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The Process of Industrialization (Ayub Industialization)

Mishal Arif is analyzing the process of industrialization in Pakistan under Ayub Khan in the 1950s and 1960s. Key policies introduced included Import Substitution Industrialization (ISI) to encourage domestic industry and protect it from imports. New industrial capitalists invested in setting up mills and industries. Government policies like Open General License (OGL) and export schemes promoted industrial growth. However, inequality grew between provinces and classes, resentment increased, and the sugar crisis of 1967 contributed to Ayub Khan's economic downfall.

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Muhammad Khizer
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70 views2 pages

The Process of Industrialization (Ayub Industialization)

Mishal Arif is analyzing the process of industrialization in Pakistan under Ayub Khan in the 1950s and 1960s. Key policies introduced included Import Substitution Industrialization (ISI) to encourage domestic industry and protect it from imports. New industrial capitalists invested in setting up mills and industries. Government policies like Open General License (OGL) and export schemes promoted industrial growth. However, inequality grew between provinces and classes, resentment increased, and the sugar crisis of 1967 contributed to Ayub Khan's economic downfall.

Uploaded by

Muhammad Khizer
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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NAME MISHAL ARIF

ROLL NO 20181-24632
COURSE ANALYSIS OF PAKISTANI
INDUSTRY

THE PROCESS OF INDUSTRIALIZATION (AYUB


INDUSTIALIZATION)

Its development raises national income, creates employment opportunities and improves the
balance of payments position both by producing exportable goods and by substituting imports,
but also supports and stimulates development in other sectors of the economy.
Development of industrial capitalism has remained an elusive goal for the rulers of Pakistan.
After independence, successive governments facilitated the transformation of merchant capital
into industrial capital. But in spite of all this support, Pakistan’s economy is still dominated by
petty commodity production and small-scale capitalism. In Pakistan, during the past few years,
indeed industry has contributed the largest segment to the economy. Self-reliance has been the
principal aim of the industrial policy in the five-year programmes. In addition to the public,
private sector has been encouraged all along to play a supreme role in the industrialization of
the country. It has also been recognized that investment of foreign capital, coupled with
technical skill can play an important part in the quick execution of the industrial programme. By
virtue of such pragmatic approach, the industrial development in Pakistan has been self-
asserting. As the country possesses the requisite natural and human resources for industrial
growth, the industrial policy would continue to be directed towards increasing the share of the
manufacturing sector in the total economy. In the earlier 1950s when Pakistan was a newly
independent country ISI (Import Substitution industrialization) takes over in order to run all the
processes. Pakistan used to produce 75% of the world’s jute but did not have a single jute mill.
ISI (Import substitute industrialization) was introduced which was a policy that would
encourage domestic industry and protect it. The risk in ISI was that it could create the
dependency on import because of an overvalued foreign exchange rate. But it was necessary as
machinery was very important and cheap in 1950s. Agriculture suffered and the growth in
agricultural sector was declining. So, the economic policies introduced in 1950s aimed to
transfer the income away from agriculture to fast growing manufacturing sector and so the
priority was given to the industrial sector. Pakistan suffered in the decline in their jute sales as
they expected that jute sales to India would be in continuity but due to devaluation in pound.
But in this situation the Korean war was beneficial for Pakistan and due to this was Pakistan’s
import was increased with the rise in prices due to the demand in commodities. Trade policies
were introduced to control the import export in Pakistan. New tariffs were introduced as for
the proper documentation and legal processes of import export to take place. During 1951-54
Pakistan was introduced to new industrial capitalists essentially, they were traders who got
benefited from the Korean war and now they started setting up industries and mills in Pakistan.
The trading class decided to start investing in Pakistan as there were not many alternatives
(middle east). Agriculture was not growing at all the agricultural processes were sluggish with
resulted in slow GDP growth. The manufacturing sectors increased at the same pace in 1960s
and the agricultural process in that era also started to grow at the same pace. New trade
policies were introduced in order for faster growth of industrialization. OGL (Open General
License) were introduced for the importers as this was giving them security and it was very
profitable for them. In 1959, government proposed export business scheme (EBS) in which if
the traders exported, they get a voucher which could be used for import commodities or sell it
in open market to get profit from it and the people who were taking this opportunity faced
different exchange rate. The government promoted exports. Foreign aid increased by 7% of
GNP in 1960s. Pakistan has seen exponential growth in population while the rate of growth in
urban areas is much higher than the overall population growth. The upsurge in urban
population has helped in the transformation of the merchant capital into industrial capital;
however, the majority of the labor force is still employed in small enterprises and “the class
structure of industrial relations is dominated by petty commodity and petty bourgeois
production.”
The downfall of this era begins by the sugar crisis in 1967 as the prices rose by 15%. Functional
and provincial inequality, lavish housing and consumer durables created resentment towards
Ayub Khan as this was his downfall economically. The inequality resulted in low opportunity for
other importers and as the other businessman would get a chance to make their own monopoly
in different sectors leaving low opportunities for other businessman. The inequality of east and
west Pakistan is growing very rapidly the per capita income is very high in Bangladesh as
compared to Pakistan.

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