Economy of Pakistan
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Economy of Pakistan
Pakistanmontage.jpg
Karachi's downtown.
Rank 26th (PPP)
44th (Nominal)
Currency
1 Pakistani Rupee (PKR)

Rs.1 = 100 Paisas
Fiscal year
1 July – 30 June
Trade organisations
ECO, SAFTA, ASEAN, WIPO and WTO
Statistics
GDP $245 billion (nominal) (2014)[1]
$576 billion (2014 est.)(PPP)
GDP growth
3.7% (2012)[2]
3.3% (2013)[3]
GDP per capita
$1,307 (nominal; 143rd; 2013) [4]

$3,149 (PPP; 140th; 2013)[4]
GDP by sector
agriculture: 21.2%, industry: 25.4%, services: 53.4% (2010 est.)
Inflation (CPI)
7.93% (March 2014)[5]
Population below poverty line
21% (2013)[6][7][8][9]
Labour force
59.74 million (2012-13)[10]
Labour force by occupation
agriculture: 49.1%, Construction: 15.2%, Manufacturing: 13.3%, Wholesale and Retail: 9.2%, Transport and Communication: 7.3% (2012-13)[10]
Unemployment 5.6% (2012 est.)
Main industries
textiles and apparel, food processing, pharmaceuticals, construction materials, chemicals, cement, mining, machinery, steel, engineering, software and hardware, automobiles, motorcycle and auto parts, electronics, paper products, fertiliser, shrimp, defence products, shipbuilding
Ease-of-doing-business rank
107th (2013)[11]
External
Exports $25.05 billion (2013 est.)[12][13]
Export goods
textiles (garments, bed linen, cotton cloth, yarn), rice, leather goods, sports goods, chemicals, manufactures, carpets, steel, foodstuffs, fertilizer, Cement, sugar, animals, electrical equipment, petroleum and rugs
Main export partners
 United States 13.3%
 China 10.9%
 United Arab Emirates 8.6%
 Afghanistan 8.5% (2012 est.)[14]
Imports $33 billion (2013 est.) [15]
Import goods
petroleum, petroleum products, machinery, plastics, transportation equipment, edible oils, paper and paperboard, iron and steel, tea
Main import partners
 China 19.8%
 Saudi Arabia 12.0%
 United Arab Emirates 11.9%
 Kuwait 6.2% (2012 est.)[16]
Public finances
Public debt
62% of GDP (2013 est.)[17]
Revenues Rs 1939 billion ($19.39 billion) (2013)[18]
Expenses $39.3billion (2014-15)[19]
Credit rating
Standard & Poor's:[20]
B- (Domestic)
B- (Foreign)
B- (T&C Assessment)
Outlook: Stable[21]
Moody's:[21]
Caa1
Outlook: Stable[22]
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.
The economy of Pakistan is the 26th largest in the world in terms of purchasing power parity (PPP), and 44th largest in terms of nominal GDP. However as Pakistan has a population of over 186 million (the world's 6th-largest), thus GDP per capita is $3,149 ranking 140th in the world. Pakistan is a rapidly developing country[23][24][25] and is one of the Next Eleven, the eleven countries that, along with the BRICs, have a high potential to become the world's largest economies in the 21st century.[26] However, after decades of war and social instability, as of 2013, serious deficiencies in basic services such as railway transportation and electric power generation had developed.[27] The economy is semi-industrialized, with centres of growth along the Indus River.[28][29][30] Major industries includes textiles (garments, bed linen, cotton cloth, yarn), chemicals, food processing (mainly sugar, salt, wheat, rice, fruit), agriculture, fertilizer, cement, dairy and rugs.[citation needed]

Growth poles of Pakistan's economy are situated along the Indus River;[29][31] the diversified economies of Karachi and major urban centers in the Punjab, coexisting with lesser developed areas in other parts of the country.[29] The economy has suffered in the past from internal political disputes, a fast-growing population, mixed levels of foreign investment.[27] Foreign exchange reserves are bolstered by steady worker remittances, but a growing current account deficit – driven by a widening trade gap as import growth outstrips export expansion – could draw down reserves and dampen GDP growth in the medium term.[32] Pakistan is currently undergoing process economic liberalization with includes privatization of all government corporations, aimed to attract foreign investment and decrease budget deficit.[33] In 2014, foreign currency reserves crossed $15 billion which has led to stable outlook on the long-term rating by Standard & Poor's.[34][35]

