World Economic Forum Report on Pakistan

WEF (World Economic Forum) has declared Pakistani Economical condition as critical. The forum stated that though Pakistan has improved its Micro Economical condition, but the overall situation is not hopeful.

 According to WEF, Pakistan has improved competitiveness ranking from 133 to 129, however the country didn’t manage to show progress in all fields. The report stated that Pakistan ranked at 142 in basic requirements, 77 in terms of innovation and sophistication and 104 in terms of efficiency enhancers.

Further report stated that almost 25% Pakistani Children haven’t access to even Primary education, while labor market is also facing crisis.

Pakistan is ranked at 140 out of 144 countries in terms of participation of women in economy, in terms of access of public to ICT (Information & Communication Technologies), Pakistan is ranked at 114 position.

 However Pakistan has improved its position in fields of Financial Market Development (67) and 30 in terms of Market Size.

PAKISTAN ECONOMIC SURVEY 2013-14

CHAPTER NAME CHAPTER AUTHOR S. Ejaz Wasti (Economic Adviser) Team Leader Overview of the Economy Growth and Investment Dr. Imtiaz Ahmad Joint Economic Adviser Agriculture Omer Farooq Research Officer Manufacturing & Mining Attaullah Shah Assistant Economic Adviser Fiscal Development Nazia Gul Assistant Economic Adviser Money and Credit Nazia Gul Assistant Economic Adviser Capital Markets Absar Hasan Siddique Deputy Economic Adviser Inflation Ahmed Khan Deputy Economic Adviser Trade and Payments Absar Hasan Siddique Deputy Economic Adviser Public Debt M. Umar Zahid Financial Analyst (Debt Wing) Education Zaila Husnain Assistant Economic Adviser Health & Nutrition Ahmed Khan Deputy Economic Adviser Population, Labor Force and Employment Nargis Mazhar Assistant Economic Adviser Transport and Communications Manzoor Ahmed Yusufi Deputy Economic Adviser Energy Muhammad Shoaib Assistant Economic Adviser Poverty and Social Safety Nets M. Shamim Wazir Joint Economic Adviser Environment S.Natiq Hussain Naqvi Project Consultant Contingent Liabilities M. Umar Zahid Financial Analyst (Debt Wing) Tax Expenditure Nazia Gul Assistant Economic Adviser Impact of War in Afghanistan and Ensuing Terrorism on Pakistan's Economy Zaila Husnain Assistant Economic Adviser Economic and Social Indicators Highlights Pakistan Economic Survey 2013-14 Download Statistical Appendices

PAKISTAN ECONOMIC SURVEY 2012-13

CHAPTER NAME		CHAPTER AUTHOR
	S. Ejaz Wasti (Economic Adviser) Team Leader
	Overview of the Economy
	Growth and Investment	Dr. Imtiaz Ahmad Joint Economic Adviser
	Agriculture	Omer Farooq Research Officer
	Manufacturing & Mining	Attaullah Shah Assistant Economic Adviser
	Fiscal Development	Nazia Gul Assistant Economic Adviser
	Money and Credit	Nazia Gul Assistant Economic Adviser
	Capital Markets	Absar Hasan Siddique Deputy Economic Adviser
	Inflation	Ahmed Khan Deputy Economic Adviser
	Trade and Payments	Absar Hasan Siddique Deputy Economic Adviser
	Public Debt	M. Umar Zahid Financial Analyst
	Education	Zaila Husnain Assistant Economic Adviser
	Health & Nutrition	Ahmed Khan Deputy Economic Adviser
	Population, Labor Force and Employment	Nargis Mazhar Assistant Economic Adviser
	Transport and Communications	Manzoor Ahmed Yusufi Deputy Economic Adviser
	Energy	Muhammad Shoaib Assistant Economic Adviser
	Social Safety Nets	Zaila Husnain Assistant Economic Adviser
	Environment	S.Natiq Hussain Naqvi Project Consultant
	Contingent Liabilities	M. Umar Zahid Financial Analyst
	Tax Expenditure	Nazia Gul Assistant Economic Adviser
	Highlights Pakistan Economic Survey 2012-13
	Economic and Social Indicators
	Download Statistical Appendices

Causes of inflation

 Causes of inflation are of two types:
A. INCREASE IN DEMAND:
1)      Increase in Money Supply
The major cause of increase in the price level is an increase in money supply. It may be due to increase in currency or credit money. Increase in the stock of money induces people to demand more and more of goods and services.
2)      Increase in Velocity of Money
According to the Fisher’s Quantity Theory of Money, if there is an increase in the velocity of circulation of money it also leads to inflation.
3)      More Investment
Investments also play an important role in producing inflation. At the moment of investment the economy’s stock of wealth and money expands and it result is in inflation.
 4)      Non-productive Expenditures
Government of Pakistan has to make a lot of non-productive expenditures like defence etc. Such unproductive expenditures lead to the wastage of economy’s precious resources and also lead to inflation.
5)      Corruption & Black Money
Corruption and black money leads to increase in aggregate demand, which is cause of inflation. These evils increase aggregate demand and import volume.
6)      Deficit Financing
Deficit financing is another cause of inflation. It increases the money supply and leads to inflation.
7)      Foreign Remittances
Increase in foreign remittances is increasing the money supply in our country. Increase in money supply leads to inflation.
8)      Foreign Aids
Foreign aids are also a source of mobilization of resources form rich countries to poor countries. It is also a cause of inflation in Pakistan.
9)      Consumption Trends
Due to demonstration effect people of our country want to copy the styles of people of rich countries. In this way there is an increase in consumption trends that leads to inflation.
10)  Population Bomb
Population of Pakistan is increasing day by day. Increasing population is demanding more and it creates inflation.
B. DECREASE IN SUPPLY:
11)  Slow Agricultural Development
Low growth rate of agricultural sector caused in shortage of productivity. It results in low supply and increase in price level.
12)  Slow Industrial Growth
Our industrial sector is not at developed form due to use of backward techniques of production. Its less production also creates shortage in market and caused in inflation.
13)  Increase in Wages & Salaries
Now labour is demanding more wages and salaries. Increase in wages and salaries leads to increase in cost that increases the prices. On the other hand due to more wages and salaries there is an increase in income and it caused in inflation.
14)  Increase in Prices of Imports
Increase in the prices of imports also leads to creation of inflation. If there is an increase in the prices of oil and other imported raw material then it will cause to reduction in supply.
15)  Devaluation
The value of our currency is decreased due to devaluation. It makes imported goods more expensive and it leads to shortage of supply.
 16)  Indirect Taxes
The imposition of indirect taxes is a reason for increase in prices. Sometimes government imposes taxes on some particular commodities. In this case producer may start to decline the production of those goods.

