Economics Chapter 11 (Economic Development and Planning) Class 12 notes. 2nd Year economics notes. FA/ fsc class 12 economics.
Q.1) What is economic development? How is it measured?
Development means change and economic development refers to the desirable changes taking place in the economic life of the people or we may also say that economic development is the process of improvement in living standard of the people.
There is a general agreement among economists on the broad meaning of the term. But when it comes to giving a precise definition, they differ.
Watson defines economic development as.
“Economic development is the expansion of production and consumption faster than population growth because of steadily higher productivity of resources and combinations of resources’’
Meier and Baldwin have given a very good definition.
“Economic development is a process whereby an economy’s real national income increases over a long period of time.”
In comparison, Meier and ‘Baldwin have better clarified the meaning of development.
According to them
A. Economic development is a complex process and a many-sided economic activity in which deep-rooted changes take place in the economic and social system. Just building of a few factories, roads or schools is not the whole development
B. Real national income must increase and production of goods and services must expand. Mere increase in money incomes is not economic development
C. Increase in national income for a year or two is not economic development. Incomes and consumption of goods and services must rise over a long period of time.
Economic development affects the economy in two ways.
Firstly, supply of factors and products rises. New mineral and water resources are brought into use. More efficient techniques of production and new materials are developed. Due to use of machines and better skills, productivity of labor and land increases and larger quantities of goods come to markets.
Secondly, economic development affects demand for goods and services. Tastes and preferences of the people change, e.g., they start liking readymade goods, arrange functions in marriage halls or hotels and use fashionable articles. Along with basic needs they are attracted to comforts and luxuries of life. Demand for educational and health services, transport facilities and banking facilities, cleanliness materials and cosmetics goes up. Use of energy per head rises. Books, magazines and newspapers are read in greater numbers. Demand for stationary, furniture and home appliances increase initially, distribution of income may be affected e g. the gap between rich and the poor may widen.
Read more: Economics Chapter 10 National Income of Pakistan Class 12
Economists have suggested different methods to measure economic development. The following three are the most important
1. Growth of GNP (or GNI)
This is a simple and commonly used measure of economic development. The increase in the country’s real gross national product is taken as a measure of development. A country whose GNP is rising faster is said to be developing at a higher rate.
Some objections are raised against this approach
a) It ignores the problems resulting from development e.g., people may suffer due to environmental pollution, urbanization and overcrowding. After all, production of more cars means more polluted air.
b) This method does not show how the composition of national output is changing with respect to the quality and variety of goods.
c) If the rate of increase of GNP is equal to that of population, then even with rise of GNP, no improvement in living standard of the people will appear.
Read more: Economics Chapter 9 Introduction to Pakistan Economy Class 12
2. Rise in Per Capita GNP
Some economists prefer to measure economic development through increase in per capita income. They feel that only if people’s living standard improves, we should say that economic development is taking place.
This approach has also some drawbacks.
a) If the population of a country is rising so fast that, in spite of an increase in national income, per capita income is not changing, we will have to say that there has been no economic development. But we know that production performance of the economy is improving.
b) Sometimes, in spite of an increase in per capita income, the standard of living of the majority of the people does not rise. Either the government may use more output for military purposes, or most of the increased incomes may go to the few rich.
c) Even if people get more to consume, it does not mean that they have become happier or more satisfied. People may have to work for longer hours to maintain their higher income and living standard.
3. Improvement in Quality of Life
Now a day’s economic development is viewed in a broader sense. It is considered as a comprehensive improvement in human living conditions. Therefore, to judge how the economic life of the people has been affected by economic development, economists use social indicators which relate to the condition about health, food, education, employment, housing, communication, life expectancy, infant mortality rate, working hours, energy consumption, social security and recreational facilities. With the help of these indicators, we can construct a ‘Quality of Life Index’.
4. Human Development Index (HDI)
The UN prepares Human Development Index (HDI). The index puts human development at the center of economic development. Human development is defined as enlarging people’s choices and bringing them out of deprivation. Along with income a large number of non-income indicators such as literacy, health care, provision of basic needs, employment opportunities and leisure time are included.
The United Nations adopted the Millennium Declaration in 2000 and set Millennium Development Goals which set specific, quantified targets for reducing poverty and achieving progress in health, education, the status of women and the use of environmental resources. Millennium Development Goals are now widely accepted as a framework for measuring development progress.
