Economic issues of pakistan: Introduction: A country where the average income of the people is much lower than that of developed countries, the economy depends upon a few export crops and where farming is conducted by primary methods is called developing country. Rapid population growth is causing the shortage of food in many developing countries. riteria to an !nder"devel !nder"developed oped #ation: i. $otential to become economically developed. ii. %ow or no rising trend of per capita income. iii. ountries very poor in resources. $rof. &arvey %eibenstein, in his 'Economic (ackwardness and Economic )rowth* divides these characteristics into four categories: A. Economic characteristics: +ollowing are the economic characteristics of !-s: " )eneral $overty and %ow %iving /tandard. $overty cannot be described, it can only be felt. 0he most of the less developed countries 1%2 are facing the ma3or problem of general as well as absolute poverty and low standard of living. 4ost of the people in developing nations are ill"fed, ill"f ed, ill"h ill"house oused, d, ill"c ill"clothe lothed d and ill"l ill"liter iterate. ate. In % %s s almo almost st 56 popu populati lation on is much poor. (ut in $akistan, 7.8 9 population is living below poverty. 7" (urden of Internal and External ebts. !nder developed developed countries 1!2 are loans and grants receiving nations. 4ost of the developing countries of the world are depending on foreign economic loans. An amount of foreign loans is increasing as the years pass. 0heir foreign trade and po polit litica icall st struc ructur ture e is als also o dep depend endent ent on th the e gui guidan dance ce of for foreig eigner ners. s. 0h 0he e outstanding total public debts are Rs. 787 billion 1;<.79 of )$2 and the value of external debts and liabilities is = >8.6 billion and services charges on all types of debts are Rs. ?68.?66 billion during 78"7, in $akistan. 6" %ow $er apita Income. ue to low national income and huge population growth rate, per capita income in developing countries is very low. At constant prices 1(ase @ear ;">82 per capita income of $akistan was Rs. <; and according to the Economic /urvey of $akistan 78"7 per capita income of $akistan is = 6?7. " Bver ependence on Agriculture. >9 $opulation $opulation of $ak $akista istan n is livin living g in more than ;8,888 villages. villages. (ac (ackwa kward rd agricu agr icultu lture re is the ma3 ma3or or occ occupa upatio tion n of the pop popula ulatio tion. n. Agr gricu icultu lture re sec secto torr is backward due to old and traditional methods of cultivation, in"efficient farmers, lack of credit facilitiesC un"organiDed agriculture market etc. >>.?9 population is directly or indirectly depending on agriculture sector in $akistan. It contributes to )$ 7.89 while in advanced nations it is less than ; 9. It employed ;.8 9 of labour force while it is less than ; 9 in deve developed loped countries. ;" (ackward Industrial /ector. (ackward (ackw ard industrial sector is an additional feature of under develo developed ped countries. Indust Ind ustrial rial sec secto torr of $a $akis kistan tanii eco econom nomy y is bac backw kwar ard d sin since ce ind indepe epende ndence nce.. $akistan got only 6 16.? 9 of total industrial units2 industrial units out of 7 units in sub"continent in ?. /mall and backward industrial sector is based on low lo w le leve vell of cap capit ital al for format mation ion,, te tech chno nolog logy, y, tr train aining ing and edu educat cation ion and ov over er
dependence on agriculture sector. 6.?9 labour force is attached with industrial sector in $akistan. Its share to )$ is 7;. 9 and to exports is more than >8 9. >" !nemployment. An outstanding problem of developing countries is their high rate of un" employment, under"employment and disguised"unemployment. 4ore than 6.; million people are unemployed in $akistan. 0here is > 9 underemployed and 789 disguised unemployed of total labour force. !nemployment rate is >.89C it is mainly due to high population growth rate, which is 7.869. ?" %ow level of $roductivity. 0he productivity level is very low in under developed countries as compared to developed countries. %ow level of productivity is due to economic backwardness of people, lack of skill, illiteracy and ill"training. alue of annual productivity of labour is about = 88 while it is more than = 7;88 in advanced nations in $akistan. 4inimum wages are Rs.<8885" per month against the average gross salary of =6,;8 1Rs.6,?,7882 per month in !nited /tates. <" eficit (alance of $ayment. 0hird world countries have to import some finished and capital goods to make economic development, on the other hand they have no products to export but raw material. uring Fuly"April, its exports were = 78.? billion and imports were = 66.; billion in case of $akistan. /o, its deficit balance of payment was = 7.>< billion in 78"7. " ualistic Economy. ualistic economy refers to the existence of advanced G modern sectors with traditional G backward sectors. $akistani economy is also a dualistic economy as other developing countries on the following grounds: o"existence of modern and traditional methods of production in urban and rural areas, o"existence of wealthy, highly educated class with a large number of illiterate poor classes and o"existence of very high living standard with very low living standard. 