Economic System of Pakistan

Topics: Economy, United States public debt, Monetary policy Pages: 7 (2518 words) Published: February 9, 2012
An overview of Pakistan's Economy.
A bloody struggle of Muslims of south Asia under the leadership of Quaid e Azam Muhammad Ali Jinnah, culminated Pakistan on 14th August 1947. She started her journey as a country without many resources, no machinery, no industry, not much educated middle class, a huge problem of refugees and a neighbor always waiting for the kill.   In 63 years Pakistan has come a long way, she is now 27th biggest economy of the world and the only nuclear power in the Muslim world. Pakistan came into being after the division of the sub continent; she consists of the western part of subcontinent. It has a 1,046-kilometre (650 mi) coastline along the Arabian Sea and Gulf of Oman in the south, is bordered by Afghanistan and Iran in the west, and India in the east and China in the far northeast. Tajikistan also lies very close to Pakistan but is separated by the narrow Wakhan Corridor. Thus, it occupies a crossroads position between South Asia, Central Asia and the Middle East. By having Arabian Sea in south, she enjoys a great strategic location especially when seen as a trade route to Afghanistan, central Asian countries, Russia and China. Pakistan has the gift of immense mineral resources, favorable climate through out the year and a fertile land for agriculture. Hence it has all the ingredients which are the prerequisites of a strong economy.

The building of Pakistan’s Economy consists of 3 main pillars; these are Services, Industry and Agriculture. Pakistan is said to be an Agricultural country as above 21% of the total contribution in income come from agriculture, in addition it is the main source of raw material for the industries, especially textile and sugar cane industry. Agriculture of Pakistan consists of 4 main components they are crops, forestry, live stock and fisheries.  Major crops of Pakistan are Cotton, Sugarcane, Rice, Wheat, Maize and Pulses. Cotton being a non food cash crop contributes significantly in foreign exchange earnings. Current production of cotton is above 12 million bales and it contributes around 1.8% in GDP, while Sugar Cane and Rice contribute 0.8% and 1.4% in Pakistan’s GDP. Forestry is also an essential contributor to the GDP, as it provides wide range of useful goods such as wood, food fodder and other recreational activities. Forest cover in Pakistan is about 5.2%, and that too is on an increasing trend. Live stock is the 3rd pillar of agriculture, it covers more than 50% of total agriculture value added and its contribution in GDP is 11.4%. It provides meat and milk for the domestic consumption and leather for the leather industry. Pakistan is the 4th largest milk producer in the world; in addition the growth in the population of cattle ensures the immense potential in this field. Last but not the least is the fishery, it provides white meat besides it’s a source of livelihood for the habitants near coastal areas. Pakistan fishery doesn’t only satisfies domestic demand but also it is contributes in exports.

To support the agriculture of a country it’s important to have ample water resources. Pakistan is fortunate in this regard. She has the most expensive and the most effective irrigational system in the world.  Five rivers Ravi, Chanab, Jhelum, Sutlag , Bais, as well as the Kabul river flow in Pakistan to support the irrigation and canal water system. Tarbella dam on Indus, Mangla Dam on Jhelum along with many other small and medium sized dams play the role of water storage and Power Generation. These ample resources are great source of hydel power which currently contributes around 57% of total production and have a enormous potential of growth. Other then that, the 2nd most important source of energy production is Thermal energy; as it contributes more than 40% in the total energy production.  However this is an expensive source as the fuel is an imported product and require foreign exchange. Efforts are being taken to shift to other cheap resources of...
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