Q-25= Besides poverty, developing countries share many characteristics. Elaborate this statement.
Characteristics of a developing country like Pakistan are as under: -
1 Agrarian economy
2 Undeveloped agriculture and feudal system
3 Population pressure
4 General unemployment and disguised unemployment
5 Low per capita income and general poverty
6 Unequal distribution of national income
7 High inflation rate (general prices are very high)
8 Low level technology
9 Insufficient infrastructure
10 Undeveloped institutional system
11 Industries are not sufficient enough
12 Shortage of entrepreneurial skills
13 Deficit balance of payments & dependence on aids
14 Natural resources are unexploited and unutilized
15 Lack of continuity in economic policies
16 Unsatisfactory law and order situation
1. AGRARIAN ECONOMYAgriculture is the mainstay of Pakistan’s economy. Nearly 22 percent of GDP and 44.8 percent of total employment is generated in agriculture. Agriculture contributes to growth as a supplier of raw materials for industry as well as market for industrial products. Furthermore 44.8 percent work force is employed in agriculture and 65.9 percent of country’s population is directly or indirectly linked with agriculture for their livelihood. Pakistan’s agriculture has been suffering on and off from a severe shortage of irrigation water in recent years.
2. UNDEVELOPED AGRICULTUREPerformance of our agriculture is not satisfactory. The low productivity in agricultural output is because of (1) shortage of water, (2) lack of use of modern machinery, (4) low quality seeds, (5) expensive fertilizers (6) Illiteracy of farmer, (7) water-logging and salinity (8) floods (9) attacks of pests (10) lack of credit facilities. (11) Feudal Lords who are owners of large lands but are not interested in the development of agriculture.
3. POPULATION PRESSUREPakistan faces the problem of over population. Population of Pakistan is 154 million. The rate of increase of population was 2.6 percent during 2005. The high rate of increase of population is nullifying the achievements of progress and development. Rate of literacy is only 24%. People are generally untrained and do not posses any skill required for the production process.
4. GENERAL UNEMPLOYMENTDue to lack of industrialization, shortage of new investment and low level of business activities, people are generally unemployed. Out of the total labor force of 24%, unemployed percentage is 14%. Unemployment is increasing due to lack of education, technical training, and bad health of the people. Disguised unemployment is a form of unemployment when workers able and willing to work do not register themselves as unemployed. In agricultural sector all family members are engaged whereas only two or three persons can do the whole job.
5. LOW PER CAPITA INCOMEThere is too much poverty in Pakistan. Per capita income is very low. 24% people are living below the poverty line. Standard of living of the people is very low and they do not have basic needs of life. Their diet is of low standard, and they are ill fed and ill clothed.
6. UNEQUAL DISTRIBUTION OF NATIONAL INCOMEPakistani society is divided between “haves and have-nots.” A small section of society i.e. industrialists and landlord have the larger share of national income and is very rich whereas a large number of people are living from hand to mouth.
7. INFLATION RATEDuring fiscal year 2005-06, inflation rate was 8 percent. The larger contribution toward the overall inflation comes from items such as house rent, energy and transport and significant increase in prices of pulses and lower production of sugarcane and sugar.
8. LOW LEVEL OF TECHNOLOGYIn Pakistan agricultural and industrial production is carried out by old methods of production. Heavy industries are not there in the country. Moreover it is not possible to import most modern machinery due to shortage of foreign exchange.
9. INSUFFICIENT INFRASTRUCTUREInfrastructure means roads, railways, housing, water, electric supply and telecommunications facilities, which contribute to a higher rate of economic growth. Due to lack of firm economic polices supply of infrastructure was not provided by the government which has badly affected industrialization.
10. UNDEVELOPED INSTITUTIONAL SYSTEMThese institutions include family system, religion, economic freedom and right of private ownership. Every member of the society has right to adopt and practice any religion, can do any business, can adopt any profession and can own property. In Pakistan these institutions are not very well developed because of the lack of education and tolerance amongst the people.
