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IHTASHAM UL HAQ

FA21-BAF-045

BAF-4A

Assignment 3(Project)

“INDUSTRIAL BACKWARDNESS OF PAKISTAN”

Table of Contents
Industry:
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Industry in Pakistan:

Main Industries of Pakistan:

Other Industries of Pakistan:

Industrial Backwardness in Pakistan:

Causes for Industrial Backwardness of Pakistan:

1. Low Foreign Investment:

2. Political Instability:

3. Energy Crisis:

4. Lack of Capital:7

5. Improper Utilization of Labor’s Potential:

6. Communication and Transportation:

7. Lack of Modern Technology:

8. Limited Market:

9. High Interest Rates:

10. People’s Preference to Foreign Goods:

Solutions for Industrial Development of Pakistan

1. Long-Lasting Policies:

2. Loan Culture:

3. Fulfil the Local Demand:

4. Familiarizing the Labor with Modern Equipment:

5. Improving the Infrastructure:

6. Solving Energy Crisis:

7. Policies to attract Foreign Investment:

Conclusion:

References:
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Industry:
“An Industry is a group of systems, businesses or companies that are generally concerned with
the processing of raw materials and production of goods in turn.”
In general, industries are classified according to their principal product, for instance, autos. To
determine statistics, industries are categorized using same classification codes. The Industrial
development is absolutely crucial for a state or nation. The whole economy might crumble if it
were not for industrial development, production and then trade of goods produced in industry.

Industry in Pakistan:
Although agriculture has traditionally been Pakistan's primary source of economic growth, the
industrial sector's importance cannot be understated. Here is a timeline of Pakistan's industrial
development. At the breakup of the subcontinent, Pakistan lost its legitimate possessions. There
were 921 industrial units in Indo-Pak at the time of independence, but only 34 were passed down
to Pakistan, meaning that just 4% of what had been built in British India was transferred to
Pakistan. Additionally, these industries weren't very productive. The majority of them were
compact and centered on the processing of raw materials. The majority of these industrial
facilities were flour mills, rice husking mills, canning plants, and minor sugar mills. expansion of
industrial facilities was a challenge for Pakistan.

Since the mid-1960s, the modern area has created 19 to 25 percent of total national output
(GDP), representing 24.5 percent of GDP in 2004. Assembling and development overwhelm the
modern area, representing around 19% of GDP. Since the 1980s, roughly 17 to 20 percent of the
functioning populace has been utilized in the modern area (25% in 2004), generally in
assembling and development. Albeit the modern base has broadened since freedom, the creation
base relies intensely upon materials and sugar. Producing yield is thusly helpless against
unfavorable weather patterns and vacillations in worldwide costs for cotton and sugar. Different
advancement changes have been sought after since the mid-1980s yet have been ruined by
significant debasement, incessant natural substance deficiencies, the public authority's propensity
to give liberal concessions to specific areas, (for example, sugar refining and yarn turning), and
an oppressive duty structure that has advanced the improvement of the casual economy.
Now we have a lot of prominent industries in Pakistan which have contributed consistently to
Pakistan’s economy. With each passing year and more modernization of the society, more and
more industries are being established. The government is attempting to diversify the country's
industrial base and to increase the number of industries. These newly established industries
mainly consist of smartphone and advanced electronics manufacturing. Here is a list of some
prominent industries in Pakistan.
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Main Industries of Pakistan:

 Textile Industry
 Sports Industry
 Sugar Industry
 Cement Industry
 Fertilizer Industry

Other Industries of Pakistan:

 Automobile
 Leather products
 Paper & board
 Pharmaceuticals
 Chemical
 Engineering items
 Electronic
 Non-metallic minerals
 Petroleum products
 Food, beverages & tobacco

Industrial Backwardness in Pakistan:

Pakistan’s Industrial Growth has gradually increased overtime. But throughout, Pakistan has
been facing some serious issues regarding its industrial development. There are several reasons
for these issues, the main one is the failure to govern the system. Pakistan’s industry had so
much potential which could have worked wonders in our favor. There is never ‘too late’ if
someone pledges to do favor to the system.