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After comparing different approaches to measure economic development, we come to the conclusion that as a rough measure it is preferable to use GNP as economic development. In spite of some limitations of this method, it is simpler and easily comprehensible. If we want to have a comprehensive view the HDI approach is best.
Q.2) Describe various factors of economic development.
Factors of economic development
Economic development is a complex and lengthy process. Many economic and non-economic factors influence the pattern and rate of development in a country. Important factors are:
Ø Economic factors
Ø Social and cultural factors
Ø Political factors
1. Natural Resources The basic factor affecting development is the quantity and quality of natural resources that includes land, forests, minerals, water and power resources, climate and geographical location.
Abundance of natural resources means the country has more potential for development. An important factor in the prosperity of the USA, Canada and Australia is that they possess vast agricultural land. Similarly, the high rate of growth of Iran and Saudi Arabia is due to their mineral wealth. However just the existence of resources is not enough. The country must have the ability to utilize these resources. Many underdeveloped countries like Sudan, India and Pakistan are rich in resources, yet they are not developed. There are some countries which have a smaller number of natural resources but have successfully made up the deficiency by importing raw materials from others, e.g., Japan, Korea and Belgium.
2. Capital Accumulation: Capital means the stock of materials, machines, equipment, buildings and social overheads like roads, canals, power houses, gas and telephone lines. Capital increases productivity of human labor. Capital accumulation leads to expansion in industry, agriculture, commerce, transport and energy. It is with the help of capital goods that a country’s natural resources can be properly exploited. Capital accumulates when savings are invested. Although England and Germany have fewer natural resources, yet they have huge capital, which is the secret of their higher incomes. Most of the developing countries are poor and do not have enough savings for investment. So, shortage of capital continues and development is slow.
3. Technology Improvement in technology makes human labor and capital more productive. For example, the invention of the engine brought industrial revolution, tractor revolutionized agriculture and computers multiplied the efficiency of human activities in all spheres of life. Japan successfully used new technology to achieve a high rate of economic growth. Improvement in technology requires scientific research and innovations, huge amounts of capital and education. Developing countries should, therefore, import technology from advanced countries.
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4. Human Resources It is the human beings who are the basic cause and source of all economic activity. Economic development is for human beings and is undertaken by human beings. Material Or physical resources of a country are helpful only if the population of the country has the necessary will, skill and technical knowledge to use these. Many UDCs of the world have an abundance of natural resources but because of poor quality of human resources, they produce a limited quantity of output. So, they remain underdeveloped. Some developing countries like Pakistan are over populated while some others like Saudi Arabia are under populated. Both situations are undesirable If the population is growing fast, the percentage of children rises with little scope for saving. This will slow down development. For achieving higher rate of development, a country should have optimum population Moreover, through education, technical training and better health facilities, the economic efficiency of the people should Be increased
Social and Cultural Factors
Socio-cultural factors have deep influence on the rate of economic development. Materials and capital are not the most important in economic development. After all, these are lifeless things. Most important is the attitude of man. Every society has a certain social set up. a particular family system, occupational structure, social attitudes, habits, customs and cultural patterns. These things determine their thinking about work, saving, consumption, working of women and family planning. If these factors are favorable in a country, it can develop rapidly. If a society’ people believe in merit, dignity of labor and proper reward for work, it will have a higher rate of development. Caste system, nepotism, corruption, ignorance, superstitions and immobility of labor are the things which retard development.
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Economic development can take place only in an atmosphere of peace and political stability. If the political system is dominated by big landlords, development will be slow. Jaghirdars, feudal lords, sardars and hereditary peers are by nature backward-looking and have conservative social thinking. They do not like the prosperity of common people as it decreases their influence. On the other hand, if persons in power belong to the middle class or have industrial background, the process of economic development is accelerated. Clean and efficient administration stimulates development. A popular government can infuse new spirit among the people and can create a favorable atmosphere for development activities. Corruption in political or official circles kills the incentive for work.
Q.3) Define underdevelopment. Explain the common characteristics of underdeveloped countries.
