Industrialization in Pakistan

Agenda
 After Partition 1947 - 1958
 Ayub Years 1958 - 1968
 Bhutto Years 1970s
 Zia Years 1980s
 1988 Onwards
 After Partition 1947 - 1958
 State of industry
 75% of world’s jute production / no jute mill
 1.5 million bales of cotton / few textile mills

 Industrial policies
 Exchange rate
 No devaluation of currency
 Sale of raw jute at higher prices / monopoly exporter
 Trade policy
 Imports retrained
 Tariffs on import of consumer items, taxes on export of consumer items
 After Partition 1947 - 1958
 Transformation through Import Substitution Industrialization
 Restriction on import of non essential items
 Licensing
 Protection to jute, cotton and leather industry

 Outcome
 Trader led growth
 Export surplus available
 Private sector orientation
 Bias towards West Pakistan
 Ayub Era 1958 - 1968
 State of Industry
 Investment in capital intensive large scale manufacturing
 Agriculture sector suffered

 Industrial policies
 Trade liberalization through
 Export bonus scheme
 Free list of imports
 Productivity growth
 Foreign aid

 Transformation through Domestic Demand and Consumption

 Ayub Era 1958 - 1968
 Outcome
 Exceptional industrial growth called the decade of development
 Functional inequality to dysfunctional equality
 44 houses controlled 71 percent of fixed assets in industry
 Private sector orientation
 Dependent on foreign aid
 Bias towards West Pakistan
 Bhutto Years 1970’s
 State of Industry
 Separation of East Pakistan
 Non plan period for industry

 Industrial policies
 Nationalization of basic industries
 LSM (capital, intermediary and consumer), vegetable oil, cotton, rice, banks
 Export bonus scheme abandoned
 Bad luck factors
 Oil crisis, floods, pest attacks
 Inflation

 Transformation through socialist economic agenda

 Bhutto Years 1970’s
 Outcome
 One of the poorest economic times in Pakistan's history
 Bad luck rather than bad management
 Significant break from the past
 Public sector orientation
 Zia Years 1980s
 Sate of industry
 Poor confidence in private investment
 Strong influence of public sector industry

 Industrial policy
 Capital investment in LSM
 Denationalization and privatization
 Islamization of financial credit
 Remittances
 Foreign aid

 Transformation through liberalization of markets

 Zia Years 1980s
 Outcome
 High growth in GDP
 Public private sector divide
 Negative productivity growth
 1988 Onwards
 Structural Adjustment Program
 WB and IMF led programs

 Trade
 Non-tariff barriers to be replaced by tariffs
 Reduce the number of banned commodities
 Reduction in the maximum tariff rates
 Increase exports, particularly higher-valued exports
 Private sector to be permitted greater involvement

 Outcome
 High growth in manufacturing sector
 Uncompetitive industries have been weeded out
 Slow economic growth is linked to adherence of structural adjustment plans