Causes for Industrial Backwardness of Pakistan

A lot of factors collectively add to failing the industrial system in Pakistan. Few of these
problems were created by us, some by poor governance and others by unpredictable political
situations. We have our own history of quickly changing our leaders, so that no one would be
able to bring solid modifications to the system. Here is a detailed look at the causes of Industrial
failure of Pakistan.

1. Low Foreign Investment:

Foreign investors have never been in great numbers in Pakistan. There is still a dearth of foreign
investment in Pakistan. The leadership consistently emphasizes this problem and works to solve
it, although there are still a few obstacles that prevent foreign investment. Security has been the
key concern in the last ten years. Terrorism successfully played its part in halting or slowing
down Pakistan’s progress. Now that, this issue is out of the way, the second problem is the lack
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of investment-friendly policies in Pakistan. There are several other issues which also affect the
foreign investment like unwelcoming approach to foreign investors. There is a lot of grinding for
foreign investors who want to invest in Pakistan.

2. Political Instability:

Political Instability has damaged the working framework of almost every department in Pakistan.
But its severe affects can be seen in Industrial system. The political instability has also brought
instability in policies, which have proven harmful for Industrial system. Each successive
government implements its own policies, which they sit fit. This cycle of changing policies is
one of the leading causes of failure of our Industrial system. The change of policies doesn’t
necessarily mean the change in policies regarding to Industrial sector, but changes made in other
sectors can also influence the functioning of a specific industry, like some policies regarding the
production of sugarcane, can have a different effect on sugar mills. As a result of this negligence,
Industrial sector along with various other sectors, are suffering a massive setback.

3. Energy Crisis:
Energy Crisis is another blow to our Industrial Sector. We are far away from having the required
levels of electricity and gas, which are seriously affecting the output of industries. Despite
having a ton of resources of all the raw materials in our country, we are unable to properly utilize
them for an uninterrupted flow of energy to the industries. According to an Economic Survey of
Pakistan in 2017, the energy crisis has badly impacted all the industries. The continuous supply
of gas and electricity is crucial for proper industrial productions.
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4. Lack of Capital:
It is essential to have ample capital to become self-sufficient in industrial sector. The industries
need large sums of fund to keep operating. But without bank loans and capital the progress of
industry has been slowed. This is the condition of almost every other industry in Pakistan. With
low capital, repairing and maintaining the system also becomes a different headache. This
problem can be solved by the loan system.

5. Improper Utilization of Labor’s Potential:

The proper utilization of Labor’s potential is crucial for the development of an industry. But in
here, we don’t really care on how much one works. In our industries, it is either underutilization
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or overutilization of Labor’s Potential. There are set rules for how much a labor has to work, and
how much he will be paid, but no one overlooks the condition, if the labor is being overworked.
This improper utilization of resources is keeping us from competing the world. The proper
utilization of Labor’s Potential can prove wonders in Pakistan’s Industrial sector, and the labors
would also be able to get the full benefits of their work.

6. Communication and Transportation:

Transportation is necessary for Industries. Bringing raw materials to industries and carrying
away the goods to market requires effective communication and transportation. The lack of
proper infrastructure and basic needs for transportation are a severe to blow to the industrial
transport system. The absence of roads, water supply, lack of sanitation, poor waste disposal
system, adds to the problems that we already had. The expensive transport and poor
infrastructure are the main causes the industrial transport system is lagging behind.

7. Lack of Modern Technology:

We can also see the lack of modern technology in every other industry. For instance, the
Pakistani textile sector cannot compete with textile industries of neighboring countries due to a
widespread lack of modern technology. The lack of modern technology hinders the mass
production of several industries. The man power cannot compete with robotics and Artificial
Intelligence in terms of efficiency and work handling.