Major Industries of Pakistan

Q.4. Give a brief account on major industries of Pakistan

A brief introduction about the major/large scale industries of Pakistan is given along the following lines.


1. Textile Industry

The textile industry is the largest industry of Pakistan. At the time of partition, Pakistan received only 17 textile units in its share. The production of textile was very low and a large quantity of textile had to be imported to meet the domestic, requirements. Now, Pakistan is a prominent country for the production of textile. The textile industry accounts for 17.3% of value added, 32.2% of industrial employment and 60% of total exports. There were 354 mills operating in the textile industry in 2001-02. The installed capacity of spindles was 8841 thousand and installed capacity of looms was 10 thousand in the same year. The production of cloth was 558 million square meters by the organized mills sector. Various steps have been taken by the Government for the growth of the textile industry e.g. the provision of incentives, freedom to acquire technical assistance from abroad, directly financing institutions and improvements in management and labour efficiency etc.


2. Vegetable Ghee and Cooking Oil Industry

At the time of independence oil industry was very poor. Now there are 150 vegetable ghee and cooking oil factories in Pakistan. Out of these 26 are in the public sector with an installed capacity of 500 thousand tonnes of ghee and cooking oil. Total production of ghee and cooking oil was 774 thousand tonnes in 2001-02. A large quantity of cooking oil is imported to meet the domestic needs. The decline in the production of vegetable ghee is due to lower scale turnover and operational difficulties & closing down of two units in N.W.F.P.


3. Sugar Industry

In 1947, there were only 2 sugar factories in Pakistan, but at present there are 77 sugar factories in the industry. During the year 2001-02 total production of sugar was 3247 thousand tonnes. Revolutionary steps are required to expand the working capacity of this industry, which must be expanded and facilities should be provided to farmers for the production of better crops.


4. Fertilizer Industry

There are 10 fertilizer units (6 in the public sector and 4 in the private sector) in the country, having an installed capacity of 42,98,000 N. Tonnes (16,74,000 N. Tonnes in the public sector and 26,24,000 N. Tonnes is the private sector). Total production of fertilizers in 2001-02 was 5012 thousand tonnes. The low production was caused, by operational difficulties, decline in working hours and power failure/load shedding. A number of concessions are provided for the growth of this industry.


5. Cement Industry

At present 24 cement factories are operating in the country, out of these 4 factories are in public sector and 20 are in private sector. The installed capacity of cement is 16,300 thousand tonnes out of which 9935 thousand tonnes of cement was produced in 2001-02. This industry has been allowed duty free import of plant and machinery.


6. Chemical Industry

There are 12 chemical factories in the country producing, soda ash, sulphuric acid, caustic soda, chlorine gas and other chemicals. The contribution of the chemical industry towards GNP is only 3%. This industry is not fulfilling domestic requirements, so a large amount of foreign exchange is spent on the import of different chemicals every year.


7. Jute Industry

At the time of independence there was not a single jute factory in Pakistan. By the cooperation of PIDC, 32 factories were setup in East Pakistan and one in West Pakistan by the time of separation of East Pakistan in 1971. At present there are 12 Jute mills in the country. Total production of Jute goods was 81.7 thousand tonnes during 2001-02. Now a large quantity of Raw Jute is imported from China and Bangladesh every year to meet the domestic requirement.


8. Engineering Goods Industry

The engineering goods and capital goods produced domestically are very helpful for economic development of a country. This industry was given importance in the 3rd five year plan. Now we have 4 heavy engineering industries. There are

(1) Heavy Mechanical Complex, Texila

(2) Heavy Foundry Project, Taxila

(3) Pakistan Machine Tools Factory, Landhi

(4) Pakistan Steel Mills, Karachi.

All these are in the public sector. There are also a number of light and medium engineering goods industries producing a lot of items.


9. Ship Building Industry

Ships are constructed at Karachi. A number of small and large ships are made by Karachi yard and Engineering works. This factory was establised by PIDC. Now Pakistan is selling ships and boats abroad. In all the five year plans, this industry is given much importance.


10. Woolen and Worsted Textile Industry

There are 16 woolen mills in Pakistan. These are located at Karachi, Nowshera, Lawrencepur, Quaidabad and Hamai. This industry is not only meeting the worsted and woolen yam requirements of the country, but it is also exporting a large quantity of worsted cloth and carpets to foreign countries.


11. Cigarette Industry

At present 22 factories are producing cigarettes and Biri. Our country is self sufficient in the production of cigarettes. The raw tobacco used in the manufacturing of cigarettes is produced domestically. During the year 2001-02, 55,318 million cigarettes were produced in the country.

Mechanized Agriculture

Farm Mechanization :-
Farm mechanization means the use of machines and technology in the agriculture sector. The use of tractor, tube-wells and plant protection measures are included in the farm mechanization. So in the farm mechanization the use of machinery is greater as compared to the labour.

Importance or Advantages of Farm Mechanization :-
In underdeveloped countries the per acre yield is low because our farmer is not using the machines and technology in the agricultural operation. Keeping in view the performance of farm mechanization, So most of developing countries has decided to provide loans to the farmers for the purchase of tractors and tube-wells. Its importance can be judged by the following facts :

1. Increase in the Cultivable Area :-
The use of machines like tractor and bulldozers will enable the farmers to bring more areas under cultivation. A large area of barren land can be cultivated more easily.

2. Irrigation Facility :-
In poor countries the canal irrigation facilities are inadequate. The installation of more tube-wells will relieve the cultivators from uncertainty of water supply which will increase the production.

3. Transportation Facility :-
Tractor and Trolly is also used for transferring the agriculture product from one place to another. A huge amount of product is wasted due to non availability of transport.

4. Reduction of Cost :-
The use of machinery decreased the cost of production and due to this income of the farmer increases. It also improves the quality of production.

5. Saving of Time :-
The use of machinery saves the time of the farmers which can be utilized for other purpose. Many acre land can be cultivated with tractor in few hours.

