Chapter 8: Economic Development, Dynamics, and Global Relations

Chapter 8: Economic Development, Dynamics, and Global Relations


In the realm of economic dynamics, Pakistan’s trade landscape stands as a pivotal force shaping its economic identity. Delving into the intricacies of foreign trade, Pakistan’s export and import composition, trade direction, and shifting balance provide a comprehensive insight into the nation’s economic prowess. The composition of exports, ranging from the textile industry’s prowess to agricultural products like rice and the prominence of leather goods and surgical instruments, underscores Pakistan’s diverse export portfolio. Conversely, the import spectrum, dominated by essentials like petroleum products and machinery, depicts the nation’s reliance on global markets to meet crucial domestic needs. This intricate web of trade, spanning various global markets, from the United States and European Union to Middle Eastern countries and China, influences Pakistan’s trade balance, often grappling with deficits due to diverse factors like commodity prices, exchange rates, and economic fluctuations. Understanding these nuances lays the groundwork for comprehending Pakistan’s economic intricacies and exploring strategies for sustainable growth and trade stability.


i. Definition of Economic Progress by Professor Arthur Lewis: Economic progress, according to Professor Arthur Lewis, is the increase in the production of goods and services in an economy over time.

ii. Organization Established in 1975 for Economic Development: The organization established in 1975 for developing economic resources is the Economic Cooperation Organization (ECO).

iii. Meaning of Small Industry: Small industry refers to businesses with a limited number of employees, relatively small scale of operations, and often, local or regional market focus.

iv. Suggestions to Solve Agricultural Problems in Pakistan: 1. Implement modern agricultural practices and technology. 2. Improve irrigation infrastructure for efficient water management. 3. Provide farmers with better access to credit and agricultural education.

v. Meaning of Exports and Imports: Exports are goods and services produced in one country and sold to other countries, while imports are goods and services purchased from other countries.

vi. Uses of Gypsum: Gypsum is used in agriculture as a soil conditioner, in construction for making plaster, and in various industries for producing gypsum products.

vii. Cities in Pakistan with Dry Ports: Karachi, Lahore, Faisalabad, Islamabad, and Sialkot have established dry ports.

viii. Countries to Which Pakistan Exports Sports Goods: Pakistan exports sports goods to countries such as the United States, the United Kingdom, Germany, Australia, and Japan.

ix. Problems Faced by the Agricultural Sector in Pakistan: 1. Water scarcity and inefficient irrigation systems. 2. Outdated farming techniques and lack of modern equipment. 3. Land degradation and soil fertility issues. 4. Insufficient access to credit and marketing facilities for farmers.

Detailed Answers

i. Explain the important problems being faced by our agricultural sector.

Water Scarcity and Irrigation Issues:

Pakistan heavily relies on the Indus River system for irrigation. However, inefficient water management practices, such as excessive water wastage and outdated canal infrastructure, lead to significant water loss. Moreover, increasing water demand due to urbanization and industrialization exacerbates the problem, resulting in water scarcity for agricultural purposes.

Outdated Farming Techniques and Technology:

Agricultural practices in Pakistan often rely on outdated methods and technologies. Limited access to modern machinery, fertilizers, and pesticides hinders productivity. Lack of awareness about advanced farming techniques and reluctance to adopt modern practices further stagnate agricultural growth.

Land Degradation and Soil Fertility Decline:

Continuous cultivation without proper crop rotation or soil conservation measures leads to land degradation. Soil erosion, salinity, and reduced fertility are common issues. Without adequate soil health management, agricultural productivity diminishes over time, impacting the livelihoods of farmers and the nation’s food security.

Inadequate Access to Credit and Marketing Facilities:

Many small-scale farmers face challenges in accessing credit for agricultural inputs and investments. Financial institutions often hesitate to lend due to the high risks associated with agriculture. Additionally, limited or inefficient marketing channels prevent farmers from obtaining fair prices for their produce, leading to income instability and reduced incentives for growth.

Climate Change Vulnerability:

Pakistan’s agriculture is highly vulnerable to the impacts of climate change. Irregular weather patterns, including erratic rainfall, extreme temperatures, and unexpected natural disasters like floods and droughts, significantly disrupt crop cycles, affecting yields and livelihoods.