Contents  [hide]
1 Economic history
1.1 First five decades
1.2 Recent decades
1.3 Economic resilience
1.3.1 Background
1.4 Macroeconomic reform and prospects
1.4.1 Doing Business
2 The economy today
2.1 Stock market
2.2 Manufacturing and finance
2.3 Middle class
2.4 Poverty alleviation expenditures
2.5 Demographics
2.5.1 Employment
2.6 Tourism
2.7 Revenue
3 Currency system
3.1 Rupee
3.2 Foreign exchange rate
3.3 Foreign exchange reserves
4 Structure of economy
5 Wealth
6 Major Sectors
6.1 Primary
6.1.1 Agriculture
6.1.2 Mining
6.2 Secondary
6.2.1 Industry
6.2.2 Automotive industry
6.2.3 Construction material
6.2.4 Information Communication Technology Industry
6.2.5 Textiles
6.2.6 Other
6.3 Services
6.3.1 Communication
6.3.2 Transportation
6.3.3 Finance
6.3.4 Housing
6.3.5 Minor Sectors
6.3.6 Energy
6.3.7 Chemicals and pharmaceuticals
7 Foreign trade, remittances, aid, and investment
7.1 Investment
7.1.1 Foreign acquisitions and mergers
7.2 Foreign trade
7.2.1 Exports
7.3 External imbalances
7.4 Economic aid
7.5 Remittances
8 Government finances
8.1 Revenues and taxation
8.2 Expenditures (and the economic costs of War on Terror)
8.3 Sovereign bonds
9 Income distribution
10 See also
11 Further reading
12 References
13 External links
Economic history[edit]
Main article: Economic history of Pakistan
First five decades[edit]
Pakistan was a very poor and predominantly agricultural country when it gained independence in 1947. Pakistan's average economic growth rate in the first five decades (1947-1997) has been higher than the growth rate of the world economy during the same period. Average annual real GDP growth rates[36] were 6.8% in the 1960s, 4.8% in the 1970s, and 6.5% in the 1980s. Average annual growth fell to 4.6% in the 1990s with significantly lower growth in the second half of that decade. See also[37]

With a GDP growth rate of 6.8% during the 1960s, Pakistan was seen as a model of economic development around the world, and there was much praise for its economic progress. Karachi was seen as an economic role model around the world, and there was much praise for the way its economy was progressing.[citation needed] Many countries sought to emulate Pakistan's economic planning strategy and one of them, South Korea, copied the city's second "Five-Year Plan".[citation needed] Later, economic mismanagement in general, and fiscally imprudent economic policies in particular, caused a large increase in the country's public debt and led to slower growth in the 1970s and 1990s. The economy improved during the 1980s, with a GDP growth of 6.5%, a policy of economic deregulation, and an increased inflow of remittances from expatriate workers.[citation needed]

Recent decades[edit]
This is a chart of trend of gross domestic product of Pakistan at market prices estimated[38] by the International Monetary Fund with figures in millions of Pakistani Rupees. See also[37]

Year Gross Domestic Product US Dollar Exchange Inflation Index
(2000=100) Per Capita Income
(as % of USA)
1960 20,058 4.76 Pakistani Rupees 3.37
1965 31,740 4.76 Pakistani Rupees 3.40
1970 51,355 4.76 Pakistani Rupees 3.26
1975 131,330 9.91 Pakistani Rupees 2.36
1978 283,460 9.97 Pakistani Rupees 21 2.83
1985 569,114 16.28 Pakistani Rupees 30 2.07
1990 1,029,093 21.41 Pakistani Rupees 41 1.92
1995 2,268,461 30.62 Pakistani Rupees 68 2.16
2000 3,826,111 51.64 Pakistani Rupees 100 1.54
2005 6,581,103 59.86 Pakistani Rupees 126 1.71
Economic resilience[edit]


