‘ECO610’ Issues in the Economy

of Pakistan
Short Notes
Module 1 to 7
By ˚⋆｡⁺Mʀ ֆɦǟɦɮǟʐ⁺｡⋆˚

Objectives of Module 01

 Laying the Foundations

 The Decade of development
 The Bad Luck Years
 The Second Military Government
 Neo-Liberalism
 Military Regime
 Democratic Transition

Introduction

Pakistan's economy has undergone significant

structural transformations over the past seven
decades.
These transformations have been shaped by a
combination of internal and external factors.
Understanding these transformations is crucial for
comprehending Pakistan's current economic
challenges and opportunities.
Introduction

Pakistan's economy has undergone significant structural transformations over the past seven decades.
These transformations have been shaped by a combination of internal and external factors.
Understanding these transformations is crucial for comprehending Pakistan's current economic challenges
and opportunities.
Structural Transformation at a Glance
The structural transformation of Pakistan's economy reflects shifts in sectors, technology, and overall
organization. This dynamic process has played a crucial role in influencing the pace and nature of
economic growth and development
Laying the Foundations: The Early Years of Pakistan's Economy (1947-1958)

The birth of Pakistan in 1947 marked the beginning of a new economic era for the region. The newly formed nation inherited a
diverse economy, with agriculture accounting for a significant portion of the GDP, followed by manufacturing and services. The
early years were characterized by a focus on import substitution industrialization (ISI), a policy aimed at fostering domestic
industries to reduce reliance on imports. While ISI was successful in establishing a manufacturing base, it also led to
inefficiencies and a lack of competitiveness in the export sector.

The Decade of Development: Rapid Growth and Challenges (1958-1968)

The 1960s witnessed a period of rapid economic growth, fueled by the continued implementation of ISI policies, favorable
external factors like high commodity prices, and increased foreign aid. This era saw the expansion of manufacturing industries,
infrastructure development, and the establishment of new educational institutions. However, the rapid growth was accompanied
by rising inequality, a widening trade deficit, and increasing reliance on foreign aid.

The Bad Luck Years: Economic Shocks and Stagnation (1968-1977)

The 1970s marked a turning point for the Pakistani economy as a series of external shocks disrupted the previous growth
trajectory. The 1971 Oil Crisis, the 1973 Indo-Pakistani War, and the 1974 global recession had a profound impact on the
country's economic performance. These events led to a period of stagflation, characterized by high inflation and low growth rates.
The economic slowdown exacerbated existing issues of poverty and inequality.

The Second Military Government: Economic Reforms and Mixed Outcomes (1977-1988)

In 1977, General Zia-ul-Haq took power in a military coup, ushering in a period of economic reforms. The Zia regime
implemented deregulation, privatization, and trade liberalization measures aimed at promoting market-based economic growth.
While these reforms led to some economic growth, they also contributed to increased inequality and poverty.

Neo-Liberalism and Economic Liberalization (1988-1999)

The 1990s saw a shift towards neoliberal economic policies in Pakistan. The government reduced tariffs, deregulated the
financial sector, and privatized state-owned enterprises to encourage private sector participation and economic growth. These
policies attracted foreign investment and boosted economic growth, but they also exacerbated inequality and poverty.
Military Regime and Continued Neoliberalism (1999-2008)

In 1999, General Pervez Musharraf seized power in another military coup. The Musharraf regime continued to implement
neoliberal policies while also emphasizing poverty reduction and social welfare programs. These policies were partially
successful in reducing poverty but also contributed to rising corruption and governance issues.

Democratic Transition and Economic Challenges (2008-Present)

Pakistan returned to democracy in 2008, facing a number of economic challenges, including a global financial crisis, a balance of
payments crisis, and a devastating natural disaster. The new government implemented a series of reforms, including reducing the
budget deficit, increasing tax revenue, and improving governance. These measures helped stabilize the economy and promote
growth, but Pakistan continues to grapple with issues of poverty, inequality, and infrastructure development.

Conclusion: Navigating the Challenges and Opportunities of the Future

Pakistan's economic journey has been characterized by periods of growth, stagnation, and reform. The country has faced
numerous challenges, both internal and external, but it has also demonstrated resilience and adaptability. As Pakistan moves
forward, it must continue to address its economic challenges, including poverty, inequality, infrastructure deficiencies, and
energy security. Embracing innovation, enhancing education, and strengthening governance will be crucial in achieving
sustainable economic growth and improving the well-being of its citizens.

