Analysis of Pakistani Industries
At partition in 1947, the new government lacked the personnel, institutions, and resources to playa large role in developing the economy. To rise from such a state surely is a great task, especiallywhen one’s borders are also insecure. Since then Pakistani officials have sought a high rate of economic growth in an effort to lift the population out of poverty. Rapid industrialization wasviewed as a basic necessity and as a vehicle for economic growth. For more than two decades,economic expansion was substantial, and growth of industrial output was striking. In the 1960s,the country was considered a model for other developing countries. Rapid expansion of theeconomy, however, did not alleviate widespread poverty. In the 1970s and 1980s, although a highrate of growth was sought; greater attention was given to income distribution. In the early 1990s,a more equitable distribution of income remained an important but elusive goal of government policy.
The disruptions caused by partition, the cessation of trade with India, the strict control of imports, and the overvalued exchange rate necessitated immediate action on the part of thegovernment. Government policies afforded liberal incentives to industrialization, while publicdevelopment of the infrastructure complemented private investment. Some public manufacturing plants were established by government holding companies. Manufacturing proved highly profitable, attracting increasing private investments and reinvestment of profits. Except for largegovernment investments in the Indus irrigation system, agriculture was left largely alone, andoutput stagnated in the 1950s. The broad outline of government policy in the 1950s and early1960s involved squeezing the peasants and workers to finance industrial development.Much of the economy, and particularly industry, was eventually dominated by a small group of people, who were largely traders who migrated to Pakistan's cities, especially Karachi, at partition. These refugees brought modest capital, which they initially used to start trading firms.Many of these firms moved into industry in the 1950s as a response to government policies.Largely using their own resources, they accounted for the major part of investment andownership in manufacturing during the first two decades after independence.Between 1947-1952 Pakistan’s average GDP was just 3%, however, in 1952, Korean War brokeout and the overall demand of goods increased worldwide and Pakistan benefitted from itsignificantly with its GDP increased at a whooping rate of 9.4%. After Korean War ended therewas a worldwide recession. However, Pakistan was the sole exporter of Jute at that time andPakistan’s conditions didn’t get worse. Till 1958 Pakistan maintained an average GDP of 3%.If one examines Pakistan economic growth record, the 1960’s stands out as the decade with the best performance. Throughout 60’s Pakistan maintained the average GDP of 6.2%. The reasonfor this was Ayub Khan’s extensive industrialization and development. The high growth rate inlarge scale manufacturing continued in the first few years of the Ayub’s regime with the average