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n the subsequent pages, we have endeavoured to concisely discuss in detail the subject of Poor
Industrial Growth, following the general to particular and Cause & Effect patterns of
compilation. The purpose of the report is to spread the awareness for the need to develop the

industrial sector of Pakistan, to fulfill which, the report is provided with grim details and recent statistics
of. The scope of this report is to discuss the problems faced by industrial sector within the 796,096 km2
land of Islamic Republic Of Pakistan, their causes, and possible solutions with recommendations.

The research is based on data collection from reliable sources; an interview and a questionnaire. The report
highlights the nature of problems with a purpose to seek scientific attention towards the possible measures to
resolve issues, in order to optimize them. The postulates mentioned in this report call for scientific research as
how to establish seek good climates and lands within the country for suitable industrial growth. The commercial
importance of this report lies in the interest of government to seek for companies, organizations, and businessmen ready to invest for the developmental procedures in Pakistan if offered cheap land areas in their respective
interests with the provision that industrial units are kept as far as possible from the residential areas. A cheapest
way to serve the purpose is to involve the local people in the procedures of development to give them an agency
in the process and create a sense of responsibility.

History bears the evidence that Pakistan got poor industrial land. It got developed to large extent in 1960s but not
industrial sector is again facing downfall It is almost certain that the causes of this industrial backwardness
are corruption, illiteracy, child labour, economic downfall and poor foreign as well as industrial policy.

HM102-Technical Report Writing by Dr. Sardar Muhammad

Industry Of Pakistan-Wikipedia

Reasons Of Poor
Industrial Growth

& Statistics

Aspects of
the Study

With Other









POLITICAL REASONS:(M.Zeeshan Ayub 2011320 + Rizwan Ali Khan 2011359)
Pakistan happens to be a country whose political issues have significantly affected its
economic progress. In order to sustain a good industrial growth rate it is important for a country to
maintain good ties with other nations, especially with its neighbors; however things have been a little
different for Pakistan.

Relations With India:

The most important of Pakistans political issues influencing its industrial growth are its issues
with India, that mainly include the Kashmir issue and the water issues. Pakistan has fought three wars
with India that include the 1965 war, 1971 war, and the Kargil incident in 1999. Even with exceptional
peaceful coordination among the two countries in the previous decade, Pakistan had been at a brink of war
with India 3 times, with the forces of both countries deployed at borders. As a consequence, Pakistan has
had to dedicate a great share of its budget for defence, and that keeps more money from being channeled
for industrial development in the form of subsidies and tax grants. In addition to this, the water issues that
Pakistan has had with India (started as a result of India stealing water from the river Chenab) have led to
water shortages for Pakistan, harming the agricultural sector. iFurthermore, due to Pakistans bitter
relations with India, trade and investment activities between the two countries have remained far less than
the potential, which can be a lot more keeping in view the effectiveness and feasibility as Pakistan shares a
1600km border with India, keeping Pakistans GNP growth rate suboptimal. 2

Relations With USA:

Besides its poor relations with India, Pakistan also experienced a time of weakening
relations with USA, that harmed its economy. History bears the evidence that Pak-USA relations
kept on dwindling ever since Pakistans establishment. USA was critical of Pakistans nuclear
development program, which got exposed in 1998, and thereby imposed economic sanctions on
Pakistan in 1998 that made it heavily dependent on International Monetary Funds(IMF) loans,
that are still not paid off. As a result, the rupee weakened and inflation increased.

Domestic Political Unrest:

In addition to Pakistans weak relations with other countries, Pakistans own domestic
political instability has also caused a lag in the economic performance of the country. After partition,
for 26 years there never happened to be a purely effective constitutional draft and later, the 1973
constitution also faced annulment and restoration several times. Military coups frequently toppling over
civilian governments and the constant political uncertainty have created an unfavorable environment for
foreign investment to come. As a result, the number of foreign multi-nationals operating in Pakistan is
very few as compared to what could have been otherwise, due to inapprehensible political scenario
within the geography of Pakistan.

