealt with.
The decade of development:1958-68
1960 stands out as the decade with the best performance. Many of the
economists have written about Ayub khan's era and they are generally agreed
that considerable economic growth and development did indeed take place. They
argue that significant leaps were made in industrial and agricultural production
Observers have pointed out that this aggressive capitalist development caused
serious economic, social and political tensions. They argue that there was
increased disparity in income across different regions. Major growth was in
central Punjab and in Karachi; critics say that two regions were permitted to grow
at the expense of the rest of the country.
The bad luck years: 1971-77
Bhutto's economic policies were more illiberal than those of his predecessor, and
his nationalization was said to be the major cause for a huge downward trend in
growth. In the 1970s GDP grew by close to 5% which indicates the need for a
thorough reexamination of the economic programmed of Bhutto. Bhutto was an
unlucky politician in many ways and events beyond his control affected his
economic programmed.
The economic loss of East Pakistan was strongly felt.
The devaluation of the Pakistani rupee by120% in May 1972 brought significant
dividends in terms of export growth in one year (1972/3)
The 1973 OPEC price increases played havoc with Pakistan's import bill and the
balance of payments deteriorate

3. `
Also, the period after 1973 saw a serious worldwide recession affecting Pakistan's
exports. Recurrent domestic cotton crop failures and floods in 1973,1974 and
1976,affected Pakistan's main exports,
The large nationalized units taken over but Bhutto were the most inefficient in
the industrial sector, and despite this, industry experience a reasonable growth
rate.
Bhutto's government also laid the foundations for future growth and
development from which his successor benefited .basic industries were set up
and a base for a capital goods industry which resulted in subsequent growth. The
Liberal economic policies of Zulfiqar Ali Bhutto were responsible for growth not
only during his own tenure but also in period after 1977.
The second military government 1977-88
General Zia regime was more liberal in economic terms but not politically than
any one of his predecessors. While the civilian military bureaucracy played a
prominent role in acquiring capital and in assuming the role of entrepreneur and
financer, numerous individual capitalists emerged in the post-Bhutto era. High
rates of industrial growth were led by coming on stream of earlier investment
made by public sector under Bhutto, especially in heavy industries and also by
rapid expansion in domestic by USA helped ensure that steps were taken to
increase growth. remittances from middle east and aid from abroad helped
launch Pakistan second economic revolution .By becoming the capitalist world's
front line state against soviet union and specially against expansionism .in the
region Pakistan’s government gained in terms of financial aid and resources.
However general Zia’s martial rile inflicted deep rooted damage to Pakistan
society.

4. `
The era of structural adjustment 1988-1999
The period after the death of general Zia in 1988resulted in return of democracy
to Pakistan, between august 1988 to august 1997, Pakistan had four general
elections with both Benazir Bhutto and nawaz Sharif being returned to power
twice. Since none of the elected governments was able to complete its full term
there have also been more than a few caretaker governments.
Musharrafera:
Pakistan’s economy has witnessed many changes since October 1999, some for
the better and others for the worse.
There was deregulation of the banking sector, including sharply cutting loan
interest rates, putting in place a regime that allowed banks to engage more
liberally in giving consumer finance loans, and lifting restrictions on the number of
branches that foreign banks could open in Pakistan. Easy access to low-cost
consumer finance led to a sharp rise in the sale of consumer goods such as cars,
motor cycles, cell phones and home appliances had been noticed.
hose years, from about $
450 in 1999 to about $ 1,000 in 2007. In making this case, the government chose
to ignore the fact that a falling dollar required that the per capita income figure
be proportionately scaled down to give a more realistic picture of the actual
figure.
The government also tended to gloss over the fact that it had artificially propped
up the value of the dollar against the rupee by directing the State Bank of
Pakistan to regularly buy dollars from the open market.
The government said it had propped up the rupee’s value to help exporters,
arguing that a higher rupee-dollar exchange rate would have meant that
exporters would have earned fewer dollars for their exports, thereby putting
additional pressure on the country’s balance of payments. While there was
considerable merit in this argument, the downside of the State Bank’s

5. `
interventionist operations in the currency market was that it made imports more
expensive in rupee terms
Higher-priced capital goods, in turn, increased the cost of expanding
manufacturing plants or setting up new factories, resulting in a slowing down of
the industrialization process.
Like all bubbles, the low-interest-rate bubble, too, had to burst one day. Within a
few years, loan interest rates again began to rise steeply, soaring from a low of
about five per cent per annum in 2002-03 to over 15 per cent today for business
loans and 22 per cent for consumer finance loans.
Higher education is a federal subject, and the Musharraf-Aziz government has to
be given credit for setting up a Higher Education Commission and for significantly
increasing the budget allocation for higher education,
Foreign remittances start growing speedily in Musharraf era
The Democratic Government ofZardari:
In 2012 the nation was poorer, hungrier, and more deprived than it was in March
2008.
For the first time since independence in 1947, democratically elected legislatures
completed their constitutionally mandated tenures in Pakistan. This is indeed a
significant landmark in Pakistan’s democratic history.
While the Musharraf regime posted 6 per cent to 8 per cent economic growth
rates, the Zardari government couldn’t muster even a 4 per cent GDP growth.
Itis, however, truethat the good fortunedid not favour the elected governments.
the Zardari government came to power in 2008 when the global economies
experienced the worst economic recession since the great depression of the 30s.
The demand for Pakistani goods declined and investment flows dried up, thus
starving Pakistani industries.