ECONOMY
The economy of Pakistan grew by 4.2 percent
annually during the period 1990-1998. While less than the 6 percent annual
expansion the country experienced in the 1980s, the rate is still high compared
to most countries. Nevertheless, the majority of the nation's citizens remained
poor and heavily dependent on the agricultural sector for employment. This was
largely a result of the country's high rate of population increase, but
political factors, such as the war of secession waged successfully by East
Pakistan (now Bangladesh) in 1971 and a coup d'état in 1977 (see the History
section of this article), also slowed economic growth and modernization. In
1998 Pakistan's gross domestic product (GDP) was $63.4 billion.
The government of Pakistan is deeply involved in
directing the country's economy, and most major industries have been
nationalized. A government economic plan for 1978 to 1983, however, recommended
that private capital be given a greater role in the industrial sector; the plan
for 1983 to 1988 emphasized investment in hydroelectric power and rural
development. A plan implemented in 1988 to liberalize internal and external
trade and privatize more sectors of the economy had produced increases in the
GDP growth rate, export revenues, and domestic and foreign investment by the
early 1990s. In 1993 the government moved to reduce the nation's deficit and
lessen its reliance on foreign aid and loans, by introducing, among other
measures, a national sales tax and increases in fuel taxes. The government
budget in 1997 included $9.6 billion in revenues and $13.6 billion in
expenditures. Pakistan receives considerable economic assistance from foreign
countries and from international organizations. The United States, which had
imposed economic sanctions against Pakistan in 1990 in order to protest
Pakistan's nuclear weapons program, lifted the sanctions in January 1996,
clearing the way for economic assistance.
Some 27 percent of Pakistan's total land area is
cultivated. Agriculture and related activities engage 50 percent of the
workforce and provide 26 percent of the GDP. By the late 1970s an intensive
land-reform effort had resulted in the expropriation of some 1.2 million
hectares (3 million acres) from landlords, the distribution of almost half of
this to tenants, and the limitation of individual holdings to 40 hectares (100
acres) of irrigated or 81 hectares (200 acres) of nonirrigated land. Formerly an
importer of wheat, Pakistan achieved self-sufficiency in the grain by the
mid-1970s. Chief cash crops are cotton (textile yarn and fabrics produce more
than one-half of export earnings) and rice. Principal crops in 1999 (with output
in metric tons) included sugarcane, 53.1 million; wheat, 18 million; rice, 6.9
million; cotton lint, 4.5 million; and corn, 1.3 million. The livestock
population in 1999 included 18 million cattle, 21.2 million water buffalo, 32
million sheep, 49 million goats, and 204 million poultry.
Forests cover 2.3 percent of Pakistan. Most of the
30.9 million cubic meters (1,092 million cubic feet) of roundwood harvested in
1997 was used as fuel.
Fishing resources, although underdeveloped, are
extensive. In 1997 the catch was 597,201 metric tons, three-quarters of it
obtained from the Indian Ocean. Types of fish caught include sardines, sharks,
and anchovies; shrimp are also an important part of the industry.
In the early 1990s the most important nonfuel
minerals (with annual production in metric tons) included gypsum (532,000), rock
salt (895,000), limestone (8.8 million), and silica sand (154,000). In 1998 coal
production was 3.16 million metric tons, crude petroleum production reached 20.1
million barrels, and production of natural gas was 20.2 billion cubic meters
(712 billion cubic feet).
The manufacturing capacity of Pakistan is still
small, but production has been steadily expanding. In 1996 manufacturing
accounted for 17 percent of the GDP. Important products include processed foods,
cotton textiles, silk and rayon cloth, refined petroleum, cement, fertilizers,
sugar, cigarettes, and chemicals. Many handicrafts, such as pottery and carpets,
also are produced.
In 1998, 63 percent of Pakistan's electricity was
produced in thermal installations, and most of the rest was generated in
hydroelectric facilities, including the large Tarbela project on the Indus
River. A nuclear power plant is situated near Karachi. Pakistan's total output
of electricity in 1998 was 59 billion kilowatt-hours.
The basic monetary unit is the Pakistani rupee,
consisting of 100 paisa (44.50 rupees equal U.S.$1; 1998 average). The
State Bank of Pakistan, established in 1948, issues banknotes; manages currency
and credit, the public debt, and exchange controls; and supervises the
commercial banks. Pakistani banks were nationalized in 1974, but in the early
1990s the country transferred two banks to private ownership and issued licenses
for ten new commercial banks. A number of major foreign banks maintain offices
in the country. In conformity with Islamic doctrine, domestic banks in Pakistan
have abandoned the payment and collection of interest. Investment partnerships
between the bank and the customer have replaced loans at interest.
The foreign trade of Pakistan consists largely of
the export of raw materials and basic products such as cotton yarn, and the
import of manufactured products. In 1998 exports earned $8.5 billion and imports
cost $9.3 billion. The chief exports were cotton textiles, cotton yarn and
thread, clothing, raw cotton, rice, carpets and rugs, leather, fish, and
petroleum products; the main imports were machinery, electrical equipment,
petroleum products, transportation equipment, metal and metal products,
fertilizer, and foodstuffs. Pakistan's chief trading partners for exports are
the United States, Hong Kong, Germany, the United Kingdom, Japan, and the United
Arab Emirates; chief sources of imports are the United States, Japan, Kuwait,
Saudi Arabia, the United Arab Emirates, the United Kingdom, and China.
The lack of modern transportation facilities is a
major hindrance to the development of Pakistan. Its terrain, laced with rivers
and mountains, presents formidable obstacles to internal overland
transportation.
The country has 247,811 km (153,983 mi) of roads.
The railroad network totals 8,775 km (5,453 mi). Karachi is the principal port;
a second major port, Muhammad bin Qasim, was opened in the early 1980s.
Pakistan International Airlines, in large part
government owned, provides overseas service to a number of countries. In the
early 1990s the government ended a monopoly held by Pakistan Airlines. Four
private carriers have since begun domestic operations. The country's main
international airports serve Karachi, Lahore, and Rawalpindi.
In 1998 Pakistan had 19 telephone mainlines for every 1,000 people. Radio receivers number 94 and television sets 22 per 1,000 residents. Television broadcasting began in Lahore in 1964 and in Karachi in 1966. Newspapers are mainly printed in Urdu and English. Pakistan has 264 daily newspapers, most with small circulations. The major dailies are concentrated in Lahore and Karachi.