In common meaning, underdevelopment of a country stands for its poverty. However, economists take a different view. They agree that the most outstanding feature of an underdeveloped economy is its poverty, but they point out that poverty, in fact, is the result of underdevelopment. Basically, underdevelopment refers to a situation where a country is not making full use of its potential resources. Its natural and human resources are not properly harnessed and exploited. In this sense of the term, we can say that Pakistan is an underdeveloped country and so is India. Iran. Indonesia. Sudan and Nigeria. Pakistan has huge natural and human resources which, if utilized fully, can make us prosperous and rich as any nation of the world, in modern economic literature, underdeveloped, developing or less developed countries (LDC) mean the same thing. Sometimes all the developing countries together are called ‘Third World’. Developed countries of Europe. America and Japan are the First World* and socialist countries are the Second World.
To further clarify the meaning of an underdeveloped economy, we give below the views of some prominent economists.
According to Samuelson. “A developing country is one with real per capita income that is low relative to that in advanced countries like the U.S.A., Japan and those in Western Europe.”
Nurse, an expert in development economics thinks that “The underdeveloped countries are those which, as compared to the advanced countries, are under equipped with capital in relation to their population and natural resources.”
According to the United Nations experts, “underdeveloped countries are those in which per capita real income is low when compared with the per capita real incomes of USA, Canada, Australia and Western Europe.”
The general features of underdevelopment include mass poverty, rapid population growth, underutilization of natural resources, scarcity of capital, use of inefficient technology, unemployment, shortage of foreign exchange, burden of foreign debt, inefficient administration, lack of infrastructure, unsettled socio-political conditions, cultural tensions and overcrowded cities. Underdevelopment is a multidimensional problem and needs many-sides strategies to overcome it Characteristics of underdeveloped countries
Underdevelopment is not a simple isolated problem. It is the result and combination of many economic and social problems and evils. If we study the conditions in various developing countries, we find that they have many features in common.
1. General Poverty and Low Level of Living: is the most important feature of underdeveloped countries. Most people do not get even the basic necessities of life. They spend a large part of their incomes on food, yet are under-fed. They have poor health, inadequate housing and lack of education. Considering Pakistan’s per capita income of $1254 (201T) compared to the USA’s and Japan’s exceeding $45,000 Out of 7 billion people on earth, more than 1 billion live in absolute poverty, i.e., their earnings can get them food just to survive from day to day.
2. Rapidly rising population: consumes major part of increase in national income leaving little for investment. Due to improved medical care, death rates have fallen whereas birth rates remain high. The proportion of dependent children in the population is large and life expectancy is low. During the past six decades, Pakistan experienced a population explosion. Our population grew five times since independence
3. Underutilization of Natural Resources: Many developing economies are not deficient in natural resources. Only their resources remain either unutilized or underutilized. For example, the whole of Pakistan’s cultivable land is not under use; mineral wealth is not fully exploited and water resources are still under-utilized.
4. Shortage of capital: limits productivity of labor and the ability of a country to produce goods. In developing countries, the number of vehicles, buildings, roads and machinery per head of population is small. Consequently, they cannot make use of modem techniques of production. For example, Pakistan saves less than 14% of its income. With this rate enough of capital cannot be accumulated.
5. Poor Technology: Developing countries use old methods of production. Application of machinery and modem technology is limited, so labor productivity does not rise. The quality of industrial products is poor and unsatisfactory. Such goods cannot compete in international markets.
6. Unbalanced Industrial Growth: In most underdeveloped countries there is imbalance in various industries. More investment is done in consumer-goods industries than in capital goods. This trend retards the pace of development.
7. Unemployment: High rate of population growth and slow rate of economic development create unemployment and under employment. Enough job opportunities are not available. In Pakistan, for example, about 15 % of labor is either totally unemployed or underemployed. There is another kind of unemployment, i.e., disguised unemployment. This situation arises when more persons are working on a farm or factory than required in rural areas family members working on a small farm are more than required.
8. Unfavorable Balance of Payments and Foreign Debt Most of UDCs have small amounts of goods for export. Quality of their products is so poor which cannot compete in international markets. They export raw materials or semi-manufactured goods which have low prices, and import manufactured goods at high prices. To fill the gap in foreign exchange earnings, most developing countries accumulate huge foreign debt and face the problem of debt servicing.
9. Inefficient and corrupt administration: People’s ignorance and poverty in developing countries provide opportunities for corruption. Selection of government officials is not on merit. Political pressure and nepotism do not allow clean administration. In such societies, duty becomes subordinate to personal gain.