The land of Pakistan inherits feudal lords in major parts of the country, especially those of
industrial base. Consequently, the feudals are intended not to develop their underlying area by large.
There is also an involvement of foreign element in paying the feudals to keep their areas under

developed. Thus, the valuable land which could have been exploited for industrial use is still under
feudal occupation.3

Afghans 1980-Exodus:
On top of the other strains on Pakistans economy, another added financial burden was the
influx of Afghan refugees in the 1980s, whose number in 2009 was estimated to be nearly 1.7
million. They created several social and environmental problems for the country, but they have legal
permission to stay in Pakistan till the end of 2012.

Thus, in order to overcome the political factors impeding our industrial development,
efforts should be made to improve relations with the other states (especially neighbors)
and to acquire political stability, as these are primary steps towards attaining a good
industrial growth rate.

ECONOMIC CAUSES:(M. Zubair Irshad 2011323 + Noman B. Paracha 2011332)

Disputable Industrial Strategy:
In the history of Pakistan, there was a policy of import substitution, in the early 1950s.
There was a trend of industrialization in the 1960s. The policy of Nationalization was
adopted in Z. A. Bhuttos period and Zia-ul-Haq adopted the policy of Privatization.

The investors are always hesitant to make investment in such situations.

Low Investment and Low Savings:

Deficiency of capital is one more major problem in the way of industrial development. Pakistan is
fundamentally, underdeveloped and there is shortage of capital in the country. Industrial development is
impossible without capital. Sufficient capital is a major condition for industrial development.

Lack of Infrastructure:
The infrastructure for industrial development is necessary. There is shortage of infrastructure in
Pakistan. For example, gas, electricity, transport, roads, railways network and communication are not
available up to the requirement of industrial development. One can easily witness price difference of same
goods in Karachi, Lahore and 5Islamabad.

Inflationary Pressures:
Rate of inflation is very high in Pakistan. The prices of imported machinery, oils, chemicals and
spare-parts are rising very sharply. These factors contribute toward industrial backwardness. Rate of
inflation is 14.1 % in Pakistan.

Unfavourable Industrial Structure:

There are inequalities in industrial growth in Pakistan. Manufacturing of consumer
goods is preferred over capital goods. No doubt, return on consumer goods is more but capital

goods are necessary for industrial development.

Lack of Industrial Consultancy Firms and Industrial Research:

The investment in modern industries is not only costly but also risky. The capitalists are
regularly withdrawn and hesitant in investing their capital in new industrial ventures. No doubt,
deficiency of capital is a problem in Pakistan but the major problem is that existing capital is not
properly utilizing due to lack of consultancy firms.
Research work for industrial sector is not satisfactory due to lack of technical education and shortage
of technological universities in the country. Improvement in production and reduction in cost of
production is impossible due to lack of research. Number of technical and vocational institutions in
Pakistan is more than 1522 out of which 1140 are in public sector. These are providing training to
3,00,000 persons.

Economic Sanctions:
Advanced countries are not willing in the improvement of backward countries. They have created
various trade zones among themselves. As a result, they import and export among themselves. So, export
volume of developing countries remains very low. On the other hand, developed nations have imposed
various sanctions on import and export with poor nations.

Global Recession and Adverse Balance Payments:

The global economic recession in the last years adversely affected the growth of
manufacturing sector. The donor countries usually interfere in our internal

affairs and economic activities in the time of recession.

To make industrial development, we have to import modern machinery and advanced technology
from other countries. But due to shortage of foreign exchange, we cannot import such items to
make rapid economic development. Pakistan is facing the deficit of $ 8.3 billion in its balance of
payment during 2010-11.

Following table shows the facts.