8" eficiency of apital. /hortage of capital is another serious problem of poor nations. %ack of capital leads to low per capita income, less saving and short investment. #ational saving is 8.?9 of )$ and total investment is 7.;9 of )$ in $akistan. Rate of capital accumulation is very low as ;9. Bn the other hand, capital output ratio 1BR2 is very high which is not desirable for economic development. " In"appropriate !se of #atural Resources. 4ostly there is shortage of natural resources in developing nations and this is also a cause of their economic backwardness. #atural resources are available in various poor countries but they remain un"utiliDed, under"utiliDed or mis"utiliDed due to capital shortage, less efficiency of labour, lack of skill and knowledge, backward state of technology, improper government actions and limited home market. #atural resources contribute to the )$ about 9. 7" 4arket Imperfection. 4arket is imperfect in accordance with market conditions, rules and regulations in the most of developing nations. 0here exist monopolies, mis"leading information, immobility of factorsC hoarding and smuggling etc. that cause the market to remain imperfect.
6" %imited +oreign 0rade. ue to backwardness, developing countries have to export raw material because the Huality of their products is not according to international standard I/B etc. %ower developing nations have to import finished and capital goods. Imports of $akistan are = 66.; billion and exports are = 78.? billion that cause into unfavourable balance of payment of = 7.>?> billion. " icious ircle of $overty. According to vicious circle of poverty, less developed nations are trapped by their own poverty. icious circle of poverty is also applied in case of $akistani economy. ue to poverty, national income of $akistan is low which causes low saving and low investment. /o, rate of capital formation is very low results in 'a country is poor because she is poor*. ;" Inflation. &igh rate of inflation causes economic backwardness in poor nations. ue to high level of price, purchasing power, value of money and saving of the consumers tend to decrease. Rate of inflation 1$I2 is 8.<9 in 78"7 in $akistan. (. emographic characteristics: +ollowing are the demographic characteristics: >" (ackward $opulation Explosion. Another common feature of lower developing nations is population pressure due to high growth rate and reduction in death rate. $opulation of the $akistan is <8.? million with the rapid growth rate of 7.869 and death rate 8.?7 9 in 78" 7. $akistan is at >th number in the list of the most populous nations. (asic needs like food, clothing, housing, education, sanitations and health facilities are not available for the huge portion of population in these countries. ?" $oor &ealth and iseases. 4. $. 0odaro in his 'Economic evelopment* states, '4any people in developing countries fight a constant battle against malnutrition, diseases and ill health*. Average life expectancy in $akistan is >;.7 year against ?; years in developed countries. Bne octor is for 78> persons and one #urse is for 76> persons, one entist for >78 persons, number of hospitals is ?7 and one hospital bed is available for >>; persons. 0he total expenditure on health sector is 3ust 8.7? 9 1Rs. ;;.7 billion2 of the )$. <" $ollution. 0here is too much pollution in poor countries. Bn the one side huge existing population is not provided basic facilities of life, like sanitation, clean water, infrastructure etc. but on the other side due to rapid population growth, industrialiDation and transportation air, water and earth pollution is increasing. Industries are causing pollution because of non"installation of treatment plants. #umber of continuous air pollution monitoring stations is only ? in $akistan. $akistan is at number 7th at the chart of the most polluted nations and at number >th in Asian countries. " (rain rain. An outflow of the best, brightest and talented student from poor nations to rich nations is called brain drain. 0here is less reward for the talent, which causes an
outflow of best brain in the backward countries. Reward is not paid in accordance with the capability, skill and efficiency in less developed countries. 78" InadeHuate Infrastructure. AdeHuate infrastructure is needed which is not available in poor economies to enhance the process of economic development. Roads, transport, telecommunications, sanitation, health and education facilities are not at their best level in these nations. )overnment has reserved an amount of Rs.66 billion to develop the infrastructure. . ultural and political characteristics: +ollowing are the cultural and political characteristics of %-s: 7" &igh egree of Illiteracy. Illiteracy rate is very high in poor countries while it is almost Dero in rich countries. 0here is lack of technical education and training centers, which is necessary for economic growth and development. %iteracy rate in $akistan is ;<9 during 78"7. Expenditure on education sector is 3ust .< 9 of )$ during last year. 77" %ow %evel of BrganiDation. 