ECONOMICS:

“Economics is the social science that studies the production, distribution, and
consumption of goods and services. Economics focuses on the behaviour and
interactions of economic agents and how economies work.”

ECONOMICS GROWTH:
“One can define economic growth as the increase in the inflation-adjusted market
value of the goods and services produced by an economy over time. Statisticians
conventionally measure such growth as the percent rate of increase in real gross
domestic product, or real GDP.”

OR

“Economic growth is an increase in the the production of economic goods and

services, compared from one period of time to another. It can be measured in
nominal or real (adjusted for inflation) terms.”

ECONOMICS GROWTH OF PAKISTAN:

Pakistan is one of the poorest and least developed countries in Asia. Pakistan has
a growing semi-industrialized economy that relies on manufacturing, agriculture
and remittances. Although since 2005 the GDP has been growing an average 5
percent a year, it is not enough to keep up with fast population growth. To make
things even worst, political instability, widespread corruption and lack of law
enforcement hamper private investment and foreign aid.

FIRST FIVE DECADES:

Pakistan was a middle class and predominantly agricultural country when it
gained independence in 1947. Pakistan's average economic growth rate in the
first five decades (1947–1997) has been higher than the growth rate of the world
economy during the same period. Average annual real GDP growth rates were
6.8% in the 1960s, 4.8% in the 1970s, and 6.5% in the 1980s. Average annual
growth fell to 4.6% in the 1990s with significantly lower growth in the second half
of that decade.

VIEW POINTS OF JIM O’NEILL:

Pakistan is a developing country and is one of the Next Eleven countries
identified by Jim O'Neill in a research paper as having a high potential of
becoming, along with the BRICS countries, among the world's largest economies
in the 21st century. The economy is semi-industrialized, with centres of growth
along the Indus River. Primary export commodities include textiles, leather
goods, sports goods, chemicals and carpets/rugs.
Growth poles of Pakistan's economy are situated along the Indus River; the
diversified economies of Karachi and major urban centers in the Punjab,
coexisting with lesser developed areas in other parts of the country.

PAKISTAN ECONOMY IN THE RECENT

YEARS:
The World Bank predicted in 2016 that by 2018, Pakistan's economic growth will
increase to a "robust" 5.4% due to greater inflow of foreign investment, namely
from the “China-Pakistan Economic Corridor”. As of May 2019, the growth rate
has been revised and the IMF has predicted that future growth rates will be 2.9%,
the lowest in South Asia. According to the World Bank, poverty in Pakistan fell
from 64.3% in 2002 to 29.5% in 2014.
In 2017, Pakistan's GDP in terms of purchasing power parity crossed $1 trillion.By
May 2019, the Pakistani rupee had undergone a year-on-year depreciation of 30%
vis-a-vis the US Dollar.

PRESENT ECONOMY:
GDP Growth Rate in Pakistan is expected to reach 5.50 percent by the end of
2020, according to Trading Economics global macro models and analysts
expectations. In the long-term, the Pakistan GDP Growth Rate is projected to
trend around 5.50 percent in 2021, according to our econometric models.
FACTORS OF ECONOMIC GROWTH :

Following are the factors of Economic growth:

 Natural Resources.
 Physical Capital or Infrastructure. ...
 Population or Labor. ...
 Human Capital. ...
 Technology. ...
 Law.

EXPLANATION:
NATURAL RESOURCES:
The discovery of more natural resources like oil, or mineral deposits may boost
economic growth as this shifts or increases the country’s Production Possibility
Curve. Other resources include land, water, forests and natural gas.
Realistically, it is difficult, if not impossible, to increase the number of natural
resources in a country. Countries must take care to balance the supply and
demand for scarce natural resources to avoid depleting them. Improved land
management may improve the quality of land and contribute to economic
growth.
In this century, availability of stock-renewable resources (primarily agricultural
produce) and of stock-material resources (minerals except fossil fuels) will not
constitute a bottleneck for continued economic growth of the industrialized
countries, though their relative prices might increase somewhat. Prospects for
continued material growth depend in significant measure on the future energy
situation, however. During the second half of the 1980s supply problems might
become acute because of limited availability of stock-energy resources and slow
development of ‘new’ sources (flow energy).
EXAMPLE:
Saudi Arabia’s economy has historically been dependent on its oil deposits.
Pakistan is one of the richest countries in the world which have a large amount of
natural resources available including coal, gas, gemstones, copper, minerals and
gold reserves, oil, iron, titanium and aluminium and so on.
In America, Mineral resources are also abundant; the large variety includes coal,
iron ore, bauxite, copper, natural gas, petroleum, mercury, nickel, potash, and
silver.

