INDUSTRIAL DEVELOPMENT

IN PAKISTAN 1947 - 1976

Dr. Noman Saeed
 INTRODUCTION
• At the time of independence 1947,
Pakistan had negligible industrial base.
• Now Pakistan has fairly diversified
industrial base.
• It helps in import substitution and saves
substantial amount of foreign exchange.
 INTRODUCTION
• The East Pakistan produced 70 percent of
the world’s jute. But, there was not a
single Jute Mill
• The newly-emerged state of Pakistan did
not even have its own bank sand
depended on the reserve bank of India
• Similarly in 1947, Pakistan did not have a
single ordnance factory
 INTRODUCTION
• Therefore, rapid industrialization of the
country was a great challenge for
Pakistan.
• With the services of the patriot economic
experts, engineers and capitalists, the
country achieved high growth rates in
manufacturing in Pakistan for 1950-55
 Growth of Industrial Sector in
Pakistan
• Industrial performance in terms of growth
can be analysis in the following period of
time.
1. Growth of industrial sector from 1947 to
1950
2. Growth of industrial sector in 1950’s
3. Growth of industrial sector in 1960’s
 Growth of Industrial Sector in
Pakistan
4. Performance of industrial sector in 1970 to 1976
5. Performance of industrial sector from July 1977
to 1988.
6. Performance of industrial sector from 1988 to
1999.
7. Performance of industrial sector from October
1999 to 2007.
8. Performance of industrial sector from 2007 to
onward.
 Growth of Industrial Sector from
1947 to 1950
• At its inception in 1947, Pakistan had a
predominantly agrarian economy–agriculture
contributed 53% of GDP in 1947
• Pakistan had a population of 30 million with 6
million people living in urban areas
• 65% of the labor force working in the agricultural
sector, and
• Agricultural output contributing 99.2% of exports
and about 90% of Pakistan’s foreign exchange
earnings
 Growth of Industrial Sector from
1947 to 1950
• Out of 921 industrial units operating in the
British India, Pakistan got only 34
industries i.e 4% of the total industries
established in subcontinent.
• All industries were in small size like sugar
mills, cotton ginning factories, flour mills
and rice husking mills.
 Growth of Industrial Sector from
1947 to 1950
• Government of Pakistan Called an
Industrial Conference in December, 1947
to industrial growth.
• The Conference recommended to
establish such an industries which use
locally produced raw material.
• Private entrepreneur was encouraged to
set up industries.
 Growth of Industrial Sector from
1947 to 1950
• The infrastructure for the heavy industries was
also be established.
• Development board was established in 1948 to
implement these recommendations.
• The Government also set up an International
Finance Corporation (IFC) and Industrial
Investment and Credit Corporation ( IICC) in
1948.
• The contribution of industrial sector was 6.9% in
1950.
 Growth of Industrial Sector in
1950’s
• Private sector was shy to invest in heavy
industries due to
» Lack of capital
» Technical Know- how
» Absence of entrepreneurship
• Pakistan banned the imports of cotton textiles
and luxury goods in 1952 and regulated virtually
all imports in 1953
• Consequently, Pakistan joined the group of the
most rapidly growing countries in the 1950s
 Growth of Industrial Sector in
1950’s
• Government established PIDC in 1952 to
invest in those industries where heavy
initial investment required.
• PIDC invested in paper board, cement,
fertilizer, jute mills, shipyards, and Sui
Karachi gas pipeline
• PIDC completed 59 industrial unit by June
1971.
 Growth of Industrial Sector in
1950’s
• Woolen, cycle tyres and tubes, paint,
varnishes and glass industries were
established in First five year plan 1955-56.
• The reduction of export duties and
introduction of export bonus scheme in
1958 increased export of manufactured
goods.
• The share of industrial sector to GDP was
11.9% in 1959-60
 Growth of Industrial Sector in
1960’s
• This period covers two five year plan.
• The country achieved self sufficiency in
consumer goods industries.
• There was a shift in the establishment of
consumer goods industries to heavy
industries such as machine tools, petro-
chemical, electrical complex, and iron and
steel.
 Growth of Industrial Sector in
1960’s
• The industrial performance in terms of growth,
export and productivity increased during the
Second five year plan.
• The share of industrial sector to GNP went to
11.8% from 1960 to 1965.
• The large-scale manufacturing grew at a rate of
16% per annum during 1960/61-1964/65 due to
protection of domestic industry from imports and
subsidies for exporters
 Growth of Industrial Sector in
1960’s
• The third five year plan 1965-1970 could
not achieved success due to reduction in
USA aid, political unrest .
• The reduced Foreign Economic
Assistance caused the large-scale
manufacturing to grow at a lower rate of
10% per annum during 1965-70
Performance of Industrial Sector
from 1970 to 77
• This was the era of disappointment in
terms of growth ,productivity and exports
due to
• Fight with India
• Suspension of foreign aid
• Fall in exports
• Nationalization of Industries
• World recession
Performance of Industrial Sector
from 1970 to 77
• There was an increase in Pakistan’s import bill
due to the October 1973 world oil price shock
• A serious post-1973 global recession during
1974-77, failures of cotton crops in 1974-75
• Pest attacks on crops, and massive floods in
1973, 1974, and 1976-77
• Pakistan experienced the worst inflation during
1972-77