MAJOR ISSUES IN THE ECONOMY OF PAKISTAN /

BASIC CHARACTERISTICS OF DEVELOPING

COUNTRIES LIKE PAKISTAN BY AHSAN KHAN 2013
Posted by : Ahsan KhanTuesday, 23 April 2013
MAJOR ISSUES IN THE ECONOMY OF PAKISTAN / BASIC CHARACTERISTICS OF
DEVELOPING COUNTRIES LIKE PAKISTAN
Introduction:
A country where the average income of the people is much lower than that of developed
countries, the economy depends upon a few export crops and where farming is conducted
by primary methods is called developing country. Rapid population growth is causing the
shortage of food in many developing countries. Criteria to an Under-developed Nation:
i. Potential to become economically developed.
ii. Low or no rising trend of per capita income.
iii. Countries very poor in resources.
Prof. Harvey Leibenstein, in his Economic Backwardness and Economic Growth divides
these characteristics into four categories: A. Economic characteristics: Following are the
economic characteristics of UDCs:
1- General Poverty and Low Living Standard.
Poverty cannot be described, it can only be felt. The most of the less developed countries
(LDC) are facing the major problem of general as well as absolute poverty and low standard
of living. Most of the people in developing nations are ill-fed, ill-housed, ill-clothed and ill-
literate. In LDCs almost 1/3 population is much poor. But in Pakistan, 21.0 % population is
living below poverty.
2- Burden of Internal and External Debts.
Under developed countries (UDC) are loans and grants receiving nations. Most of the
developing countries of the world are depending on foreign economic loans. An amount of
foreign loans is increasing as the years pass. Their foreign trade and political structure is
also dependent on the guidance of foreigners. The outstanding total public d ebts are Rs.
12024 billion (58.2% of GDP) and the value of external debts and liabilities is $ 60.3 billion
and services charges on all types of debts are Rs. 730.733 billion during 2011 -12, in
Pakistan.
3- Low Per Capita Income.
Due to low national income and huge population growth rate, per capita income in
developing countries is very low. At constant prices (Base Year 1959-60) per capita income
of Pakistan was Rs. 985 and according to the Economic Survey of Pakistan 2011-12 per
capita income of Pakistan is $ 1372.
4- Over Dependence on Agriculture.
61% Population of Pakistan is living in more than 50,000 villages. Backward agriculture is
the major occupation of the population. Agriculture sector is backward due to old and
traditional methods of cultivation, in-efficient farmers, lack of credit facilities; un-organized
agriculture market etc. 66.7% population is directly or indirectly depending on agriculture
sector in Pakistan. It contributes to GDP 21.0% while in advanced nations it is less than 5
%. It employed 45.0 % of labour force while it is less than 5 % in developed countries.
5- Backward Industrial Sector.
Backward industrial sector is an additional feature of under developed countries. Industrial
sector of Pakistani economy is backward since independence. Pakistan got only 34 (3.7 %
of total industrial units) industrial units out of 921 units in sub-continent in 1947. Small and
backward industrial sector is based on low level of capital formation, technology, training
and education and over dependence on agriculture sector. 13.7% labour force is attached
with industrial sector in Pakistan. Its share to GDP is 25.4 % and to exports is more than 60
%.
6- Unemployment.
An outstanding problem of developing countries is their high rate of un-employment, under-
employment and disguised-unemployment. More than 3.5 million people are unemployed in
Pakistan. There is 16 % underemployed and 20% disguised unemployed of total labour
force. Unemployment rate is 6.0%; it is mainly due to high population growth rate, which is
2.03%.
7- Low level of Productivity.
The productivity level is very low in under developed countries as compared to developed
countries. Low level of productivity is due to economic backwardness of people, lack of skill,
illiteracy and ill-training. Value of annual productivity of labour is about $ 100 while it is more
than $ 2500 in advanced nations in Pakistan. Minimum wages are Rs.8000/- per month
against the average gross salary of $3,950 (Rs.3,79,200) per month in United States.
8- Deficit Balance of Payment.
Third world countries have to import some finished and capital goods to make economic
development, on the other hand they have no products to export but raw material. During
July-April, its exports were $ 20.474 billion and imports were $ 33.15 billion in case of
Pakistan. So, its deficit balance of payment was $ 12.68 billion in 2011-12.
9- Dualistic Economy.
Dualistic economy refers to the existence of advanced & modern sectors with traditional &
backward sectors. Pakistani economy is also a dualistic economy as other developing
countries on the following grounds: Co-existence of modern and traditional methods of
production in urban and rural areas, Co-existence of wealthy, highly educated class with a
large number of illiterate poor classes and Co-existence of very high living standard with
very low living standard.
10- Deficiency of Capital.