Addressing these challenges demands a multi-faceted approach involving modernizing irrigation systems, promoting technological advancements, implementing sustainable farming practices, providing financial support and education to farmers, and developing resilient strategies to cope with climate change. Collaboration between the government, agricultural experts, and local communities is crucial for sustainable solutions to uplift Pakistan’s agricultural sector.

ii. Explain what the cottage, small, and large-scale industries of Pakistan are.

In Pakistan, industries are categorized into cottage, small-scale, and large-scale based on their size, scope, and production capacity.

Cottage Industries:

Cottage industries in Pakistan typically involve small-scale production carried out at home or in small workshops. These industries often rely on traditional methods and skilled craftsmanship. Examples include handloom weaving, pottery, handicrafts, and small-scale food processing. These sectors play a significant role in generating employment, especially in rural areas, and contribute to preserving cultural heritage and traditional crafts.

Small-Scale Industries:

Small-scale industries in Pakistan encompass a broader spectrum of manufacturing activities, characterized by a relatively higher level of organization and production compared to cottage industries. These businesses operate on a more formal scale and often involve machinery and technology, albeit on a smaller level compared to large-scale industries. Small-scale industries in Pakistan include textiles, leather goods, food processing, and small manufacturing units. They contribute significantly to employment generation and serve as a stepping stone for industrial growth.

Large-Scale Industries:

Large-scale industries in Pakistan are characterized by extensive capital investment, advanced technology, and mass production capabilities. These industries operate on a significant scale, often involving complex production processes and high levels of mechanization. Examples include the textile industry, automobile manufacturing, petrochemicals, and heavy machinery production. Large-scale industries significantly contribute to the national economy by generating substantial revenue, and exports, and providing employment to a considerable workforce.

Importance and Interdependence:

All these sectors, from cottage to large-scale industries, form an interconnected web contributing to Pakistan’s industrial landscape. Cottage industries preserve traditional skills and culture, small-scale industries foster local economies and employment, while large-scale industries drive significant economic growth and export earnings. They create a diverse industrial ecosystem, each playing a crucial role in the country’s development trajectory.


Balancing the growth of these sectors is essential for Pakistan’s economic development. Encouraging small and cottage industries through supportive policies, technological advancements, access to finance, and skill development can create a robust foundation for the overall industrial growth, employment generation, and sustained economic progress of the nation.

iii. Narrate the importance of resources of energy for development.

Energy resources play a pivotal role in the development of any nation and are regarded as the lifeblood of economic growth and sustainability. Here’s a detailed explanation of their significance:

Industrial and Economic Growth:

Energy resources are the backbone of industrialization and economic progress. They power factories, machinery, and technological innovations across all sectors. Access to abundant and reliable energy sources is critical for manufacturing, production, and the overall functioning of industries. A well-supplied energy sector is fundamental for attracting investments, fostering innovation, and driving economic growth.

Infrastructure Development:

Energy resources are indispensable for building infrastructure. They are essential for constructing transportation networks, such as roads, railways, and airports, enabling connectivity within and between regions. Additionally, energy powers the development of telecommunications, enabling information flow crucial for modern economic activities.

Social Development and Standard of Living:

Access to energy resources directly impacts the quality of life and social development. Reliable energy supports healthcare services by powering medical equipment, refrigeration for vaccines and medicines, and providing lighting for hospitals and clinics. Furthermore, it enhances education by facilitating lighting in schools, powering computers, and enabling internet connectivity, thus improving educational standards.

Agricultural Productivity:

Energy resources are vital for agricultural development. They power irrigation systems, machinery for tilling, planting, and harvesting, as well as food processing and preservation facilities. Access to energy-efficient technologies can significantly enhance agricultural productivity, ensuring food security and reducing rural poverty.

Environmental Sustainability:

The type and management of energy resources also impact environmental sustainability. A shift towards renewable and clean energy sources such as solar, wind, hydro, and biomass is crucial for mitigating climate change and reducing carbon emissions. Balancing energy needs with environmental conservation is key to ensuring sustainable development.