6. Increase in Efficiency :-
The use of machinery increases the efficiency of the worker and rises the out put per worker. So the income and efficiency of workers improves.

7. Water-logging Solution :-
In poor countries every year thousands acre land is destroyed by the water logging. We can remove the water-logging through installation of tube-wells.

8. No Dependence Upon Animal Power :-
The use of machinery reduces the dependence upon animal power which is costly and slow. There is always a fear of animal death when it is over burden.

9. Relief to Farmer :-
The use of machinery has relieved the farmer from hard work and has increased the production of agriculture sector. Before the use of machinery ploughing and thrashing was a hard job.


Disadvantages of Farm Mechanization :-

1. Increase in Unemployment :-
In the poor countries the rate of unemployment is already high. So the use of machinery in agriculture has increased the rate of unemployment in the country. It is useful in those countries where labour is not available or labour is costly.

2. Not Suitable for Small Holding :-
The use of machinery is not profitable for small holdings. The majority of the farmers in underdeveloped countries is the owner of small holdings. For instance, owner of a 5 acre land can not purchase tractor.

3. Costly Machinery :-
In the poor countries farmer is unable to purchase the expensive machinery due to poverty. While labour is cheap in the poor country. Costly machinery increases the cost of production.

4. Lack of Technical Knowledge :-
In the underdeveloped countries majority of farmers are uneducated and they cannot handle the machines. So misuse of machinery causes a great loss to the farmer.

5. Lack of Foreign Exchange :-
Foreign exchange is required to make payments for imported machinery. There is a shortage of foreign exchange in poor countries. So it becomes difficult to import the machinery.

6. Preparing Facilities :-
In most of developing countries maintenance and repairing facilities are not available in the rural areas. The break down of the machinery will cause delay in agricultural operation.

7. Lack of Energy Resources :-
Oil, Gas, and Electricity are the main source of energy. These are essential for the farm mechanization but there is shortage of these resources in the most of underdeveloped countries. Prices of oil are increasing day by day.

8. Lack of Capital :-
In the developing countries farmers are very poor and they are unable to purchase the tractor and heavy machinery.

9. Lack of Credit Facilities :-
In the poor countries, the credit facilities are inadequate so the farm mechanization can not be adopted.

Keeping in view the above facts we conclude that farm mechanization increases the agriculture productivity. It increases the income, saving and investment of the farmers. In the other word we can say that farm mechanization is very useful for the development of agriculture sector.
Now in the today modern world every country has also realized importance of farm mechanization and has encouraged the import of machinery. Most of countries providing loans on low rate of interest to the farmers.

Natural Resources of Pakistan

Q.2. Describe the natural resources of Pakistan?
Introduction

Resources are defined as a means of meeting a need, particularly an economic or social need, of the people. The term usually refers to natural resources like land, water, air. Natural resources are largely unchanged materials of the land that are valuable to people and used in variety of ways.

Pakistan is rich in natural resources. It has mountains, plains, deserts, fertile soils, rivers and oceans. Natural Resources are very important for the development and prosperity of a country. The important thing is to utilize them for the welfare of the human beings and development of the country economically because the progress of a country totally depends upon the utilization of the available resources. The important natural resources are described as under:


1. Soil

The Soil of Pakistan belongs to dry group having high calcium carbonate and content and deficient in organic matter. These vary in colour from reddish brown in the north to red or gray in the south. These soils are generally fertile due to process of formation. The newly deposited alluvium near the river is called Khaddar and mostly consists of sand. The old alluvium of the bar uplands, called Bangar, consists of finer particles - loams. At the foot of the mountains the soil is sandy and generally becomes finer towards the plains where Khankah, limestone concentration, is occasionally found. The soils of the Thal and the Thar deserts and of Balochistan are wind-blown. In southern Potwar a thin layer of residual soil covering is found.

Soil is defined as that part of the unconsolidated material covering the surface of the earth which supports plant growth. It has three major constituents. (1) Solid Particles (Salts, mineral and organic matter), (2) air and (3) water. The type of soil formed is a function of topography, climate vegetation and the parent rocks from which the soil material is derived. Soil material transported and deposited by running water is known as alluvium which that transported and deposited by winds form aeolian soil. Soils formed in silt are termed residual. Soil forming process is complex and continuous. As a result, soils vary in their chemical composition colour, texture and organic content place to place.


2. Water

Water is basic need of life. Human beings, animals and plants cannot live without water. Water is essential for sustaining quality of life on earth. This finite commodity has a direct bearing on almost all sectors of economy. In Pakistan its importance is more than ordinary due to the agrarian nature of the economy. The share of agricultural sector in the Gross Domestic Product (GDP) of Pakistan is about 25%. Since agriculture is the major user of water, therefore sustainability of agriculture depends on the timely and adequate availability of water. The increasing pressures of population and industrialization have already placed greater demands on water, with an ever increasing number and intensity of local and regional conflicts over its availability and use. Historically, the high aridity index of the country is adding further to the significance of water in development activities in Pakistan.

Though, once a water-surplus country with huge water-resources of the Indus River System, Pakistan is now a water-deficit country. Surface water-resources of Pakistan are mainly based on the flows of the Indus River and its tributaries. The Indus River has a total length of 2900 kilometres (Km) and the drainage-area is about 9,66,000 sq.km. Five major tributaries joining its eastern side are Jhelum, Chenab, Ravi, Beas and Sutlej; besides, three minor tributaries are the Soan, Harow, and Siran, which drain in mountainous areas. The famous lakes of Pakistan are Haleji Lake, Hana Lake, Keenjhar Lake, Manchhar Lake, Saiful Muluk Lake.


3. Air/Winds

Air is very important for the existence of life because all living beings respire through air. The air is composed of nitrogen, oxygen and carbon dioxide etc. These are the base of existence of ever form of life on earth. The oxygen in the air is essential for our life whereas other gases are necessary for animal and plant life.


4. Forests

Forests are extensive, continuous areas of land dominated by trees. The forests of Pakistan reflect great physiographic, climate and edaphic contrasts in the country. The desired level of forests is 20-30 percent of the total land of a country. In Pakistan only about 4.8 percent of the total area is forested which is very low.