10. Shortage of Social Overhead Capital: Developing economies are short of social overhead capital or infrastructure in the form of railways, roads, drainage system, electric supply, training institutions and research institutes.
11. Excessive Dependence on Agriculture or Primary Products: like oil and minerals. Due to a fast-increasing population, the labor-land ratio is high. Small land holdings are not suitable for mechanized farming. Productivity per worker and per acre is low. Exports mainly consist of agricultural goods or minerals. In Pakistan 43 % of labor is employed in agriculture and still it is deficient in food.
12. Illiteracy and Economic Backwardness of the People: results in low labor efficiency, less mobility and lack of specialization in occupations. Due to the caste system, people stick to the occupations of their parents even though better opportunities may exist elsewhere. People are illiterate, ignorant, conservative, tradition-bound and superstitious who resist new ideas. Child labor is widespread.
Status of women is inferior. More prestige is attached to a government job. Even a low-paid clerical job is preferred to a high-paid manual work Joint family system, encourages laziness and kills initiative. People waste their time, energies and money to safeguard their false notions of prestige.
13. Social and Political Tensions: create general unrest. Due to migration from rural to urban centers, improvement in living patterns, shifting of occupations, increased use of money, commercialization of various economic activities, spread of education and scientific knowledge, increased competition in various fields, old moral values and social relations come under strain. The gap between the views of young and old generation widens. There is tension in various regions of the country. As a whole, the things in developing countries are unsettled.
Q.4) Explain the problems of developing economies with reference to Pakistan.
Pakistan was formed in 1947 and meanwhile its establishment or starting point of an organization or action, it has been surrounded by frequent issues including but not limited such as substructure, inadequate refined resources, unfertile or obsolete factories and knowhow about new technology, imposed battles at Kashmir and other facades poverty, inflation and many other undissolved issues. In spite of it being rich on raw resources thus far Pakistan is a developing country with limited development in every period due to the problems it faces.
According to a scrutiny organized and carried out by the government of Pakistan and shows that the poverty has increased approximately from 30% to 40% during the past decade. Consider that if 40% of a country’s population is earning their life below the poverty-line in which the people are deprived of basic necessities of life such as medication, food, shelter, edification and clothing are necessary to live.
Literacy is clear to those persons who are the age of 15 or above who can “read” and “write”. According to this definition, Pakistanis officially reported to have a 50% literacy rate in our country. Even those who are called “Literate” are only able to read and write, which in today’s skill-oriented world is considered as illiteracy.
CORRUPTION AND POLITICAL INSTABILITY
Corruption and political instability are the major problem of Pakistan today. It is interesting to note that due to the international interference and skillful manners, the very same people that we label as corrupt just some time ago, responsibility and reproach, come back to govern us after a couple of years again and people welcome them with open arms. This is possibly also the main reason why the political process in Pakistan is not let to flourish physically.
OVERPOPULATION, INFLATION, UNEMPLOYMENT
Overpopulation, inflation and unemployment is the major problem of Pakistan. According to accurate figures may be fine above the officially reported facts, the country has an estimated 2% growth rate which for a country of official population of 160 Million turns out to be approximately around 3.2 Million every year.
About 40% of the population is already living under the poverty line and 5.6% official facts and figures of the population is without a job, the ever-growing population of Pakistan is just adding to the problems of the previously under pressure state.
Also, with the worldwide intensifying oil prices are causing every item in the country to double and in some circumstances tripled every year.
Q.5) Define economic planning. What are the major objectives of planning?
Planning refers to estimation and use of one’s resources for some definite and predetermined objectives in an organized and systematic manner. The resources include land, property, money, materials and human abilities. Planning is the essence of all human activities. Planning is applied in social, political, religious, educational and, of course, economic fields. However, presently, we are concerned only with economic planning and that too at macro level, i.e., national economic planning. Prof. Robbins observes, “Planning is the grand panacea of our age”.
Economic planning has no universally accepted meaning. Under different economic systems, the term is used to convey different things. On the one extreme, in socialist countries economic planning is the name given to the state policy of making a detailed “Survey of a country’s resources and exercising a tight control over every economic activity. Individuals are allowed a limited freedom and personal choice. All farms and factories are owned by the state which follow government instruction. Planning, according to socialist view:
“The state policy to control and run the economy by making major economic decisions through a central planning authority: what is to be produced, how, when and where it is to be produced and to whom it is to be allocated, on the basis of a comprehensive survey of a country’s human and material resources”.
