Name: Kanza Mehmood Anwar

Student ID: 13454

Class: BBA-2A
Subject: Pakistan Studies
Assignment No: 01
Submission Date: July 18, 2018
Submitted to: Miss. Sahar Khan
Economic Problems Faced by Pakistan
Economy is the most important sector which affects every aspect of life.
Now a days Pakistan’s economy is facing many challenges.
Some of the economic problems faced by Pakistan are discussed below,

1. Balance of Payment’s Deficit:

Pakistan is importing more and exporting less for years, so Pakistan’s
balance of payment is running deficit for many years. As Pakistan’s import is
higher than its export so the cash inflow in Pakistan is also less than its outflow.
Higher outflow means Pakistan’s industries are earning less profit than foreign
industries.
80% of Pakistan’s import is financing through our exports till 2007-2008.
But now this ratio goes down to 50%, now are 50% imports are financing through
our exports. We have a balance of payments ’deficit of 50% which is increasing
year by year. This is presenting great challenge to Pakistan’s economy.

2. Fewer Savings and More Consumption

In Pakistan the earning of people is not too much than compared to their
expanses. They tend to consume more and save less. As the saving rate in Pakistan
is low thus the investment rate in Pakistan is also too low. Low investment means
low growth of economy. Investment provides capital to the industries and plays a
key role in the economy of any country. According to one survey every Pakistani
consumes 85 from every hundred rupees. This indicate that saving rate is too low
in Pakistan.

3. High Load Shedding in Pakistan

Energy plays an important role in the economy of any country. The worst
economic challenge faced by Pakistan is load shedding. Because of load shedding
industries in Pakistan are shifting to other countries and not only foreign investors
but Pakistani investors are also discouraged to invest here. Load shedding has
destroyed small businesses as well as large businesses. Energy crisis has not only
affected general public but it is also effecting government indirectly. Because of
mobilization of businesses from Pakistan to other countries the government
revenue decreases in the form of tax collection. As the businesses decreases,
unemployment increases and the government has to pay more in the form of
unemployment compensation. Due to load shedding government spending is also
increasing on the development of energy plants.

4. Natural Disasters
Natural disasters affect the economy of any country. Natural disasters ha
also affected the economy of Pakistan very badly. When flood comes it destroys a
large number of agricultural products, disturbs budget policy, people get
unemployed and the government has to spend to fulfill the needs of those people
who are affected by the disaster. Pakistan has faced a lot of economic damage due
to natural disasters for past many years.

5. Decreasing Share in the World Trade

In 1990s our share in the world trade was 0.2 % and now it is 0.12 %. This
indicates that our share in world trade is shrinking day by day. Although we export
many things but our most exported goods are textile, wheat, rice and cotton. And
even these are limited to some countries like US, UAE and Australia etc. Our
shrinking share in world economy is presenting us great challenges to overcome
economic problems.

Solutions to Overcome Economic Challenges

It is unfortunate to see that the government of Pakistan has been primarily focused
on implementing the reforms and solutions that provide temporary solutions to the
national economic issues. As there is a need to reduce the ‘cost of agricultural
production’ in the country, the government merely offered a subsidy on fertilizer
prices. This is not a long-term solution for the farmers. Experts have repeatedly
advised that: Reducing the high-taxes and ‘GIDC’ on fertilizer industry will bring
down the costs of fertilizer-production in the country and help in permanently
lowering the cost of cultivation too. Therefore, the authorities must also think
about providing natural-gas and electricity at cheaper rates for the fertilizer
producers. This way, the agricultural sector – which forms the back-bone of
Pakistan’s economy, can be strengthened for higher productivity in future.
In Pakistan, millions of qualified graduates continue to suffer due to
unemployment, but the only solution the government could come up with, was to
launch the ‘Rozgar Cab scheme’. This is not a solution to provide ‘Respectable’
livelihood to qualified graduates. Apparently, the authorities have failed to realize
that; they must encourage industrialization on a large-scale to create millions of
sustainable job opportunities. This is the only way that the deprived segments can
be included into the mainstream economic activity of the country and their
productivity can be optimized.
More resourceful initiatives and long-term solutions will help the government in
addressing the economic problems permanently, rather than offering short term
solutions.

Geopolitical Problems Faced by Pakistan

Some of the geopolitical problems faced by Pakistan are discussed below.

