Five-year plans of Pakistan
Encyclopedia
Pakistan
has prepared a series of five year plans for the national economy
since the 1950s.
began in 1948. By 1950 a six-year plan had been drafted to guide government investment in developing infrastructure
. But the initial effort was unsystematic, partly because of inadequate staffing. More formal planning—incorporating overall targets, assessing resource availability, and assigning priorities—started in 1953 with the drafting of the First Five-Year Plan (1955-60). In practice, this plan was not implemented, however, mainly because political instability led to a neglect of economic policy, but in 1958 the government renewed its commitment to planning by establishing the Planning Commission.
The Second Five-Year Plan (1960-65) surpassed its major goals when all sectors showed substantial growth. The plan encouraged private entrepreneurs to participate in those activities in which a great deal of profit could be made, while the government acted in those sectors of the economy where private business was reluctant to operate. This mix of private enterprise and social responsibility was hailed as a model that other developing countries could follow. Pakistan's success, however, partially depended on generous infusions of foreign aid, particularly from the United States. After the 1965 Indo-Pakistani War
over Kashmir
, the level of foreign assistance declined. More resources than had been intended also were diverted to defence. As a result, the Third Five-Year Plan (1965-70), designed along the lines of its immediate predecessor, produced only modest growth.
When the government of Zulfikar Ali Bhutto came to power in 1971, planning was virtually bypassed. The Fourth Five-Year Plan (1970-75) was abandoned as East Pakistan
became independent Bangladesh
. Under Bhutto, only annual plans were prepared, and they were largely ignored.
The Zia government accorded more importance to planning. The Fifth Five-Year Plan (1978-83) was an attempt to stabilize the economy and improve the standard of living of the poorest segment of the population. Increased defense expenditures and a flood of refugees to Pakistan after the Soviet invasion of Afghanistan in December 1979, as well as the sharp increase in international oil prices in 1979-80, drew resources away from planned investments (see Pakistan Becomes a Frontline State , ch. 5). Nevertheless, some of the plan's goals were attained. Many of the controls on industry were liberalized or abolished, the balance of payments
deficit was kept under control, and Pakistan became self-sufficient in all basic foodstuffs with the exception of edible oils. Yet the plan failed to stimulate substantial private industrial investment and to raise significantly the expenditure on rural infrastructure development.
The Sixth Five-Year Plan (1983-88) represented a significant shift toward the private sector. It was designed to tackle some of the major problems of the economy: low investment and savings ratios; low agricultural productivity; heavy reliance on imported energy; and low spending on health and education. The economy grew at the targeted average of 6.5 percent during the plan period and would have exceeded the target if it had not been for severe droughts in 1986 and 1987.
The Seventh Five-Year Plan (1988-93) provided for total public-sector spending of Rs350 billion. Of this total, 36.5 percent was designated for energy, 18 percent for transportation and communications, 9 percent for water, 8 percent for physical infrastructure and housing, 7 percent for education, 5 percent for industry and minerals, 4 percent for health, and 11 percent for other sectors. The plan gave much greater emphasis than before to private investment in all sectors of the economy. Total planned private investment was Rs292 billion, and the private-to- public ratio of investment was expected to rise from 42:58 in FY 1988 to 48:52 in FY 1993. It was also intended that public-sector corporations finance most of their own investment programs through profits and borrowing.
In August 1991, the government established a working group on private investment for the Eighth Five-Year Plan (1993-98). This group, which included leading industrialists, presidents of chambers of commerce, and senior civil servants, submitted its report in late 1992. However, in early 1994, the eighth plan had not yet been announced, mainly because the successive changes of government in 1993 forced ministers to focus on short-term issues. Instead, economic policy for FY 1994 was being guided by an annual plan.
From June 2004, the Planning Commission gave a new name to the Five Year Plan - Medium Term Development Framework (MTDF). Thirty two Working Groups then produced the MTDF 2005-2010.
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...
has prepared a series of five year plans for the national economy
Economy
An economy consists of the economic system of a country or other area; the labor, capital and land resources; and the manufacturing, trade, distribution, and consumption of goods and services of that area...
since the 1950s.
History
Pakistan's economic development planningEconomic planning
Economic planning refers to any directing or planning of economic activity outside the mechanisisms of the market, in an attempt to achieve specific economic or social outcomes. Planning is an economic mechanism for resource allocation and decision-making in contrast with the market mechanism...
began in 1948. By 1950 a six-year plan had been drafted to guide government investment in developing infrastructure
Infrastructure
Infrastructure is basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function...
