NAME: AYESHA ARFAN ROLL NO: 008

ECONOMIC HISTORY OF PAKISTAN

Economy:
An economy involves all activity related to production, consumption, and trade of goods
and services in an area.

Overview:
Since the country's independence in 1947, the economy of Pakistan has emerged as a semi-
industrialized one, based largely and heavily on textiles, agriculture, and food production,
though recent years have seen a push towards technological modification. However,
decades of intense corruption and internal political conflict have usually led to low levels of
foreign direct investment and underdevelopment.

Major events in the Economic History of Pakistan:

Some major events in the economic history of Pakistan are:

 FLAT FIFTIES: 1947-1958

o After the inauguration of State Bank of Pakistan, a currency dispute between
India and Pakistan broke out in 1949. Trade relations were strained until the
issue was resolved in mid-1950.
o Govt of Liaqat Ali Khan
o National bank of Pakistan is launched.
o Pakistan launches five-year economic plans
o Russian structural framework
o Highest GDP in 1953
o Monsoon floods of 1952-1953

 THE GOLDEN SIXTIES: 1958-1969

o Gen. Ayyub Khan (dictatorship govt.) introduces first land and agricultural
reforms in the country.
o 1964, third highest GDP
o 1965, INDO-PAK war

 THE SOCIALIST SEVENTIES: 1971-1977

o First trade agreement with China
o First steel mill inauguration
o Prime minister Zulfiqar Ali Bhutto introduced nationalisation (making private
entities public) programme to improve the growth of national economy of
Pakistan.
o Growth rate decreased from 6 to 3.6%
o Inflation reaches an all-time high of 37.8%.
  THE REVIVALIST EIGHTIES: 1977-1988
o 2nd dictatorship ruled by Zia-ul-Haqq
o Pakistan became a nuclear power.
o PSM inaugurated, land reforms introduced, Zakat Usher ordinance passed.
o Structural adjustment with IMF.
o GDP grew to 6.6%

 THE MUDDLING NINETIES: 1988-1999

o Nine different governments
o Internet services launched.
o First motorway launched.
o Nuclear power plant inaugurated.
o US starts pouring millions of dollars in Pakistan after 9/11.

 THE REFORMING HUNDREDS: 1999-PRESENT

o 3rd dictatorship by General Parvez Musharraf
o Country's worst floods begin. Resultant property damage estimated at over
$40bn.
o Unemployment rate fell from 8.4% to 6.5%
o Debt crisis was increased.
o China-Pakistan Economic Corridor (CPEC) formalised during the Chinese
premier’s visit to Pakistan.
o IMF approves $6.7bn loan package to help Pakistan revive its ailing economy.
o Pakistan’s relation with other countries improved.

Effects of Economic Events on Behaviours of Individuals:

Social behaviour of individuals is affected by many factors and events, so social behaviour of
individuals is also affected by changing economic events in a country or state. Economic
events in a country might be improving or they might be getting worse. So, the economic
conditions of a country do affect the behaviours of individuals and their ideologies.
Economic conditions affect behaviour of individuals but also attitudes that are reflected in
their behaviour. This means that satisfaction and well-being, satisfaction with economic and
social system of the country and their own perception of economic conditions is becoming
the subject of evaluation of social behaviour. Studies that have been carried out in this area
suggest a correlation between satisfaction and income, corresponding with work
satisfaction, depending on income, the possibility of additional income etc. with a strong
influence on perceptions of justice or injustice of one´s own economic situation, i.e. how
people explain their economic situation. Poor people perceive the cause of their condition
structurally, i.e. put it to external influences (or state control of the economy) rather than
their own internal efforts (motivation, skills). This also explains the so-called effect of point
influencing behaviour.
Good Economic Conditions of a Country:
A good economic condition of a country at a specific time makes people happier, affects
their well-being, gives them a sense of confidence and it makes them proud of their country.
Also, when a country’s economy improves, it improves their lifestyles and gives them better
opportunities.
Poor Economic Conditions of a Country:
But when a country’s economy declines, people enter poverty, depression, it also affects
their lifestyle in a negative way. Rates of crimes, suicides, and divorces increase as well as
death rate due to accidents and illnesses. Decline of a country’s economy also affects the
person’s economy as well. During severe economic breakdown, individuals working at
various places may agree to work at a lesser salary in hope for betterment for the overall
economy and hope of the betterment still remains but on the other hand depression, and
various other problems still surround him.