Shortage of capital is another serious problem of poor nations. Lack of capital leads to low
per capita income, less saving and short investment. National saving is 10.7% of GDP and
total investment is 12.5% of GDP in Pakistan. Rate of capital accumulation is very low as
5%. On the other hand, capital output ratio (COR) is very high which is not desirable for
economic development.
11- In-appropriate Use of Natural Resources.
Mostly there is shortage of natural resources in developing nations and this is also a cause
of their economic backwardness. Natural resources are available in various poor countries
but they remain un-utilized, under-utilized or mis-utilized due to capital shortage, less
efficiency of labour, lack of skill and knowledge, backward state of technology, improper
government actions and limited home market. Natural resources contribute to the GDP
about 1%.
12- Market Imperfection.
Market is imperfect in accordance with market conditions, rules and regulations in the most
of developing nations. There exist monopolies, mis-leading information, immobility of
factors; hoarding and smuggling etc. that cause the market to remain imperfect.
13- Limited Foreign Trade.
Due to backwardness, developing countries have to export raw material because the quality
of their products is not according to international standard ISO etc. Lower developing
nations have to import finished and capital goods. Imports of Pakistan are $ 33.15 billion
and exports are $ 20.474 billion that cause into unfavourable balance of payment of $
12.676 billion.
14- Vicious Circle of Poverty.
According to vicious circle of poverty, less developed nations are trapped by their own
poverty. Vicious circle of poverty is also applied in case of Pakistani economy. Due to
poverty, national income of Pakistan is low which causes low saving and low investment.
So, rate of capital formation is very low results in a country is poor because she is poor.
15- Inflation.
High rate of inflation causes economic backwardness in poor nations. Due to high level of
price, purchasing power, value of money and saving of the consumers tend to decrease.
Rate of inflation (CPI) is 10.8% in 2011-12 in Pakistan.
B. Demographic characteristics:
Following are the demographic characteristics:
16- Backward Population Explosion.
Another common feature of lower developing nations is population pressure due to high
growth rate and reduction in death rate. Population of the Pak istan is 180.71 million with the
rapid growth rate of 2.03% and death rate 0.72 % in 2011-12. Pakistan is at 6th number in
the list of the most populous nations. Basic needs like food, clothing, housing, education,
sanitations and health facilities are not available for the huge portion of population in these
countries.
17- Poor Health and Diseases.
M. P. Todaro in his Economic Development states, Many people in developing countries
fight a constant battle against malnutrition, diseases and ill health. Average life expectancy
in Pakistan is 65.2 year against 75 years in developed countries. One Doctor is for 1206
persons and one Nurse is for 2369 persons, one Dentist for 16420 persons, number of
hospitals is 972 and one hospital bed is available for 1665 persons. The total expenditure on
health sector is just 0.27 % (Rs. 55.12 billion) of the GDP.
18- Pollution.
There is too much pollution in poor countries. On the one side huge existing population is
not provided basic facilities of life, like sanitation, clean water, infrastructure etc. but on the
other side due to rapid population growth, industrialization and transportation air, water and
earth pollution is increasing. Industries are causing pollution because of non -installation of
treatment plants. Number of continuous air pollution monitoring stations is only 7 in
Pakistan. Pakistan is at number 29th at the chart of the most polluted nations and at number
6th in Asian countries.
19- Brain Drain.
An outflow of the best, brightest and talented student from poor nations to rich nations is
called brain drain. There is less reward for the talent, which causes an outflow of best brain
in the backward countries. Reward is not paid in accordance with the capability, skill and
efficiency in less developed countries.
20- Inadequate Infrastructure.
Adequate infrastructure is needed which is not available in poor economies to enhance the
process of economic development. Roads, transport, telecommunications, sanitation, health
and education facilities are not at their best level in these nations. Government has reserved
an amount of Rs.133 billion to develop the infrastructure. C. Cultural and political
characteristics: Following are the cultural and political characteristics of LDCs:
21- High Degree of Illiteracy.
Illiteracy rate is very high in poor countries while it is almost zero in rich countries. There is
lack of technical education and training centers, which is necessary for economic growth
and development. Literacy rate in Pakistan is 58% during 2011-12. Expenditure on
education sector is just 1.8 % of GDP during last year.
22- Low Level of Organization.
There is absence of developed minded leadership in economic activities in third world