Energy resources serve as the cornerstone for socio-economic development. A well-managed, diversified, and sustainable energy sector not only fuels economic growth but also empowers communities, improves living standards, fosters innovation, and contributes to environmental preservation. Strategic planning, investment in renewable sources, technological advancements, and efficient utilization of energy resources are essential for achieving holistic development and a prosperous future.

iv. Discuss the production of important energy resources in Pakistan and their

Pakistan possesses various energy resources, each with its production methods and diverse usage across sectors.

Natural Gas:

Production: Pakistan has substantial reserves of natural gas, primarily extracted from Sui (Balochistan), Mari, and Kandhkot fields. Exploration continues in other regions to discover new reserves.

Usage: Natural gas is extensively used in power generation, industrial processes (fertilizer, textile, and cement industries), domestic cooking, and as a fuel for vehicles. It’s a cleaner-burning fuel compared to other fossil fuels, contributing to reduced emissions.


Production: Pakistan has large coal reserves in Thar, Sindh. The Thar Coalfield has significant potential for power generation. Usage: Coal is predominantly used for power generation in thermal power plants. The development of Thar coal is pivotal in addressing Pakistan’s energy needs and reducing dependency on imported fuels.


Production: Pakistan is blessed with rivers and water bodies, enabling hydropower generation. Key projects like Mangla, Tarbela, and Neelum-Jhelum contribute significantly. Usage: Hydropower is a renewable energy source used for electricity generation. It’s clean, sustainable, and contributes to the country’s energy mix, providing electricity to residential, industrial, and agricultural sectors.


Production: While Pakistan’s domestic oil production isn’t substantial, it has oil fields in Khyber Pakhtunkhwa and Balochistan. Usage: Oil is primarily used in transportation (as fuel for vehicles and airplanes), industrial processes, and as a source for petroleum products like diesel, gasoline, and lubricants.

Renewable Energy (Solar and Wind):

Production: Pakistan has immense potential for solar and wind energy, especially in regions like Balochistan and Sindh. Usage: Solar and wind energy are utilized for electricity generation, particularly in off-grid areas. These sources contribute to diversifying the energy mix, reducing carbon footprint, and addressing remote energy needs.

Nuclear Energy:

Production: Pakistan operates nuclear power plants at Chashma and Karachi. Usage: Nuclear energy contributes to the national grid and fulfills a portion of the electricity demand. It’s a reliable source of base-load electricity, reducing dependency on fossil fuels.


Diversification of energy resources is crucial for Pakistan’s energy security and sustainable development. Balancing traditional fossil fuels with renewable sources is essential for meeting increasing energy demands, mitigating environmental impacts, and ensuring long-term energy sustainability. Moreover, investing in modern technologies, improving infrastructure, and encouraging efficient use of resources are vital steps towards a more robust and sustainable energy future for Pakistan.

v. Study the foreign trade of Pakistan, its composition, direction, and changes in balance.

Pakistan’s foreign trade plays a vital role in its economy, comprising exports and imports. Here’s a detailed overview of its composition, direction, and changes in balance:

Composition of Foreign Trade:


  1. Textiles and Garments: Pakistan is known for its textile industry, exporting cotton fabrics, yarn, garments, and made-up textiles.
  2. Rice: Basmati and non-Basmati rice varieties are significant export commodities.
  3. Leather Products: Leather goods, including footwear and leather garments, constitute a notable export category.
  4. Surgical Instruments: Pakistan is a leading exporter of surgical and medical instruments.
  5. Sporting Goods: Products like sports equipment, especially soccer balls, are significant exports.
  6. Chemicals and Pharmaceuticals: Chemical products and pharmaceuticals contribute to export earnings.


  1. Petroleum and Oil Products: Pakistan heavily relies on imports to meet its energy needs.
  2. Machinery: Industrial machinery, electrical equipment, and mechanical appliances are major imports.
  3. Edible Oil: Imports of edible oils, particularly palm oil, are substantial.
  4. Plastics and Plastic Articles: Imported for various industrial and consumer purposes.
  5. Iron and Steel Products: Used in construction and manufacturing sectors.
  6. Electronics: Items like cell phones, computers, and related accessories are significant imports.

