Rough sketch of the project

Evolution of Industries Since the Inception of Pakistan and the Causes of Underdevelopment

Construct a timeline of events, how many industries Pak acquired since its
evolution.
What was the condition
How much time it took to grow from that situation
What industries came on top
It became an agriculture oriented country not industrial cus Pak lacked the
technology
Recently Corona has set us back as we are unable to export and shit
It formed ties, the war put us back
Political relations weren’t satisfactory
We faced challenges such as shortage of funds and human capital, had to deal
with inflation
Corruption and all
Constant changes in political environment
Crime rate perhaps, terrorism gives us a bad image
Marshal Law and era of nationalization took away uri industry
Recently Corona has set us back as we are unable to export and shit
Economy is poor asf

Links
https://www.elibrary.imf.org/view/IMF071/06528-9781557753021/06528-9781557753021/ch04.xml?
language=en&redirect=true

https://thediplomat.com/2020/02/is-pakistans-economy-recovering/

https://www.thenews.com.pk/latest/640805-industry-struggling-to-stay-afloat-during-coronavirus-
lockdown-in-pakistan
Introduction
Industries are of great importance when it comes to the development of a nation. All the
developed countries in the world such as USA, Japan, China, European countries have one thing
in common, they are all industrialized. They have a strong backbone to support their system.
Developed industries give potential for the nation to grow and expand positively.
Underdeveloped countries such as Pakistan, Bangladesh, Philippines and Vietnam had to rely
on the agricultural abilities to survive.
Through industrialization, many hurdles can be overcome such as unemployment, economic
stability etc. It also allows for other sectors to have a chance to grow as well.
When it comes to Pakistan, since its creation it has faced countless and endless difficulties.
Pakistan became independent with insufficient financial resources as well as military assets.
There were no electrical or water resources that stopped the industries from growing at first,
but little by little, the industrial sector of Pakistan came to be developed.

Growth of Industrial Sector of Pakistan

When Pakistan came into being on August 14th, 1947. It had insufficient resources, it lacked
human capital as well as the know-how regarding how to run industries. Thus, the people of
Pakistan had to learn from scratch. Pakistan was given only 35 industries out of 955 that went
under the custody of India. A newly born country such as Pakistan had to develop its industrial
sector from scratch, and it had to face the competition from all over the world. But Pakistan
used its natural resources to develop its manufacturing sector.

Evolution of Pakistan’s Industrial Sector (1947-1950)

As mentioned before, at the time of inception; Pakistan was only equipped with 36 out of 955
industries. All the remaining industries as well as the most important and crucial ones were
kept by India. Not only the number of industries were limited but they were also small in size
and all needed special techniques used to produce the goods and services. Most of the
industries relied on raw material such as cotton, wool, rice etc. Pakistan had the possession of
sugar, cotton, flour mills and one leather factory. It was only natural for people of Pakistan to
opt choosing to do agriculture as their main focus because industries at that time all had the
same concept, and it was fairly cheaper and easier to work on agriculture as opposed to
industrial. One reason for this preference for agriculture was also that the majority of people at
that time were uneducated and had no means of education before migration. The Quaid also
expected the new generation to have more knowledge that would carry the weight of
industrialization in the near future.
According to the research conducted by Sadaf Jameel, the government of Pakistan decided to
focus on industries whose raw material was easily available or could be crafted such as jute,
cotton, hide and skins etc. The government of Pakistan also established official corporations
that helped to finance business and industrial investment, the main purpose of this
organizations was lending credit. After this period, there was a positive incline in business
startups and the local population started to take keen interest in the business spectrum. There
was also a period during the 1950’s where investment rose to the point where the contribution
of industrial sector boosted up to 6.9% which was impressive because it indicated that the
policies and methods that were being used to improve this sector were working.

Evolution of Pakistan’s Industrial Sector (1950’s)

The government soon came to realise that they could not only rely on the agriculture spectrum
to pick up their GDP. Thus, in 1952; the government took measures to establish Pakistan’s first
Industrial Development Corporation (PIDC). The primary function of the PIDC was to extend
credit to those industries that required heavy initial investment. The industries that PIDC was
made to focus on were cement, fertilizer, jute and paper. The government also constructed
policies that would help to boost the process of development, and major focus was placed on
reducing tariffs. By June of 1971, PIDC was successful in constructing 59 industrial units and had
become self-sustained in the industrial sector. After this period, the number of new industries
started to rise gradually, and the manufacturing capacity of the old industrial units were
increased considerably. During the period of 1950’s, the government announced more
reduction in export duties and introduced export bonus scheme in 1958 to motivate local
entrepreneurs to take their business outside the border of Pakistan. More organizations such as
Pakistan Industrial Finance Corporation (PIFC) and Pakistan Industrial Credit and Invest
Corporation (PICIC) were also given more freedom after the years following 1950. Pakistan also
formed a pact with Sweden known as the Swedish-Pak Institute of Technology that helped the
labour of Pakistan to become more skilled.