GDP Rate of Growth 1951–2009
Background[edit]
Historically, Pakistan's overall economic output (GDP) has grown every year since a 1951 recession. Despite this record of sustained growth, Pakistan's economy had, until a few years ago, been characterised as unstable and highly vulnerable to external and internal shocks. However, the economy proved to be unexpectedly resilient in the face of multiple adverse events concentrated into a four-year (1998–2002) period —

the Asian financial crisis;
economic sanctions – according to Colin Powell, Pakistan was "sanctioned to the eyeballs";[39]
The global recession of 2001–2002;
a severe drought – the worst in Pakistan's history, lasting about four years;
heightened perceptions of risk as a result of military tensions with India – with as many as 1 million troops on the border, and predictions of impending (potentially nuclear) war;
the post-9/11 military action in neighbouring Afghanistan, with a massive influx of refugees from that country;
Despite these adverse events, Pakistan's economy kept growing, and economic growth accelerated towards the end of this period. This resilience has led to a change in perceptions of the economy, with leading international institutions such as the IMF, World Bank, and the ADB praising Pakistan's performance in the face of adversity.[citation needed]

Macroeconomic reform and prospects[edit]


National Highways, Motorways & Strategic Roads of Pakistan.
According to many sources, the Pakistani government has made substantial economic reforms since 2000,[40] and medium-term prospects for job creation and poverty reduction are the best in nearly a decade.

Government revenues have greatly improved in recent years, as a result of economic growth, tax reforms – with a broadening of the tax base, and more efficient tax collection as a result of self-assessment schemes and corruption controls in the Central Board of Revenue – and the privatisation of public utilities and telecommunications. Pakistan is aggressively cutting tariffs and assisting exports by improving ports, roads, electricity supplies and irrigation projects. Islamabad has doubled development spending from about 2% of GDP in the 1990s to 4% in 2003, a necessary step towards reversing the broad underdevelopment of its social sector.[citation needed]

Current Opportunities

Do good, feel good

ADP is made up of talented professionals and students volunteering from both within and outside Pakistan, driven by a strong belief in developing Pakistan in measurable and meaningful ways. Volunteer activities at ADP usually pertain to identifying, evaluating and executing quality projects as well as raising funds to finance the same. This allows our volunteers to learn first-hand about development issues, while contributing higher-level skills and intellect.

Please start by having a look at the Volunteer Introduction.

You can find out more about volunteering activities by clicking on the links under Volunteer Roles to the right. Applying for a volunteer position is easy: click on the volunteer sign up button below and complete the following form. Given the large number of applicants (especially for project teams), please note that we may not be able to immediately match you with an opportunity.

Economic development

Economic development is the sustained, concerted actions of policy makers and communities that promote the standard of living and economic health of a specific area. Economic development can also be referred to as the quantitative and qualitative changes in the economy. Such actions can involve multiple areas including development of human capital, critical infrastructure, regional competitiveness, environmental sustainability, social inclusion, health,safety, literacy, and other initiatives. Economic development differs fromeconomic growth. Whereas economic development is a policy interventionendeavor with aims of economic and social well-being of people, economic growth is a phenomenon of market productivity and rise in GDP. Consequently, as economist Amartya Sen points out: “economic growth is one aspect of the process of economic development.”^[1]

Contents

  [hide] 

• 1 Term
• 2 History
  • 2.1 Growth and development
• 3 Goals
• 4 Regional policy
  • 4.1 Organization
  • 4.2 International Economic Development Council
• 5 Development indicators and indices
  • 5.1 GDP per capita
  • 5.2 Income distribution
  • 5.3 Literacy and education
  • 5.4 Access to healthcare
  • 5.5 Social security and pensions
  • 5.6 Modern transportation
• 6 Community competition
• 7 See also
• 8 References
• 9 Further reading

Term[edit]

See also Development economics

The scope of economic development includes the process and policies by which a nation improves the economic, political, and social well-being of its people.^[2]

The University of Iowa's Center for International Finance and Development states that:

'Economic development' is a term that economists, politicians, and others have used frequently in the 20th century. The concept, however, has been in existence in the West for centuries. Modernization, Westernisation, and especially Industrialisation are other terms people have used while discussing economic development. Economic development has a direct relationship with the environment.

