Economic history of Pakistan
Encyclopedia
The economic history of Pakistan
begins with the country's independence in 1947. The economy of Pakistan
is a semi-industrial
ised one, based heavily on textiles, agriculture
and food production, though recent years have seen a surge towards technological diversification. The land forming modern-day Pakistan was home to the ancient Indus Valley Civilisation from 2800 BC to 1800 BC; historical evidence suggests that the civilisation relied on and carried trade through the Indus River
, and its inhabitants were some of the most resourceful traders.
rate since independence has been higher than the average growth rate of the world economy during the same period. Average annual real GDP growth rates were 6.8% in the 1960s, 4.8% in the 1970s, and 6.5% in the 1980s. Average annual growth fell to 4.6% in the 1990s with significantly lower growth in the second half of that decade. See also
During the 1960s, Pakistan was seen as a model of economic development around the world, and there was much praise for its economic progression. The capital Karachi
was seen as an economic role model around the world, and there was much praise for the way its economy was progressing. Many countries sought to emulate Pakistan's economic planning strategy and one of them, South Korea
, copied the city's second "Five-Year Plan"; the World Financial Center
in Seoul
is modeled after Karachi.
Later, economic mismanagement in general, and fiscally imprudent economic policies in particular, caused a large increase in the country's public debt and led to slower growth in the 1990s. Two wars with India
- the Second Kashmir War in 1965 and the Bangladesh Liberation War
in 1971 - and the resultant separation of Bangladesh
from Pakistan also adversely affected economic growth. In particular, the latter war brought the economy close to recession
, although economic output rebounded sharply until the nationalization
s of the mid-1970s. The economy recovered during the 1980s via a policy of deregulation
, as well as an increased inflow of foreign aid and remittances from expatriate workers.
Pakistan
Pakistan , officially the Islamic Republic of Pakistan is a sovereign state in South Asia. It has a coastline along the Arabian Sea and the Gulf of Oman in the south and is bordered by Afghanistan and Iran in the west, India in the east and China in the far northeast. In the north, Tajikistan...
begins with the country's independence in 1947. The economy of Pakistan
Economy of Pakistan
The economy of Pakistan is the 47th largest in the world in nominal terms and 27th largest in the world in terms of purchasing power parity . Pakistan has a semi-industrialized economy, which mainly encompasses textiles, chemicals, food processing, agriculture and other industries...
is a semi-industrial
Industry
Industry refers to the production of an economic good or service within an economy.-Industrial sectors:There are four key industrial economic sectors: the primary sector, largely raw material extraction industries such as mining and farming; the secondary sector, involving refining, construction,...
ised one, based heavily on textiles, agriculture
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
and food production, though recent years have seen a surge towards technological diversification. The land forming modern-day Pakistan was home to the ancient Indus Valley Civilisation from 2800 BC to 1800 BC; historical evidence suggests that the civilisation relied on and carried trade through the Indus River
Indus River
The Indus River is a major river which flows through Pakistan. It also has courses through China and India.Originating in the Tibetan plateau of western China in the vicinity of Lake Mansarovar in Tibet Autonomous Region, the river runs a course through the Ladakh district of Jammu and Kashmir and...
, and its inhabitants were some of the most resourceful traders.
First five decades
Pakistan's average economic growthEconomic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
rate since independence has been higher than the average growth rate of the world economy during the same period. Average annual real GDP growth rates were 6.8% in the 1960s, 4.8% in the 1970s, and 6.5% in the 1980s. Average annual growth fell to 4.6% in the 1990s with significantly lower growth in the second half of that decade. See also
During the 1960s, Pakistan was seen as a model of economic development around the world, and there was much praise for its economic progression. The capital Karachi
Karachi
Karachi is the largest city, main seaport and the main financial centre of Pakistan, as well as the capital of the province of Sindh. The city has an estimated population of 13 to 15 million, while the total metropolitan area has a population of over 18 million...
was seen as an economic role model around the world, and there was much praise for the way its economy was progressing. Many countries sought to emulate Pakistan's economic planning strategy and one of them, South Korea
South Korea
The Republic of Korea , , is a sovereign state in East Asia, located on the southern portion of the Korean Peninsula. It is neighbored by the People's Republic of China to the west, Japan to the east, North Korea to the north, and the East China Sea and Republic of China to the south...
, copied the city's second "Five-Year Plan"; the World Financial Center
World Financial Center
The World Financial Center is a complex of buildings across West Street from the World Trade Center site in Lower Manhattan in New York City, overlooking the Hudson River. This complex is home to offices of companies including Merrill Lynch, RBC Capital Markets, Nomura Group, the Wall Street...
in Seoul
Seoul
Seoul , officially the Seoul Special City, is the capital and largest metropolis of South Korea. A megacity with a population of over 10 million, it is the largest city proper in the OECD developed world...
is modeled after Karachi.
Later, economic mismanagement in general, and fiscally imprudent economic policies in particular, caused a large increase in the country's public debt and led to slower growth in the 1990s. Two wars with India
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
- the Second Kashmir War in 1965 and the Bangladesh Liberation War
Bangladesh Liberation War
The Bangladesh Liberation War was an armed conflict pitting East Pakistan and India against West Pakistan. The war resulted in the secession of East Pakistan, which became the independent nation of Bangladesh....
in 1971 - and the resultant separation of Bangladesh
Bangladesh
Bangladesh , officially the People's Republic of Bangladesh is a sovereign state located in South Asia. It is bordered by India on all sides except for a small border with Burma to the far southeast and by the Bay of Bengal to the south...
from Pakistan also adversely affected economic growth. In particular, the latter war brought the economy close to recession
Recession
In economics, a recession is a business cycle contraction, a general slowdown in economic activity. During recessions, many macroeconomic indicators vary in a similar way...
, although economic output rebounded sharply until the nationalization
Nationalization
Nationalisation, also spelled nationalization, is the process of taking an industry or assets into government ownership by a national government or state. Nationalization usually refers to private assets, but may also mean assets owned by lower levels of government, such as municipalities, being...
s of the mid-1970s. The economy recovered during the 1980s via a policy of deregulation
Deregulation
Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or...
, as well as an increased inflow of foreign aid and remittances from expatriate workers.