Q.1. Discuss the main characteristics of the Economy of Pakistan?
Introduction
Islamic Republic of Pakistan is an under developed country. The characteristics of the economy of Pakistan are almost the same of the economy of any under developed country. The main characteristics of the economy of Pakistan are as follows.
1. Burder of International Debt
Most of the developing countries are depending on foreign economic assistance to meet the short fall in domestic savings and for quickening the pace of economic developement. As the year pass, the amount of foreign loans is increasing. The liability of debt servicing has increased manifold. In Pakistan, debt service payments amount to 2309 million dollars in 1996-97 which is a heavy burden.
2. Low per Capital Income
Majority of the people living in developing countries are poverty ridden. Poverty is reflected in low per capital income. People live in unsanitary conditions. Service like health, education expand very slowly. In short, mostly the people in LDCs (less developed countries) are ill-fed, ill-clothed, ill-housed and ill-educated. People here are involved in misery-go-round. In Pakistan the per capital income at current market prices is Rs. 18,320 in 1996-97 (470 dollars).
3. Agriculture, the Main Occupation
In developing countries two third or even more of the people live in rural areas. Their main occupation is agriculture which is in a backward stage. The average land holding and the yield per acre is low. The peasants mostly live at a subsistence level. As far as Pakistan is concerned agriculture contributes 25% of GDP.
4. Dualistic Economy
The economies of developing countries are characterized by dualism. Dualism refers to economic and social division in the economy. For instance, in the developing countries one is the market economy and the other is the subsistence economy. Both the economies exist side by side. In and around the city, there is a market economy which is well developed. Ultra modern facilities of life are available here. But in rural areas the economy is primitive, backward and agriculture, oriented. Similarly, industrial sector uses capital intensive techniques and produce variety of capital goods. The rural sector produces commodities mainly with traditional techniques. The standard of living of the people living in market economy is high but that of their brothers living in subsistence sector is low. The dualistic nature of the economy is not conductive to healthy economic progress.
5. Under-Utilization of Natural Resources
An important characteristics of the developing countries is that their natural resources either remain un-utilized or under-utilized or mis-utilized. Most of the countries are rich in resources but they remain un-utilized or under-utilized due to lack of capital, primitive techniques of production, limited size of the market and sluggish nature of the people.
6. High Rates of Population Growth
Almost all the developing countries are having a high population growth rate and a declining death rate. The development made with low per capital incomes and low rates of capital formation here is swallowed up by increased population. As a result there is no or very slow improvement in the living standards of the people. In Pakistan the rate of increase in population is estimated about 2.77% per annum. This high growth rate is offsetting all achievements of developments.
7. Unemployment
Another notable feature of developing countries is vast unemployment and disguised unemployment both in the rural and in the urban areas. It is estimated at 31% of the labour force in LDCs. The unemployment is increasing with the spread of education and urbanization.
8. Low Level of Productivity
In developing countries people are economically backward. The main causes of backwardness are low labour efficiency, immobility of labour due to joint family system, cultural and pshychological factors leading to low level of productivity.
9. Deficiency of Capital
Deficiency of capital is another common sign in all the developing countries of the word. The capital deficiency is mainly due to
(1) low per capital income
(2) low rate of saving
(3) low rate of investment
(4) Inequalities of wealth
(5) adoption of consumption pattern of advanced countries
(6) Higher level expenditure on consumption etc.
10. Backward State of Technology
All the developing countries are in the backward state of technology. The technological backwardness is due to
(1) higher cost of production despite low money wages
(2) Deficiency of Capital
(3) Predominance of unskilled and untrained workers
(4) Dualism
(5) Misallocation of resources etc
These are the major hurdles in the spread of techniques in the LDCs.
11. Dependence on Export of Primary Products
The LDCs are still relying on the 19th century pattern of external trade. They are mainly producing and exporting primary commodities to the developed countries and importing finished goods and machinery from them.
12. Influence of Feudal Lords
In Pakistan, like many other developing countries, the poor are under the hard grip of feudal lords and tribal heads. It is in the interest of the feudal lords that the poor should remain poor.