Although nobody is certain when the concept originated, most people agree that development is closely bound up with the evolution of capitalism and the demise of feudalism.^[3]

Mansell and When also state that economic development has been understood since the World War II to involve economic growth, namely the increases in per capita income, and (if currently absent) the attainment of a standard of living equivalent to that of industrialized countries.^[4][5] Economic development can also be considered as a static theory that documents the state of an economy at a certain time. According to Schumpeter (2003), the changes in this equilibrium state to document in economic theory can only be caused by intervening factors coming from the outside.^[6]

History[edit]

Economic development originated in the post war period of reconstruction initiated by the US. In 1949, during his inaugural speech, President Harry Truman identified the development of undeveloped areas as a priority for the west:

“More than half the people of the world are living in conditions approaching misery. Their food is inadequate, they are victims of disease. Their economic life is primitive and stagnant. Their poverty is a handicap and a threat both to them and to more prosperous areas. For the first time in history humanity possesses the knowledge and the skill to relieve the suffering of these people ... I believe that we should make available to peace-loving peoples the benefits of our store of technical knowledge in order to help them realize their aspirations for a better life… What we envisage is a program of development based on the concepts of democratic fair dealing ... Greater production is the key to prosperity and peace. And the key to greater production is a wider and more vigorous application of modem scientific and technical knowledge."

There have been several major phases of development theory since 1945. From the 1940s to the 1960s the state played a large role in promoting industrialization in developing countries, following the idea of modernization theory. This period was followed by a brief period of basic needs development focusing on human capital development and redistribution in the 1970s. Neo-liberalism emerged in the 1980s pushing an agenda of free trade and Import Substitution Industrialization.

In economics, the study of economic development was borne out of an extension to traditional economics that focused entirely on national product, or the aggregate output of goods and services. Economic development was concerned in the expansion of people’s entitlements and their corresponding capabilities, morbidity, nourishment, literacy, education, and other socio-economic indicators.^[7] Borne out of the backdrop of Keynesian, advocating government intervention, andneoclassical economics, stressing reduced intervention, with rise of high-growth countries (Singapore, South Korea, Hong Kong) and planned governments (Argentina, Chile, Sudan, Uganda), economic development, more generally development economics, emerged amidst these mid-20th century theoretical interpretations of how economies prosper.^[1] Also, economistAlbert O. Hirschman, a major contributor to development economics, asserted that economic development grew to concentrate on the poor regions of the world, primarily in Africa, Asia and Latin America yet on the outpouring of fundamental ideas and models.^[8]

It has also been argued, notably by Asian and European proponents of infrastructure-based development, that systematic,long-term government investments in transportation, housing, education, and healthcare are necessary to ensure sustainable economic growth in emerging countries.

Growth and development[edit]

Dependency theorists argue that poor countries have sometimes experienced economic growth with little or no economic development initiatives; for instance, in cases where they have functioned mainly as resource-providers to wealthy industrialized countries. There is an opposing argument, however, that growth causes development because some of the increase in income gets spent on human development such as education and health.

According to Ranis et al., economic growth and development is a two-way relationship. According to them, the first chain consists of economic growth benefiting human development, since economic growth is likely to lead families and individuals to use their heightened incomes to increase expenditures, which in turn furthers human development. At the same time, with the increased consumption and spending, health, education, and infrastructure systems grow and contribute to economic growth.