Highly-Qualified and Highly-Skilled Pakistani Migrants by Professional

Category, 2001-2011

SOCIAL FACTORS:(Rafay Khan 2011350 + Sajid 2011370)

Lack of Education:
People have no idea how to set up the industry due to high degree of illiteracy. They have
no sufficient resources to start heavy projects. Efficiency of unskilled, untrained and illiterate labour
is very low that causes in industrial backwardness. Literacy rate is just 57.7 % and expenditures on
education sector are only 1.8 % of GDP, which is lowest in Asia. Also,there are very less number of
universities and technical institutions in Pakistan.Also there are only 125 private and public sector
universities in Pakistan where as in Tokyo city only there are more than 800 universities!!!.

Faith & Fate:

Man should work hard first and then put the result in the hands of ALLAH. Mostly, our people are
irrational, they believe on faith and fate. They do not want to take the risks. They are working just to meet
their basic needs. There is absence of commercial mind in Pakistan.

Corruption is a great evil, which is still increasing at very high rate in Pakistan. It is found in
government as well as private sector also. Due to corruption, illiterate and dishonest workers come forward
and cause industrial backwardness. Pakistan is at number 34th at the table of the most corrupt nations and
at number 1st in South Asia.7

Climate and Weather:

Climate and weather conditions are also a big cause of backwardness in various industries.
There is inter-relationship between industrial and agricultural sector. If weather is not well, it causes
agricultural backwardness and it results in industrial backwardness.

Cultural Disturbance:
The cultural disturbances in the country have slow down the production in manufacturing
sector. In addition to this, shortage of raw material has an adverse effect on production. There are
various caste systems in the country.

Brain Drain:
Graduated student with great minds and ideas, to improve our industrial sector are moving abroad,
as they are finding more better jobs abroad, or other than to live in Pakistan and work in an industry and
work a long time to make their salary a respectable one.

Pakistani people are poor. According to a survey,48% of the people of Pakistan spend their whole
income on only food. So these people cannot establish or run an industry. They have no investment, land
and resources for an industry. Following graph will show us the facts.

Recently due to many problems that Pakistan is currently facing, many skilled,professional and well
educated people are leaving Pakistan and going abroad for better future.This is a great loss to our already
weak industry.Rich Pakistani people are not investing money in Pakistan, but they are investing in foreign

Mustafa Kamal 2011328

Pakistan Studies-12:National Book Foundation

Mustafa Kamal 2011328


Dr.Shahid Masood Column, Ary News.


Pakistan was formulated in

with no industries at all. The whole major industrial sector

was left with India. Although there are a number of industries operating in Pakistan now but the
general growth rate is not up to the mark. There are several reasons as to why Pakistan has not been
able to match the world standards for industrial growth. Inconsistency in industrial policies by ruling
governments is one of the major reasons.
Pakistan industrial policies were either formulated in response to a crisis or as part of the mediumterm development plans-most of which never saw their actualization.
Firstly, in 1948 India imposed a trade embargo on Pakistan and they blocked the transfer of funds
that they owed to Pakistan under 1947 partition agreement . This trade war highly effected Pakistan as it
was dependent upon on Indian imports of basic goods. Thus, Pakistan encouraged investment in consumer
goods and this resulted in increase in output for domestic goods.
Moreover, from

in Ayub Khans regime the industrial growth rate was much better.

Policies included industrial licensing, formation of Pakistan industrial and commercial investment
corporation (PICIC) and the industrial development bank of Pakistan (IDBP) to facilitate industrialization.
World Bank funded these organizations.
Furthermore, from

nationalizatio11n of large scale industries took place this did not

prove vital as new projects were chosen on political not meritorious grounds .so in this era also


industrial growth was poor. In 1989 privatization of large industries took place which was not
successful as well.

private sectors got a prominent role and deregulation and adjustment of

tariff regime led to major developments in automobile and consumer electronic industries.
At last

the distorted law and order situation, fiscal crisis, and the lack of

domestic support decreased the investors and proved to be the reason for poor industrial growth.
In conclusion, the inconsistent industrial policies, political instability, poor law and order
conditions are the main reasons for poor industrial growth in Pakistan.