11. INDUSTRIES ARE NOT SUFFICIENT ENOUGHIndustrial sector in Pakistan is progressing at a very slow speed. Due to market imperfections, low savings rate and weak capital and money markets, industries are not established. There is less progress with reference to heavy industries and other industries based on most modern technology.
12. SHORTAGE OF ENTREPRENEUR SKILLSPakistan is short of dynamic business leadership. Enterprise and initiative of entrepreneurs is hampered due to many factors, for example small size of the market, shortage of resources, poor infrastructure and old technology. Businessmen are not highly educated and trained and they are unaware of modern business techniques. They do not have innovative qualities and skills.
13. UNFAVORABLE BALANCE OF PAYMENTSPakistan’s balance of payments is usually against it, due to more imports and less exports. Main exports are raw material and other primary products, prices of which are decreasing in international market. Main imports are machinery, chemicals, drugs and electronic goods, prices of which are continuously increasing in international market. Thus it has to pay more than what it receives. Pakistan depends on foreign aids and grants for its economic development plans.
14. NATURAL RESOURCES ARE UNEXPLOITEDThere is shortage of natural resources. Petroleum, natural gas, iron, copper, water etc. are less than their demand. These resources are not properly discovered and exploited. Therefore industries are not developing for want of raw materials. The reason for not exploiting resources is lack of skill, technology and ill planning by of the Government.
15. LACK OF CONTINUITY IN ECONOMIC POLICIES There is no consistency in the economic policies of Government. It keeps on changing frequently; therefore-foreign investors and local businessmen cannot chalk out their business and investment plans in Pakistan.
16. UNSATISFACTORY LAW AND ORDER SITUATIONProper law and order situation is a basic requirement for speedy economic development whereas Pakistan is lacking in this regard. There are general strikes, lockouts, political processions, dacoits and killings in the society. This hampers economic and investment activity. Foreign investors avoid establishing their factories in Pakistani due to poor law and order situation.
Characteristics of a developing country like Pakistan are as under: -
1 Agrarian economy
2 Undeveloped agriculture and feudal system
3 Population pressure
4 General unemployment and disguised unemployment
5 Low per capita income and general poverty
6 Unequal distribution of national income
7 High inflation rate (general prices are very high)
8 Low level technology
9 Insufficient infrastructure
10 Undeveloped institutional system
11 Industries are not sufficient enough
12 Shortage of entrepreneurial skills
13 Deficit balance of payments & dependence on aids
14 Natural resources are unexploited and unutilized
15 Lack of continuity in economic policies
16 Unsatisfactory law and order situation
1. AGRARIAN ECONOMYAgriculture is the mainstay of Pakistan’s economy. Nearly 22 percent of GDP and 44.8 percent of total employment is generated in agriculture. Agriculture contributes to growth as a supplier of raw materials for industry as well as market for industrial products. Furthermore 44.8 percent work force is employed in agriculture and 65.9 percent of country’s population is directly or indirectly linked with agriculture for their livelihood. Pakistan’s agriculture has been suffering on and off from a severe shortage of irrigation water in recent years.
2. UNDEVELOPED AGRICULTUREPerformance of our agriculture is not satisfactory. The low productivity in agricultural output is because of (1) shortage of water, (2) lack of use of modern machinery, (4) low quality seeds, (5) expensive fertilizers (6) Illiteracy of farmer, (7) water-logging and salinity (8) floods (9) attacks of pests (10) lack of credit facilities. (11) Feudal Lords who are owners of large lands but are not interested in the development of agriculture.
3. POPULATION PRESSUREPakistan faces the problem of over population. Population of Pakistan is 154 million. The rate of increase of population was 2.6 percent during 2005. The high rate of increase of population is nullifying the achievements of progress and development. Rate of literacy is only 24%. People are generally untrained and do not posses any skill required for the production process.