nations. Decision making power of entrepreneur is very low due to illiteracy, less training
and backward techniques. Most of educational institutions are producing employees rather
than employers.
23- Low Self-esteem.
There is less respect, honour and dignity of people in the lower developed countries. People
are honoured due to their powers, relations and castes instead of capabilities. There is
poverty, poor health, poor education and shortage of other social services. Government and
population of poor countries are under the external influence.
24- Un-productive Expenditures.
Population mostly copies the styles of population of developed nations due to demonstration
action in poor economies. Their consumption activities not only move around their income
but also depend upon the relatives, friends and locality. They spend more on birth, death,
marriages and various other ceremonies etc. which reduces their savings and investment.
25- Political Instability.
There is political instability in the most of the developing countries. There are a lot of
clashes between government and the opposition that is a cause to reduction in domestic as
well as foreign investment. Political instability keeps low the level of economic
development.
26- Influence of Feudal Lords.
The poor class is under the influence of feudal lords and tribal heads in lower developed
nations. The feudal lords want to keep the people backward and do not appreciate the
development of the poor. About 50.8% poor borrow from landlords and 57.4 % poor are
working for feudal lords without wages in Pakistan.
27- Unproductive Use of Funds.
The unproductive expenditures are rising day by day in developing countries like Pakistan
due to socio-economic and administrative reasons. During the year 2009-10, Rs. 343 billion
were spent for defence. About 75% of the budget is spent on defence, administration,
repayments of loan and interest charges in Pakistan.
28- Govt. Control by Wealthy Persons.
Wealthy persons, landlords and elite class not only control the government but also they
have full control over all the major sectors of the economy in poor countries. This rich class
is not interested to solve the problems of the poor for their welfare but they make
government policies for their own improvement.
29- Frequent Changes in Fiscal Policy.
Revenues and expenditures policy of government is not stable in developing countries.
Government has to change the fiscal policy according to the will of its own people.
Industrialists are the main controller of the government and they adjust the fiscal policy in
accordance with their own benefits.
30- Violation of Law and Order.
Law and order conditions are at their poor stage in Pakistan like other developing countries.
A huge portion of saving of people is wasted in costly and lengthy legal process. As in case
of Iftikhar Muhammad Chohdery (CJP), he himself has to wait for justices for a long period.
D. Technological and miscellaneous characteristics:
Following are the technological and miscellaneous characteristics of developing countries:
31- Backward State of Technology.
Use of modern techniques of production is not adopted in developing countries. It may
cause further unemployment. Use of advanced technology is impossible due to shortage of
capital, lack of skill and training, high cost of production and lack of foreign exchange
reserves. Backward state of technology is results in low production, high cost and wastage
of time.
32- Social Aspects.
Under developed countries have also some factors such as joint family system, caste
system, cultural and religious views, beliefs and values that badly affect their economic
development. 30.88 % population is working population and remaining 69.12 % population is
depending on them in Pakistan.
33- Un-fair Wealth and Income Distribution.
There are not only regional inequalities in developing countries but also wealth and income
inequalities. There is unfair wealth and income distribution in less developed nation. 20 %
extremely rich population has 50.02% of national resources, while 20 % poorest population
has just 6.37 % of national resources in Pakistan. The difference between rich and poor is
increasing day by day.
34- Lack of Experts and Skilled Persons.
People have to move abroad for advanced study due to illiteracy and lack of training
institutes. They adjust them in foreign countries due to low remuneration and less self-
esteem. So, there is scarcity of experts, skilled and trained staff that causes the poor nation
to remain backward.
35- Dependence on External Resources.
The international trade, political activities and other economic activities are under the
influence of other advanced countries in less developing countries. Their development plans
are financed by the loan giving countries; these plans are made to serve the interests of
foreign countries. So, poor nations are loans and grants receiving nations. Conclusion: We
conclude that all above characteristics are unfavourable for the developing economies.
These features are obstacles in way of economic development. All these features are cause
of low rate of capital formation, poverty and creation of vicious circle of poverty.