“Economic planning is a system in which the government manipulates the free-market mechanism to produce a more desirable pattern of production and consumption.”
Objectives of economic planning
Planning is always adopted to achieve certain objectives. These objectives are not the same for all countries and nor even the same for a country at all times. They are determined in the light of prevailing economic situations and are changed according to new problems arising from time to time. Objectives of planning depend upon the stage of economic development and socio-political conditions.
For example, In the 1960s, economic planning in Pakistan had the most important objective as raising national income. But in the 1980s, the objectives of fair distribution of income and provision of basic needs to the people were given more importance at the start of the 21″ century, the governments are giving more attention to poverty reduction. Similarly, whereas Pakistan faces the problem of overpopulation, Saudi Arabia is under populated. So, the planning in these two countries must be different in this regard. The USA has to make plans to utilize its surplus agricultural food production while we are planning to overcome the problem of food shortage.
The important objectives commonly found in plans of different countries are:
1. Increase in National Income: Low national income or per capita income is supposed to be an index of underdevelopment. So almost all underdeveloped countries include this objective in their national plans. All of Pakistan’s five-year plans have aimed to increase national income.
2. Rapid Industrialization: The standard of living of a people cannot be raised unless through industrialization their incomes are raised and abundant quantities of consumer goods are made available to them. The fact that all developed countries are industrialized shows the importance of this objective. We can find this objective in various plans of Pakistan.
3. Economic Equality and Social Justice Economic development will fail in its purpose, if its fruits are not fairly distributed over the whole population. Glaring inequalities of income, wealth and economic opportunities are not acceptable to the modern democratic mind. Planning can help to change this situation and establish social justice. If in a society, on the one side, there are millions who live in semi-starvation while on the other, few rich enjoy all kinds of luxuries, such society has no right to exist.
4. Development of Backward Regions: Pakistan’s development plans include the objective of developing backward regions at a faster rate. Special programs have been made for Baluchistan and FATA.
5. Balanced Economy: Economic development of a country can continue only if all sectors of the economy grow simultaneously. If industry grows faster while agriculture stagnates or vice versa, then the pace of development will soon slow down. If the transport or energy sector lags behind, it affects industrial and agricultural output. Planning is used to achieve balance in development of various sectors.
6. Achievement of Full Employment: Achievement of full employment is an important aim of planning. Unemployment not only means wastage of resources but also creates other social and political problems. One of the reasons for unrest in Karachi and large-scale facilities in the country is the existence of widespread unemployment.
7. Self-Reliance: Dependence on foreign countries for investment funds or food or essential raw- materials can create trouble at any time and make the economy unstable. Thus, planning can be used to avoid such a situation. In earlier plans Pakistan tried to achieve the objective of self-reliance but now when the world has become a global village, this objective has less importance.
8. Correction of Balance of Payments: Many developing countries do not export sufficient quantities of goods and services and so have to face persistent deficits in their balance of payments. Through planning they aim to promote exports on the one hand and control imports on the other. Since Pakistan also faces this problem all of our plans have aimed to improve the position of balance of payments.
9. Diversification of Economy: Excessive dependence on one sector creates frequent troubles in smooth working of the economy. Planning can be used to diversify the economy. Pakistan depends heavily on cotton production, if due to unfavorable weather conditions in some years, its output drops, the whole economy suffers. Kuwait depends upon oil production. During the Gulf War, its oil production stopped and it had no other source of income.
10. Other Objectives
Depending upon particular conditions in different countries, we find that the following objectives have also been included in some plans.
I. Population Control – China increased the rate of economic growth through population planning.
ii. Inflation Control.
iii. Establishment of basic industries: Iran and India and all socialist countries have used planning for this purpose.
iv. Energy Generation.
Q.6) Enumerate major problems of Agriculture.
Agricultural sector is the backbone of our economy. But the growth of agriculture in Pakistan is facing a lot of problems. Due to various causes, per acre yield is very low in Pakistan as compared to other developed countries.