8. Limited Market:

In Pakistan, there is also a threat by Chinese and Indian manufacturers to gain most of the market
share as Pakistan has a limited market. Pakistani manufacturers have high production and selling
costs, low labor productivity, and inefficient processing methods. We have not been able to
expand our domestic market to accommodate homemade goods due to the government’s
indifference. There are just a few products which are exported every year, and which are
bringing in revenue, like rice. But that might not be enough in future. The big markets are now
producing advanced electronics and they have their new variation every other month. This way
they have open market for themselves.
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9. High Interest Rates:

Pakistan also has more interest rates than its surrounding countries, China, India and Bangladesh.
In 2011, the interest rates in Bangladesh were 8-9%, meanwhile China and India had 5.58% and
5.25% interest rates respectively. On the other hands, Pakistan had 13.25 % interest rates. The
increase in the interest rates also increase the capital, that is not a good sign for businessmen,
entrepreneurs and foreign investors.

10. People’s Preference to Foreign Goods:

Our industries had a history of creating products which were not up to mark with foreign
products. So now, our own people prefer choosing a foreign product instead of the locally
produced one. The low market of the goods in own market is a very discouraging factor for
Industrial sector. This way, it is also difficult to get enough taxes which are then used to run the
country. People pay taxes on foreign products which are then added to the GDP of that country.
Not using the products made in our country also effects the GDP of country.

11. Lack of infrastructure facilities:

The foundation offices for developing a sound modern industry are lacking in Pakistan.
The wellsprings of force, warm, sunlight based, nuclear and so on, are inadequate to meet
the modern necessities of the country. The vehicle and correspondence offices which are
crucial for the development of industry are exorbitant and furthermore don't completely
meet the modern and business necessities of the country.

12. Lack of Technical know-how:

Another issue which is holding up traffic of quick industrialization of the nation is the
absence of skilled people. The capital concentrated enterprises need exceptionally
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prepared specialized staff. The nation at present is inadequate of them. The import of
experts from the high-level subjects isn't just expensive yet in addition against the interest
of the country.

13. Rise in agricultural production:

Industrialization gives hardware like work vehicles, thrashers, reapers, tractors, transport,
flying shower and so forth, to be utilized in the ranch area. The expanded utilization of
current sources of info has expanded the yield of harvests per hectare. The expansion in
the pay of the ranchers has given lift to financial advancement in the country.

14. Reduction in population growth:

Industrialization prompts movement of excess work from area to the enterprises generally
arranged in metropolitan places. In urban areas further developed offices of disinfection
and medical care are accessible. Individuals through the reception of family arranging
measures, lessen the pace of populace development.

15.Provision for Defense:

Assuming that a nation is industrialized, it can fabricate arms and ammo essential for the
protection of the country. A country which relies upon different nations for the stockpile of
ammo will ultimately endure and may confront rout. The two conflicts with India ought to
be a stunner for Pakistan.

16. Lesser pressure on Land:

The foundation and development of enterprises reduces the exorbitant tension of

workforce from the agriculture sector.

17.Development of Markets:

With the improvement of industries, the market for natural substances and completed
divine beings enlarges in the country.

18.Increase in Revenue of Government:

Industrialization expands the inventory of merchandise both for inward and outside
business sectors. The commodity of merchandise gives unfamiliar trade. The traditions,
extract obligations and different expenses collected on the creation of merchandise
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increment the income of the State. The personal expense got from the industrialists adds
to the income steam of the Government which at last is spent for the government
assistance of individuals in general.

Solutions for Industrial Development in Pakistan

Pakistan’s Industrial Sector has suffered several blows, but it will take a lot of time and
consistent effort for it to heal. Here are some solutions which might be taken to redevelop or
improve the current Industrial Issues.

1. Long-Lasting Policies:
So far, our system has seen instable policies which change with each successive
government. In this regard, a set of some solid policies must be made, which is
implementable. And then it must be made sure that those policies are being followed. The
continuity of work can have a positive impact on the output, as the industrial workers get
used to procedures.

2. Loan Culture:
There is a need to provide loan to industrialists so that they can run the industries
smoothly when the industry is not doing so well. Moreover, it can help establish some
new facilities or maybe a new production center in an industry. In short, loan must
always be an option for industrialists, it will enhance the production of quality products.

3. Fulfil the Local Demand:

This step requires the production of quality products and their availability to the local
consumers. Since, our people prefer foreign products, there is need to rebrand the whole
industrial sector, with quality products befitting that rebranding. The consuming of
products by local people will add to the GDP of the country, and it will also boost the
confidence of industrialists. That would be a win for the country. With the demand of the
products in the country, the foreign demand will also be increased, which is another plus
point to the industrialists.

