Assignment 3 project PDF

Preview

Summary

ContentsINTRODUCTION: ........................................................................................................................Definition of Economy: ..............................................................................................................REASON WHY I CHOOSE ECONO...

Description

Assignment 3

ECONOMIC CHALLENGES TO THE Contents

INDUSTRIAL

SECTOR OF PAKISTAN

INTRODUCTION:........................................................................................................................ 3 Definition of Economy:..............................................................................................................3 REASON WHY I CHOOSE ECONOMIC CHALLENGES:...........................................................4 INDUSTRIAL SECTOR OF PAKISTAN:......................................................................................4 ROLE OF INDUSTRIES:............................................................................................................. 5 MAJOR

BY THE SECTOR

IMPROVE

Course Title: Pakistan Studies Course Code: HUM111 Submitted by: Ali Hussein Registration No.: FA18-BSE-105 Submitted to: Muhammad Tanveer Jamal

PAKISTAN:...............6 INDUSTRIES OF PAKISTAN:...............7 ECONOMIC CHALLENGS FACED INDUSTRIAL OF PAKISTAN:........8

Course Title: Pakistan Studies Course Code: HUM111 Submitted by: Aiman Sartaj Registration No.: FA18-BSE-057 Submitted to: Dr. Zahid Shah

MINOR

INDUSTRIES OF

SOLUTIONS TO

ECONOMY

CHALLENGES:......13 CONCLUSION:......17 REFERENCES:......19

INTRODUCTION: In 1947, Pakistan had 30 million people with per capita income of 100$. Agriculture accounted for almost 50% of economic output with hardly any manufacturing, as all industries were located in India. Therefore, it was unable to feed 30 million people and was dependent on PL-480 imports from the USA. From thereon, Pakistan has come a long way. Today with 170 million people, our per capita income in 2008 was 1000$ which was ten times more. Pakistan is the third largest exporter of rice in the world and producing enough food grains to feed its people. 3 million tons of rice is exported every year by Pakistan which is surplus to our requirements. Pakistan is also one of the five major textile producing countries in the world. So if we measure in relation to where we were vis-à-vis structure of economy, agriculture has come down from 50% to 20%. Agriculture is not only crops, within agriculture there has been a significant change. Livestock, dairy, mutton, beef, poultry and similar other products is 50% of agriculture output in Pakistan. Pakistan also produces third largest quantity of milk in the world. So within agriculture sector, there is a change i.e. major crops are only 36% of agriculture value added and 14% are minor crops, fisheries, orchards, fruits and vegetables. Thus, we are moving in a direction where the same land and same resources are being used more efficiently in order to produce more. As a contrast, agriculture is only 2.5% in the US having a population of 300 million, out of which they not only feed the entire population, but also export to the rest of the world. Therefore, it is important to understand that when it is said that agriculture is producing/contributing more, it is the productivity of agriculture rather than the share of agriculture in GDP. Manufacturing and industry now account for 25% of the income; when we recall there was not even a single industry worth its name at the time of partition. So if we look where we were and where we are, I think the justification for Pakistan in terms of betterment of economic conditions of Muslims in this part is very strong. But where we have failed is that we have not lived up to our potential. In 1969, Pakistan exports of manufactured goods were higher than the combined exports of Indonesia, Malaysia, Philippines and Thailand. In 1960’s Korea emulated Pakistan in its five years planning process. The tragedy is that even a country such as Vietnam which was completely devastated by the war has now overtaken Pakistan. Ten years ago, India which was way behind Pakistan (till 1990’s) is now way ahead. As an economist and student of globalization, the biggest challenge is: how can we organize ourselves to reach that position where at least we can be running not at the nine second a mile but at least ten second a mile 3 race which is going on in the global economy.