4. GENERAL UNEMPLOYMENTDue to lack of industrialization, shortage of new investment and low level of business activities, people are generally unemployed. Out of the total labor force of 24%, unemployed percentage is 14%. Unemployment is increasing due to lack of education, technical training, and bad health of the people. Disguised unemployment is a form of unemployment when workers able and willing to work do not register themselves as unemployed. In agricultural sector all family members are engaged whereas only two or three persons can do the whole job.
5. LOW PER CAPITA INCOMEThere is too much poverty in Pakistan. Per capita income is very low. 24% people are living below the poverty line. Standard of living of the people is very low and they do not have basic needs of life. Their diet is of low standard, and they are ill fed and ill clothed.
6. UNEQUAL DISTRIBUTION OF NATIONAL INCOMEPakistani society is divided between “haves and have-nots.” A small section of society i.e. industrialists and landlord have the larger share of national income and is very rich whereas a large number of people are living from hand to mouth.
7. INFLATION RATEDuring fiscal year 2005-06, inflation rate was 8 percent. The larger contribution toward the overall inflation comes from items such as house rent, energy and transport and significant increase in prices of pulses and lower production of sugarcane and sugar.
8. LOW LEVEL OF TECHNOLOGYIn Pakistan agricultural and industrial production is carried out by old methods of production. Heavy industries are not there in the country. Moreover it is not possible to import most modern machinery due to shortage of foreign exchange.
9. INSUFFICIENT INFRASTRUCTUREInfrastructure means roads, railways, housing, water, electric supply and telecommunications facilities, which contribute to a higher rate of economic growth. Due to lack of firm economic polices supply of infrastructure was not provided by the government which has badly affected industrialization.
10. UNDEVELOPED INSTITUTIONAL SYSTEMThese institutions include family system, religion, economic freedom and right of private ownership. Every member of the society has right to adopt and practice any religion, can do any business, can adopt any profession and can own property. In Pakistan these institutions are not very well developed because of the lack of education and tolerance amongst the people.
11. INDUSTRIES ARE NOT SUFFICIENT ENOUGHIndustrial sector in Pakistan is progressing at a very slow speed. Due to market imperfections, low savings rate and weak capital and money markets, industries are not established. There is less progress with reference to heavy industries and other industries based on most modern technology.
12. SHORTAGE OF ENTREPRENEUR SKILLSPakistan is short of dynamic business leadership. Enterprise and initiative of entrepreneurs is hampered due to many factors, for example small size of the market, shortage of resources, poor infrastructure and old technology. Businessmen are not highly educated and trained and they are unaware of modern business techniques. They do not have innovative qualities and skills.
13. UNFAVORABLE BALANCE OF PAYMENTSPakistan’s balance of payments is usually against it, due to more imports and less exports. Main exports are raw material and other primary products, prices of which are decreasing in international market. Main imports are machinery, chemicals, drugs and electronic goods, prices of which are continuously increasing in international market. Thus it has to pay more than what it receives. Pakistan depends on foreign aids and grants for its economic development plans.
14. NATURAL RESOURCES ARE UNEXPLOITEDThere is shortage of natural resources. Petroleum, natural gas, iron, copper, water etc. are less than their demand. These resources are not properly discovered and exploited. Therefore industries are not developing for want of raw materials. The reason for not exploiting resources is lack of skill, technology and ill planning by of the Government.
15. LACK OF CONTINUITY IN ECONOMIC POLICIES There is no consistency in the economic policies of Government. It keeps on changing frequently; therefore-foreign investors and local businessmen cannot chalk out their business and investment plans in Pakistan.
16. UNSATISFACTORY LAW AND ORDER SITUATIONProper law and order situation is a basic requirement for speedy economic development whereas Pakistan is lacking in this regard. There are general strikes, lockouts, political processions, dacoits and killings in the society. This hampers economic and investment activity. Foreign investors avoid establishing their factories in Pakistani due to poor law and order situation.