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Background
Pakistan inherited the least industrialized parts of the subcontinent. Despite inherited industrial backwardness, Pakistan progress in industrialization was impressive during the early years. With 6% average industrial growth rate during infancy, Pakistan stunned the world and emerged as a model developing country. Many compared Pakistan with US.
Background
Main Features:
o
1947-1958 Period.
Frequent Govt. Changes Influx of Indian Muhajireen (about 7 million 20% of then population) No industrial Base. No skilled industrial labor Avg growth rate 3% Classical economic policies, Import Substitution.
1958-1968 Period:
Established industrial base. Political stability. Authoritarianism. Paradox- Decade of Development followed by loss of East Pakistan (Now Bangladesh). Growing Income and regional disparities, Economic injustice.
Syed Karim Bux Shah
Negative/ falling growth in agri-sector hampered the further growth of industrial growth. 65% of the labor force and 75% of the total population lived on agri-sector. (recession in agri-sector contracted the aggregate demand for the industrial production). Dr. Stehen R. Lewis identifies the main objective of the economic policy of that era as to transfer income from the agri-sector to industrial sector. Table 6.2: Domestic terms for trade (next page)
Syed Karim Bux Shah
Demonstrating the independence to the world. Protecting Pakistans exportable raw materials. Sell raw jute to India at higher Indian Rupee price (since Pakistan had no jute mill). Use the proceeds to buy Indian imports at lower costs.