0here is absence of developed minded leadership in economic activities in third world nations. ecision making power of entrepreneur is very low due to illiteracy, less training and backward techniHues. 4ost of educational institutions are producing employees rather than employers. 76" %ow /elf"esteem. 0here is less respect, honor and dignity of people in the lower developed countries. $eople are honored due to their powers, relations and castes instead of capabilities. 0here is poverty, poor health, poor education and shortage of other social services. )overnment and population of poor countries are under the external influence. 7" !n"productive Expenditures. $opulation mostly copies the styles of population of developed nations due to demonstration action in poor economies. 0heir consumption activities not only move around their income but also depend upon the relatives, friends and locality. 0hey spend more on birth, death, marriages and various other ceremonies etc. which reduces their savings and investment. 7;" $olitical Instability. 0here is political instability in the most of the developing countries. 0here are a lot of clashes between government and the opposition that is a cause to reduction in domestic as well as foreign investment. $olitical instability keeps low the level of economic development. 7>" Influence of +eudal %ords. 0he poor class is under the influence of feudal lords and tribal heads in lower developed nations. 0he feudal lords want to keep the people backward and do not appreciate the development of the poor. About ;8.<9 poor borrow from landlords and ;?. 9 poor are working for feudal lords without wages in $akistan. 7?" !nproductive !se of +unds. 0he unproductive expenditures are rising day by day in developing countries like $akistan due to socio"economic and administrative reasons. uring the year
788"8, Rs. 66 billion were spent for defence. About ?;9 of the budget is spent on defence, administration, repayments of loan and interest charges in $akistan. 7<" )ovt. ontrol by ealthy $ersons. ealthy persons, landlords and elite class not only control the government but also they have full control over all the ma3or sectors of the economy in poor countries. 0his rich class is not interested to solve the problems of the poor for their welfare but they make government policies for their own improvement. 7" +reHuent hanges in +iscal $olicy. Revenues and expenditures policy of government is not stable in developing countries. )overnment has to change the fiscal policy according to the will of its own people. Industrialists are the main controller of the government and they ad3ust the fiscal policy in accordance with their own benefits. 68" iolation of %aw and Brder. %aw and order conditions are at their poor stage in $akistan like other developing countries. A huge portion of saving of people is wasted in costly and lengthy legal process. As in case of Iftikhar 4uhammad hohdery 1F$2, he himself has to wait for 3ustices for a long period. . 0echnological and miscellaneous characteristics: +ollowing are the technological and miscellaneous characteristics of developing countries: 6" (ackward /tate of 0echnology. !se of modern techniHues of production is not adopted in developing countries. It may cause further unemployment. !se of advanced technology is impossible due to shortage of capital, lack of skill and training, high cost of production and lack of foreign exchange reserves. (ackward state of technology is results in low production, high cost and wastage of time. 67" /ocial Aspects. !nder developed countries have also some factors such as 3oint family system, caste system, cultural and religious views, beliefs and values that badly affect their economic development. 68.<< 9 population is working population and remaining >.7 9 population is depending on them in $akistan. 66" !n"fair ealth and Income istribution. 0here are not only regional ineHualities in developing countries but also wealth and income ineHualities. 0here is unfair wealth and income distribution in less developed nation. 78 9 extremely rich population has ;8.879 of national resources, while 78 9 poorest population has 3ust >.6? 9 of national resources in $akistan. 0he difference between rich and poor is increasing day by day. 6" %ack of Experts and /killed $ersons. $eople have to move abroad for advanced study due to illiteracy and lack of training institutes. 0hey ad3ust them in foreign countries due to low remuneration and less self"esteem. /o, there is scarcity of experts, skilled and trained staff that causes the poor nation to remain backward. 6;" ependence on External Resources. 0he international trade, political activities and other economic activities are under the influence of other advanced countries in less developing countries. 0heir development plans are financed by the loan giving countriesC these plans
are made to serve the interests of foreign countries. /o, poor nations are loans and grants receiving nations. onclusion: e conclude that all above characteristics are unfavorable for the developing economies. 0hese features are obstacles in way of economic development. All these features are cause of low rate of capital formation, poverty and creation of vicious circle of poverty