Direction of Trade:

Export Markets:

  • United States: Significant market for textiles, garments, surgical instruments, and sporting goods.
  • European Union: Importer of textiles, garments, and leather products.
  • Middle Eastern Countries: Import rice, textiles, and other commodities.
  • China: Exports various goods including cotton yarn and rice.

Import Sources:

  • Middle Eastern Countries: Major source of petroleum and oil products.
  • China: Importer of machinery, electronics, and other manufactured goods.
  • United States: Supplies machinery, electronics, and agricultural products.
  • European Union: Provides machinery, chemicals, and automotive parts.

Changes in Balance:

Pakistan often faces a trade deficit, where the value of imports exceeds that of exports. This deficit is primarily due to high import costs of petroleum, machinery, and other essential goods against moderate export earnings from textiles, rice, and other commodities. Fluctuations in global commodity prices, exchange rates, geopolitical factors, and domestic economic conditions impact the trade balance.


Enhancing export diversification, improving the quality of manufactured goods, investing in value-added industries, reducing dependency on imports, negotiating favorable trade agreements, and promoting innovation and competitiveness in various sectors are vital strategies to improve Pakistan’s trade balance and overall economic stability.

vi. Explain the importance of the seaports and dry ports of Pakistan.

Seaports and dry ports play a pivotal role in Pakistan’s economic infrastructure and global trade. Here’s an in-depth look at their significance:


  1. Trade Connectivity: Seaports like Karachi Port, Port Qasim, and Gwadar Port act as vital gateways for Pakistan’s trade. They facilitate the import and export of goods, connecting Pakistan to international markets.
  2. Economic Growth: These ports contribute significantly to Pakistan’s economy by handling a substantial portion of its maritime trade. Karachi Port, for instance, handles a diverse range of cargo, including containers, bulk cargo, and oil shipments, fostering economic growth through trade activities.
  3. Transshipment Hub: Seaports in Pakistan serve as transshipment hubs, allowing goods to be transferred from larger vessels to smaller ones destined for regional ports. This role enhances the efficiency of trade routes and reduces transportation costs.
  4. Employment Generation: The operations and activities at these seaports create job opportunities directly and indirectly. From port workers to logistics, transportation, and associated industries, many benefit from the employment opportunities generated by these ports.
  5. Infrastructure Development: Seaports drive infrastructure development in their surrounding areas. They stimulate investments in transportation networks, warehousing facilities, and logistics, fostering regional development and connectivity.

Dry Ports:

  1. Inland Connectivity: Dry ports like Lahore Dry Port and Sialkot Dry Port act as extensions of seaports, providing connectivity to inland areas. They serve as transit points for cargo being transported via road or rail from seaports to destinations within the country.
  2. Customs Clearance and Efficiency: These ports expedite customs clearance procedures, reducing congestion at seaports and facilitating smoother movement of goods. This efficiency benefits trade by saving time and costs associated with delays.
  3. Regional Trade Integration: Dry ports enhance regional trade integration by serving as hubs for cargo consolidation, allowing easier movement of goods within Pakistan and across borders to neighboring countries like Afghanistan and Central Asian states.
  4. Industrial Development: Proximity to dry ports often attracts industrial and commercial activities, leading to the development of industrial zones and manufacturing clusters around these areas. This boosts economic growth and job creation in the surrounding regions.
  5. Multimodal Connectivity: Dry ports offer multimodal connectivity, linking various modes of transportation like rail, road, and sometimes air, providing flexibility in moving goods efficiently across different regions.

In essence, both seaports and dry ports in Pakistan are integral components of the country’s trade infrastructure. They not only facilitate international trade but also contribute significantly to economic development, employment generation, and regional connectivity. Their efficiency and growth directly impact Pakistan’s position in global trade networks and its overall economic prosperity.

vii. Study the economic development of Pakistan from 1947 to 1970.

The economic development of Pakistan from 1947 to 1970 was marked by various phases and challenges, shaping the nation’s trajectory in its early years post-independence.

1. Initial Challenges:

  • Partition Effects: The partition in 1947 led to the division of economic resources, disrupting trade routes and causing social upheaval, impacting both India and Pakistan.
  • Resource Constraints: Pakistan started as an agrarian economy with limited industrial infrastructure and faced challenges in establishing economic foundations.

