Zia History and Role in Pakistan Development

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Presented by: Rao Aziz
Std Id# 2008-1-02-9290
Presented to: Sir M. Ashraf Janjua
IoBM| Seminar in Economic Policy Zia Era 1977-88|

Table of Contents
The reversal of state role under Islamic Capitalization3
Factors helping Zia to prolong his Regime3
Macroeconomic Performance under Zia Era4
Investment and savings4
Agriculture sector Policies5
Industrial Sector5
Price trends6
Soviet Union Invasion Helps Pakistan6
Riba Elimination7
REREGULATION AND LIBERALIZATION7
Devaluation to support Export8
Foreign Remittances8
Balance of Payment9
CRITICISIMS12
Appendix13

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Zia ul Haque period 1977-88
The reversal of state role under Islamic Capitalization
The focus of economic policy under Zia regime (1977-88) was an attempt at market- friendly deregulation and liberalization of economy besides, besides promoting healthy relation ship between public and private sector. The main aim of Zia policy is to encourage private sector investment through trade and industrial policies. Economic policies provided additional export incentives, focused on the need of flexible exchange rate management and improve the climate for private sector both in agriculture and industry by removing political uncertainty and reducing the role of state in price fixing. Factors helping Zia to prolong his Regime

There are number of internal and external factors that prolong and benefited Zia regime a. His efforts to Islamize the society
b. Soviet union invasion to Afghanistan
c. Completion of predecessor project like Terbela, fertilizers and cement plant. d. Record increase in worker remittances
e. Privatization
Cotton ginning , rice husking and flour mills were denationalized in 1977.the government issued “Transfer of Managed Establishment order” allowing denationalization of units specially in manufacturing area and make it part of policy in fifth five year plan (1978-83). Although the process of deregulation of markets and production continued over the years so massive that it takes a lot of time to restore but the banking, insurance remained under state control. The establishment order give confidence and faith back to investors and they were also given tax relief and nationalized industry was handed over back to previous owners with proprietary rights and also other regulation like increase in investment and size of industrial unit were removed and this has given a sharp rise in private sector investment which grew by 90% in 1980s as compared to 25% in 1976-77. Yarn production and export were profitable to private sector but despite supported by large subsidies the benefits to the country was limited because of technology. The regulation made it possible for the industry to have raw cotton for yarn industry below the international levels. Zia government want to sell the share of government hold enterprises but wanted to keep the owner rights with them and theses units were highly over valued and were also the sick units which were making losses and adding in the deficits and they were also over staffed. Another hindrance was the high protection rates enjoyed by the nationalized industry which was 66%in 1980-81. Macroeconomic Performance under Zia Era

The Zia era was characterized by comparative macroeconomic stability and revival in private investment which encourage the industry and agriculture to rise. The agriculture sector which suffered badly in Bhutto’s era started to improvement and rose from 2.1% to 4% in Zia regime. And this recovery was an important factor...
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