Definition of Economy: An economy is the large set of inter-related production and consumption activities that aid in determining how scarce resources are allocated. This is also known as an economic system. Economics is on the one side a study of wealth; and on the other and more important side, a part of the study of man.” According to Marshall, wealth is not an end in itself as was thought by classical authors; it is a means to an end—the end of human welfare. Economic development first became a major concern after World War II. As the era of European colonialism ended, many former colonies and other countries with low living standards came to be termed underdeveloped countries, to contrast their economies with those of the developed countries, which were understood to be Canada, the United States, those of western Europe, most eastern European countries, the then Soviet Union, Japan, South Africa, Australia, and New Zealand. As living standards in most poor countries began to rise in subsequent decades, they were renamed the developing countries. There is no universally accepted definition of what a developing country is; neither is there one of what constitutes the process of economic development. Developing countries are usually categorized by a per capita income criterion, and economic development is usually thought to occur as per capita incomes rise. A country’s per capita income (which is almost synonymous with per capita output) is the best available measure of the value of the goods and services available, per person, to the society per year. Although there are a number of problems of measurement of both the level of per capita income and its rate of growth, these two indicators are the best available to provide estimates of the level of economic well-being within a country and of its economic growth

REASON WHY I CHOOSE ECONOMIC CHALLENGES: I choose economic challenges because Pakistan has been facing different challenges regarding to its economy. The economic situation of Pakistan is very critical and people are looking towards the solution of these challenges faced by the economy of Pakistan. Pakistan has different opportunities which can help it to solve its economic problem. But without tackling long term challenges and problems decisively, country will no longer be able to take advantages of opportunities. Increase in debt, increase in import and decrease in export, low saving, lower investment, low tax collection, lack of policy implementation, excessive taxation are some of the challenges faced by the Pakistan’s economy. Some of the solutions of these problems are offering low interest rate, collection of the taxes, and proper use of young labor force, use of technology, governance and decentralization. This is quiet considerable to take essential steps for it.

INDUSTRIAL SECTOR OF PAKISTAN: “Industry refers to that sector of economy which is related with manufacturing and production of different products” Industrial Sector is of great importance for economic development of country. Industrial Sector is of great importance for economic development of country. It is historical fact that countries with strong industrial sector have showed more economic growth and development industrial sector have shown improvement in national income and promoted living standard of population. Historically, Pakistan’s textile industry and clothing sector has always been a major contributor to the foreign exchange earner and still contributes 4th largest grower of cotton after USA, China and India 3rd largest consumer of cotton 3rd largest exporter of cotton textiles 2nd largest supplier of cotton yarn with 26% share of the international market. Over 1.3 million farmers, out of total of 5million are involved in cultivation of this crop. Industrial Sector is the second largest individual sector of the economy accounting for 24% of the GDP Fertilizer is any organic or inorganic material of natural or synthetic origin (other than liming materials) that is added to a soil to supply one or more plant nutrients essential to the growth of plants. Cement industry is one of most prominent and energetic organization having operations and interactions with cement industry Pakistan is ranked Pakistan exports 5th in the world’s increased by 47% in cement exports last fiscal year.5th position leaving 2008-09 Exported Germany behind (20.28 mt) $700m in past year. At the time of independence in 1947, there were only two sugar factories in Pakistan.  At present there are 106 sugar mills operating in Pakistan. It is the 2nd largest industry in Pakistan after Textile Industry Sugarcane acreage in Pakistan is 5th Pakistan ranks 15thtotal of 106 sugar in the World and in the World for mills it is grown on over sugarcane in the country 1 million hectares production GDP contribution PER CAPITA (0.7%) CONSUMPTION Employment (26kg) (1million) Alcohol (used by pharmaceutical industry) Ethanol (used as a fuel) Sports are all forms of physical activity which, through casual or organized participation, aim at expressing or improving physical fitness and mental well-being, forming social relationships or obtaining results in competition at all levels” FootballCricket batsHockey sticksboxing glovesVolley ball swimming suitsGolf ballsBadminton racketsBasketballs The export of sports goods, increased by 7.85% from US$39.180m →US$42.257m last year Sialkot export 70% of total world demand for hand-stitched inflatable soccer balls (footballs). 40 million balls annually worth US$210 million. . Companies of various sizes 2,400Employments more than 200,000Exporting goods worth US$450 millionLarge exporters (more than 250 employees) Medium exporters (100–250 employees)Small exporters (10–100 employees).Commercial exporters (1–9 employees). Telecommunication is the transmission of information over significant distances to communicate. Main Categories  Telephone  Mobiles  Internet