1. Problems with India

India had been working upon East Bengal since 1948 with the aim of subverting
the minds of Bengalis and poisoning their minds against people of West Pakistan
through an orchestrated subversion plan. It wanted to disprove Two-Nation theory.
India in collusion with former Soviet Union and supported by several other
countries hatched the gory plan of dismemberment of Pakistan. After nine months
insurgency, Indian military jumped in to cut Pakistan to size and create
Bangladesh. Indira Gandhi chortled that Two-Nation theory had been sunk into the
Bay of Bengal.

2. Kashmir Issue and Nuclearization in South Asia

Another great challenge to the foreign policy of Pakistan is Kashmir issue and
Nuclearisation in the region. Since its very inception the issue of Kashmir
remained cardinal credential to the foreign policy of Pakistan. On the issue of
Kashmir both India and Pakistan have fought wars of 1965, 1971, and 1999 of
Kargil, and in 1998 both the courtiers tested their nuclear weapons that has made
the region a dangerous.
“Indo-Pak relations always remained security centric. The historic crises put both
the states on the verge of nuclear explosion inmate 1998; the situation could seek
nuclear aspect indeed nuclear deterrence in the South Asia is weak. Kashmir has
been the flash point in constrain of both the states have been fought several wars
including in 1947-48, 1965 and1971 and the Kargil conflict in 1999.The Kashmir
conflict remains unfinished business.”

3. Globalization an Emerging Threat to Foreign Policy of

Pakistan
Globalization is challenge rather than opportunity for under develop countries like
Pakistan. According to the critics of globalization only those countries which are
economically strong and politically viable can survive in this prevalent world.
Keeping in view the credentials of globalization, Pakistan has to reform its political
system, to flourish its economic performance, and to set out the essential elements
like good governance and maintain rule of law to keep abreast with the new
challenge of globalization. In south Asian perspective, where India is a threat not
in perspective of arm race but also in terms of economic competition in the region
and the world at large. India is an emerging economic giant with china in the South
Asia. It horizontally and vertically affects the policy matters of Pakistan; because
in the globalized world economic interests of countries are prior to the other
interests.

4. Afghan Issue and War on Terror

The most gigantic challenge to the foreign policy of Pakistan is the issue of
Afghanistan, and internal war against terror. In the war against terrorism launched
by America against invisible enemy put Pakistan on the epicenter of the war. First,
the geo-strategic environment has impelled Pakistan to adopt defensive policy in
the region. India has been trying to contain Pakistan in Afghanistan due to its
fragile political economic and geo- strategic conditions. Second, after the
withdrawal of America and disintegration of Russia a political vacuum was created
in Afghanistan. Pakistan for securing its position in the region adopted the policy
of ‘strategic depth’ to contain Indian influence in Afghanistan. Third, after 9/11
again it has become difficult to Pakistan to secure its interest in Afghanistan.
Indian influence in Afghanistan is increasing day by day because some analysts
believe that Government in Kabul is Indian friendly. Pakistan in the prevalent
scenario is facing two fold challenges regarding Afghan crisis after the 91/11.

5. Drone Attacks
After terrorism drone strikes by the US is a singular challenge to Pakistan’s foreign
policy. There are two points of views regarding drone strikes in Pakistan. One
believes that drone strikes are being conducted by CIA on the approval of Pakistan
government through secrete agreement. The effectiveness of the drone attacks lies
on the fact that in these attacks major militant commanders of Pakistan Tehreek-e-
Taliban (a terrorist group) are killed. The other point of view regarding drone
strikes is that the done attacks are clear violation of Pakistan’s sovereignty, and
through theses strikes Pakistan is getting great deal of collateral damage and
innocent people are being killed.

Some Viable Suggestions for the Geopolitical

Problems of Pakistan
 Self-reliance is need of the hour, Pakistan must settle down its debt reduction,
so that the interference from the donors can be curtailed in matters of Political and
economic issues of the foreign policy of Pakistan.
 Pakistan must keep amicable relations with its neighboring countries especially
with India.
 The solution of Kashmir issue is not consisting with policy of using force; even
the policy has given boost up to the Nuclearisation in the region.
For the solution of Kashmir issue Pakistan must strengthen itself. For example
China could not get its parts as Hong Kong, Macao form Britain until it became
politically strong and economically strong.