2. Focus on Agriculture:

  • Agrarian Economy: Agriculture played a pivotal role in the early economy, contributing significantly to the GDP and employing a large portion of the population.
  • Land Reforms: Attempts were made to introduce land reforms to redistribute land among farmers more equitably, aiming for increased productivity and rural development.

3. Industrialization Efforts:

  • Five-Year Plans: The government implemented multiple Five-Year Plans to promote industrialization and economic growth. These plans aimed to build infrastructure, promote industries, and reduce dependence on imports.
  • Public Sector Enterprises: The state took an active role in establishing public sector enterprises, particularly in industries like textiles, steel, and cement, to stimulate industrial growth.

4. Foreign Aid and Alliances:

  • Alliances and Aid: Pakistan formed strategic alliances and received foreign aid, particularly from the United States, contributing to infrastructure development and economic stability.
  • Military Assistance: During the Cold War, Pakistan’s geopolitical significance led to substantial military aid from Western countries, influencing its economic landscape.

5. Challenges and Setbacks:

  • Political Instability: Frequent changes in government and political instability affected long-term economic planning and policy continuity.
  • Income Disparities: Economic growth was not evenly distributed, leading to widening income disparities between rural and urban areas and among different provinces.

6. Progress in Certain Sectors:

  • Infrastructure Development: Investments were made in infrastructure, including roads, dams, and energy projects, laying the groundwork for future development.
  • Education and Health Initiatives: Efforts were initiated to improve education and healthcare systems, although progress was gradual.

7. Economic Performance:

  • Growth Rates: Pakistan experienced varying economic growth rates, with some years marked by significant progress while others faced economic downturns.
  • Exports and Imports: Export-oriented industries, particularly textiles, began to flourish, contributing to foreign exchange earnings, while imports increased to meet industrial demands.

8. Outcome by 1970:

  • Mixed Results: The economic landscape of Pakistan by 1970 reflected a mix of progress and challenges. There were advancements in industrialization and infrastructure, but issues like income inequality and reliance on foreign aid persisted.


The period from 1947 to 1970 was critical in laying the groundwork for Pakistan’s economic development. While there were efforts to diversify the economy, industrialize, and invest in infrastructure, challenges like political instability and uneven growth persisted. The era set the stage for subsequent economic policies and development strategies, shaping Pakistan’s economic trajectory in the years to come.

viii. Explain the reserves, economic value, and distribution of metallic and nonmetallic

Metallic Minerals:

  1. Reserves:
    • Metallic minerals refer to minerals that contain metal elements. Pakistan is endowed with various metallic minerals such as iron ore, copper, gold, silver, and chromite, among others.
    • The country has substantial reserves of these minerals, with significant deposits located in different regions. For instance, the Chiniot and Rajoa Iron Ore projects hold vast iron ore reserves.
  2. Economic Value:
    • Metallic minerals have significant economic value due to their diverse industrial applications. Iron ore, for example, is a crucial raw material for steel production, and a fundamental component in construction and manufacturing.
    • Copper, another valuable metallic mineral, is used in electrical wiring, electronics, and construction, among other industries. Gold and silver hold high value for their use in jewelry, electronics, and as reserves for national economies.
  3. Distribution:
    • Metallic minerals are distributed across various regions in Pakistan. Iron ore deposits are found in Punjab and Balochistan, while copper deposits are located in Balochistan and Sindh provinces.
    • Gold and silver deposits exist in areas like Chitral, Gilgit-Baltistan, and Balochistan. Balochistan, in particular, is rich in metallic minerals, hosting significant reserves of copper, gold, and chromite.

Non-Metallic Minerals:

  1. Reserves:
    • Non-metallic minerals encompass a wide range of minerals such as limestone, gypsum, coal, salt, and gemstones. Pakistan has abundant reserves of these minerals, contributing to various industries.
    • Limestone reserves, for instance, are substantial and spread across different regions, especially in Punjab and Khyber Pakhtunkhwa.
  2. Economic Value:
    • Non-metallic minerals play a vital role in construction, agriculture, and other industries. Limestone, for example, is used in cement production, contributing significantly to the construction sector.
    • Gypsum, another non-metallic mineral, is used in plasterboard and cement production. Coal serves as a vital energy source for power generation and industrial purposes.
  3. Distribution:
    • Non-metallic minerals are widely distributed throughout Pakistan. Limestone reserves are abundant in Punjab and Khyber Pakhtunkhwa. Balochistan and Sindh contain significant coal reserves.
    • Gemstones like ruby, emerald, and topaz are found in the northern areas of Pakistan, including the regions of Gilgit-Baltistan and Khyber Pakhtunkhwa.