Socio Economic Problems of Pakistan --- A sample Essay

SOCIO-ECONOMIC PROBLEMS OF PAKISTAN --- A Sample Essay

Introduction:

Linguistic and cultural diversity, economic disparity, divisions of class and caste, tribal and clan
affiliations, and inherited differences of rank and privilege have profoundly conditioned Pakistani society
and its responses to democracy and human rights. The most visible characteristic of this society is the
dominance of a feudal and tribal social structure, with strong patriarchal and authoritarian trends. Social
behavior is shaped by these trends, which are manifested in a culture of control and monopoly over
power and resources.

REASONS OF SOCIO-ECONOMIC PROBLEMS OF PAKISTAN

1. The Problem of Feudal Structure:

 The pattern of colonial rule in undivided India had given rise to ruling elite drawn from feudal and
tribal groups and the industrial bourgeoisie. Access to the State for the vast rural majority took place
through the patron, who was the feudal landlord or the tribal chief. Power and privilege were
negotiated with the colonial rulers by these elites. Patron-client networks had grown stronger during the
period of colonial rule.

The grip of a landed oligarchy (government by a small group of people) in the Punjab and Sindh,
and of tribal chiefs in Balochistan and NWFP, over the rural population continued to be a main cause of
the growth of inequality in Pakistan. Control of political decision-making remained directly or indirectly
in the hands of those who had a stake (interest) in maintaining the status-quo. Economic policies also
accommodated those interests. A series of military regimes co-opted the same stake-holders to
perpetuate the tradition of control over power and resources to the exclusion of the 'common man'. A
more equitable redistribution of assets never became a part of any political or economic plan, and
remained a rhetorical slogan of successive regimes. The social structure, therefore, persists (carry on)
without serious challenges from either state policies or social movements.

In Sindh, the feudal structure is stronger than in the Punjab, and at the same time the tribal
system of NWFP is slightly less hierarchical than the Sardari Nizam of Balochistan. In Sindh and Punjab,
particularly in Southern Punjab, power emanates from control over resources, i.e., land and its products.
In tribal society, strong ties of clan and kinship impose the necessity to submit to the control of the tribal
elite.

The feudal system operates by controlling all aspects of the subject's life. The landlord sees it as
a right to command the labour of the peasant. If any terms are offered, these are extremely exploitative.
Often peasants are subjected to forced and bonded labour. Social rights of the peasants are also subject
to the will of the feudal. Education has been discouraged by the feudal class, which always felt that
education would empower the peasantry sufficiently to challenge feudal control. Exploitation has often
taken more serious forms of abuse and violence. Rape of women, illegal confinement of families to
prevent their mobility, child labour, and cruel and inhuman punishment for defiance (challenge) of
authority are common occurrences under the feudal system in rural Pakistan.

Failure to Implement Effective Land Reform:

Failure to implement effective land reform has resulted in the continuing prevalence of large
land holdings. The first attempt at land reform in Pakistan was in 1959, the second in 1972, and the third
in 1977. These attempts failed to bring about any significant reduction in the size of land holdings, and
caused no loss of social or political power to the landlords. The major factor responsible for the failure
of the land reforms was the ceiling on ownership.

The limit to the size of holdings was fixed on an individual, rather than a family, basis. This
allowed most of the feudal landlords to circumvent (Evade,escape from) the reforms by effecting
fictitious (imaginary, unreal.) or merely formal transfers of land. Many used other lacunas (a gap) in the
scheme to retain land without declaring any land in excess of the ceiling. The failure of land reforms to
achieve the objective of equitable distribution of land is evident in the following observations:
1. Landlords were left with large land holdings even after declaring land in excess of the fixed ceilings;

2. In 1959, only 35% (1.9 million acres) of the land declared in excess of the ceiling could be taken over by
the government. In 1972, this was even less. The total amount of land taken over was 0.1 million acres.

3. A major portion of the land taken over by government after the attempts at reform was uncultivated and
needed considerable improvement before it could be cultivated. The recipient farmer not having access
to credit or support services could, therefore draw neither economic nor social benefit from his new
holdings.