Physical Capital or Infrastructure:

DEFINITION:
Physical capital represents in economics one of the three primary factors of
production. Physical capital is the apparatus used to produce a good and services.
Increased investment in physical capital, such as factories, machinery, and roads,
will lower the cost of economic activity. Better factories and machinery are more
productive than physical labor. This higher productivity can increase output. For
example, having a robust highway system can reduce inefficiencies in moving raw
materials or goods across the country, which can increase its GDP.
The category of physical capital includes the plant and equipment used by firms
and also things like roads (also called infrastructure). Again, greater physical
capital implies more output.

Physical capital can affect productivity in two ways:

 An increase in the quantity of physical capital (for example, more

computers of the same quality)
 An increase in the quality of physical capital (same number of computers
but the computers are faster, and so on).

Human capital and physical capital accumulation are similar: In both cases,
investment now pays off in longer-term productivity in the future.

EXAMPLE:
Physical capital consists of man-made goods that assist in the production process.
Cash, real estate, equipment, and inventory.

Population or Labor:
It is the sum of persons employed and the unemployed. Together these two
groups of the working-age population represent the supply of labour for the
production of goods and services in exchange for remuneration existing in a
country at a given point in time.
A growing population means there is an increase in the availability of workers or
employees, which means a higher workforce. One downside of having a large
population is that it could lead to high unemployment.

EXAMPLE:
Children, for  example, should not be counted as
unemployed .

Human Capital:
Human capital is the economic value of the abilities and qualities of labor that
influence productivity. These qualities include higher education, technical or on-
the-job training, health, and values such as punctuality
An increase in investment in human capital can improve the quality of the labor
force. This increase in quality would result in an improvement in skills, abilities,
and training. A skilled labor force has a significant effect on growth since skilled
workers are more productive. For example, investing in STEM students or
subsidizing coding academies would increase the availability of workers for
higher-skilled jobs that pay more than investing in blue-collar jobs.

CATEGORY OF HUMAN CAPITAL:

There are two kinds of human capital: specific and general.

Specific human capital refers to knowledge and skills that few find useful and are
willing to pay for. For example, knowing how to operate a proprietary machine
that is owned and operated by Company XYZ might be a skill that only Company
XYZ is willing to pay for.
General human capital refers to knowledge and skills that many employers find
useful, such as knowing accounting, knowing how to transplant a heart, or
knowing how to design a bridge.

Technology:
Another influential factor is the improvement of Technology. The technology
could increase productivity with the same levels of labor, thus accelerating
growth and development. This increment means factories can be more
productive at lower costs. Technology is most likely to lead to sustained long-run
growth.
EXAMPLE:
In this sense, processes like assembly line production or creating medical vaccines
are considered technologies. Even social or political things like language, money,
banking, and democracy are considered technologies.

Law:
An institutional framework that regulates economic activity such as rules and
laws. There is no specific set of institutions that promote growth.
Law & Economics meshes together two of society's fundamental social constructs
into one subject, allowing a multi-faceted study of significant problems which
exist in each subject. ... Law & Economics, with its positive economic analysis,
seeks to explain the behaviour of legislators, prosecutors, judges, and
bureaucrats.
The law and economics movement offers a general theory of law as well as
conceptual tools for the clarification and improvement of its practices. The
general theory is that law is best viewed as a social tool that
promotes economic efficiency, that economic analysis and efficiency as an ideal
can guide legal practice.
 HOW THESE FACTORS EFFECT ECONOMIC
GROWTH?
NATURAL RESOURCES:
Natural resources have a double-edge effect on economic growth, in that the
intensity of its use raises output, but increases its depletion rate. ... Natural
resources have limited direct economic use in satisfying human needs but
transforming them into goods and services enhances their economic value to the
society.

INFRASTRUCTURE:
A larger stock of infrastructure is thought to fuel economic growth by reducing
the cost of production and transportation of goods and services; by increasing the
productivity of input factors; and by creating indirect positive externalities

POPULATION:
Population growth increases food demand and therefore the demand for
agricultural land. Since rationally acting agents use the economically most suitable
resource first, additional agricultural land is likely to be less profitable.

HUMAN CAPITAL:
Human capital affects economic growth and can help to develop an economy by
expanding the knowledge and skills of its people. The level of economic
growth driven by consumer spending and business investment determine the
amount of skilled labor needed.
TECHNOLOGY:
Technological development brings economic growth. However it also enhances
social wealth on the one hand by increasing the income levels and wealth and
causes certain social problems on the other hand. Technological
development makes very important contributions to the economic and social-
cultural life.

LAW:
Rule of Law and Economic Growth. Economic growth depends on many factors.
Key among those factors is adherence to the rule of law and protection of
property rights and contractual rights by a country's government so that markets
can work effectively and efficiently.