Urbanization and Its Effects

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Chapter No. 1
Urbanization brings about a social change. This is most prominent in the expansion of entrepreneurship and industrialization. It is known that the progress of the landless laborer and the absorption of wealth into a few hands promote urbanization. A lot of people say that urbanization is the predictable outcome of economic growth, with the increase of expert craftsmen, merchants, and proprietors. Urban growth or urbanization brings an attraction for the people residing in rural areas. They get attracted by the luxuries, comforts and opportunities which people of cities are enjoying. Both the natural increase (population growth) and net migration are the major contributory factors to urban growth. As in other parts of the world, although the urban growth in Pakistan is dominated by the natural increase, about one-fifth of this growth is certified to internal migration. Internal migration or urbanization has played a major role in the expansion of the population density in the major cities of Pakistan. Internal migration has also been very important in the fast growth of these cities. Urbanization is more rapid than a population growth. People are moving from rural areas to urban areas for a better living standard, to seek better quality education, mesmerizing work places. Besides all the positive aspects of urbanization, it also has a negative impact on the economy which includes the loss of agriculture land, urban food supply like vegetables, wheat, rice, maize etc., the devastating of habitats and urban diseconomies. Economy of Pakistan thus has both negative as well as positive effects of urbanization. Further moving on with the details of effects of urbanization on Pakistani economy, we need to know the conditions of the economy of Pakistan at present. The economy of Pakistan and the effects of urbanization on Pakistani economy are discussed in below: Economy of Pakistan:

The economy of Pakistan is placed to be the 27th largest in dollar terms. Pakistan is surrounded by chemical industries, textiles, agriculture, food processing and other industries, which makes it the semi-industrialized economy. The economy of Pakistan has suffered a lot in the past from high inflation rates, increasing poverty levels, low quality of education, terrorism and a fast growing population. The economy of Pakistan has been going through hard times since last 5 to 6 years. The gross domestic product (GDP) of Pakistan is US$167 billions, which makes it 48th largest economy in the world Today Pakistan is said to be having the 2nd largest economy in the South Asia. In Pakistan GDP growth and a prominent rise in the industrial and service sector remained in the range of 6% to 8% in 2004 to 2006, due to the transformation by the Musharraf government in the year 2000. In year 2005 World Bank named Pakistan to be the top reformer in its region and in the top 10 reformers throughout the world/globally. Pakistan’s GDP gross domestic product is estimated to be $475.4 billion if measured by purchasing power parity (PPP). The per capita Income in Pakistan is estimated to be 23% to 28%. GDP growth rate was stable during the mid of 2000 at a rate of 7% however it slowed down due to the economic crisis of 2008 to 4.7%. Pakistan has a high inflation rate of 24.4% and a low savings rate which makes it difficult to sustain a high growth rate. In year 2005 inflation rate jumped to more than 9% and reduced to 7.9% in year 2006. Following the route, in year 2008 petrol prices hit the highest price in Pakistan as high as 25.0%. The State Bank of Pakistan is adopting the policy to tighten its monetary policy to preserve the growth of Pakistan. In year 2007 and 2008, the prominent rise in the international oil and food prices on combining with the internal political confusion leads to macroeconomics imbalances in Pakistan. In year 2008, Pakistan faced a balance of payment deficit. The government agreed to an International...
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