Financing Economic Development in Pakistan
For a proper understanding of the issues involved, the strategy of financing economic development in Pakistan needs to be analysed in the context of its peculiar socio-economic environment. In this paper we first recount the nature of the traditional economy of Pakistan at the time of independence. Secondly, we spell out the development strategy adopted and its possible rationale. Thirdly, we point out the benefits and adverse effects of the present strategy. Fourthly, we suggest that the present strategy has become anachronistic owing to developments in the Pakistan economy. Finally, we specify an alternative policy-mix that should replace the present strategy to create a milieu conducive to the growth of financial intermediaries, mobilisation of domestic saving, inflow of foreign capital and increase in the real return on investment.
KeywordsFinancial Asset Foreign Bank Income Transfer Domestic Saving Traditional Export
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- 2.P. Hasan, Deficit Financing and Capital Formation: The Experience of Pakistan, 1951–59 (Pakistan Institute of Development Economics, Karachi, 1962) p. 36Google Scholar
- 2.An account of the disruption of the banking system in Pakistan at the eve of independence is given in R. C. Porter, Liquidity and Lending: Volume of Bank Credit in Pakistan, Monographs in the Economics of Development, No. 10 (Pakistan Institute of Development Economics, Karachi, 1963) pp. 2–3.Google Scholar
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- 1.Some evidence of severe underutilisation of capacity in Pakistani industries is provided in N. Islam and I. O. Malik, ‘Comparative Costs of the Manufacturing Industries in Pakistan: A Statistical Study’, Research Report No. 58 (Pakistan Institute of Development Economics, Karachi, June 1967) mimeographed.Google Scholar