PROBLEMS OF AGRICULTURAL SECTOR
Problems of agricultural sector are categorized as below:
A. TECHNO-ECONOMIC PROBLEMS
1) Limited Cultivable Area
The total area of Pakistan is about 79.6 million hectares, out of which only 23.7 million hectares (28%) area is used for agricultural purposes. About 8 million hectares of land is idle and un-utilized. There is vast subdivision and fragmentation of land holdings, as a result modern technology cannot be applied in the agriculture sector.
2) Water Logging and Salinity
Water logging and salinity are twin problems of the agricultural sector due to salinity, deposits of salt in land have appeared on the surface of land and they have adversely affected the performance of the agricultural sector. Water logging and salinity affect about 0.10 million acre of land every year. It is not only a waste of land but also a reduction in productivity.
3) Slow Growth of Allied Products
Allied products refer to those productions, which are not agricultural but indirectly, help the farmer to improve his living standard. Pakistan is in-sufficient in the production of fruits, milk, poultry, fisheries, livestock and forestry. As a result, not only our food quality is poor but also industries such as furniture, textiles and dairy cannot be developed.
4) Low Per Hectare Yield
The most important problem of agriculture is its low yield per hectare for almost every major crop. 45.0% of the labor force is engaged in this sector in Pakistan while it is less than 5% in developed countries. But, other countries of the world are getting higher yields per hectare due to use of modern technology and trained labor.
5) Inadequate Infrastructure
Rural infrastructure like roads, storage facilities, transport, electricity, education, sanitation and health facilities etc. is inadequate to meet the requirement of growth of agriculture. Total length of farm-to-market roads is not only shorter but their condition is also poor. Many villages have no metal-led road at all. Electricity is available to only 3/4 rural populations.
6) Uneconomic Land Holdings
Due to increasing population and division of land under the law of inheritance, landholdings are subdivided over and over again. The result is that a very large number of farmers have less than 2 hectares of area. Moreover, holdings are scattered. It is difficult to use modern machinery on small pieces of land.
7) Old Methods of Production
No doubt, mechanization of agriculture is increasing in Pakistan, but in most of the areas, the old implements are still being used for agricultural production. Old and orthodox techniques of production cannot increase the production according to international levels.
8) Inadequate Supply of Agricultural Inputs
The supply of modern inputs like high yielding variety (HYV) seeds, chemical fertilizers, pesticides, mechanized machinery etc. is not only costly but also inadequate and irregular in Pakistan. Numbers of fertilizer producing units are just 10 in Pakistan.
9) Lack of Irrigation Facilities
Shortage of irrigation facilities causes a serious limitation in the expansion of crop areas in Pakistan. The lower water supplies, losses from water courses in the fields are the serious problems of the farm sector. Actual surface water availability is 91.8-million-acre feet.
10) Inadequate Agricultural Research
The average crop yield in Pakistan is very low as compared to the production levels of the advanced countries of the world. In order to raise the potential of agricultural production, there should be continuous improvement in the research for agricultural growth. Total agricultural universities and colleges are only 16 in Pakistan.
11) Problem of Land Reforms
Land reforms have been implemented against the will of people. There is an urgent need to conduct a proper land reform for improving agricultural growth. Due to this problem agricultural production cannot increase to the desired level.
12) Defective Land Tenure System
Defective land tenure system is also responsible for low yield per acre in the agricultural sector. Landlords and feudal-lords live in posh urban areas while tenants and peasants have no or less incentive for their hard work. So, the productivity in the agricultural sector remains low.
13) Subsistence Farming
Our farmer is attached with subsistence farming; a huge portion of production is consumed at the farmer’s own house to support a large family. Hence, less portion of the production is available for market supply. It causes low income for the farmers. Farming is not conducted at commercial level in Pakistan.
14) Low Cropping Intensity
Cropping intensity means the number of crops grown on a piece of land in one year. At the present stage of our development, there is low level of cropping intensity as compared to advanced countries. Cultivable areas under double or multiple cropping are inadequate in Pakistan.
15) Improper Crop Rotation
Proper turning round of crops is essential to re-establish the fertility of the land. The constant cultivation of one crop or two; exhausts the fertility of the soil. Proper rotation of crops is necessary in order to restore fertility.
B. NATURAL PROBLEMS
16) Various Plant Diseases
Various agricultural crops like cotton, sugarcane, tobacco, wheat and rice often come under attack of pests and insects. Pests and plant diseases reduce the annual productivity of agriculture.
