Globalization And

Liberalization
Globalization

 Globalization is also called internationalization.

 Globalization is a set of fresh beliefs
 Working methods Economic, political and socio-
cultural realities in which the previous assumptions
are no longer valid.

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For Developing Countries

 It means integration with the world

economy.
 In economic terms Globalization refers to
the process of integration of the world
into one huge market.
 Such unification calls for the removal of
all trade barriers among countries.
 Even political and Geographical barriers
become irrelevant.

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Effects of Globalization

 More goods at lower prices.

 Scaled up businesses.
 Better quality and variety.
 Innovation.
 Job churn.
 Decline in gap between rich and poor
globally, but wider inequality within
united states.

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Liberalization

 Liberalization is a very broad term that

usually refers to fewer government
regulations and restrictions in the economy.
 Liberalization refers to the relaxation of the
previous government restriction usually in
area of social and economic policies.
 When government liberalized trade , it
means the removal or reduction of
restrictions or barriers.
 These barriers include tariffs, such as duties
and surcharges, and nontariff barriers, such
as licensing rules and quotas.

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Liberalization

ADVANTAGES DISADVANTAGES
 Increase in foreign direct  Increase Dependence.
investment.
 Loss in domestic unit.
 Liberalization of foreign
technology.  Unbalanced economy.
 Industrial location.
 Faster growth and poverty
reduction.

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Pakistan’s Experience With
Globalization
 Pakistan liberalized its economy as part of the
structural adjustment conditionality’s of the
IMF program and World Bank lending.
 While globalization is viewed as a key to
future economic development, it is also
argued that it increases poverty, threatens
employment and living standards of the
poor. 
 Pakistan’s performance in attracting the
foreign investment has been poor.
 Pakistan’s share in the world exports has
fallen from 0.17 to 0.11 between 1992 to
2017.

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PAKISTAN: PERCENT OF WORLD EXPORTS

 The average value for Pakistan during that

period was 0.14 percent with a minimum of
0.11 percent in 2008
 A maximum of 0.18 percent in 1991.
 The latest value from 2017 is 0.11 percent.
 For comparison, the world average in 2017
based on 173 countries is 0.58 percent.

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Reasons
There were both, external and internal reasons
why Pakistan did not become globalized.
 The rise of extremism and associated
terrorism discourages foreign participation in
the country’s progress.
 The country will not benefit from external
contacts as long as there is a sense that it
cannot provide security for capital and
investors.
 Finally, there needs to be greater domestic
interest in the economy. If Pakistan’s rich and
powerful are more interested in keeping their
wealth outside the country’s borders, foreign
capital is not likely to be attracted.

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TRADE LIBERALIZATION

As part of Structural Adjustment Programs of

the economy in the 1990’s the successive
governments of Pakistan liberalized trade.
 As a result the tariff rate in Pakistan was
reduced from 23.1% in FY2000 to 8.9% in
FY2014. During the same period, exports
increased by 173% from US$ 9.2 billion to
US$ 25.1 billion.
 Since FY2014, the tariff liberalization has
been reversed by gradually increasing the
applied tariff to 11.6%, which resulted in
decline of exports to US$ 23 billion in
FY2019.

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CONT.
 Negative impact on domestic products:
Reducing the tariffs brought the prices down
of the consumer goods and this had a negative
impact on the domestic producers in rural
areas.

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Impact Of Liberalization On industrialization development

The tariffs erode competitiveness of industry by increasing cost of inputs, cause de-industrialization by
making industrial investment less viable due to eroded competitiveness by protecting the inefficient
producers, impose costs on consumers by making industrial products expensive, and create anti-export bias
by making the domestic market more attractive than exports.

The fact that the economy witnessed de-industrialization with the share of industrial production going
down from 26.4% of the GDP in FY2010 to 20.3% in FY2019, and the share of exports going down from 13.5%
of GDP in 2010 to 7% in 2019.

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