In addition to increasing private incomes, economic growth also generate additional resources that can be used to improvesocial services (such as healthcare, safe drinking water, etc.). By generating additional resources for social services, unequal income distribution will be mitigated as such social services are distributed equally across each community, thereby benefiting each individual. Concisely, the relationship between human development and economic development can be explained in three ways. First, increase in average income leads to improvement in health and nutrition (known as Capability Expansion through Economic Growth). Second, it is believed that social outcomes can only be improved by reducing incomepoverty (known as Capability Expansion through Poverty Reduction). Lastly, social outcomes can also be improved with essential services such as education, healthcare, and clean drinking water (known as Capability Expansion through Social Services). John Joseph Puthenkalam's research aims at the process of economic growth theories that lead to economic development. After analyzing the existing capitalistic growth-development theoretical apparatus, he introduces the new model which integrates the variables of freedom, democracy and human rights into the existing models and argue that any future economic growth-development of any nation depends on this emerging model as we witness the third wave of unfolding demand for democracy in the Middle East. He develops the knowledge sector in growth theories with two new concepts of 'micro knowledge' and 'macro knowledge'. Micro knowledge is what an individual learns from school or from various existing knowledge and macro knowledge is the core philosophical thinking of a nation that all individuals inherently receive. How to combine both these knowledge would determine further growth that leads to economic development of developing nations.

Yet others believe that a number of basic building blocks need to be in place for growth and development to take place. For instance, some economists believe that a fundamental first step toward development and growth is to address property rights issues, otherwise only a small part of the economic sector will be able to participate in growth. That is, without inclusive property rights in the equation, the informal sector will remain outside the mainstream economy, excluded and without the same opportunities for study.

Goals[edit]

In the United States, Project Socrates outlined competitiveness as the driving factor for successful economic development ingovernment and industry. By addressing technology directly, to meet customer needs, competitiveness was fostered in the surrounding environment and resulted in greater economic performance and sustained growth.

Economic development typically involves improvements in a variety of indicators such as literacy rates, life expectancy, andpoverty rates. GDP does not take into account other aspects such as leisure time, environmental quality, freedom, or social justice; alternative measures of economic well-being have been proposed. Essentially, a country's economic development is related to its human development, which encompasses, among other things, health and education. These factors are, however, closely related to economic growth so that development and growth often go together. Due to globalization growth and development in those countries are interrelated to trends on international trade and participation in Global Value Chains (GVCs) and international financial markets. The last financial crisis had a huge effect on economies in developing countries. Economist Jayati Ghosh states that it is necessary to make financial markets in developing countries more resilient by providing a variety of financial institutions. This could also add to financial security for small-scale producers.^[9]

Regional policy[edit]

In its broadest sense, policies of economic development encompass three major areas:

• Governments undertaking to meet broad economic objectives such as price stability, high employment, and sustainable growth. Such efforts include monetary and fiscal policies, regulation of financial institutions, trade, and tax policies.
• Programs that provide infrastructure and services such as highways, parks, affordable housing, crime prevention, andK–12 education.
• Job creation and retention through specific efforts in business finance, marketing, neighborhood development, workforce development, small business development, business retention and expansion, technology transfer, and real estatedevelopment. This third category is a primary focus of economic development professionals.

One growing understanding in economic development is the promotion of regional clusters and a thriving metropolitan economy. In today’s global landscape, location is vitally important and becomes a key in competitive advantage.

International trade and exchange rates are a key issue in economic development. Currencies are often either under-valued or over-valued, resulting in trade surpluses or deficits.

Organization[edit]

Main article: economic development organization

Economic development has evolved into a professional industry of highly specialized practitioners. The practitioners have two key roles: one is to provide leadership in policy-making, and the other is to administer policy, programs, and projects. Economic development practitioners generally work in public offices on the state, regional, or municipal level, or in public–private partnerships organizations that may be partially funded by local, regional, state, or federal tax money. These economic development organizations function as individual entities and in some cases as departments of local governments. Their role is to seek out new economic opportunities and retain their existing business wealth.

There are numerous other organizations whose primary function is not economic development that work in partnership with economic developers. They include the news media, foundations, utilities, schools, health care providers, faith-based organizations, and colleges, universities, and other education or research institutions.