In 2008 Pakistan was the world’s third fastest growing telecommunications market Fixed-line subscriptions declined from a peak of 5.2 million in 2005-06 to 3.4 million in 2009-10 Pakistan traffic volume grew by 253 percent compared to last year during the same period 5% of its Gross Domestic Product has created 220,000 high-paying jobs in Pakistan. Pakistan is now a leader in mobile usage in south Asia PTCL Ufone Warid Telenor Zong Mobilink The glass industry in Pakistan, though developed, still has space for improvement.  There are about 37 glassworks in the organized sector, with the production capacity ranging between 10 tons and 200 tons per day. The major ceramics industry are KaramCeramics, Swat Ceramics, Master Tiles, Shabbir Tiles and Emco Industries. Punjab Baluchistan GDP Contribution 73% 3% Sindh NWFP 5% 19% Glass industry in Pakistan comprises sixteen manufacturers in the (PAGMA) organized sector which Pakistan exported produces over 90 per cent of glass products worth the indigenous production Rs.60 million to within the country. Rs.20 million per annum during imports of various glass2005-2010, from Rs.975 million to Rs.1, 782 million, during last five years 83%.

ROLE OF INDUSTRIES: ● Major industries of country contribute greatly to the economy of that country. ● They are usually in the formal sector and are usually registered. ● They employee a larger number of employees ● They are usually large and important industries of a country. ● They usually contribute to GDP of a country.

MAJOR INDUSTRIES OF PAKISTAN: Cotton textile industry Agriculture industry Mining industry Sugar industry Cotton-textile Industry Textile Industry: The Textile industry in Pakistan is the largest manufacturing industry in Pakistan. Pakistan is the 8th largest exporter of textile products in Asia. This sector contributes 8.5% to the GDP. In addition, the sector employs about 45% of the total labor force in the country (and 38% of the manufacturing workers). At present, there are 1,221 ginning units, 442 spinning units, 124 large spinning units and 425 small units which produce textile. The Textile industry in Pakistan is the largest manufacturing industry in Pakistan. Pakistan is the 8th largest exporter of textile products in Asia. This sector contributes 8.5% to the GDP.

Agriculture industry: Agriculture constitutes the largest sector of our economy. Majority of the population, directly or indirectly, dependent on this sector. It contributes about 24 percent of Gross Domestic Product (GDP) and accounts for half of employed labor force and is the largest source of foreign exchange earnings. It feeds our whole rural and urban population. Realizing its importance, planners and policy makers are always keen to have reliable area and production statistics of agricultural crops well in time. Policy makers primarily need accurate and timely statistics for the important crops such as wheat, cotton, rice, sugarcane, maize etc. In 2005, Pakistan produced 21,591,400 metric tons of wheat, more than all of Africa (20,304,585 metric tons) and nearly as much as all of South America (24,557,784 metric tons), according to the FAO. The country was expected to harvest 47 to 64 million tons of wheat in 2015. Pakistan has also cut the use of dangerous pesticides dramatically. Mining industry: Mining is an important industry in Pakistan. Pakistan has deposits of several minerals including coal, copper, gold, chromite, mineral salt, bauxite and several other minerals. There are also a variety of precious and semi-precious minerals that are also mined. These include peridot, aquamarine, topaz, ruby, emerald, rare-earth minerals bastnaesite and xenotime, sphene, tourmaline, and many varieties and types of quartz. The Pakistan Mineral Development Corporation is the responsible authority for the support and development of the mining industry. Gemstones Corporation of Pakistan looks after the interests of stake holders in gemstone mining and polishing as an official entity. Baluchistan province is the richest in mineral resources available in Pakistan. While recently Sindh discovered coal deposits in Thar. Khyber Pakhtoon khwa is rich in gems. Most of the mineral gems found in Pakistan exist here. Apart from oil, gas and some mineral used in nuclear energy purposes which comes directly under federal control mining of other minerals is provincial issue. Currently around 52 minerals, are mined and processed in Pakistan. Khewra salt mines are second largest salt mines in the world. Sugar Industry: Sugar Industry is an agro-based industry, which provides employment to the landless rural population and has a great impact on the economy of the country. it has become the second largest industry after the Textiles sector. The sugar industry is totally dependent on this raw material although sugar in the northern areas is also made from sugar beet. Sugarcane is a labor-intensive crop. It requires about 134 man-days/hectare. Sugarcane cultivation provides partial and seasonal employment to 3.9983m people approximately, which is about 12.14% of the total agricultural labor force. The general perception of the sugar industry as minting money is not a correct perspective in the prevailing situation. First of all, it has a seasonal production spell for a period of five months from November to March. Keeping production flow smoothly coordinated with storing and maintaining orderly schedules of supplies throughout the year are really complex issues to tackle.