17) Natural Calamities
Labor is in the hands of mankind but its result is in the hands of ALLAH in the agriculture sector. So, the growth of agriculture is dominated by nature. In case there is too much rain, reduction in productivity. There is 20% reduction in productivity due to unnecessary rain and unfavorable climatic situations in Pakistan.
18) Scarcity of HYV Seeds
Our poor farmers have to use lower quality seeds due to non-availability of High Yielding Variety (HYV) seeds. On the other hand, if seed is available, they cannot be purchased due to low income. Agricultural production is badly affected because of inferior quality of seeds.
19) Under Utilization of Land
Mostly the poor population is attached with the agricultural sector in Pakistan. They are using orthodox and traditional means of cultivation. Our farmer is not interested in using the advanced and modern means of farming, as a result the area under cultivation remains underutilized, un-utilized or mis-utilized.
C. SOCIO-ECONOMIC PROBLEMS
20) Consumption Oriented
Our farmers have no proper records of their incomes and expenses. Mostly, they spend more when they have more due to illiteracy. A huge part of the farmer’s income is consumed on occasions of marriage, birth, death and several other rural ceremonies and festivals in Pakistan.
21) Farmer’s Litigation
There are frequent and continuous litigations among the farmers directly or indirectly. They are often seen in courts, police stations, irrigation offices, revenue boards and other official problems. Due to mentioned problems, our farmer cannot devote his time, energy, efficiency and labor to agricultural productions.
22) Joint Family System
Joint family system is also a big problem in the agricultural sector. Our farmer is poor; on the other hand, he has to support his big family. It creates deficiency in saving and investment. A huge part of a farmer’s productivity is consumed at his own house.
23) Illiteracy and Ill-health
Most of the farmers, laborer’s and tenants in our country are illiterate. They are untrained and inefficient to boost agricultural productivity. On the other side, the health of our farmers is improper due to rural backwardness. Literacy rate is only 57.7 % in Pakistan. The Economic Survey of Pakistan shows that literacy remains higher in urban areas (73.2 percent) than in rural areas (49.2 percent).
24) Political Instability
Political instability has affected development in all economic and social sectors. Unfortunately, the political situations in Pakistan are not stable. It creates unrest among the farmers to sell the productions to various industries as raw material. On the other hand, people hesitate to invest in the agricultural sector due to political unrest.
D. FINANCIAL PROBLEMS
25) Lack of Credit
Basically, our farmer is poor and he has a low income. Agricultural credit facilities are not common in Pakistan. Credit that can facilitate agriculture is not available easily. Moreover, non-institutional sources are available but these are not reliable due to high rates of interest. About 50.8% poor borrow from landlords in Pakistan.
26) Poor Financial Position of Farmers
It is a common saying about our farmer that he is born in debts, grows in debts and dies in debts. It means that the financial position of Pakistani farmers is weak and poor. According to “Pakistan Human Development Report 2003” about 57.4% of the poor are working for feudal-lords without wages.
27) Instability in Market Prices
The price market of agricultural goods generally remains unstable in the country. The Cobweb theorem is very popular in case of market prices; it means that the price of one commodity is much higher in this year and much lower in the next year and vice versa. The farmers do not get due reward from the sale of their productions. So, they remain unsatisfied.
28) Shortage of Agricultural Finance
Agricultural credit facilities are not sufficient in Pakistan. Rate of interest on agricultural credit is high and loans are not provided on time. According to “Pakistan Human Development Report 2003” in Pakistan about 50.8% poor borrow from landlords at a very high rate of interest.
MEASURES TO REMOVE THESE PROBLEMS
Following measures are suggested to improve the agriculture:
1) Supply of Agriculture Credit
Poor farmers cannot afford the expensive technology from their own resources in Pakistan. So, supply of agriculture credit at easy terms and conditions is very necessary. An amount of Rs. 85,177 million was disbursed by commercial banks in 2009 and Rs. 49 billion was distributed by ZTBL. ZTBL issued credit for Rs. 37.4 billion during 2010-11.
2) Water Logging and Salinity Control
Water logging and salinity destroys about one million acre of land every year in Punjab and Sindh. It reduces our cultivable area. For this purpose, installation of tube wells, repair of canal banks and drainage of water etc. are needed. The Ministry of Agriculture proposed to invest Rs. 18.5 billion with the objective of converting 2,00,000 acres of irrigated land to drip and shower irrigation systems.