Islamic Republic of Pakistan is an under developed country. The characteristics of the economy of Pakistan are almost the same of the economy of any under developed country. The main characteristics of the economy of Pakistan are as follows.
1. Burder of International Debt
Most of the developing countries are depending on foreign economic assistance to meet the short fall in domestic savings and for quickening the pace of economic developement. As the year pass, the amount of foreign loans is increasing. The liability of debt servicing has increased manifold. In Pakistan, debt service payments amount to 2309 million dollars in 1996-97 which is a heavy burden.
2. Low per Capital Income
Majority of the people living in developing countries are poverty ridden. Poverty is reflected in low per capital income. People live in unsanitary conditions. Service like health, education expand very slowly. In short, mostly the people in LDCs (less developed countries) are ill-fed, ill-clothed, ill-housed and ill-educated. People here are involved in misery-go-round. In Pakistan the per capital income at current market prices is Rs. 18,320 in 1996-97 (470 dollars).
3. Agriculture, the Main Occupation
In developing countries two third or even more of the people live in rural areas. Their main occupation is agriculture which is in a backward stage. The average land holding and the yield per acre is low. The peasants mostly live at a subsistence level. As far as Pakistan is concerned agriculture contributes 25% of GDP.
4. Dualistic Economy
The economies of developing countries are characterized by dualism. Dualism refers to economic and social division in the economy. For instance, in the developing countries one is the market economy and the other is the subsistence economy. Both the economies exist side by side. In and around the city, there is a market economy which is well developed. Ultra modern facilities of life are available here. But in rural areas the economy is primitive, backward and agriculture, oriented. Similarly, industrial sector uses capital intensive techniques and produce variety of capital goods. The rural sector produces commodities mainly with traditional techniques. The standard of living of the people living in market economy is high but that of their brothers living in subsistence sector is low. The dualistic nature of the economy is not conductive to healthy economic progress.
5. Under-Utilization of Natural Resources
An important characteristics of the developing countries is that their natural resources either remain un-utilized or under-utilized or mis-utilized. Most of the countries are rich in resources but they remain un-utilized or under-utilized due to lack of capital, primitive techniques of production, limited size of the market and sluggish nature of the people.
6. High Rates of Population Growth
Almost all the developing countries are having a high population growth rate and a declining death rate. The development made with low per capital incomes and low rates of capital formation here is swallowed up by increased population. As a result there is no or very slow improvement in the living standards of the people. In Pakistan the rate of increase in population is estimated about 2.77% per annum. This high growth rate is offsetting all achievements of developments.
7. Unemployment
Another notable feature of developing countries is vast unemployment and disguised unemployment both in the rural and in the urban areas. It is estimated at 31% of the labour force in LDCs. The unemployment is increasing with the spread of education and urbanization.
8. Low Level of Productivity
In developing countries people are economically backward. The main causes of backwardness are low labour efficiency, immobility of labour due to joint family system, cultural and pshychological factors leading to low level of productivity.
9. Deficiency of Capital
Deficiency of capital is another common sign in all the developing countries of the word. The capital deficiency is mainly due to
(1) low per capital income
(2) low rate of saving
(3) low rate of investment
(4) Inequalities of wealth
(5) adoption of consumption pattern of advanced countries
(6) Higher level expenditure on consumption etc.
10. Backward State of Technology
All the developing countries are in the backward state of technology. The technological backwardness is due to
(1) higher cost of production despite low money wages
(2) Deficiency of Capital
(3) Predominance of unskilled and untrained workers
(4) Dualism
(5) Misallocation of resources etc
These are the major hurdles in the spread of techniques in the LDCs.
11. Dependence on Export of Primary Products
The LDCs are still relying on the 19th century pattern of external trade. They are mainly producing and exporting primary commodities to the developed countries and importing finished goods and machinery from them.
12. Influence of Feudal Lords
In Pakistan, like many other developing countries, the poor are under the hard grip of feudal lords and tribal heads. It is in the interest of the feudal lords that the poor should remain poor.
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