After establishment of our country it has been through different situations, from military
regimes to corrupt democracies. Meanwhile the industries of the country kept their growing, but the
pace of growth is affected by political, social and economic conditions. Comparing the industrial
growth of the country to other nations we see discouraging results. Other countries, like China,
India, Turkey and many more,12 which have the same age as a nation, have gone beyond what we
could actually think in the field of industry and production technologies. Here we want to compare
industrial growth of Pakistan to many other countries.

Comparison with China:

We actually fear comparing our industrial growth with that of China. After liberation Chinese
work very hard that has no comparison with any other nation of the world. Today china stands almost on
top in its industrial production and exports. Unlike Pakistan chinas economy is rising very high. Following
figure compares the industrial growth rate of Pakistan and china in the past ten years.

Industrial growth rate of China and Pakistan

growth rate %

2011, 13.9


2011, 3










Comparison with India:

India is a growing economy in this world today. Besides the industrial growth India has
improved its economy through its man power. Being established in the same day Pakistan and India
are having very different economic conditions, this is somehow because of the military interference
in governance of Pakistan. Industries have been established on both sides of the boundary but India
has an edge in this field havin 13g more established industries. Following figure shows a relation
between the growth of industries of both countries.

Industrial growth rate of India and Pakistan

Growth rate %


2011, 4.8
2011, 3











Comparison with Iran:

Iran is another neighboring country of Pakistan which has an established industrial setup.
Irans major industrial earnings are from the oil and gas sector. It has a good economy, but it could
not compete in the world because of its governance policies, which are much like theocratic.
Pakistan has good relations with Iran in terms of trade and commerce.



Industrial growth rate of Iran and Pakistan

Growth rate %


2011, 4.3
2011, 3












Comparison with Turkey:

Turkey is one of the most advanced countries among the Islamic states. After 1 st world war
Turkey emerged as a democracy on the face of the world. Since then its economy is growing, it has good
relations with the global community and takes good advantage of it. Turkey has been declared as an
emerging market economy of the world. Its industrial production is comparable to the developed countries.
Pakistan and Turkey are having good relations but their economy differs a lot, Pakistan being much less
developed in industrial sector. Following figure compares industrial growth of both countries in last decade.

Industrial growth rate of Turkey and Pakistan

Growth rate %


2011, 9.2


2011, 3












Comparison with USA:

At the time of independence, the land of Pakistan contained just 5 percent of the large scale
industries of the subcontinent. We can say that virtually Pakistan started from ground with almost zero
industrial, institutional, financial or energy resources. Tardily, it started growing. During 60s and 70s,
industry of Pakistan, especially light industry expanded rapidly. In fact, Pakistan was seen as a model of


economic development around the world. Now, Pakistans economy is at a conjectural moment in its
history. Deep rooted problems in the structure of the economy and in the institutions of governance
have slowed down economic growth.
As far as America is considered, its industry revolutionized at the end of 19 th century. At time of
independence of Pakistan, Britain was losing control over colonies and America was one of the dominant
industrial powers. In the second half of the 20th century, United States faced a competition with the Soviet
Union for political, economic and m14ilitary primacy. Technology and industry have profoundly shaped
America's economic success. At present, USA is one of the top economic powers of the world. Weapon
industry is a major industry of USA.

(Prepared By Rohaan Mehmood 2011361 + Sadruddin 2011369)


Comparison with UK:

When comparing with UK, we come to know that at UK was the first country in 18th
century to industrialize and in 19th century it had dominant global economy. But in late 19 th
century, industrial revolution in America and Germany became the challenge for Britain. Further
world war-I and world war-II further weakened the industrial growth of the country. But after
taking off the hold from colonies, Britain had a long time without recession. It had to face just
a few recessions in the decade of 70s. After that, there was not any major problem. Main
advancement started during 1997 and as we talk of today, UK is the 7 th largest national
economy in the world.




SOLUTIONS TO PROBLEMS: (Rizwan Ali Khan 2011359)

Eradication Of Corruption:
The main hurdle to industrial development is corruption at individual and collective
levels.It should be got rid of

with an iron fist. Nepotism should be checked and removed,

appointments on posts should be by suitable relevancy measures.

