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Introduction

Pakistan is bordered by Afghanistan to the north-west and Iran to the west while the People's Republic of China borders the country in the north and India to the east. The nation is geopolitically placed within some of the most controversial regional boundaries which share disputes and have many-a-times escalated military tensions between the nations, e.g., that of Kashmir with India and the Durand Line with Afghanistan. Its western borders include the Khyber Pass and Bolan Pass that have served as traditional migration routes between Central Eurasia and South Asia.

Historical background

The history of Pakistan encompasses the history of the region constituting modern Pakistan. Prior to independence in 1947, the territory of modern Pakistan was a part of the British Indian Empire. Prior to that it was ruled in different periods by local kings and numerous imperial powers. The ancient history of the region comprising present-day Pakistan also includes some of the oldest empires of Indian Subcontinent and some of its major civilizations By the 18th century the land was incorporated into British India. Pakistan's political history began with the birth of the All India Muslim League in 1906 to protect "Muslim interests, amid neglect and under-representation" and to oppose Congress and growing Indian nationalism in return the British Raj would decide to grant local self-rule. On 29 December 1930, philosopher Sir Muhammad Iqbal called for an autonomous new state in "northwestern India for Indian Muslims".The League rose to popularity in the late 1930s. Muhammad Ali Jinnah espoused the Two Nation Theory and led the League to adopt the Lahore Resolution of 1940, demanding the formation of independent states in the East and the West of British India. Eventually, a successful movement led by Jinnah resulted in the partition of India and independence from Britain, on 14 August 1947.

Ethnic Composition

Religion in Pakistan:

An estimated 95-97% of Pakistanis are Muslim, with the remaining few percentage points made up of small groups of Hindus, Christians, Sikhs, Parsi (Zoroastrians), Buddhists and followers of other faiths.

About 75% of the population are Sunni Muslims, while 20% are Shi'a.

Most Pakistani Sunnis belong to the Hanafi branch, or to the Ahle Hadith. Shi'a sects represented include the Ithna Asharia, the Bohra, and the Ismailis.

Status at International Level

Pakistan is facing serious challenges on the economic management side, with a double-digit inflation, very low savings rate of 13.2 percent of the Gross Domestic Products (GDP), general government debt at 63.1 percent of GDP and the 8 percent budget deficit gives little room for government to create socio-economic dividends for its citizens.

This year report consists of three main indexes and 12 pillars. Pakistan ranked in efficiency enhancers at 104 and in innovation and sophistication factors ranked at 78. All the 12 pillars into the report ranks Pakistan as- institutions are ranked at 123, infrastructure at 121, macroeconomic environment at 145, health and primary education at 128, higher education and training at 129, goods market efficiency at 103, labour market efficiency at 138, financial market development at 67, technological readiness at 118, market size at 30, business sophistication at 85 and innovation at 77.

Political structure

Pakistan is a democratic parliamentary federal republic with Islam as the state religion. The first Constitution of Pakistan was adopted in 1956 but suspended by Ayub Khan in 1958. The Constitution of 1973—suspended by Zia-ul-Haq in 1977 but reinstated in 1985—is the country's most important document, laying the foundations of the current government. The Pakistani military establishment has played an influential role in mainstream politics throughout Pakistan's political history. Presidents brought in by military coups ruled in 1958–1971, 1977–1988 and 1999–2008.

Cont….

Head of State: The president who is elected by an electoral college is the ceremonial head of the state and is the civilian commander-in-chief of the Pakistan Armed Forces.

Legislative: The bicameral legislature comprises a 100-member Senate and a 342-member National Assembly. Members of the National Assembly are elected through the first-past-the-post system under universal adult suffrage, representing electoral districts known as National Assembly constituencies.

Judiciary: The judiciary of Pakistan is a hierarchical system with two classes of courts: the superior (or higher) judiciary and the subordinate (or lower) judiciary. The superior judiciary is composed of the Supreme Court of Pakistan, the Federal Shariat Court and five High Courts, with the Supreme Court at the apex.