Forests are important in many different ways. From an ecological point of view, they help to maintain a balance in the environment by checking pollution and protecting the soil from erosion by wind or water and intercepting rainfall, particularly on sloping ground. By preventing soil erosion, the trees on the slopes of hills also regulate the supply of water to the reservoirs thereby reducing floods.

Decomposition of leaves helps in humus formation, which maintains the fertility of the soil. This ensures food supply to millions of people.

From a commercial and industrial point of view, forests provide raw materials to various industries e.g. timber, pharmaceutical paper. They also have recreational value, promote tourism and provide employment in the forest department. The are many employment opportunities that depend on the forests.

The type and distribution of forests are closely linked to altitude. In areas above the snow line, there is hardly any vegetation. Alpine forests grow just below the snow line. From 1000 to 4000 meters, coniferous forests are found. Below 1000 meters, only irrigated plantations have good species of wood.


5. Minerals and Power/Energy Resources

Minerals and power resources are the foundation of economic development. They help in giving an initial push to the raising of production in all sectors of the economy. Pakistan has a large variety of minerals some of which have Bubatantial reserves and quite a few are of high quality. Besides rock salt, coal, iron, ore, limestone, chromite, gypsum, marble, copper, magnetite and uranium useful deposits of magnesite, sulphur, barites, china clay, bauxite, antimony ore, bentonite, dolomite, fire clay, fluorite, fuller's earth, phosphate rock, silica sand, soap stone and molybdenum are found in the country development. Semi-autonomous corporations under the Ministry of Petroleum and natural resources have been set up for the purpose. These are the Pakistan Mineral Development Corporation (PMDC), the Resource Development Corporation (RDC) and the Geological Survey of Pakistan (GSP).

Pakistan has extensive energy resources, including fairly sizable natural gas reserves, some proven oil reserves, coal and a large hydropower potential. However, the exploitation of energy resources has been slow due to a shortage of capital and domestic political constraints. Domestic petroleum production totals only about half the country's oil needs, and the need to import oil has contributed to Pakistan's trade deficits and past shortages of foreign exchange. The current government has announced that privatization in the oil and gas sector is a priority, as is the substitution of indigenous gas for imported oil, especially in the production of power. Pakistan is a world leader in the use of Compressed Natural Gas (CNG) for personal automobiles.

Poverty

A state or condition in which a person or community lacks the financial resources and essentials to enjoy a minimum standard of life and well-being that's considered acceptable in society. Poverty status in the United States is assigned to people that do not meet a certain threshold level set by the Department of Health and Human Services.

How can we reduce poverty rate from pakistan??

Policies regarding poverty reduction Marshalled by different government could not calculate the desire results.Crudely speaking,this is the gravest problem being faced by pakistani nation,if not handled with diligent care and implicit faith,will swell and devour the entire mechanism of the state.For a welfare state to get stronger,policies as regards development of poor strata should be the top of the checklist.i behold a time when we shall be steadily hauling our downtrodden economy towards heights,provided that we chalk out such policies that not only project the welfare of effected spots but also transpose their outlook .I propose following measures for extermination of this menace;

1.Promote industriallization
2.replacement of the orthodox agricultural implements with new scientific equipments in order to increase the yield.
3.establishment of justice and equality
4.equal distribution of resources
6.merit should be the upshot strategy in all walks of life
7.elimination of discriminatory policies
6.controlling of inflation and other economic indicators and regulators.
8.developing investment friendly environment
9.Giving more feasibilities and concessions to the foreign investors
10.dumping extremism and feudalism
11.establishing more and more technical institute in order to get people well skilled.
12.prevalence of education
13.provision of job opportunities
14.division of agricultural lands among tenants.
15.imposition of progressive tax system in order to elicit revenue without missing a single head
16.maintaining law and order situation in order to protect economic activities
17.Net of public oriented Development projects should be extended so that the respective people could find jobs.
18.smuggling and other illegal economic activities should be dealt with iron hand.
19.industrial zones should be established in the areas according to the local economic preferences.
20.A grand strategy should be formulated in order to achieve a radical overhaul in economic system in general by keeping in view the long term requirements of the country.

Problems of Agriculture in Pakistan

Agriculture in Pakistan & its problems

The magnanimity of the agricultural problems in Pakistan has undoubtedly crippled the economy. In 1947, agriculture’s contribution of GDP was 53% that has shrunken down to 21% last year. Pakistan has great agricultural potential because of its alluvial soils. However, it is producing almost 50% below its potential. Neighboring India and Bangladesh have shown significant improvement in their agriculture sector unlike Pakistan. Where China is growing padi crops in Gobi desert, Pakistan is still relying on perennial canal system of irrigation. Let us make an attempt to study the agricultural profile of Pakistan followed by a brief discussion on problems in this sector.
Pakistan lies in a semi arid subtropical region. It is in the north east of the world; that is just above tropic of cancer i.e. 23.5oN. Its dimensions are 240 30’ N – 370 N and 610 E – 750 E approximately. Pakistan has 1046km coastline in the south that impacts its climate and agriculture.
Almost 90% to 97% of showers in Pakistan are received during summer monsoon season. Very few showers are received during winters. Droughts and floods formulate a permanent feature of the area. Pakistan receives seasonal showers due to which most of the agricultural land must be irrigated and agricultural output is largely affected by the climatic variations and global warming.
Total land area of Pakistan is 96.9% and 3.1% is constituted of water bodies. Total cropped area of Pakistan is 23.04 million hectors. 90% of the land is irrigated and only remaining 10% is rain fed. In Pakistan, Intensive Subsistence Farming is largely practiced Use of fertilizers and pesticides; and techniques of crop rotation are practiced widely in order to have larger yield. Among major crops of the country there is wet padi and wheat. Cash crops include cotton, sugarcane, maize, jute, tobacco, citrus fruits, mangoes etc. Almost 44% of the labor is involved in it and almost 64.5% of the population is still rural in nature. Due to 2010 floods, agriculture sector showed overall growth of 1.2% where as major crops showed negative growth of 4% during year 2010 – 2011.

Problems of Agriculture in Pakistan

Irrigation issues

Quite unfortunately, network of water channels existing in Pakistan has become redundant. Perennial canal system of irrigation, when formed, was a very efficient in 1960’s. But today, Pakistan is deprived of the modern ways of irrigation that is drip and sprinkle irrigation. A huge amount of water is lost due to seepage and evaporation. Moreover, due to problem of distribution of water in fields, farmers do not practice the standard water required in fields. Thus, this leads to mismanagement of water.