Major Events in Pakistan’s Economic History and their Effects on

Behaviours and Ideologies of Individuals:
Disturbance of Trade Relations:
Trade basically deals with imports and exports. As in 1949, the currency dispute started
between INDIA and PAKISTAN, so trade relations were strained. This led to the disturbance
in economics of country and traders. They fell short of money which certainly affected their
behaviours in everyday life. So, the people reflected behaviours according to the ongoing
circumstances.

Starting period of Pakistan’s Independence:

At the start of Pakistan’s independence, the rate of production was low, there were less
factories, people had lost their lands, their revenues, and they were jobless. There were
even no offices to start with. People started under the sky as their initial offices. People
were devastated as well as enthusiastic because they came from a slavery-stricken sub-
continent. Their hopes were high. They were ready to do anything for the sake of their
country. So that period was difficult but the hopes of individuals were high so somehow,
under great leadership, they managed to manage themselves.

Five-year Economic Plans:

Five-year economic plans were launched to steer the economic growth and so that people
had better idea of what is going to happen in their country. So, it focused mainly on the
production and exports to steer the economy. As the production was low, so the things
were costly including basic needs.

Land and Agricultural Reforms:

Major General Ayyub Khan laid land and agricultural reforms. That was because Pakistan’s
economy is basically based on agriculture so these reforms proved to be beneficial. That
gave an edge to the farmers and from farmers to the wholesalers and retailers. And
eventually buyer. And it had a large part in exports so the economy started to get better. So,
the economy started to get better.
Reducing Foreign-Aid:
Pakistan also tried to reduce foreign-aid by building local industries. It gave a large
population an opportunity to get employments. Industries basically dealt with exports and
reduced the imports. Also, domestic industries focused more on the domestic area. It is a
human nature that a well-employed person is much satisfied than unemployed person
because he knows that he is going to be the bread-winner of his family and his life settles.
While unemployed person moves to negative activities after a long time period of
unemployment.

Protectionism:
Protectionist policies were applied to better the economy.

Nationalization:
Under the Government of Zulfiqar Ali Bhutto, Nationalization took place. Nationalization is
the conversion of private bodies to public bodies or national bodies. People(employees) had
a very great response to this as they knew that their job was going to be secure and they
were going to work under a national company. It ensures that everyone in the economy is
benefitted and all the industries are united. Interests of labourers and technical efficiency
was increased which led to increases economic benefits to the state. According to PM
Zulfiqar Ali Bhutto,
Activity of public sector prevents the concentration of economic power in few hands and
protects the small and medium entrepreneurs from the clutches of giant enterprises and
vested interests
— Zulfikar Ali Bhutto

Privatization:
 From 1988, encouragement of private enterprise and privatisation of state-owned banks
and manufacturing enterprises started and it led to somehow the betterment of economy
by increasing investments and efficiency but on the other hand it affected the people
because many people lost their jobs, unequal distribution of wealth, and many other
reasons.

Economic losses:
After years of strong growth, the economy stalled in the latter 1990s, with a widening trade
deficit and large external debt. In March 1997, the Sharif government embarked on an
economic revitalisation programme to enhance exports, reduce inflation, generate
employment and widen the tax base (there were then only one million income tax payers,
mainly belonging to the urban middle class). An IMF structural adjustment programme was
approved in October 1997, but suspended in May 1999, until progress on economic reform
was accelerated.

After the October 1999 coup, the military government set a new agenda of reforms,
opening the way for the renewal of IMF support in late 2000 and resulting in good growth
for most of the 2000s. From November 2002, the civilian government continued with this
agenda which included the resumption of privatisation, giving priority to agriculture, smaller
enterprises, and oil and gas exploration, as well as encouraging the development of a
computer software industry.

The economy grew by 6.6 per cent p.a. over 2004–08, but then, in 2008, growth slowed (to
an annual rate of 1.7 per cent) in response to the global downturn and collapse of world
demand. Devastating floods in July 2010 then caused massive disruption to economic
activity across the country and it was only in 2012 that growth returned to levels above four
per cent p.a., continuing in 2013–15.

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ECONOMIC HISTORY.mp3