Characteristics of the Economy of Pakistan
Q.1. Discuss the main characteristics of the Economy of Pakistan?
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. Burden 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 development. 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.
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
(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.
Overview: Country Full Name: Islamic Republic of Pakistan.
Country Location: Pakistan is in Southern Asia, bordering the Arabian Sea, between India on the east and Iran and Afghanistan on the west and China in the north.
Country Climate: Mostly hot, dry desert; temperate in northwest; arctic in north.
Country Terrain: Flat Indus plain in east; mountains in north and northwest; Balochistan plateau in west.
Country Major Languages: English, Urdu, Punjabi, Sindhi, Pashto, Balochi.
Country Major Religions: Islam.
Location Population: 13.2 Mil (2012 est.).
Country Economy: The economy of Pakistan is a semi-industrialized economy, which mainly encompasses textiles, chemicals, food processing, agriculture and other industries. The structure of the Pakistani economy has changed from a mainly agricultural base to a strong service base. Agriculture now only accounts for roughly 20% of the GDP, while the service sector accounts for 53% of the GDP.
Country Currency: Pakistan Rupee (PKR).
Country Inflation: 7.7% (2012 est.).
Karachi is the largest city, main seaport and the financial capital of Pakistan.
Karachi is Pakistan’s premier center of banking, industry, and trade. Karachi is also home to Pakistan’s largest corporations, including those that are involved in textiles, shipping, automotive industry, entertainment, the arts, fashion, advertising, publishing, software development and medical research.
Cost Of Living The cost of living in Karachi is very low compared to other places. This is based on a comparison of locally collected prices for defined quantities of the same goods and services, converted to USD. Sources include local service providers in each location, international service providers, official governmental statistics and global agency data. The data is quality assured and manually checked by Xpatulator Analysts. The prices of similar related items have been grouped together into 13 basket groups and the cost of living index calculated for each basket in each location. The 13 basket groups are the result of extensive research of actual spending habits ensuring the cost of living indexes reflect a reality-based international expenditure pattern. The cost of living index for each basket for Karachi is only available using our online calculators.
The current overall cost of living rank (using all 13 baskets) for Karachi is 742 out of 780 international locations covering every country in the world (rank 1 is most expensive: rank 780 is least expensive). The current cost of living rank for each basket is as follows:
Alcohol & Tobacco costs are very low compared to other places for items such as beer, spirits, wine and cigarettes. There are 767 places that are more expensive, and 12 places that are less expensive for alcohol and or tobacco. Note: Alcohol is not legally available and therefore not included.
Clothing costs are low compared to other places for items such as business, casual and children’s clothing and footwear. There are 583 places that are more expensive, and 196 places that are less expensive for clothing.
Communication costs are low compared to other places for various communication costs such as home telephone rental, internet subscription, mobile tariff and data costs. There are 526 places that are more expensive, and 253 places that are less expensive for communication.
Education costs are very low compared to other places for items such as creche / pre-school fees, primary school fees, high school fees and tertiary study fees. There are 703 places that are more expensive, and 76 places that are less expensive for education.
Furniture & Appliance costs are average compared to other places for items such as dining table and chairs, home entertainment, kitchen appliances, and sofa. There are 329 places that are more expensive, and 450 places that are less expensive for furniture and appliances.
Grocery costs are very low compared to other places for items such as consumables, cleaning products, dairy, fresh fruit & vegetables, general food products, snacks, soft drinks. There are 753 places that are more expensive, and 26 places that are less expensive for groceries.
Healthcare costs are very low compared to other places for doctor visit, hospital stay, non-prescription medicine, and medical insurance. There are 731 places that are more expensive, and 48 places that are less expensive for healthcare.
Household Accommodation costs are average compared to other places for items such as apartment purchase, mortgage rate, rental, and utilities. There are 341 places that are more expensive, and 438 places that are less expensive for household accommodation.
Miscellaneous costs are low compared to other places for items such as dry cleaning, linen, magazines, newspapers, office supplies, and postage stamps. There are 491 places that are more expensive, and 288 places that are less expensive for miscellaneous items.
Personal Care costs are very low compared to other places for items such as cosmetics, hair care, and toiletries. There are 755 places that are more expensive, and 24 places that are less expensive for personal care.
Recreation and Culture costs are very low compared to other places for items such as books, cinema, sport and theatre tickets. There are 756 places that are more expensive, and 23 places that are less expensive for recreation and culture.
Restaurants, Meals Out and Hotel costs are very low compared to other places for items such as hotel daily room rates, meals and beverages in restaurants, and take away food and beverages. There are 765 places that are more expensive, and 14 places that are less expensive for restaurants, meals out and hotels.
Transport costs are very low compared to other places for items such as fuel (petrol/gasoline), public transport, vehicle purchase and maintenance. There are 725 places that are more expensive, and 54 places that are less expensive for transport.
Hardship in the context of an expatriate and their family refers to the degree of hardship they are likely to experience and the relative impact on their lifestyle in a host location. The degree of hardship correlates to the degree of difference between the home and host location. Hardship pay is compensation for the hardship likely to be endured during an international assignment in order to encourage people to move, in particular to less desirable locations.
Hardship factors include-:
Economic Factors: Such as poverty levels and level of service provision
Political Factors: Such as freedom/tolerance towards different points of view / lifestyle
Religious Factors: Such as freedom/tolerance towards different religions
Public Service Factors: Such as provision of water, electricity, sanitation, work permits etc
Environment/Climate Factors: Such as extreme weather
Personal Safety Factors: Such as personal safety / level of crime
Health Factors: Such as prevalence of disease and health standards
Education Factors: Such as education standards, prevalence of international schools
Transportation Factors: Such as prevalence of public transport, fuel and road safety.
The ratings for hardship are classified into four main groups and can be described as follows:
1) Minimal Hardship (10% Hardship Premium)
2) Some Hardship (20% Hardship Premium)
3) High degree of Hardship (30% Hardship Premium)
4) Extreme Hardship (40% Hardship Premium).
Karachi is ranked as extreme hardship with a typical hardship premium of 40%.
The above information is updated quarterly using data collected over the previous 12 months. The international cost of living & hardship indexes are only available using our online expatriate calculators to enable users to create personalized cost of living comparison reports:
Published by Xpatulator.com on 1 April 2013.