Water issues

In Pakistan, construction of water reservoirs has become a matter of political tussle. Due to which construction of dams has been in halt since last major project of Terbela. Indus Basin Treaty 1960 has failed to stop India from constructing water reservoirs on the channels flowing to Pakistan. However, Pakistan consistently failed to establish its view point on international forums. The present canal water is not effectively used in our irrigation system. 25% - 35% losses of water are recorded out of total applied to fields. Out of 142 MAF, total quantum of water available to crops is only 42 MAF. Due to shortage of canal water farmers have to use tube well water. This water is brackish and having higher concentration of different salts and enhances the problem of soil salinity.

Deforestation

Less than 4% of land in Pakistan is forested and rate of deforestation is around 3%. From northern highlands to the coastline of Karachi, Pakistan has diverse range of forests from coniferous to mangroves respectively. However, deforestation is the result of increased and unplanned urbanization. Therefore, expanding urban units grow at the cost of trees. This is not only causing environmental hazards, but also accentuating the impacts of global warming.

Absence of Land Reforms

During Ayub’s era, first time land reforms was practiced. Mr. Zulfiqar Ali Bhutto introduced more reforms in 1972. The Law Reforms Act 1977 was also enforced by Bhutto’s regime. The most important change was that individual holdings, including shares in shamilat, if any, in excess of 100 acres of irrigated land or 200 acres of un-irrigated land. Furthermore, notwithstanding the above, no land holding could be greater than an area equivalent to 8,000 PIU. However, these laws were declared in contradiction to Islam and have ceased to be in effect since 1990. Thus, absence of land reforms has always caused a lot of damage to the agricultural sector of Pakistan.

Salinity and water logging

Due to excessive use of canal water, most of cultivated lands have become victims of these two dangerous diseases. Every year, salinity alone is turning about 100,000 acres of arable land into marches and salt lands. Water-logging is no less injurious. About 25% of the irrigated area of Pakistan is affected by water logging and salinity problems.

Lack of R&D and neglect in education & training of farmers

There are only five universities in Pakistan and around 15 research centers related to agriculture. Research conducted, techniques taught and skills imparted in these institutions rarely reach at the level of small farmers. Farmers need to know how to make optimum use of land. How to use fertilizers and pesticides and what amount of water is exactly useful and necessary for any crop. Techniques to fight water logging, old irrigation system and low yield must also be learnt. For instance, if take example of using fertilizers in Pakistan, per hector usage of NPK is 170 kg, but the recommended is 300 kg per hector. Hence, in fertilizer application problem is poor nutrition application and incorrect fertilizer case. Lack of management on the part of farmer is a huge problem.

International compulsions & inconsistent government policies

Pakistan fell back in to the clutches of IMF after the change of regime back in 2008. Since then IMF has told Pakistan to reduce agricultural subsidies and impose agriculture tax. Therefore, Pakistan fails to practice a long term policy whether of flexi loans, subsidies or of agriculture tax. Moreover, Pakistan is a WTO signatory as well; therefore, she has to follow those compulsions as well. In the wake of these challenges of international nature, farmer of Pakistan that is illiterate, less equipped, under trained and technologically poor can only rely on policies of government to protect and grow them. Therefore, weak and inconsistent policies of consecutive governments in Pakistan have caused serious problems to Pakistan’s agriculture sector.

Lack of accountability

The marketing facilities for agricultural products in Pakistan are still far from satisfactory level. Our cultivators can not get just prices for their produce due to defective marketing organization. Moreover, the chain of middle men between the producers and ultimate consumers take a heavy share of their produce .Thus the cultivators do not take much real interest in increasing their product too. Hoarding and smuggling has become a culture. Creating farce crisis and causing price hike has become a routine matter. That benefits only middle men; both producer and consumer suffer badly due to this. Lack of proper check and balance and accountability is a fundamental feature of lack of good governance in Pakistan. This is also effecting agriculture sector as well.

Infrastructural problems

The agricultural activities are to be performed in rural areas, but most of villages in Pakistan have no road or railway links with markets. So, farmers have to face innumerable hardships to sell their products. Pakistan is also facing grain storage problems at large scale throughout the country. The people often store their grains in godowns, which cause time to time damage to the seed. Thus, hundreds of thousand of tones of crops have to be stored in temporary facilities that afforded inadequate protection and pilferage. The hazards may occur because of improper ventilation, lack of control over temperature and humidity, high moisture content in seeds, lack of control over rain due to broken walls, floors and ceilings, spoil and un-cleaned godowns, lack of spray and fumigation etc. That results in increase number of dormant seeds, sprouting and rotting, increase of insect damage and bird contamination.

Analysis

Pakistan is a cluster of more than 170 million people. Though Pakistan is the most urbanized country in South Asia, yet it is an agrarian economy. Fluctuating policies, influx of MNCs and private sector have forced the rural labor to find better economic opportunities in urban centers. But unfortunately, they have added to the poverty only. Pakistan is suffering from energy and water shortage and food inflation has been touching double figures. Realizing these ground realities Pakistan needs to look seriously in to its agricultural problems. 2010 floods played havoc with the agricultural lands. Changing climatic conditions; rise in temperature and changing patterns of rainfall are also adding to the agricultural problems. No matter how long lived and deep rooted are the problems of agriculture in Pakistan, they can be solved with due deliberation in to them.

Relationship between Economic Development and Social Welfare

Existing literature focuses on the issue ofpreparation of social welfare measurements onthe basis of an unadjusted Gross DomesticProduct (GDP). This paper extends this methodto incorporate cost-benefit analysis ofeconomic growth in a growing economy incalculating the adjusted GDP, termed as thecost-benefit (CB)-adjusted GDP. This approachis empirically applied to Thailand. There arestark differences between GDP per capita and CBadjusted GDP per capita rates for this period.This paper concludes that GDP can be used as anindicator of social welfare if the GDPestimates are undertaken within a cost-benefitanalysis framework.

Unemployment

Unemployment occurs when a person who is actively searching for employment is unable to find work. Unemployment is often used as a measure of the health of the economy. The most frequently cited measure of unemployment is the unemployment rate. This is the number of unemployed persons divided by the number of people in the labor force.