With the "green revolution" in late 1960s, successive governments saw no need for land reform, as the
argument that small farms had a higher yield than large farms could no longer be used to spur action by
the government. The prospect for another attempt at more genuine land reform was finally eliminated
by a decision of the Federal Shariat Court in 1989 declaring the Land Reforms Ordinance of 1972 to be
non-Islamic thereby establishing the principle that the whole concept of land reform is non-Islamic.

Rights of Women in the Society:

Regardless of class or urban/rural differences, women are subject to cultural practices that are
repressive (oppressive) and discriminatory. Many of these practices reflect the status of women in
society. They are perceived as having no independent existence or dignity. They are the repositories
(storehouse) of family honour, and violation of their honour and dignity is not seen as injury to the
women themselves but to the family honour. A common form of humiliation, often meted out
(measure) to the defiant (openly disobedient) subject by the landlord, is publicly stripping (undress)
women of the offender's family. On the other hand, any exercise of freedom of choice in marriage by
women, whether in a feudal or tribal setting or in an urban environment, is also seen as blemishing the
honour of the family, and results in extreme forms of violence exercised against women.

Women from the peasant class suffer both as members of their social class as well as from denial
of rights and status on the basis of gender. While women from the feudal class enjoy freedom from
poverty, their status and rights are as vulnerable to feudal practices as those of peasant women. In
some respects, the freedom of tribal women and those belonging to feudal families is more restricted
than that of peasant women. Deprivation of most of their social rights, including education and health
care, results not from poverty but from the strict rules of seclusion (privacy) imposed on them. No
opportunities for economic independence are available. Although entitled to inheritance under the law,
patriarchal trends have largely denied this right to women of the landed aristocracy. In order to prevent
division of land-holding, only male heirs are allowed a share in landed property. Where title to land is
transferred to women, either as a concession to the law, or to avoid land reform schemes, it is only
formal and women have no control over the land. More often than not, they are not even aware that
they hold this title. Patriarchal attitudes and value systems have denied women autonomy in all
decision-making. The right of choice in marriage is totally denied. Women are bartered into marriage to
forge (fabricate, invent) family alliances to strengthen the power base, or to protect interests in land-
holdings.
2. War against Terrorism:

Most of Pakistan's socio-economic problems originate from the heavy emphasis on national
defense and military spending. Pakistan's unconditional support for the US's "war against terrorism"
after September 11, 2001 has augmented this lopsided (with one side lower) stress. The then President
General Pervez Musharraf had been handed "an enduring rationale for continuing as president under
Kelsen's law of necessity that has served all prior military rulers". He was less inclined to take any major
initiatives to pursue peace with India. Military expenditure continued to absorb the lion's share of the
government budget and no major overhaul of Pakistan's military organization is likely.

More harm than good has accrued when Musharraf short-sold Pakistan to the US. To prevent
the "Islamic bomb" from falling into religious terrorist hands, the American 15th Marine Expeditionary
unit is ready to "neutralize" Pakistan's weapons of mass destruction even at the cost of engaging
Pakistani troops. The arrest of Pakistani nuclear scientists for passing know-how to Al-Qaeda was done
to please the US Federal Bureau of Investigation. Changes in the Pakistan army high command and the
Inter-Services Intelligence were carried out to curry favor with the Central Intelligence Agency. India has
succeeded in throwing flashlights on terrorist training infrastructure in Pakistani Kashmir. The victory of
the Northern Alliance in Afghanistan is a major setback to Pakistan due to the former's closeness to Iran
and India. Pakistan's economy is deteriorating, with sliding per capita incomes lower than 1%, and
foreign economic assistance evaporating after the Taliban were dislodged from Afghanistan.

Pakistan's nuclear program cost an estimated $10 billion up to 2001 and set back development indices
by more than years. Post-nuclear US sanctions caused Pakistan's economy to suffer a gross domestic
product fall of 2.9%. The exorbitant (extravagant) opportunity costs of Pakistan's nuclear white elephant
have actually diminished the country's national security.

RETRENCHMENT STRATEGIES:

The solution to Pakistan's security deficit suggested by Faruqui is to balance its economic
resources with strategic ambitions. What is needed is a "lean and mean military organization, without
becoming a drain on the national treasury and undermining the non-military dimensions of security. The
comparative experience of Israel, which depends on reservists for defending territorial integrity, is a
lesson. To defend Pakistan against external aggression, a force level of 300,000 troops is enough, i.e.
half of the present strength. Offering golden handshakes and compensation packages for converting
swords into plowshares can carry out demobilization. Small force levels do not imply weak defense.