Objectives of Module 02
Agriculture Sector of Pakistan
 Agriculture Sector
 Agriculture before British Rule
 Impact of British Colonialism 1
 Impact of British Colonialism 2
 Feudal or Capitalist
 Green Revolution 1
 Green Revolution 2
 Land Reforms 1
 Land Reforms 2
 Issues in Agriculture 1
 Issues in Agriculture 2

Agriculture Sector of Pakistan

Agriculture is a crucial sector of Pakistan's economy, employing around 44% of the labor force
and contributing significantly to GDP. The country's diverse climate and fertile lands support a
wide variety of crops, including wheat, rice, cotton, sugarcane, and fruits.

Agriculture before British Rule

 Pakistan's agricultural practices have evolved over centuries, with traditional systems
emphasizing subsistence farming and small-scale landholdings. Prior to British colonial rule in
the 18th century, agriculture was primarily characterized by:

 Subsistence farming: Farmers produced primarily for their own consumption and local markets,
with limited surplus for trade.
 Small-scale landholdings: Land ownership was largely fragmented, with many farmers owning
small plots of land.
 Traditional agricultural techniques: Farming methods were often based on traditional knowledge
and practices, with limited use of modern technology.

Impact of British Colonialism

British colonialism brought significant changes to Pakistan's agricultural sector, introducing new
crops, technologies, and landownership patterns. The colonial government focused on
commercializing agriculture for export, leading to:

 Introduction of new crops: Cash crops like cotton and sugarcane were introduced for export,
while food crops like wheat and rice continued to be grown for domestic consumption.
 Modernization of agricultural techniques: British officials promoted the use of irrigation systems,
fertilizers, and improved crop varieties to increase agricultural productivity.
 Changes in landownership: Colonial policies favored large landowners, leading to the
consolidation of landholdings and the emergence of absentee landlords.

Feudal or Capitalist

The debate over whether Pakistan's agricultural sector is feudal or capitalist has been ongoing
for decades. Proponents of the feudal view argue that the system is characterized by large
landowners, tenant farmers, and exploitative labor practices. They point to the persistence of
absentee landlordism, unequal distribution of land, and low wages for agricultural workers.

On the other hand, proponents of the capitalist view argue that the sector has undergone
significant transformation, with the emergence of commercial farmers, market-oriented
production, and the use of modern technologies. They emphasize the growth of agribusinesses,
the adoption of hybrid seeds and fertilizers, and the increasing integration of Pakistani
agriculture into global markets.

The reality is likely a complex mix of both feudal and capitalist elements. While there are still
large landowners and exploitative practices, there is also a growing class of commercial farmers
and a more market-oriented approach to agriculture.

Green Revolution

The Green Revolution of the 1960s and 1970s brought about significant changes in Pakistan's
agriculture. The introduction of high-yielding varieties of wheat and rice, along with improved
irrigation and fertilizer use, led to a substantial increase in agricultural production.

Green Revolution 1
 The Green Revolution had a positive impact on Pakistan's agricultural output, contributing to
food security and self-sufficiency. However, it also had some negative consequences, including:

 Widening inequality: The Green Revolution benefited larger landowners who could afford the
new technologies, while small-scale farmers often struggled to adapt. This led to an increase in
income inequality within the agricultural sector.
 Environmental concerns: The intensive use of pesticides and fertilizers had negative
environmental impacts, including water pollution and soil degradation.

Land Reforms

Land reforms have been a contentious issue in Pakistan, with attempts to redistribute land from
large landowners to tenants and landless farmers. These reforms have met with resistance from
powerful landowners and have had mixed success in achieving their objectives.

Land Reforms 1

Land reforms in Pakistan have been implemented in several phases, including:

 1959 Land Reforms: These reforms aimed to limit landholdings and introduce tenant-sharing
arrangements.
 1972 Land Reforms: These reforms further restricted landholdings and introduced measures to
protect tenant rights.
 1977 Land Reforms: These reforms were implemented under military rule and aimed to
redistribute land more equitably.

The effectiveness of land reforms has been debated, with some arguing that they have had a
limited impact on land distribution and tenancy arrangements.

Issues in Agriculture

Pakistan's agriculture sector faces a number of challenges, including:

 Low productivity: Agricultural productivity in Pakistan lags behind many other countries in the
region.
 Water scarcity: Water scarcity is a major constraint on agricultural production, particularly in arid
regions.
 Climate change: Climate change is expected to have significant impacts on Pakistani
agriculture, including more extreme weather events and changes in precipitation patterns.
 Market distortions: Government policies and market interventions can distort agricultural prices
and incentives, affecting production and investment decisions.

Issues in Agriculture 2

Additional challenges facing Pakistan's agriculture include:

 Limited access to credit: Small-scale farmers often face difficulties in accessing credit, which
can hinder their ability to invest in new technologies and inputs.
 Weak infrastructure: Poor infrastructure