International Economic Development Council[edit]

With more than 20,000 professional economic developers employed world wide in this highly specialized industry, theInternational Economic Development Council (IEDC) headquartered in Washington, D.C. is a non-profit organization dedicated to helping economic developers do their job more effectively and raising the profile of the profession. With over 4,500 members across the US and internationally, serving exclusively the economic development community, IEDC membership represents the entire range of the profession ranging from regional, state, local, rural, urban, and international economic development organizations, as well as chambers of commerce, technology development agencies, utility companies, educational institutions, consultants and redevelopment authorities. Many individual states also have associations comprising economic development professionals, who work closely with IEDC.

Development indicators and indices[edit]

There are various types of macroeconomic and sociocultural indicators or "metrics" used by economists and geographers to assess the relative economic advancement of a given region or nation. The World Bank's "World Development Indicators" are compiled annually from officially-recognized international sources and include national, regional and global estimates.

GDP per capita[edit]

Income distribution[edit]

Literacy and education[edit]

Access to healthcare[edit]

Social security and pensions[edit]

Modern transportation[edit]

European development economists have argued that the existence of modern transportation networks- notably high-speed rail infrastructure constitutes a significant indicator of a country’s economic advancement: this perspective is illustrated notably through the Basic Rail Transportation Infrastructure Index (known as BRTI Index) ^[10]

Community competition[edit]

One unintended consequence of economic development is the intense competition between communities, states, and nations for new economic development projects in today's globalized world. With the struggle to attract and retain business, competition is further intensified by the use of many variations of economic incentives to the potential business such as: tax incentives, investment capital, donated land, utility rate discounts, and many others. IEDC places significant attention on the various activities undertaken by economic development organizations to help them compete and sustain vibrant communities.

Additionally, the use of community profiling tools and database templates to measure community assets versus other communities is also an important aspect of economic development. Job creation, economic output, and increase in taxable basis are the most common measurement tools. When considering measurement, too much emphasis has been placed on economic developers for "not creating jobs." However, the reality is that economic developers do not typically create jobs, but facilitate the process for existing businesses and start-ups to do so. Therefore, the economic developer must make sure that there are sufficient economic development programs in place to assist the businesses achieve their goals. Those types of programs are usually policy-created and can be local, regional, statewide and national in nature.

See also[edit]

Wikimedia Commons has media related to Economic development.

• Constitutional economics
• Factors of production
• FORGE Program
• Infrastructure
• Private sector development
• Public capital
• Opportunity management
• International development
• Right to development
• Women's education and development
• World Bank Group
• Organisation for Economic Co-operation and Development
• International Monetary Fund
• European Free Trade Association
• North–South divide

References[edit]

1. ^ Jump up to:^a b Sen, A. (1983). Development: Which Way Now? Economic Journal, Vol. 93 Issue 372. pp. 745–762.
2. Jump up^ A. and Sheffrin, S. M. (2003). Economics: Principles in action. Pearson Prentice Hall, Upper Saddle River, New Jersey. 471pgs.
3. Jump up^ R. Conteras, "How the Concept of Development Got Started" University of Iowa Center for International Finance and Development E-Book [1]
4. Jump up^http://cbdd.wsu.edu/kewlcontent/cdoutput/TR501/page59.htm
5. Jump up^ Mansell, R & and Wehn, U. 1998. Knowledge Societies: Information Technology for Sustainable Development. New York: Oxford University Press.
6. Jump up^ Schumpeter, Joseph & Backhaus, Urusla, 2003. The Theory of Economic Development. In Joseph Alois Schumpeter. pp. 61–116. Available at:http://dx.doi.org/10.1007/0-306-48082-4_3 [Accessed October 19, 2009].
7. Jump up^ See Michael Todaro and Stephen C. Smith, "Economic Development 11th Edition"., Pearson Education andAddison-Wesley (2011).
8. Jump up^ Hirschman, A. O. (1981). The Rise and Decline of Development Economics. Essays in Trespassing: Economics to Politics to Beyond. pp. 1–24
9. Jump up^ Jayati Gosh (January 2013). "Too much of the same". D+C Development and Cooperation/ dandc.eu.
10. Jump up^ Firzli, M. Nicolas J. (Q3 2013). "Transportation Infrastructure and Country Attractiveness". Revue