Suggestions:
Pakistan always had the human and natural resources but its leadership lacked the will and sincerity of
purpose. Under the leadership of sincere leaders, Pakistan will emerge as a responsible and dignified
member in the comity of nations and will show unflinching commitment in discharging its international
responsibilities. The people of Pakistan strongly desire to have friendly relations with all countries,
especially, its neighbors.
 1. Cut short the Military Expenditures:
Pakistan's poor economic situation is linked intrinsically (essentially) with faulty defense and
foreign policies. Pakistani leaders should follow the example of Deng Xiaoping, who converted China's
foreign policy of confrontation into one of economic cooperation. Pakistan's savings and investment
ratios are among the lowest in the world, mainly due to defense spending and corruption, both severe
drains. It spends 6% of its gross domestic product on defense, while health and education stagnate at
1% and 2%.

Military spending in Asia as a whole has declined from the end of the Cold War and helped
power investment and per capita incomes in the long run. Disarmament is feasible and practical, as
examples from both developing and developed countries reveal. For Pakistan, which is on the edge of
the precipice, (dangerous situation) there is no choice but to pragmatically take a leaf from Deng's
famous dictum that strength is primarily economic. The million-dollar question is whether Pakistani
leaders follow this honest reappraisal of what Pakistan requires to be really secure.

The President must initiate the process of strengthen the nation by pursuing the following seven point
agenda:

Rebuild National confidence and morale

Strengthen the Federation, remove inter-provincial disharmony and restore National cohesion

Revive the economy and restore investor confidence

Ensure law and order and dispense speedy justice

Depoliticize State institutions

Devolution of power to the grass-roots level

Ensure swift and across the board accountability

In an effort to drive maximum focus from the seven points, a four point strategy must be developed.
The idea is to concentrate, prioritize and accomplish tangibles. The key goals should be:

1. Economic revival

2. Poverty alleviation

3. Political restructuring

4. Devolution of power to grass root

On each one of these we will see tremendous forward movement.

2. Extremism and Ethnic hatred should be abolished:
The nation strongly feels that in order to attain the objective of becoming a mature, moderate
and tolerant society, Pakistan has to get rid itself from the elements spreading religious extremism and
ethnic hatred. The nation should be firmly committed to root out terrorism in all its forms and
manifestations from Pakistan. While evolution of a moral and ethical society, strong in religious and
cultural values shall remain the nation's cherished goal, I believe that extremism and sectarian violence
by a fringe (border) have to be rooted out from our society. The minority cannot be allowed to hold the
majority hostage.

A progressive and prosperous society is directly linked with a dynamic, robust (sound) and
resilient economy. Pakistan, therefore, as a strong, vibrant economy, should make progress at an
average rate of 7 to 8% over the next decade. In order to meet this target, the policy makers should
initially, through singular focus and by following a definite strategy, concentrate on removing the
weaknesses of Pakistan's economy. The problems of growing debt, rising corruption, sliding confidence
of the business community and prospective investors and eroding credibility of vital State institutions
should be addressed with encouraging results. With economic stability and wide ranging reforms,
Pakistan will look ahead towards self-reliant growths, which will directly impacts poverty reduction. Our
small and medium enterprises i.e. housing and construction, oil and gas, information technology,
tourism and telecommunications can play a pivotal role in the envisaged growth.

4. Development in Agricultural-Sector:

Around 70% of Pakistan's population live in rural areas with their livelihood dependent on
agriculture. Irrigated agriculture is the backbone of Pakistan's economy but water is becoming a limiting
factor on cropping area. Pakistan also has the additional potential of bringing about 22.5 million acres of
virgin land under cultivation if irrigation water is made available. The policy makers, therefore, should
designate the construction of medium and large reservoirs, canals and brick-lining of watercourses, for
maximum water conservation, a foremost National priority.

5. The Encouragement of Private Sector:

The economists envision the distinct roles and realms of government and the private sector.
They strongly believe that the private sector is not only the main engine of growth but also the primary
source of employment generation. To them, the private sector can produce, distribute and trade goods
and services more efficiently and at a lower cost than the government. The government's role should
only be in facilitating and creating an environment conducive for the private sector to flourish. The
government should, therefore, be committed to the vigorous (active; robust) pursuit of the privatization
policy.