3) Construction of Dames
Sometimes, due to heavy unwanted rains and floods, agricultural productivity is destroyed. To tackle this problem, it is necessary to construct dames and bands on rivers.
4) Provision of HYV Seed
High yielding variety seed is not available at a suitable price in Pakistan. So, farmers have to depend upon low quality of seeds that causes 20% reduction in total production. Government should provide HYV seed at minimum price in this case.
Farm mechanization is necessary to remove the problems to the agriculture sector. Sowing, cultivation and harvesting of crops through agricultural machines increase the productive quality and quantity.
6) Agricultural Research
Agricultural research is compulsory to remove the backwardness of the agriculture sector. Major agricultural colleges and universities are only about 16 in Pakistan. Government should increase research work in the field of agriculture.
7) Agro-based Industries
Agro-based industries like poultry, fisheries, dairy and livestock should establish. These industries indirectly lead to improve the agricultural sector.
8) Tax Concessions
Mechanization is necessary to remove the problems of the agriculture sector. Government should give tax concessions on imports of agricultural technologies to enhance the process of farm mechanization.
9) Training of Farmers
Our farmers are illiterate and ill trained, so their efficiencies are poor. Government should start a special education programmed for farmers and give them training about farming.
10) Prices of Agricultural Productivities
Sometimes, our farmers receive low prices of their crops. There is no proper effective price policy of government. Government should set reasonable prices of agricultural productions to develop the living standard of farmers.
Being an agrarian country, the agricultural sector of Pakistan’s economy is still backward. Use of modern techniques, provision of credit facilities, basic infrastructure and agriculture research facilities are needed to remove all the problems of the agriculture sector.
Q.7) Explain why industrial development in Pakistan is slow.
Causes of slow industrial development in Pakistan
Industrialization means novelty and change. If those who hold power fear that change may bring unpleasant consequences, they will systematically obstruct it, which rulers in Pakistan proceeded to do for decades.
But slow and distorted industry development in Pakistan is the result of blocked opportunities as well. Wouldn’t Pakistan be much better off if it exported more of its textiles to the rich industrial world? Wouldn’t waiving Pakistan’s quota under the Multi- Fiber Agreement have been a very good and important step for the US government to take in reciprocation of the Pakistani government’s help as US-led forces attacked Al Qaeda bases in Afghanistan? No doubt it would have been.
But other key reasons for the slow pace of industry development in Pakistan reflect the standard dilemmas of poor governance. “Protect property rights and enforce contracts”. But property rights and contracts are threatened at many levels. They are threatened by roving bandits, by local notables, and, most of all, by government functionaries who use their offices to extort extra income. Simply put, a weak state cannot enforce contracts and property rights, while a state that is strong enough to enforce them must control its own bureaucrats.
However, the most important reasons that Pakistan has done worse than Latin America or Southeast Asia seem to be focused around education. There can be little hope for the sustained industry and economic development where the educational system is at least one generation–and possibly three generations–behind other regions in terms of its commitment to universal literacy, and where higher education largely ignores the skills and subjects needed to enable people to master technology.
After all, blocked export opportunities, weak government institutions, and high levels of corruption are worldwide problems. Even political and religious leader’s hostile to change and industrialization are not uncommon. But as we compare patterns of development throughout the world, more and more evidence are piling up that universal literacy and a large class of people with industrial-technical skills are key resources that determine whether countries are able to break free from the grip of backwardness and poverty.
- During the past four decades, a large number of industrial units have been set up in Pakistan. These units are producing consumer goods. Pakistan has not attained any position in industrial countries of the world. There are different causes of this backwardness. Some of them are:
- Poor in the heritage of industrial units.
- Lack of basic minerals.
- Low level of technical knowledge
- A policy matter of British ruler
- Shortage of foreign exchange
- A limited class of organizers
- No consistent industrial policy
- Political instability in the country
- Smuggling of goods etc.
At the time of partition of the subcontinent, Pakistan got only 34 units out of 928 registered units. These units were of small size and all were not in operation. Pakistan started from scratch. Iron, coal and copper are basic minerals for industrial development. These minerals are not available in Pakistan. Imported machinery and pig iron are very expensive.
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