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– A CROSS COUNTRY
ANALYSIS
Talal Sajid
Omer Sadiq
Furqan Ishaaq
Alizeh Umair
Introduction
• As part of his investment policies, Bhutto founded the National Development Finance
Corporation (NDFC).
• In July 1973, this financial institute began operation with an initial government
investment of 100 million.
• Aim was to finance public sector industrial enterprises
• Later it was modified to provide finance to the private sector as well.
•The NDFC is currently the largest development finance institution of Pakistan - 42
projects financed by NDFC have contributed Rs. 10,761 million to Pakistan's GDP
• Bhutto’s government increased the level of investment less than Rs. 7,000 million in
1971–72 to over Rs. 17,000 million in 1974–75
Growth & Investment in India
1960’s-1970’s
India in 1960’s
Persistent underdevelopment has afflicted the Indian subcontinent since the independence
from British Raj.
At the time of Independence India and Pakistan both were at a similar socio economic level.
Inspired by soviet union and capitalism, India designed a centralized state led economies.
Congress ruled where the PM’s changed from Lal Bahadur Shastri (1904–1966)to Indira
Gandhi
Between 1956 & 74, India’s GDP grew between 3 and 4 % per annum, due to closed and
highly regulated economy.
Period from 1947 to 68 were years of moderate regulation by state and between 69 to 74 by
stringent regulation of private and foreign companies.
Post Nehru’s death when Lal took over, Industrial sectors such as steel and cement were
decontrolled the decision to devalue the Rupee was taken which effected the export
revenues
India in 1960’s
Under Indira, the droughts of 1964/65 and 1965/66 and the war with Pakistan in
1965 created a financial situation
Food price inflation is a major setback for any Indian political party. The
government needed substantial external finance to fund
India faced serious trade deficits since independence which increased in 1960’s
and therefore government couldn’t borrow internationally or privately.
The policy of trade promotion and private sector participation was reversed by
1969. The government nationalized private sector assets in areas such as
insurance, banks, coal, wheat, and significant parts of the steel industry. Large
industrialists in the private sector were controlled stringently
India in 1970s’s
• Private sector flourished, and GDP increased to 5% between 1975 & and 1990.
• Low level of growth and productivity led to gradual process of liberalization of the
economy in 70s.
• GDP per capita grew 33% in 1960s reaching its peak growth of 142% in 70s
• Towards the end of Nehru’s government, India faced serious food shortages as
agriculture growth decreased.
Growth & Investment in
Germany, Europe
1960’s- 1970’s
The Golden Era
• By the end of World War II, the country's economic infrastructure was completely
destroyed.
• The Golden Age of European growth The period between 1950 and 1973 is
conventionally known as the Golden Age of European economic growth.
• First of all, growth became a most important policy objective due to the Cold War
• Many contributions in the 1960s thus focused on the rate of growth from the point of
view of economic policy
• As investment was assumed to depend on the level of aggregate demand, fiscal and
monetary policies were used to foster economic growth
• The West German boom that began in 1950 was truly memorable.
• The growth rate of production was 25.% in 1950 & 18% 1951.
• Table 1 reports growth rates of real GDP per person in excess of 4 per cent
per year for most western European countries
• Table 1 Highlights the point that 50’s-73 saw the highest growth rate in
western Europe; era in which fast growth experience was witnessed
Annual growth rate in this period GDP per person ranged from 2.4% to 6.2%
Growth in Germany were even higher than UK in this period due to high investment In
broad capital
During this time capital needs of the country were met by great banks capable of
Thus, it was no coincidence that Europe had in place following World War II
Bureaucrats decided how many factories to build, instructed state banks to mobilize the
necessary resources
espionage.
Germany in the 1970’s
• The end In the mid-1970s, German unemployment was less about 2.5 percent, less than half of that of
the United States
• Inflation rate was close to zero it also experienced a satisfactory rate of real economic growth
• However, after the Golden Age After the early 1970s, European growth slowed down quite markedly.
• German policy approach that worked so well in those years has ceased to perform now
• Although inflation rate remained low, the unemployment rate had risen
• In short run, GDP declined and budget deficit reached the 3%t limit imposed by
• As growth slowed down, the postwar settlements came under severe pressure and became less
capable of delivering wage moderation
Solutions:
- A stable political environment
- Decrease balance of trade deficit
- Stability in security
- Consistency in economic policies
- Lowered interest rates
If sorted, Pakistan can become a booming
economy.
THANK YOU