MINOR INDUSTRIES OF PAKISTAN: In Pakistan, cottage or household industries hold an important position in rural set-up and are usually know as minor industries .Most villages are self-sufficient in the basic necessities of life. They have their own carpenters, blacksmiths, potters, craftsmen and cotton weavers. Many families depend on minor cottage industries for income. Minor industries have also gained immense importance in cities and towns. There is great demand for hand-woven carpets, embroidered work, brassware, rugs and traditional bangles. These are also considered important export items and are in good demand in international markets. Sports Industry: There is an industry to manufacture everything so is for sport’s goods and this is one of those industries that earn great revenue each year because of the popularity of every sport. In Pakistan almost all sports related items are produced but the famous products are soccer ball, cricket bat, cricket ball, tennis ball and some other items too. Sports industry of Pakistan has even manufactured the soccer ball for the FIFA World cup of the year 1994; this shows that how demanding the sports industry of Pakistan is in the world market of sports goods. The sports industry of Pakistan lies in the city of Sialkot which is a part of the province of Punjab. All the items of sports of the best quality are manufactured in the city of Sialkot and sports industry in Sialkot is the main factor of Sialkot’s economy as it earns great profit from it due to the high demand of sports good in international market. Surgical Equipment industry: The surgical instruments industry is mainly clustered in and around the skirts of Sialkot. Over 99% of the countries production is centered at Sialkot. The sector comprises over 2300 companies, of which around 30 can be considered large and the remainder can be split as 150 units of medium sized and remaining as small. The industry produces on average over 150 million pieces a year with an estimated value of around Rs.22 billion. Ancillary Textile Industry: The ancillary textile industry includes cotton spinning, cotton cloth, cotton yarn, cotton fabric, fabric processing, home textiles, towels, hosiery and knitwear and readymade garments. These components are being produced both in the large scale organized sector as well as in the unorganized cottage / small and medium units. The performance of these various ancillary textile industries is illustrated as under:o Cotton Spinning Sector: The Spinning Sector is the backbone in the ranking of textile production. At present, as per record of Textile Commission Organization (TCO), it is comprised of 523 textile units (40 composite units and 483 spinning units) with 13.269 million spindles and 185 thousand rotors. Installed and 11.083 million spindles and 140 thousands rotors in operation with capacity utilization of 84 percent and 76 percent respectively, during July –Mar FY 2016. o

Cloth Sector :

There are three different sub-sectors in weaving viz, Integrated, Independent Weaving Units, and Power loom units. There is investment in the shuttle-less looms both in integrated and independent weaving sector. This trend is likely to intensify in the country. The power loom sector modernized and registered a phenomenal growth over the last two decades. The growth of power loom sector is due to favorable government policies as well as market forces. The production in Non-Mills Sector is not reported and therefore is estimated. The Table 3.4 shows production and export of clothing during the period under review.

ECONOMIC CHALLENGS FACED BY THE INDUSTRIAL SECTOR OF PAKISTAN: Debt Servicing: A recently produced data of the State Bank showed the country paid $6.820bn as debt servicing in FY14, including $5.910bn as principal amount and $915m as interest. This $7 billion debt is presenting great challenge to the economy of Pakistan. The main cause of Pakistan’s budget deficit is the huge amounts of debt servicing. The government, trapped in floods and political crisis, may face another serious turmoil by the end of this fiscal year if IMF and other donors did not release the promised loans. The gravity of the situation is visible in the wake of increasing trade gap, with no foreign inflows, no release of installments from IMF and no interest of foreign investors in the country. The disappointing foreign investment has developed another difficult situation under which repatriation of profits and dividends on foreign investments ha...