OVERVIEW OF ECONOMY

Structure of economy

The economy of the Islamic Republic of Pakistan is suffering with high inflation rates well above 26%. Over 1,081 patent applications were filed by non-resident Pakistanis in 2004 revealing a new-found confidence. Agriculture accounted for about 53% of GDP in 1947.

Agriculture contributes 21% to the total GDP of Pakistan and 62% of total population resides in agriculture sector. It provides employment to 25% of total population of our country

Agriculture sector

Pakistan is one of the world's largest producers and suppliers of the following according to the different sources i.e. Food and Agriculture Organization of The United Nations and FAOSTAT given here with ranking:

Chickpea (3rd)

Apricot (6th)

Cotton (4th)

Milk (5th)

Date Palm (5th)

Sugarcane (5th)

Onion (7th)

Kinnow, mandarin oranges, clementine (6th)

Mango (4th)

Wheat (7th)

Rice (4th)

Services Sector

Services sector contribution to Gross Domestic Product (GDP) at current price increased by one per cent to 54.4 per cent in 2011-12, while in terms of value it contributed an additional Rs1.44 trillion to the economy, bringing the total contribution to Rs10.571 trillion, according to the State Bank of Pakistan data.

The contribution of services sector was dominated by wholesale and retail, followed by transport, storage and communication, with a contribution of Rs3.574 trillion and Rs2.476 trillion respectively.

Agriculture and industry contributed only Rs8.864 trillion to the economy.

Last year, the services sector’s contribution was 53.4 per cent of GDP and in terms of value, services sector contributed an additional Rs1.440 trillion to the GDP

Manufacturing and finance

Pakistan's manufacturing sector has experienced double-digit growth in recent years, from 2000 to 2007, with Large-scale manufacturing growing from a minimal 1.5% in 1999 to a RECORD 19.9% in 2004-05 and averaged 8.8% by end of 2007. The Federal Bureau of Statistics valued FINANCE & INSURANCE sector at Rs.311,741 million in 2005 thus registering over 166% growth since 2000. A reduction in the fiscal deficit has resulted in less government borrowing in the domestic money market, lower interest rates, and an expansion in private sector lending to businesses and consumers.

Investment

Foreign direct investment (FDI) in Pakistan soared by 180.6 per cent year-on-year to US$2.22 billion and portfolio investment by 276 per cent to $407.4 million during the first nine months of fiscal year 2006, the State Bank of Pakistan (SBP) reported on April 24. During July-March 2005-06, FDI year-on-year increased to $2.224 billion from only $792.6 million and portfolio investment to $407.4 million, whereas it was $108.1 million in the corresponding period last year, according to the latest statistics released by the State Bank. Pakistan has achieved FDI of almost $7 billion in the financial year 06/07, surpassing the government target of $4 billion.

Comparative Statement of GDP & GCFC Estimates for the period 2005-06 (Rs. Billion)

Base 2005-06 Base 1999-2000 %Change

GDP 7716 7159 7.8

Agriculture 1775 1457 21.8

Industry 1616 1927 -16.0

Services 4324 3778 14.5

GCFC 1457 841 73.2

Agriculture 255 70 264.3

Industry 392 245 60.1

Services 612 403 52.0

General Government 198 123 60.

Exports

Pakistan's exports stood at $17.011 billion in the financial year 2006-2007, up by 3.4 percent from last year's exports of $16.451 billion.

Pakistan exports rice, furniture, cotton fiber, cement, tiles, marble, textiles, clothing, leather goods, sports goods (renowned for footballs/soccer balls), surgical instruments, electrical appliances, software, carpets, and rugs, ice cream, livestock meat, chicken, powdered milk, wheat, seafood (especially shrimp/prawns), vegetables, processed food items, Pakistani assembled Suzuki's (to Afghanistan and other countries), defense equipment (submarines, tanks, radars), salt, marble, onyx, engineering goods, and many other items. Pakistan now is being very well recognized for producing and exporting cements in Asia and Mid-East.