Pakistan’s rich geological diversity presents a wealth of both metallic and non-metallic minerals. These minerals play pivotal roles in various industries, contributing to the economy through raw material supply, industrial growth, and export potential. Balancing exploration, sustainable extraction, and responsible utilization of these mineral resources are crucial for Pakistan’s economic development and industrial expansion while ensuring environmental conservation and equitable distribution of benefits.

ix. Discuss the role of agriculture in the economy of Pakistan.

Agriculture holds immense significance in Pakistan’s economy, contributing significantly to various aspects:

1. Contribution to GDP and Employment:

  • GDP Contribution: Agriculture contributes around 20% to Pakistan’s GDP directly and around 60-65% indirectly through related industries like textiles and agro-based industries.
  • Employment: It is the largest employer, engaging nearly 40% of the labor force, and providing livelihoods in rural areas.

2. Food Security and Subsistence:

  • Food Production: Agriculture ensures food security by producing staple crops like wheat, rice, and maize, meeting domestic consumption needs.
  • Livelihoods: Subsistence farming remains prevalent, supporting rural communities and ensuring their sustenance.

3. Export and Foreign Exchange Earnings:

  • Cash Crops: Pakistan’s agriculture includes cash crops like cotton, sugarcane, and fruits, contributing to export earnings and foreign exchange reserves.
  • Textile Industry: Cotton production fuels the textile industry, a major contributor to exports and industrial growth.

4. Rural Development and Poverty Alleviation:

  • Income Generation: Agriculture provides income opportunities, reducing poverty levels in rural areas.
  • Infrastructure and Development: Investments in agriculture stimulate rural infrastructure development, improving living standards in these regions.

5. Role in Industrial Sector:

  • Agro-Based Industries: Agriculture supplies raw materials to various agro-based industries, such as textiles, sugar, and food processing, contributing significantly to industrial growth.

6. Technology and Modernization:

  • Adoption of Technology: The sector is gradually modernizing through the adoption of technology, improved irrigation methods, and the use of high-yield crop varieties, enhancing productivity.
  • Research and Development: Agricultural research institutions strive to develop improved seed varieties and farming techniques to boost yield and resilience against climate change.

7. Challenges and Opportunities:

  • Water Scarcity: The sector faces challenges like water scarcity, inefficient irrigation practices, and land degradation, requiring sustainable solutions for long-term viability.
  • Climate Change: Climate variations impact agricultural productivity, necessitating adaptation strategies and resilient crop varieties.

8. Government Policies and Support:

  • Subsidies and Incentives: The government provides subsidies, credit facilities, and agricultural extension services to support farmers and promote agricultural growth.
  • Policy Reforms: Continuous policy reforms aim to enhance productivity, improve market access, and ensure fair prices for farmers’ produce.


Agriculture remains the backbone of Pakistan’s economy, playing a crucial role in providing food security, employment, industrial growth, and foreign exchange earnings. Sustainable development and modernization of the sector, along with effective policies addressing challenges like water scarcity and climate change, are pivotal for ensuring continued agricultural prosperity and contributing to the overall economic stability of the nation.

x. Study the economic development of Pakistan after 1980.

The economic development of Pakistan after 1980 was marked by various phases, reforms, and challenges, that influenced the nation’s economic trajectory.

1. Economic Policies and Structural Reforms:

  • 1980s – Initial Reforms: The 1980s saw structural adjustments influenced by IMF programs, focusing on liberalization, privatization, and deregulation.
  • Economic Liberalization: Policies aimed at reducing state intervention, encouraging private investment, and opening up the economy to foreign trade.