Major Causes of Unemployment in Pakistan:

Causes and Solution of Unemployment Problem in PakistanIf we talk about the private sector, then the employment level completely stopped because their capital got shifted to other countries due to nationalization of the industrial units which really disturbed the investment industrial sector of Pakistan.

The growth rate of population in Pakistan is very high and that is one of the biggest causes of unemployment in Pakistan. The resources of Pakistan or of any country are always limited and sadly Pakistan has exceeded the optimum level of their resources.

Karachi is the biggest and an ideal place in terms of industrial base of Pakistan. Sadly, investors are not willing to invest in Karachi due to violence that has taken over Karachi in the past few years.

Our educational sector is also one of the causes of unemployment in Pakistan. The attitude of our young children towards the choice of a career is sheer unproductive and unrealistic.

Pakistan has very limited facilities in the area of energy, infrastructure and also the transportation system prevents investors to invest new industries.

Due to current unfortunate situation of Pakistan, the number of industries is very limited and at the same time number of graduates keeps increasing which leads to an up rise of unemployment level.

Government is not playing its part for the country, because they are not doing anything in capital expenditures which basically creates more jobs.

Another one of the biggest issues of Pakistani students are that whenever there comes a new trend or a new technology, then everyone follows to study that specific subject only rather than differentiating themselves they all follow the same pattern. Later, when there are only 5-10 vacancies of that specific field the number of graduates of that field are in thousands. This is the reason why not everyone gets the appointment letter.

Nothing is being handled or organized in a correct way. The numbers of vacancies are only few in numbers, but job seekers are countless every single day.

There are a number of reasons why unemployment is so high in Pakistan. One of the other reasons is the lack of quality of education in Pakistan. A student may have a master’s degree with him, but when he walks into an office for his interview, he lacks the confidence to carry himself for a formal conversation and in the end so many students of this type are rejected and left unemployed!



Solution of Unemployment in Pakistan:

Economic Revival package must be announced by the government of Pakistan to make sure the industrial sector is revived and more investment and production is carried out in Pakistan.

Government needs to motivate people to export more than import through broadening the tax base and by lowering down the tariff plans.

The government need to officially announce different and multiple packages for the betterment and development of the agricultural sector of Pakistan.

The government need to make such policies that attracts foreign investment in our country which will lead to more job opportunities.

Not only the plans need to be made by the government, but also the implementation have to take place in order to make sure that the crisis of unemployment in Pakistan is taken care of ASAP!

Definition of 'Change In Demand'

Definition of 'Change In Demand'

A term used in economics to describe that there has been a change, or shift in, a market's total demand. This is represented graphically in a price vs. quantity plane, and is a result of more/less entrants into the market, and the changing of consumer preferences. The shift can either be parallel or nonparallel.

A parallel shift in demand means that there is no change in the elasticity of demand for the given market, but a nonparallel shift means there has been a change in elasticity.

For example, if there is a perceived increase in the price of gasoline, then there will be a decrease in the demand for SUVs, ceteris paribus. This shift is likely to be parallel, as those who are still in the market for SUVs are still as sensitive to price increases in the prices of SUVs as before the perceived increase in gasoline prices took place.

Change In Supply

Definition of 'Change In Supply'

A term used in economics to describe when the suppliers of a given good or service have altered their production or output. A change in supply can be brought on by new technologies, making production more efficient and less expensive, or by a change in the number of competitors in the market.
   
A change in supply will lead to a shift in the supply curve, which will cause an imbalance in the market that is corrected by changing prices and demand. If the change in supply increases supply, you will see the supply curve shift to the right, while a decrease in supply from a change in supply will shift the supply curve left.

For example, if there is a new technology that makes the production of DVD players a lot cheaper, according to the law of supply, there will be an increase in the output of DVD players. With more outputs in the market, the price of DVD players will likely fall, creating greater demand in the marketplace and more overall sales of DVD players.

Characteristics of the Economy of Pakistan

Q.1. Discuss the main characteristics of the Economy of Pakistan?
Introduction

Islamic Republic of Pakistan is an under developed country. The characteristics of the economy of Pakistan are almost the same of the economy of any under developed country. The main characteristics of the economy of Pakistan are as follows.


1. Burder of International Debt

Most of the developing countries are depending on foreign economic assistance to meet the short fall in domestic savings and for quickening the pace of economic developement. As the year pass, the amount of foreign loans is increasing. The liability of debt servicing has increased manifold. In Pakistan, debt service payments amount to 2309 million dollars in 1996-97 which is a heavy burden.


2. Low per Capital Income

Majority of the people living in developing countries are poverty ridden. Poverty is reflected in low per capital income. People live in unsanitary conditions. Service like health, education expand very slowly. In short, mostly the people in LDCs (less developed countries) are ill-fed, ill-clothed, ill-housed and ill-educated. People here are involved in misery-go-round. In Pakistan the per capital income at current market prices is Rs. 18,320 in 1996-97 (470 dollars).


3. Agriculture, the Main Occupation

In developing countries two third or even more of the people live in rural areas. Their main occupation is agriculture which is in a backward stage. The average land holding and the yield per acre is low. The peasants mostly live at a subsistence level. As far as Pakistan is concerned agriculture contributes 25% of GDP.


4. Dualistic Economy

The economies of developing countries are characterized by dualism. Dualism refers to economic and social division in the economy. For instance, in the developing countries one is the market economy and the other is the subsistence economy. Both the economies exist side by side. In and around the city, there is a market economy which is well developed. Ultra modern facilities of life are available here. But in rural areas the economy is primitive, backward and agriculture, oriented. Similarly, industrial sector uses capital intensive techniques and produce variety of capital goods. The rural sector produces commodities mainly with traditional techniques. The standard of living of the people living in market economy is high but that of their brothers living in subsistence sector is low. The dualistic nature of the economy is not conductive to healthy economic progress.


5. Under-Utilization of Natural Resources

An important characteristics of the developing countries is that their natural resources either remain un-utilized or under-utilized or mis-utilized. Most of the countries are rich in resources but they remain un-utilized or under-utilized due to lack of capital, primitive techniques of production, limited size of the market and sluggish nature of the people.