Major imports of Pakistan

Major imports of Pakistan are:

1. Machinery.

2. Petroleum.

3. Chemicals.

4. Vehicles and spare parts.

5. Edible Oil.

6. Wheat.

7. Tea.

8. Fertilizers.

9. Plastic material.

10. Paper Board

11. Iron ore and steel.

12. Pharmaceutical products.

Pakistan’s imports are highly concentrated in few countries. Over 40 percent of them continue to originate from just seven countries namely, the USA, Japan, Kuwait, Saudi Arabia, Germany, UK and Malaysia. Saudi Arabia is emerging as major supplier to Pakistan followed by the USA and Japan. The shares of USA and Japan, with some fluctuations, exhibited a declining trend because of the shift in the import of machinery/capital goods and raw materials to other sources. On the other hand, the share of Pakistan’s imports from Saudi Arabia has been rising due to higher imports of POL products. Malaysia share has shown rising, as well as, falling trends over the years mainly on account of fluctuations in palm oil prices.

Graph of Pakistan Imports

CONTRIBUTION TO ECONOMY

• Contributes 26% to GDP• Employs 44% of labour force• 70% of exports are Agricultural & Agri-processed products

Pakistan Unemployment Rate

Unemployment Rate in Pakistan decreased to 6 percent in the second quarter of 2013 from 6.30 percent in the first quarter of 2013. Unemployment Rate in Pakistan averaged 5.43 Percent from 1985 until 2013, reaching an all time high of 7.80 Percent in the second quarter of 2002 and a record low of 3.10 Percent in the fourth quarter of 1987. Unemployment Rate in Pakistan is reported by the Pakistan Bureau of Statistics.

Unemployment Rate

Pakistan Core Inflation Rate

Core Inflation Rate in Pakistan increased 6.90 percent in November of 2014 over the same month in the previous year. Core Inflation Rate in Pakistan averaged 9.11 percent from 2010 until 2014, reaching an all time high of 11.40 percent in June of 2012 and a record low of 6.50 percent in February of 2010. Core Inflation Rate in Pakistan is reported by the State Bank of Pakistan.

Core Inflation

Employment

The high population growth in the past few decades has ensured that a very large number of young people are now entering the labor market. Even though it is among the seven most populous Asian nations, Pakistan has a lower population density than Bangladesh, Japan, India, and the Philippines. In the past, excessive red tape made firing from jobs, and consequently hiring, difficult. Significant progress in taxation and business reforms has ensured that many firms now are not compelled to operate in the underground economy.

In late 2006, the government launched an ambitious nationwide service employment scheme aimed at disbursing almost $2 billion over five years.

Tourism

In Pakistan's economy, tourism has the potential to play a vital role, due to the majestic landscape of Pakistan and the variation of cultures within the nation. However, due to a lack of proper infrastructure in certain areas, and a worsening security situation in others, Pakistan still faces major set backs. Otherwise, according to some international companies, Pakistan's tourism industry has the potential to reach some $10 billion annually.

PAKISTAN AND ROSTOW’S THEORY OF GROWTH

Pakistan lies at the 2nd stage of ‘Preconditions for takeoff’ taking Rostow’s growth theory into account. Although most of the economy’s labor is much engaged in agriculture but at the same time plantation, mining, manufacturing and industrialization also took place during 80s rapidly.

Lewis model

Lewis model is not applicable

Contribution of sectors in GDP

agriculture:25.3% industry:21.6% services: 53.1% (2013 est.)

So the model suggest that industrial sector is already good and there is no surplus of the labour in the economy

Economical growth chart of Pakistan.(GDP)

Year Gross Domestic Product US Dollar ExchangeInflation Index

(2000=100)Per Capita Income

(as % of USA)

1960 20,058 4.76 Pakistani Rupees 3.37




1978 283,460 9.97 Pakistani Rupees 21 2.83

1985 569,114 16.28 Pakistani Rupees 30 2.07

1990 1,029,093 21.41 Pakistani Rupees 41 1.92




2014 100.55 Pakistani Rupees 195