INTERNATIONAL POLITICAL ECONOMY

Submitted to: Rehana Saeed Hashmi

Name Inamullah
Roll no. 54
Bs (Hons) Political Science, semester 8th
 1. Evaluate the role of the WTO in enhancing or
decreasing Pakistan’s exports in textile sector?
Akbar Zaidi has adopted a structural approach to highlight major issues within the
macro-economy of Pakistan. These structural adjustments have drastic effect on
economy, politics, class and society of Pakistan. Pakistan’s’ economy has been
somewhat stable since 1960’s to 1980s. Although Pakistan faced serious crisis
during these decades, just like separation of Pakistan, floods, Afghan refugees,
and oil crisis (OPEC).However, growth of agriculture and industry was much stable
,in fact rapidly increased. But, after 1990 Pakistan not only faced trade deficit but
also unemployment, lack of health facilities, replacement of agricultural economy
by non-agricultural economy, and large scale manufacturing sector by small one.
The Structural Adjustment Programme put forwarded these demands:

No interference of state in economic activities.

1-Privatization

2-Reduced protection of domestic industries

3-Elimination of subsidies on social sector especially electricity, health, fertilizer and seeds.

4-Indirect taxes to be increased

There were three major sectors at large scale which were supporting Pakistan’s
economy. These are Textile, Food and tobacco. Importantly, these large scale
sectors were already 3/4th privatized before the arrival of the IMF package. So,
there was no need to privatize more industries. Secondly, when subsidies were
cut down, consequently, it led to the exploitation of producers and farmers.
Because they were deprived of their due incentives, it had more pungent reaction
in next year when agricultural production was less than previous 30 years.
Moreover, small sectors have been increasing in such a way that they are now
considered to be one of the most contributors in the GDP of Pakistan.
Additionally, when we opened our market, because of our least competitive
production of cotton in sense of quality, led to the various other actors to play our
own ground, leaving domestic absolutely backward. This is the reason Pakistan is
one of the largest producers of cotton and other textiles, however, least
 benefitted in surplus. Cotton becomes now a Low Value-added Akbar Zaidi has
quoted that our cotton growth has decreased from 11% to 2%.Last but not least
Pakistan has also lost it sovereignty since this so-called package of IMF. It is really
important to note that all the Central Bank SBP governors who worked at their
posts during the period starting from 1988 till 2009, were direct employees of
either IMF or World Bank in the past, and have played key roles in shaping the
economic, financial and monetary policies for Pakistan for more than two
decades. Dr. Yaqub, Dr. Ishrat Hussain and Dr. Shamshad Akhtar left their jobs at
IMF or World Bank and joined the Central Bank of Pakistan as governors.

2. What did you understand the main issues of Pakistan’s

industrial sector after reading these three chapters from
Akbar Zaidi book (ISSUES IN PAKISTAN ECONOMY)

There are various issues which are halting the way of smooth running economy of
Pakistan. Pakistan has facing severe problems regarding, even, basic necessities of
life. it seems Pakistan’s economy will not be affected until and unless some durable
problems are not solved. These are the issues:

Import Substitution Industrialization strategy

Pakistan pursued the Import Substitution Industrialization Strategy throughout her
history, but there has been little diversification of industry. The cascaded tariff
structure has provided higher protection to consumer goods and can promote
domestic industry. But Pakistan is following IMF agenda which begets the fall of local
industry. Import substitution accounted for 96.9 percent of growth during the 1951-
55 period and for 25 percent during the 1963-71 period. So,tarrif must be used to
protect local industry.

Power supply
It is estimated that an ordinary business in Pakistan on average loses 5.6% percent
of annual output due to power outages as compared with less than 2% for the
average plant in China. Therefore, firms are often forced to use their own generators
 and solar plates. It has 3 basic issues. One the production cost is increased, second it
is gives birth to pollution and third, production takes days to complete project on
time.

Credit facility/High interest

Small businesses have least access to banks or other formal resources. The reason is
people don’t have awareness; secondly the banking procedure is highly complicated
and time-taking. Third is the property on which loan is granted, commonly, is very
high and makes it almost impossible to get the access at these formal institutions.
However, if someone, luckily, gets access to the banks then he has to pay interest
which is very high to payback that payment.
Weak Infrastructure/Transport system
In order to improve the economic health conditions there is a dire need of better
infrastructure. Pakistan is way behind achieving this kind of infrastructure. the lack
of repair and maintenance has resulted in the deterioration of infrastructure, inept
in the public sector utilities have contributed to high costs of production, which
erodes the competitiveness of domestic manufacturers. Railways need to be
improved as early as possible.

 Human Resource Development

In Pakistan there is a lack of skilful labor. They must be skilful as they are the
backbone of the economy. so sufficient measures should be taken to enhance the
capability of a firm of its production.

 Lack of Diversification
The diversification of industrial sector is very essential for the revival of the
economy. However, Pakistan’s industrial structure lacks diversification. For
example almost 38 percent of industrial value added was contributed by food
and textiles. The different areas comprising electronics, machinery, and metal
products, Pakistan has made any significant progress, while the engineering
sector is sharing only 5 percent of import.80 percent trade is consisted of mainly
textiles. so there is a absolute need of diversify the goods and services.

3. Compare and evaluate the policies of the three local

governments in Pakistan regarding women
participation, fiscal autonomy and development?

Ayub Khan Zia-ul-Haq Musharraf

WOMEN No representation Limited Enhanced and

PARTICIPATION representation 33% Quota

FINANCIAL  Local  Local  More

AUTONOMY/BUDGE government government autonomy
T APPROVAL can levy can levy in
very limited special collecting
taxes. taxes. taxes and
 Approved by  Approved by levying
DC elected them
assembly  Approved
by elected
assembly

ADMINISTRATIVE Bureaucracy heads No bureaucratic No bureaucratic

all tiers above UC head in local head in local
government, still government.
DC head of the District Nazim’s
district, provincial right to writes
govt. could fire any ACR of DCO.PG
elected officials can remove
Nazim by
approval of
assembly
components. In the Pakistan the share of the engineering industries in total
manufacturing is around 5 percent. Not surprisingly, a narrow industrial base
has led to highly concentrated exports: roughly 80 percent of the country’s
manufactured exports consist of only textiles and clothing and carpets and

rugs .