6. High Rates of Population Growth

Almost all the developing countries are having a high population growth rate and a declining death rate. The development made with low per capital incomes and low rates of capital formation here is swallowed up by increased population. As a result there is no or very slow improvement in the living standards of the people. In Pakistan the rate of increase in population is estimated about 2.77% per annum. This high growth rate is offsetting all achievements of developments.


7. Unemployment

Another notable feature of developing countries is vast unemployment and disguised unemployment both in the rural and in the urban areas. It is estimated at 31% of the labour force in LDCs. The unemployment is increasing with the spread of education and urbanization.


8. Low Level of Productivity

In developing countries people are economically backward. The main causes of backwardness are low labour efficiency, immobility of labour due to joint family system, cultural and pshychological factors leading to low level of productivity.


9. Deficiency of Capital

Deficiency of capital is another common sign in all the developing countries of the word. The capital deficiency is mainly due to

(1) low per capital income

(2) low rate of saving

(3) low rate of investment

(4) Inequalities of wealth

(5) adoption of consumption pattern of advanced countries

(6) Higher level expenditure on consumption etc.


10. Backward State of Technology

All the developing countries are in the backward state of technology. The technological backwardness is due to

(1) higher cost of production despite low money wages

(2) Deficiency of Capital

(3) Predominance of unskilled and untrained workers

(4) Dualism

(5) Misallocation of resources etc

These are the major hurdles in the spread of techniques in the LDCs.


11. Dependence on Export of Primary Products

The LDCs are still relying on the 19th century pattern of external trade. They are mainly producing and exporting primary commodities to the developed countries and importing finished goods and machinery from them.


12. Influence of Feudal Lords

In Pakistan, like many other developing countries, the poor are under the hard grip of feudal lords and tribal heads. It is in the interest of the feudal lords that the poor should remain poor.

control inflation

Following measures are suggested to control high inflation:
1.Increase in the growth rate of output
2.Government should control the supply of money through effective monetary policy
3.Highly increasing unproductive expenditures must be control
4.Government should check the corruption first to eliminate the inflation
5.Control on population is also necessary to control inflation
6.Reduction in budget surplus
7.Reduction in monetary expansion
8.Effective tax system will be helpful to control the inflation
9.Improvement in balance of payment
10.Developments of agricultural and industrial sector will helps to control the inflation.

Cottage

In Pakistan cottage or household industries hold an important position in rural set-up. Most villages are self-sufficient in the basic necessities of life. They have their own carpenters, blacksmiths, potters, craftsmen and cotton weavers. Many families depend on cottage industries for income.

impORTance of cottage industry:-
1.Cottage and small-scale industries are labor intensive and provide employment to 80% of the industrial labor force. This reduces the unemployment and offers opportunities for self-employment.
2.Traditionally, women are not encouraged to work outside their homes. Cottage or small-scale industries like carpet-weaving, candle-making and handicrafts can be established in houses and women can be gainfully employed. This increases the active labor force.
3.These industries also meet the local demands for industrial goods, and save foreign exchange spent in imports.
4.There is a demand for rugs, carpets, brassware, handicrafts and embroidered work in the International market. These goods provide 30% of the export receipts of the manufacturing sector.
5.When people are employed gainfully in villages, the migration of people from rural to urban areas will reduce. The acute problems of housing, sanitation, education, transport and health will be reduced in urban areas.
6.Many districts are under-developed. With the expansion of such industries, the regional disparity in income can be reduced.
7.These industries make effective use of local raw materials which also promotes primary industries like agriculture and mining.
8.Small-scale industry does not require much capital and high technology. I.T is suited to the traditional economic set-up.
9.Cottage and small-scale industries do not use much imported material or equipment.
10.The waste of large-scale industries, particularly the cotton, sugar and steel industries, can be used to make by-products.

Development Economics

Economic development is the development of economic wealth of countries, regions or communities for the well-being of their inhabitants. From a policy perspective, economic development can be defined as efforts that seek to improve the economic well-being and quality of life for a community by creating and/or retaining jobs and supporting or growing incomes and the tax base.

There are significant differences between economic growth and economic development. The term "economic growth" refers to the increase (or growth) of a specific measure such as real national income, gross domestic product, or per capita income. National income or product is commonly expressed in terms of a measure of the aggregate value-added output of the domestic economy called gross domestic product (GDP). When the GDP of a nation rises economists refer to it as economic growth.

The term "economic development," on the other hand, implies much more. It typically refers to improvements in a variety of indicators such as literacy rates, life expectancy, and poverty rates. GDP is a specific measure of economic welfare that does not take into account important aspects such as leisure time, environmental quality, freedom, or social justice. Economic growth of any specific measure is not a sufficient definition of economic development.

energy crisis

An energy crisis is any great bottleneck (or price rise) in the supply of energy resources to an economy.An energy crisis occurs when a country has a great need for fuel or electricity but does not have enough of either (or both) to provide for its citizens

Cause Of Energy Crisis In Pakistan:-

Energy is now the talk of town in Pakistan. Starting from house wives, traders, businessmen, students, ministers all the victims of the shortage of energy. Karachi the biggest city experiencing up to 12 hours load shedding in peak hot weather and during the board exams are on the way. Every body now became the expert of energy and all the figures are on finger tips. some time the shortage is 200 MW some time 2500 MW. energy admin seriously explores the causes of such acute shortage

Gas as Fuel

AGING OF THE EQUIPMENT
One very important reason attributed to this energy shortage is the aging of the generating equipment which could not develop the electricity as per the design requirement. This is the responsibility of continuous updating the equipment and keeping the high standard of maintenance.
we sincerely think a serious thought should be given for general overhaul and maintenance of existing equipment to keep them in good working order.

WASTAGE OF ENERGY
So far energy conservation is limited to newspaper ads lip service in seminars. No serious thought is being given to utilize the energy at the optimum level. A new culture need to develop to conserve energy. Some times on government level illiteracy is blamed for the failure of the energy conservation program. this is not true,. Maximum energy is consumed by elite class which have all the resources of knowledge and communication. But for their own luxury they themselves ignore the problem. Government should seriously embark on energy conservation program.

HIGH COST OF FUEL
The cost of crude has increased from 40 $ to 140 $/barrel. it means the generation from thermal units are costing exorbitant price. WAPDA and KESC when purchasing electricity on higher cost are not eager to keep on selling the electricity on loss. Therefore they do not move on general complain of load shedding.
One simple solution is to increase the energy cost. Again the theft of electricity from the consumers adding the misery of common citizen who wants to pay the bills honestly.
the problem of the energy losses is being discussed for more than a decade and in spite all efforts no solution has been found.

