Causes of Industrial

Backwardness in Pakistan

Presenters

Mr. Zafar Iqbal Roll No. 259

Mr. Abdul Jabbar Sheikh Roll No. 260

Mr. Mujtaba Raheem Roll No. 253

Mr. Said Rasool Roll No. 281

Mr. Syed Taimoor Alam Roll No. 299

Hafiz Yasir Ummar Roll No. 300

Industry

In Economics Terms:

The organized economic activity concerned with

manufacture, extraction and processing of raw materials, or

construction.

In Business / Commerce Terms:

A branch of commercial enterprise concerned with the output of a specified product or service the steel industry.

Extraction industry Construction Industry Steel Industry

Industrial Development in Pakistan

Industrialization plays a vital role in the economic

development of an underdeveloped country.

Pakistan being a developing country also wants to

achieve higher standard of living for its masses. It has,

therefore, embarked upon various programmers of

industrialization.

The policies of privatization, deregulation and

liberalization of the economy are being pursued.

Industrial Backwardness

At the time of partition Pakistan got only 34 units out

of 928 registered units. The government of Pakistan

since 1947 is trying hard to develop industries andinfrastructure facilities for the growth of industrial

sector, yet it has not achieved success to the desired

extent.

In the last over three decades, the contribution of

industrial sector to GDP is only 18.5% which by anystandard is not satisfactory .

Agro Based Industry

Causes

• Lack of Capital

• Energy Crisis

• Size of Market

• Lack of Credit Facilities

• Modern Technology

• Lack of Industrial Research

• Inadequate Transport Facilities

• Shortage of Specialists

• Decrease in External Value of Currency

• Poor Quality of Industrial Labor

• Political Instability

Lack of Capital

Lack of capital is a major hurdle in the way of

industrialization of heavy industries in Pakistan.

The amount of capital required in industries like

chemical, automobile, iron, steel, textile, sugar,

paper board and paper, is huge, Pakistan

Industrial Development Corporation (Pidc) And

Pakistan Industrial And Credit Corporation

(Picic) part of the required capital. Sufficient

amount of capital is not available for investment

from domestic sources.

Energy Crisis

Load shedding has resulted in frequent breakdowns

of electricity in the country. This is obstructing the

industrial production and thus the expansion of

industries is not taking place.

Moreover, there has not been any long term energy

policy in the country due to economic and political

instability. The shout term measures therefore have

not led to the expansion of industries in Pakistan.

Gas CrisisElectricity generation and inadequate steps

Results in Shutting down of industries

Size of The Market

The size of market in Pakistan is very small; therefore, it

is an obstacle in the expansion and growth of industrial

sector. Poverty of the people, supply of bad quality

product, limited demand for goods, market, transport, and

communication facilities, high production costs etc, are

the major factors which limit the extent of market. Unless

multinational enterprises are invited to make investment in

export oriented and import substitution industries, the size

of market for industrial goods cannot be extended.

Need to expand

size of Market

Lack of Credit Facilities

Prior to nationalization of banks, the banks were in the

hands of few families who were also holding large scale

industries. Major share of loans was going in these hands;

they were receiving loans at lower rate of interest. These

loans were frequently used for unproductive purposes while

small businessmen and qualified entrepreneurs could not

enjoy credit facility although after nationalization there was

a change in this behavior yet credit facilities were being

provided on political basis for the last 20 years. The

previous and the present governments have however,

changed the policy and banks are being privatized now.

Modern Technology

In the modern time a country without modern technology

cannot develop industrially. The basic secret of industrially

developed countries at present is the modern technology. J

Especially Japan at present is on top of the list of

industrially developed countries because of technology but

in Pakistan the literacy rate is low. There is little research

work, level of technical know-how is low, technical training

has not been given proper place; there is a shortage of

foreign exchange to import modern technology.

Lack of Industrial Research

Lack of industrial research is also a problem which is

responsible for high production cost. Industrial

research discovers new technique of production and

introduces new varieties of product. Due to lack of

industrial research, improvement in the production

technique has not been made possible and as such

production cost continues to be high.

Remedy lies in the establishment of more laboratories

in the country for industrial research in the

production technique and new varieties of products.

Inadequate Transport Facilities

Swift and developed means of transport are necessary

for lab our mobility and for raw materials from

production areas to factories and to supply finished

products from factories to markets. But means of

transport and communications are not developed. Due

industrialists are not properly aware of the market

situation. Fast information technology is now solving

this problem for the educated industrialists.

Shortage of Specialists

Industrial sector requires specialized staff e.g.

qualified organizers, engineers, mechanics,

accountants, marketing managers marketing

surveyors, sale and purchase managers, but they are

short in Pakistan. Due to lack of facilities and

financial hardships, they prefer to work in developed

countries. Skilled workers and professionals are

needed badly to get rid of industrial slow down.

Decrease in External Value of Currency

Being a developing country Pakistan has to

import industrial – plants and machinery from

abroad but the import of machinery, raw material

and spare parts is becoming expensive due to

decrease in the external value of currency.

Pakistan devalued currency in 1955 and in 1972

and then delinked rupee from dollar in 19981.

The external value decreased by six times which

has made it difficult to import.

Poor Quality of Industrial Labor

The industrial lab our in Pakistan like other workers is mostly

conscious of its rights but not of duties. It may not be inferred

that the lab our is inherently incapable and inefficient in the

performance of duties. The fact, however, is that they are not

properly trained. The spirit of work is not included in them.

The political parties patronize them to meet their own ends.

The spirit of Japanese workers, love for work , love for the

country , should be inculcated not only in the industrial lab

our but also in all the Pakistanis . The change in the attitude

towards work will increase production and the country will

attain rapid rate of economic growth in a short period of time.

Political Instability

The political instability, lack of proper planning,

heavy taxes etc are also responsible for the lagging

behind of manufacturing sector. Since partition, the

political system of Pakistan has remained unstable.

Frequent changes in the government have been

taking place until now. There were only two long

period governments were run by military men,

while in this age of democracy all over the world,

people do not like martial law because investors

remain hesitant in making investment in the

industrial sector.

STEPS TAKEN BY THE GOVERNMENT OF PAKISTAN

• Pakistan Industrial Development Corporation (P.I.D.C)

• Industrial Development Bank of Pakistan (I.D.B.P)

• Pakistan Industrial Credit and Investment Corporation

• Industrial Research and Training

• Protectionist Policy

• Tax Concession

• Encouragement to Private Enterprises

• Export Processing Zone

• Attracting Foreign Capital

• National Development Corporation Finance