. But the initial effort was unsystematic, partly because of inadequate staffing. More formal planning—incorporating overall targets, assessing resource availability, and assigning priorities—started in 1953 with the drafting of the First Five-Year Plan (1955-60). In practice, this plan was not implemented, however, mainly because political instability led to a neglect of economic policy, but in 1958 the government renewed its commitment to planning by establishing the Planning Commission.
The Second Five-Year Plan (1960-65) surpassed its major goals when all sectors showed substantial growth. The plan encouraged private entrepreneurs to participate in those activities in which a great deal of profit could be made, while the government acted in those sectors of the economy where private business was reluctant to operate. This mix of private enterprise and social responsibility was hailed as a model that other developing countries could follow. Pakistan's success, however, partially depended on generous infusions of foreign aid, particularly from the United States. After the 1965 Indo-Pakistani War
Indo-Pakistani War of 1965
The Indo-Pakistani War of 1965 was a culmination of skirmishes that took place between April 1965 and September 1965 between Pakistan and India. This conflict became known as the Second Kashmir War fought by India and Pakistan over the disputed region of Kashmir, the first having been fought in 1947...
over Kashmir
Kashmir
Kashmir is the northwestern region of the Indian subcontinent. Until the mid-19th century, the term Kashmir geographically denoted only the valley between the Great Himalayas and the Pir Panjal mountain range...
, the level of foreign assistance declined. More resources than had been intended also were diverted to defence. As a result, the Third Five-Year Plan (1965-70), designed along the lines of its immediate predecessor, produced only modest growth.
When the government of Zulfikar Ali Bhutto came to power in 1971, planning was virtually bypassed. The Fourth Five-Year Plan (1970-75) was abandoned as East Pakistan
East Pakistan
East Pakistan was a provincial state of Pakistan established in 14 August 1947. The provincial state existed until its declaration of independence on 26 March 1971 as the independent nation of Bangladesh. Pakistan recognized the new nation on 16 December 1971. East Pakistan was created from Bengal...
became independent 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...
. Under Bhutto, only annual plans were prepared, and they were largely ignored.
The Zia government accorded more importance to planning. The Fifth Five-Year Plan (1978-83) was an attempt to stabilize the economy and improve the standard of living of the poorest segment of the population. Increased defense expenditures and a flood of refugees to Pakistan after the Soviet invasion of Afghanistan in December 1979, as well as the sharp increase in international oil prices in 1979-80, drew resources away from planned investments (see Pakistan Becomes a Frontline State , ch. 5). Nevertheless, some of the plan's goals were attained. Many of the controls on industry were liberalized or abolished, the balance of payments
Balance of payments
Balance of payments accounts are an accounting record of all monetary transactions between a country and the rest of the world.These transactions include payments for the country's exports and imports of goods, services, financial capital, and financial transfers...
deficit was kept under control, and Pakistan became self-sufficient in all basic foodstuffs with the exception of edible oils. Yet the plan failed to stimulate substantial private industrial investment and to raise significantly the expenditure on rural infrastructure development.
The Sixth Five-Year Plan (1983-88) represented a significant shift toward the private sector. It was designed to tackle some of the major problems of the economy: low investment and savings ratios; low agricultural productivity; heavy reliance on imported energy; and low spending on health and education. The economy grew at the targeted average of 6.5 percent during the plan period and would have exceeded the target if it had not been for severe droughts in 1986 and 1987.
The Seventh Five-Year Plan (1988-93) provided for total public-sector spending of Rs350 billion. Of this total, 36.5 percent was designated for energy, 18 percent for transportation and communications, 9 percent for water, 8 percent for physical infrastructure and housing, 7 percent for education, 5 percent for industry and minerals, 4 percent for health, and 11 percent for other sectors. The plan gave much greater emphasis than before to private investment in all sectors of the economy. Total planned private investment was Rs292 billion, and the private-to- public ratio of investment was expected to rise from 42:58 in FY 1988 to 48:52 in FY 1993. It was also intended that public-sector corporations finance most of their own investment programs through profits and borrowing.
In August 1991, the government established a working group on private investment for the Eighth Five-Year Plan (1993-98). This group, which included leading industrialists, presidents of chambers of commerce, and senior civil servants, submitted its report in late 1992. However, in early 1994, the eighth plan had not yet been announced, mainly because the successive changes of government in 1993 forced ministers to focus on short-term issues. Instead, economic policy for FY 1994 was being guided by an annual plan.
From June 2004, the Planning Commission gave a new name to the Five Year Plan - Medium Term Development Framework (MTDF). Thirty two Working Groups then produced the MTDF 2005-2010.
Source
- "Development Planning" (April 1994) A Country Study: Pakistan. Library of Congress.
External Links
- Five year plans Planning Commission of Pakistan.