MONOPOLY IN THE BUSINESS
Wapda and KESC are two generation and dispatch units in Pakistan. although NEPRA is a government authority to settle the tariff  issues but the fact remains that once the question of WAPDA comes the authority has a very little influence.
This is suggested that private sector should be allowed to install power plant and settle the electricity to consumers. Once the rates are settled on competitive basis and the service and uninterrupted power supply will be insured then consumers will be benefited.

EXPLORING COAL
Pakistan is blessed with large amount of the coal. again no serious work is done to explore the coal for power generation. This is complained that the coal quality is inferior. however tailored made solutions are available to burn any type of coal. Government is looking for private sector to play its role.
In our opinion the government itself should come forward and install the power plants on the site of coal mines only.

RENEWABLE ENERGY
The government exerting great efforts to develop the renewable energy. PPIB has issued letter of intent to many private sector sponsors. If a serious work is done then the total shortage can be met from Hydro and wind power sector.
This is also suggested that small loans should be provided to consumers to install small hydro and solar cells for one family usage of electricity. The mechanism should be made that instead of monthly bills loan recovery each month to be carried out .

ROLE OF GOVERNMENT
So far the government is looking for private sector investment in energy sector and for itself it choose a role of facilitator and arbitrator. We strongly suggest that  a massive investment from government itself in generating units for conventional as well as new technologies is needed. Once the government sector embarks on massive plans then private sector will follow immediately.

ENERGY PLANNING
in spite  higher costs immediate relief is only possible with thermal power plants which can be commissioned in 24 months time. A comprehensive and realistic planning will help to develop generating units in Pakistan which will be a catalytic element for the  economic  growth , poverty elevation and prosperity in Pakistan

DISTRIBUTION SYSTEM
Wapda briefing highlight  the poor distribution system as the main cause of tripping and break down of the system. However we consider as the last of our concern.
This is true that the distribution system causes many unwanted tripping and break down but now we honestly believe that the shortage of energy generation is our main cause of the problem
for last twenty years WAPDA and KESC complaining about the distribution system but fails to bring any improvement
vvvvv

FDI

foreign direct investment, commonly known as FDI, "... refers to an investment made to acquire lasting or long-term interest in enterprises operating outside of the economy of the investor." The investment is direct because the investor, which could be a foreign person, company or group of entities, is seeking to control, manage, or have significant influence over the foreign enterprise.

 How is the FDI Beneficial to the Investors as Well as the Host Countries?

Foreign direct investment leads to increase in profits within different industries as well as tax cuts and expanded marketability for singularly differing industries. Often times procurement of properties, buildings, and labor can be obtained at a fraction of the cost in host countries than would be the case within the company's home country. While this may seem unfair, it is a good idea to keep in mind the host countries economy and market. Companies are often forced to abide by local regulations rather than the regulations of their home country.

On the other side of the coin, the host country benefits due to the increase in jobs it produces in the regional labor market to which the investment companies reach out to. Often times dying economies can be revived in the process of becoming a host for certain industries or markets in which that industry or market had not previously been. This is especially the case with third world countries that are trying to catch up to industrial nations or who need a boost due to changes in regional climates or in the advent of recovery from the aftermath of civil or world war.

How can the Investors Estimate the Rate of Return on Investments?

Investment research is a key factor when trying to determine the rate of return for foreign investments. It is generally regarded as a rule that the rate of return is higher for U.S. industries to invest in foreign domains than it is for foreign industries to invest in U.S. soil. On the other hand it is not always advantageous for the host country to accept foreign investments as this may drive out local and small commercial enterprise, sometimes the benefits of investment outweigh the cost. Small and medium sized investment industries tend to benefit the most from investing on foreign soil as this represents an opportunity to become actively involved in international business and profitable trade margins.

For cold hard figures on the baseline rate of return for a particular investment risk on a particular investment industry the Bureau of Economic Analysis website lists such data. This data is collected by a section of the U.S. Department of Commerce and is responsible for including information about foreign investing as well as monitoring the rate of return. This website is especially helpful for cross referencing, following the market trends, and trying to determine the impact of various investments in multiple economies.

What Circumstances Could Make FDI Become More Risky for Investors?

It is best to always consult a personal investment advisor before making major investments. Since the global market seems to have a life of its own the return on investment varies by wide margins. Investors take risks in every investment; however, investing in small or newer markets poses an increased risk. Other factors to consider in investment research are the host country's local economy and whether it can support that industry. Local governments play a key role in the rise and fall of the markets and it would be wise to stay out of war zones and regions that could not support the economy increase or those that make transport in of goods in or out of that region, expensive, difficult, or limited.

Important Facts About the FDI Market

Foreign direct investment has had a major impact in the role of internationalization in both foreign and local markets. Investment companies have reacted to the rapid changes in technology and taken advantage of the growing liberalization in the national regulatory framework that governs investments. Recent changes in the capital market have included income sustaining profits due to changes in size, scope, and methods allowed the FDI.

One of the biggest cost cutting factors that have made global investing highly profitable is the reduced cost of international communication along with information technology advances. Other factors that have been a catalyst in increasing the profits margin for FDI include changes in trade and investment policies, as well as increasing changes in the liberalizations of the foreign trade policy and tariffs. Furthermore, the lessening of restrictions in regards to foreign investment policies and the acquisition and procurement of property in foreign places has aided in the investment industries ability to increase foreign investments. Another factor that has led to the increase in the advent investment companies is the deregulation and privatization of companies within the industry.

Foreign Aid

foreign aid, the international transfer of capital, goods, or services from a country or international organization for the benefit of the recipient country or its population. Aid can be economic, military, or emergency humanitarian (e.g., aid given following natural disasters).

Types of Foreign Aid:

    Bilateral aid – when the capital flows from a developed nation to a developing nation
    Multilateral aid – when the capital flows to developing nations from a world agency such as the World Bank
    Tied aid – when funds are used to buy imports from the donor country or for a specific project
    Project aid – when the funds are used to finance a particular project



40% of the richer developing nations get twice as much aid as poorer 40%.