6. Human Resource Development:

Human Resource Development is an imperative for socio-economic development. According to

experts, no nation can effectively progress without a strong human capital base and education is central
to overall Human Resource Development. The holistic approach of the nation should aim at enhancing
literacy levels, improving quality of primary and secondary education and also giving a major boost to
the quality of higher education. Thanks to God, the present government has targeted 60 % literacy level
by 2005 and over 90% by 2015 and producing 1,500 PhDs each year, mainly in science subjects by 2009.
The present percentage of students entering higher education is to be enhanced from 2.6% to 5 % by
2009.

7. Gender Equity:

The cause of gender equity is very close to the prosperity of the nation. I firmly believe that the
route to women's emancipation is through political empowerment. Therefore, a series of concrete
measures should be taken to ensure adequate and effective representation of women in the National
decision-making institutions. It is encouraging that under the present government their representation
in local government bodies has been increased to a minimum of 33% of the total seats. It is minimum,
because women are at liberty to contest elections for general seats as well. In the Senate, the National
Assembly and Provincial Assemblies, women have been guaranteed strong representation by reserving
17% of the total seats for them. This, of course, is a quantum leap from the zero level of the past. With
this initiative, over 40,000 women have been politically empowered through the electoral process.

8. Peaceful Solution of International Disputes:

Being a peace-loving nation, we must show our predisposition to dialogue over confrontation and
finding just solutions to international disputes in accordance with UN resolutions. The landmark strategy
of Enlightened Moderation of the president of Pakistan is reflective of his efforts to promote global
peace and stability. The two-pronged strategy on the one hand induces Ummah to introspect and
address their deficits in social and economic standards and on the other solicits from international
community rejection of misconceptions about Islam and the thesis of clash of civilizations. The
developed world should not only support Muslims in their efforts for socio-economic uplift but also help
resolve international political disputes in a fair and equitable manner.

At present, Pakistan is incurring a price tag of $110 million a year for pumping the insurgency in Indian
Kashmir and thereby earning the ire of the international community. Analysts prescribe a more active
"third party catalyst" role for the US to provide incentives for peace over Kashmir, though how a
superpower interested in running off democratic India against China can be expected to be an honest
broker over Kashmir is left for the reader's imagination. Faruqui's reading of post-Cold War realities and
US-China equation are confusing.

Economic aid, debt write-offs and conversion to zero-interest loans are also recommended to encourage
defense spending cuts in Pakistan and India. Faruqui makes assumptions that Indian security is purely
Pakistan-centric by adducing two-country game theory models to prove that economic diplomacy works.
Bilateralizing concentric multilateral threat perceptions is too simplistic.

The Problem of Terrorism:

However, in the post-9/11 world, which is pre-occupied with the threat of terrorism, the
argument that carries weight in the developed world is the relevance of socio-economic development to
the war against terror. The mere appeal to humanity, and fairness did not seem to attract resources
from the developed countries to remedy backwardness and poverty. However, the fear that economic
deprivation may drive desperate people to take to terrorism is proving more effective in attracting
attention to the need for economic justice. The other root cause of terrorism is the frustration caused by
political injustice in Palestine, Kashmir and other parts of the Muslim world.

The Extremism:
For developing countries like Pakistan, where the problems of poverty are exacerbated by the rise
of extremism that can turn into terrorism addressing the problem of poverty is the most effective way to
contain terrorism. President Musharraf, speaking at the Islamic Summit last year in Malaysia, drew
attention to the tendency in the West to link the phenomenon of terrorism to Islam. He came up with
the strategy of 'enlightened moderation", which would create a win-win situation both for the West and
the Islamic world.

The role of the Muslim world would be to eschew extremism and militancy, even for just causes, and to
adopt the path of socio-economic uplift. The West would provide economic and technical assistance to
remove poverty, and use its power and influence to help resolve the disputes in which the democratic
and human rights of the Muslims were being violated. This concept, which the President also mentioned
in his address to the UN General Assembly this year, won considerable support.