2. Aid and Foreign Investment:

  • Foreign Assistance: Pakistan received significant aid from Western countries and multilateral institutions, mainly due to its geopolitical importance during the Afghan-Soviet war.
  • Foreign Direct Investment: Efforts were made to attract foreign investment, particularly in sectors like energy, infrastructure, and manufacturing.

3. Agricultural Reforms:

  • Green Revolution: Continued emphasis on the Green Revolution, introducing high-yield crop varieties and modern farming techniques, boosting agricultural productivity.
  • Export Promotion: Focus on cash crops like cotton and rice for export earnings, contributing to foreign exchange reserves.

4. Industrial Development and Privatization:

  • Industrial Growth: Industrialization continued, particularly in textiles, manufacturing, and pharmaceuticals, contributing to economic expansion.
  • Privatization: Privatization initiatives aimed to improve efficiency and reduce the burden on the state by divesting state-owned enterprises.

5. Challenges and Setbacks:

  • Debt Burden: Accumulation of external debt and reliance on foreign aid led to concerns about debt sustainability and servicing obligations.
  • Political Instability: Periodic changes in government and political unrest affected long-term economic planning and policy continuity.

6. 1990s – Economic Crisis and Reforms:

  • Economic Challenges: The 1990s witnessed economic crises, including balance of payments issues, fiscal deficits, and inflationary pressures.
  • IMF Bailouts: Pakistan sought multiple IMF programs for financial assistance, implementing structural reforms to stabilize the economy.

7. Information Technology and Services Sector:

  • IT Industry: Growth of the IT sector emerged, becoming a significant contributor to the economy through software development and IT services.

8. Infrastructure and Energy Development:

  • Infrastructure Projects: Investments in infrastructure, including transportation and energy projects, aimed to boost connectivity and power generation.
  • Energy Crisis: Despite efforts, Pakistan faced chronic energy shortages impacting industrial output and economic growth.

9. Trade and Globalization:

  • Trade Liberalization: Continued efforts towards trade liberalization and participation in global markets aimed to enhance export competitiveness.
  • Global Integration: Integration into global supply chains and trade agreements facilitated access to international markets.


The period after 1980 witnessed both advancements and challenges in Pakistan’s economic landscape. While reforms aimed to liberalize the economy, attract foreign investment, and boost industrial and agricultural productivity, challenges like debt burden, political instability, and energy crises persisted. The era set the stage for subsequent economic policies and development strategies, shaping Pakistan’s economic trajectory into the 21st century.


i. Economic development means:

  • (a) increase in national income ✓

ii. Pakistan government established “Pakistan Industrial Development Corporation” in:

  • (c) 1956 ✓

iii. Pakistan’s economy is:

  • (b) underdeveloped ✓

iv. 5-year developmental plan started in Pakistan in:

  • (b) 1955 ✓

v. The first dry port was built in Pakistan in:

  • (b) Lahore ✓

vi. Pakistan imports edible oil from America, Sri Lanka and:

  • (d) Malaysia ✓

vii. The largest scheme for producing hydro-electric power in Pakistan is:

  • (a) Ghazi Barotha Project ✓

viii. With the cooperation of the World Bank, the Indus Waters Treaty between Pakistan and India was settled in:

  • (d) 1962 ✓

ix. The largest sector of Pakistan’s economy is:

  • (c) agriculture ✓

x. Who came into power in Pakistan in 1958?

  • (b) General Muhammad Ayoub Khan ✓


Pakistan’s economic landscape is intricately woven with the dynamics of foreign trade, encompassing both exports and imports that shape its economic identity. In examining the country’s trade scenario, several facets emerge: the composition of exports showcases the nation’s diversity, with textile dominance, agricultural prowess in rice, and notable exports in leather goods and surgical instruments. Meanwhile, imports reveal Pakistan’s dependence on global markets, particularly for essentials like petroleum products and machinery. This trade network spans varied global markets, including the United States, the European Union, Middle Eastern nations, and China. However, the nation often grapples with trade deficits, influenced by factors such as commodity prices, exchange rates, and economic fluctuations. This understanding of Pakistan’s trade intricacies forms the foundation for devising strategies to ensure sustainable economic growth and trade stability. Efforts to diversify exports, invest in value-added industries, and reduce import dependency emerge as key pathways to fortify Pakistan’s economic standing in the global trade arena.