Pakistan Economy

ECONOMIC PERFORMANCE OF PAKISTAN FROM 1947-1972

This long period of 25 years was split into two major eras of our economic history; first starting from 1947 to 1958 and second from 1959 to 1972.

First era (1947-1958)

Pakistan’s economy and society have evolved considerably since the time the country

gained independence in 1947. Primarily an agrarian and rural country at the time, a fair

amount of structural change has led to the development of large services (contributing to

50% of the GDP) and manufacturing (contributing to 25% of GDP) sectors.

At the time when Pakistan gained its independence, country was struggling to make the ends meet with no infrastructure, no industrial base, no currency of its own and no resources to meet the challenges faced by the country at that time such as the refugee problem. The GDP growth rate of the country was between 3- 3.5% in the initial years.

If it had not been the Korean War in 1951, the fate of Pakistan would have been something different. The Korean War not only boosts the Pakistani economy but also gave the initial start to our industrial base. In order to further boost the economy from the industrial start the government imposed trade and foreign exchange controls in 1952. That turned out to be the most important cause of the rapid growth in the Pakistan’s industry at that time. The country chose licensing and quantitative import controls over devaluation to deal with the Bop (balance of payment) problem. So the system allowed the rupee to remain overvalued which in turn created an excessive demand for the imports at duty paid prices. This policy of ‘high tariffs and quantitative controls paved the way for the import substitution in particular and industrialization in general.  

The average rate throughout the decade was 19.1%, which is impressive. The average rate for agriculture was 1.43% and performed poorly in this period.

Second era (1958 –1972)

The era (1958-1968) is most...