ECONOMIC HISTORY

In 1947 Pakistan had every right to be called an agricultural country because at

that time major share of Pakistan's gross domestic product was from agriculture
which contributed around 53% compared to 7.8% from manufacturing and 11.9%
from retail trade. More than 65% of Pakistani labor force worked in agriculture
and almost all of Pakistani exports consisted of primary products, essentially
agricultural commodities like jute, tea, which not surprisingly originated from East
Pakistan.

Laying the foundation 1947-58:

In 1947 Pakistan was indeed a predominantly agrarian, underdeveloped, newly

independent nation, with little industry few services, and no infrastructure.

The primary task of the government .attempts to restructure the economy and to
ensure that it was on a strong footing could be undertaken only after the initial
political and economic shocks had been dealt with.

The decade of development: 1958-68

1960 stands out as the decade with the best performance. Many of the
economists have written about Ayub khan's era and they are generally agreed
that considerable economic growth and development did indeed take place. They
argue that significant leaps were made in industrial and agricultural production

Observers have pointed out that this aggressive capitalist development caused
serious economic, social and political tensions. They argue that there was
increased disparity in income across different regions. Major growth was in
central Punjab and in Karachi; critics say that two regions were permitted to grow
at the expense of the rest of the country.

The bad luck years: 1971-77

Bhutto's economic policies were more illiberal than those of his predecessor, and
his nationalization was said to be the major cause for a huge downward trend in
growth. In the 1970s GDP grew by close to 5% which indicates the need for a
thorough reexamination of the economic programmed of Bhutto. Bhutto was an
unlucky politician in many ways and events beyond his control affected his
economic programmed.

The economic loss of East Pakistan was strongly felt.

The devaluation of the Pakistani rupee by120% in May 1972 brought significant
dividends in terms of export growth in one year (1972/3)

The 1973 OPEC price increases played havoc with Pakistan's import bill and the
balance of payments deteriorate

Also, the period after 1973 saw a serious worldwide recession affecting Pakistan's
exports. Recurrent domestic cotton crop failures and floods in 1973,1974 and
1976,affected Pakistan's main exports,
The large nationalized units taken over but Bhutto were the most inefficient in
the industrial sector, and despite this, industry experience a reasonable growth
rate.

The second military government 1977-88

General Zia regime was more liberal in economic terms but not politically than
any one of his predecessors. While the civilian military bureaucracy played a
prominent role in acquiring capital and in assuming the role of entrepreneur and
financer, numerous individual capitalists emerged in the post-Bhutto era. High
rates of industrial growth were led by coming on stream of earlier investment
made by public sector under Bhutto, especially in heavy industries and also by
rapid expansion in domestic by USA helped ensure that steps were taken to
increase growth. remittances from middle east and aid from abroad helped
launch Pakistan second economic revolution .By becoming the capitalist world's
front line state against soviet union and specially against expansionism .in the
region Pakistan’s government gained in terms of financial aid and resources.
However general Zia’s martial rile inflicted deep rooted damage to Pakistan
society.
The era of structural adjustment 1988-1999
The period after the death of general Zia in 1988resulted in return of democracy
to Pakistan, between august 1988 to august 1997, Pakistan had four general
elections with both Benazir Bhutto and nawaz Sharif being returned to power
twice. Since none of the elected governments was able to complete its full term
there have also been more than a few caretaker governments.

Musharraf era:
Pakistan’s economy has witnessed many changes since October 1999, some for
the better and others for the worse.

There was deregulation of the banking sector, including sharply cutting loan
interest rates, putting in place a regime that allowed banks to engage more
liberally in giving consumer finance loans, and lifting restrictions on the number of
branches that foreign banks could open in Pakistan. Easy access to low-cost
consumer finance led to a sharp rise in the sale of consumer goods such as cars,
motor cycles, cell phones and home appliances had been noticed.

Country’s per capita income had risen dramatically in those years, from about $
450 in 1999 to about $ 1,000 in 2007. In making this case, the government chose
to ignore the fact that a falling dollar required that the per capita income figure
be proportionately scaled down to give a more realistic picture of the actual
figure.

The Democratic Government of Zardari:

In 2012 the nation was poorer, hungrier, and more deprived than it was in March
2008.

For the first time since independence in 1947, democratically elected legislatures
completed their constitutionally mandated tenures in Pakistan. This is indeed a
significant landmark in Pakistan’s democratic history.

While the Musharraf regime posted 6 per cent to 8 per cent economic growth
rates, the Zardari government couldn’t muster even a 4 per cent GDP growth.
It is, however, true that the good fortune did not favour the elected governments.
the Zardari government came to power in 2008 when the global economies
experienced the worst economic recession since the great depression of the 30s.
The demand for Pakistani goods declined and investment flows dried up, thus
starving Pakistani industries.