The Strategy of Socio-economic Development

The strategy of socio-economic development to fight poverty as well as to contain terrorism and
militancy is being implemented in Pakistan. After the first five years, during which Finance Minister
Shaukat Aziz helped lay the foundation for economic stability and growth, attention is being turned to
spreading the benefits to the common man, by addressing the problems in the social sector. Education,
health and technological skills are being promoted, with increasing participation of the private sector, as
well as the foreign agencies and governments

The Poverty Problem:

The poverty and not terrorism is the core problem of Pakistan.The governments recent figures
that poverty witnessed 7 per cent decline in the country is baseless. Prices of goods have increased
manifold in the last decade, while 80 per cent of the employed people in Pakistan still took salaries
below Rs4,000 per month. The rulers dont know the problems of the masses. They dont know how a
poor man supports his family in Rs2,000 or Rs3,000 a month. Pakistan is a country where the poor
subsidize the rich because 80 per cent of the taxes are indirect and the elite are exempted from many
taxes.
The country is unable to even introduce a capitalist system let alone a social welfare state. In US,
where there is a capitalist system the one per cent elites paid 35 per cent of the overall taxes. A study
reported by the BBC about Pakistan as being among the tenth vulnerable states is vigorously
challenged by the government statistically. The tenth state is Afghanistan and Pakistan comes ninth. It
was said at the seminar on poverty in Islamabad that poor governance hurt the poor more. That is true
indeed, whether that be in the shape of corrupt and inefficient policeman and a feeble or corrupt low
judiciary. In addition what is promised to the poor in the shape of more and better schools and hospitals
is hardly ever delivered to them and the poor mans protest in this regard evokes little response unless
he takes to violence. The debate continues whether poverty is increasing or decreasing in the country.
According to the government officials, led by the prime minister, poverty is decreasing and prosperity
is increasing. For others, including President Musharraf, inflation, unemployment and poverty are the
problems that badly affect people and need greater attention from the government.

Education System:
The government should announce education emergency in Pakistan because the countrys
education system was almost non- existent.

There is education Apartheid ( a policy or system of segregation or discrimination on grounds of race.) in

Pakistan, as a few elite educational institutions produced people, who controlled the affairs of the
country leaving zero space for the poor to come into powers and serve the nation.

Public Sector Development Programme:

The next public sector development programme will be worth Rs 245 billion, the current years
plan being Rs. 272 billion, to keep up the high rate of economic growth and provide education
infrastructure for industry and agricultural growth. But allocated 17 p-*er cent more funds are not
enough if the additional power and water needed are not available. Power should hence have the top
most priority.
-*

The Population Explosion:

The problem with Pakistan is its large population 165 million of them. Too many people have
too little to share and too many privileged claimants among them. Apart from a small number it is not a
highly educated population with great skills. That reduces their mobility and makes them confined to
their roots as in Balochistan and Frontier province. But not much time Pakistan can afford to waste in a
highly competitive world. Even South Asia is awake making rapid progress while Pakistan is grappling
with some of the age-old issues. If jobs are available in large numbers, there could be greater mobility
and people move to other regions.

Miscellaneous Problems:

Pakistan is also facing the problem of inadequate public services throughout the country, with
much of the population not having access to basic medical services, particularly outside of urban areas;
low levels of foreign investment and a 2005 inflation rate of nine per cent; and that 32 per cent of the
population were living below the poverty line although the real number is likely to be much higher.

The Energy Crisis:

Failure to build one of the large dams can cost the country four billion dollars per year, says Dr
Salman Shah, Advisor to the Prime Minister. And if the approved five dams were built by 2015 they
can add ten to fifteen billion dollars to the GDP of the country. He says that with a $120 billion
economy a new mega dam contributes 2.5 per cent to its GDP every year.

Meanwhile, power is being made more costly as the Nepra has approved a 15 per cent rise in
power rates for KESC. Earlier, a 23 per cent rise was recommended by Nepra but was ignored by the
Government.

The UN report on Children:

According to another report of the United Nations Children Emergency Fund nearly half the
children of South Asia under the age of five are under weight and despite some progress, the region is
far from reaching the goal of halving hunger by 2015. They say that South Asia is behind the target. But
in case of Pakistan, officials say, that goal has already been achieved and poverty already halved.

Conclusion:
In such circumstances they are promised reforms of the system but real reforms in practice hardly ever
come through, more so in the regions dominated by feudal lords and tribal chiefs.