4. Familiarizing the Labor with Modern Equipment:

This is the age of modernization. More and more modern equipment and machinery is
being added to the industries and factories. But most of our labor are not familiar with
such kind of equipment. Needless to say, a layman would probably fear handling a
precious machine or a new instrument. In future, there would be more digital machines.
For that, labor must be familiarized with new technology and instruments. Industries
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should host different workshops for the practice of labor. Moreover, more technical
institutions and courses in universities can be helpful as they could provide the hands-on
experience to students before they go to the industries.

5. Improving the Infrastructure:

Damaged Infrastructure and ineffective transportation and communication is responsible
for delayed deliveries, which lowers the credibility of an industry. The basic
infrastructure, like roads, sewerage system, solid and liquid industrial waste management,
should be improved for the continuity of work and best results possible.

6. Solving Energy Crisis:

Considering the resources, we have; energy crisis should not have been bothered us. But
since they do, thanks to various factors, they must be solved on priority basis. The
continuous supply to industries can increase the production of desired products. Energy
Crisis are also a difficulty for civilians, so solving the energy crisis can improve the life
standards of the country as a whole.

7. Policies to attract Foreign Investment:

There are only a few reasons why foreign investors don’t invest in our country. The main
point is security. So, law and order should be improved in order to give a safe place to
foreign investors to work on. Moreover, the policies should be made favoring the
investors, so they could be satisfied working in Pakistan.

8. Allocation of Funds for Industrial Research:

More allocation of funds for industrial research is required, which is necessary, for the
industrial development.

9. Increasing Capital:

 Industrial sector can be promoted by increasing capital.

10. More Savings and Investment:

Saving and investment should be increased to develop industrial sector.

11. Technical Know-how:

To promote industrial sector, there should be technical know-how.

12. Acquisition of skills:

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Skills should be acquired by people through regular training.

13. Good government policies:

There should be good government policies to protect local industries

Conclusion:
The industrial sector in Pakistan is very disorganized, and it will take a lot of work to get it back on track.
Although it will take time, it is not impossible to cure the system. The industrial sector is what is keeping
the nation in its current state of economic turmoil. If only Pakistan's industrial sector could be
developed to its full potential alongside its agricultural sector, the nation might quickly advance. The
industrial sector can also outperform other departments in the country, if it only adds up some of
the in-demand industries of this era. Curing the system, might not happen in the next year, but
even if it takes 5 to 10 years, but the industrial sector could stand on its feet, it would be a great
achievement for Pakistan. The government should take some steps to help our industry to keep
pace with modern and developed industries.

The public authority ought to change the administrative framework and on second thought of
including financial backers in such a strong interaction, the public authority ought to give them
the office of one-window activity. The one-window activity will make it extremely simple for
unfamiliar financial backers to put resources into our country. The public authority ought to
likewise lay out material testing research centers to assist enterprises with creating quality items.
We ought to zero in on innovative work to contend with the created world. Government assets,
for this situation, can end up being useful.

References:
1. https://www.jstor.org/stable/41259505?seq=1
2. https://www.researchgate.net/publication/319875972_Determinants_of_Industrial_Sector_Growth_in_Pakistan
3. http://documentos.bancomundial.org/curated/es/680081468286261431/pdf/Revitalizing-industrial-growth-in-Pakistan-
trade-infrastructure-and-environmental-performance.pdf
4. http://documents.worldbank.org/curated/en/802071468286272829/pdf/multi-page.pdf
5. http://aerc.edu.pk/wp-content/uploads/2017/02/Industrial-Development-in-Pakistan-5th-Paper-Page-107-119-1.pdf
6. http://aerc.edu.pk/wp-content/uploads/2017/02/Industrial-Development-in-Pakistan-5th-Paper-Page-107-119-1.pdf
7. https://sites.google.com/site/maeconomicsku/home/industrial-development-in-pakistan
8. http://www.rcci.org.pk/wp-content/uploads/2012/12/igtip.pdf
9. www.chatgtp.com/pakistanindustries
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