Resolution Of International Disputes:

The water disputes with India as well as the Kashmir issue should be taken towards immediate
solution to get rid of heavy defence budget as well as to establish Pakistan as a peaceful entity in
international politics.

Budget Commitments
A fixed budget should be allocated for industrial development throughout the country, with
successive increase on yearly or five yearly basis. This will lead to consistent industrial growth of
industrial sector.16

Policy Commitments & Foreign Investment

Industrial policy needs to be framed on firm basis and strictly adhered to guarantee an steady
industrial growth. Foreign investors must be attracted by industrializing the remote areas.

Nationalization Of Feudal Lands

The vast industrial land getting ruined under feudal occupation should be nationalized, with a
revenue paid to them. Negotiations may serve the purpose.

Land Planning & Building Codes

Primarily, land planning should be done in order to get rid of concentration of industries
confined to a limited part of country. Research should be made in collaboration with geological and
meteorological departments to seek for areas that are less prone to disasters.

Pakistan Report by Atta-ur-Rahman


Interdependent Critical Infrastructure:

Critical services such as energy, water, telecommunications, and public transport constitute
systems and networks in cities which are not only essential, but increasingly complex and
interdependent. The failure of one system component can have a cascading impact, bringing down
entire networks, causing extensive disruption and huge losses. An added complexity is the increasing
privatization of public systems and services. The responsibility, management, investment decisions
about long-term reduction in vulnerability, and the obligations for immediate repairs following a
disaster event can all invite potential conflict between private or short-term profit considerations and
longer-term values for the public good.

The first and foremost problem that should be addressed is of education. As discussed in the earlier
sections of this report, free technical education and scholarship programs are already an agenda of the
Sindh government that is in action. Technical education centres should be spread country-wide, taking in
account the economic condition of the masses. Sindh Board Of Technical Education is serving good in
this regard. The public also agrees that lack of education among is the major cause of unawareness among
the people about the importance of education. The government should take rigorous efforts to create
awareness of education among these illiterate people, using advertisement and persuasive programs.

Poverty Alleviation
Poverty alleviation measures should be adopted, so that the local public can come forward in
investments and saving, using their own territories. This will help in eradicating economic imbalance,
since the products will be cheaper domestically. 17

Pakistan Report by Atta-ur-Rahman


CONCLUSIONS (Sajid 201370)

Following major conclusions can be reached after aspective study of this report:
Pakistan is yet spending only 24% of its GDP to industrial sector as compared to 28% of India and only
1.8% to education, the lack of which is major hindrance in industrial development of Pakistan.
The causes of industrial backwardness of Pakistan can be divided into economic, political, social,
geographical and security reasons.
As regards politics, Pakistan has a 3-war history with India and dwindling relations with USA and other
big economies. The domestic political scenario is still worse, with feudalism adding to the deterioration.
In economic spheres, Pakistan is facing worst records of poverty, poor infrastructure and inflation
pressures. The exchange value of Rupee has reached to 94-USDollars and 25-SaudiRiyals as compared to
the figure of $65 and 18SAR of 2008.
As regards social and security effects, Pakistan is a symbol of corruption, illiteracy, migration and
terrorism in international news. It is now the top most corrupt country of South Asia.
In geographical concern, there is no planning of industrial land and industrial wastage in Pakistan. The
industries are situated in disaster-prone areas and highly concentrated in Sindh without any balance. 18
A comparison of Pakistan with its history shows that now Pakistan owns more industries but very less
industrial growth. A comparison with China depicts our backwardness in industrial development, with the
provision that China got independence after Pakistan.
A brief solution that can be recommended to above problems include: eradication of corruption and
nepotism, framing of firm industrial policy, improvement of international relations, poverty alleviation
and above all, literacy rate uplift with greater provision of technical education.

Pakistan Report by Atta-ur-Rahman
Automobile Car Industry
By M. Shahrukh Mirza, Irfan Anjum Manarvi
Key Issues in Industrial Growth in Pakistan by AR. Kemal*