Evolution of Pakistan’s Industrial Sector (1960’s)

Due to the industries established before the decade of 1960, it was a prosperous time for
Pakistan as there was a shift in the manufacturing of consumable goods to industrial goods such
as machines, heavy vehicles, chemical, electrical complexes. This was due to the Five-Year Plan
that was drafted previously and Pakistan showed signs of improvement as its GNP raised to
11.8%.

Evolution of Pakistan’s Industrial Sector (1970’s)

This was the decade where Pakistan failed to follow its pattern of improvement and in terms of
growth, export, GDP, production, 1970 was disappointing for the industrial sector. This was also
the year where East Pakistan was separated, and Pakistan had to go to war with India in 1970.
Pakistan faced devaluation of the rupee as well as the suspension of foreign aid, labour unrest,
climate, flood, and unfavorable political situation. All these factors combined set Pakistan
behind the industrial race. Resultantly, the annual growth rate was decreased to 2.8% during
this period. However, government still tried to balance the loss and took large number of
measures to pacify the mistakes that were created. One of these measures was the
nationalization of privately owned industries. This affected the business negatively, but it was
the step taken to improve the condition of the business and save it from going bankrupt.

Evolution of Pakistan’s Industrial Sector (1980-2010)

This was a time period of great loss for the country, the decline of annual growth rate of the
70’s was only the beginning of the problems that Pakistan was about to face. During this time,
the country had the worst political conditions. According to the survey conducted by
Transparency Official, the nation dealt with most corruption out of all the years preceding.
The government failed to give adequate attention to the industrial sector during this era and
the policies laid out by the early governments were failed to be implemented. However, during
the government of Nawaz Sharif, more attention was emphasized on industrial sector in
Pakistan and policies such as deletion, deregulation and privatization were pursued. In the later
half of year 2000, the costs of industrial products had become cheaper under the WTO
agreement. It turned out that the implementation of WTO in Pakistan was a smart step, as it
helped the state’s foreign trade to be improved considerably. After the WTO agreement, export
was being conducted by a rapid speed but not up to the same expectation as desired. More
goods were being imported than exported and it left Pakistan with the problem of trade deficit
that is not resolved up to this day.
The policies that were implemented by the government had the following effects on the
economy of Pakistan.
The Policy of Deletion was drafted as early as 1987 but it was only in the 2000’s that it was
pursued. The primary function of this policy was self reliance in the engineering and industrial
sector.
If we take a look at the car manufacturing companies, they relied mainly on spare parts that
were to be imported from abroad, and these parts that were essential to be used in the cars
were not available to a large extent locally. The government put their whole focus on giving the
local business a chance at succeeding and imports were taxed on heavily to maintain the
balance of payment. The Deletion program was difficult to implement. Strategies were
generated to make-up for the loss inability to import.
The second policy that was implemented was the Deregulation Policy. Pakistan adopted this
policy to remove excessive restrictions in the industrial sector and to allow space for further
business growth.
The third strategy used was the Privatization Policy. The main purpose of this was to reduce
financial burden that was carried by the government. The state was unable to keep up with
failing businesses as they lacked potential and resources. Due to this policy, a healthy
competition was formed between business as there was no monopoly or duopoly and it also
allowed the business to be more innovative and active.

Evolution of Pakistan’s Industrial Sector (2010-2020)

The period after 2010 upto 5 year was tough for Pakistan as the political conditions became
unstable and the economy faced a downfall in respect of living conditions, however the
industrial sector showed signs of improvement as more people demonstrated interest in
entrepreneurship. Pakistan has been improving with a growing momentum in all sectors of
economy as well as Industrial sector. The growth recorded for year 2015 came to be 4.24%.
Though the growth is not desirable, the results are positive. Manufacturing sector as well as
Industrial sector contributes more than half of the development of Pakistan. The account deficit
dropped by 80% in the September of 2019 and FDI is growing rapidly as well, all of these factors
have a positive affect on the industrial sector of Pakistan.
The following graph shows the industrial sector share in real GDP growth rate. It focuses on
how the industry has come to grow throughout the years after the independence of Pakistan.
As it can be seen, Pakistan’s industrial sector was thriving in 2000’s in comparison to the other
decades but it was also the year where certain policies were implemented and the WTO
agreement was signed.

Due to the recent issue of COVID-19, the industrial business of Pakistan is affected negatively.
According to the research conducted by TheNews, “The industrial sector is struggling to stay
afloat amid the lockdown, with growing number of industrialists are burdened with high tax
and interest rates.”
The lockdown has resulted negatively in every economy, but it is hitting Pakistan hard because
the local industrial business are struggling to keep their business from going out. The
government at the moment is trying to release relief funds to compensate the loss being done,
and funds like EOBI and WWF are issued for industrial workers to protect them from starvation.
The government has promised to keep everything in control and going once this period of
pandemic is passed. Thus, industries are expected to start their work soon.

This graph illustrates the growth of Industrial sector in recent years, this particular sector has
shown sign of improvement and it grew with a percentage of 5.80% in 2015-2016.