Globalization, by definition, is the integration and democratization of the world's

culture, economy, and infrastructure through transnational investment, rapid spread

of communication and information technologies, and the impacts of free-market on
local, regional and national economies. The golden words of late Dr. Mahbub ul Haq
provides the true vision:
"Globalization is no longer an option, it is a fact. Developing countries have either
to learn to manage it far more skilfully, or simply drown in the global cross
currents."
Theoretically,
Globalization opens up markets and ensures competition;
Removes inefficiencies and leading to greater growth;
Ensures specialization takes place in areas of comparative advantage;
For labour abundant economies this means increased employment as well as
economic growth.
PAKISTANS EXPERIENCE WITH GLOBALIZATION:
Pakistans expansion in trade has not been as spectacular as that of some of the fast
globalizers. Pakistans exports merchandize exports have not kept pace with that of
the rest of the world. Pakistans experience with globalization between 1990 and
2009 has not been great. Pakistans share in the world merchandize exports has
fallen from 0.16 to 0.15 per cent. Chinas share in world merchandize exports went
up from 1.80 to 5.04 per cent. Malaysias share in world merchandize exports has
increased from 0.85 to 1.44 per cent.
PAKISTANS TRADE SECTOR:
While the size of the trade sector relative to GDP has grown from about 28 per cent
in 1980 to about 31 per cent in 2008. It has been subject to large year to year
variations.
The trade sector has on an average grown only slightly faster than the growth of the
economy. The overall growth of the economy and the social sector development
indicators, particularly for the decade of 1990s, does not show any significant gains
from the liberalization process. Poverty which was declining till the early 1990s
started to increase thereafter till the end of the decade. The increase in the

openness of the economy did not translate significantly into any enhancement of
growth and subsequent decline in poverty.
(In Billion $)

Year

2006

2007

2008

2009

2010

2011

Goods
imported

26.696

28.775

38.216

28.617

32.917

38.933

(Source: world development indicators)

Pakistans trade sector did not grow significantly during the 1990s and from 20002010 despite the liberalization because of
narrow range of export markets and export products;
modest short-term demand responsiveness for major
Pakistan export categories;
small foreign direct investment in tradable sectors;
inadequate infrastructure in certain potential growth sectors.
GLOBALIZATION AND RE-INDUSTRIALIZATION IN PAKISTAN:
Originating from free-trade doctrine, some opinions claim that Pakistan, under
globalisation, should forget about possibilities of a new wave for industrialisation
altogether. Though controversial, the claim also argues that the East Asian Gang of
Four days are over, and globalisation - meaning flow of foreign direct investment
(FDI) and openness - will determine whether the country can industrialise or not.
Such arguments also advise that Pakistan should try to attract FDI through the
policies of liberalisation, deregulation, and privatisation. Most importantly, the
government has to be cut-to-size and be kept out of markets in the process.
(In Billion $)

Year

2006

2007

2008

2009

2010

2011

FDI

4.16400

5.49200

5.38900

2.26700

1.97100

1.24677

However, on the opposite side, forceful voices originate from at least two quarters,
which at a certain level are mutually supportive approaches to long-term economic
development. Broadly speaking, one is new institutionalising political economy and
the second is new growth and new trade theory.
The moral of the story is that industrialisation under globalisation for long-term

economic development is too important an activity to be left to blind forces of FDI

and openness.
All three sectors, first (government), second (business), and third (civil society) must
work together towards achieving national development objectives and strengthen
national institutions. Each sector can contribute a set of competitive advantages.
GDP GROWTH RATE:
Pakistans experience also shows that in the decade of 1990s, significant trade
liberalization was accompanied by a steady decline in the GDP growth rate, from
6.1% in the 1980s to 4.5% in the 1990s. The following table shows the ups and downs
in the GDP growth rate of Pakistan.
year

2006

2007

2008

2009

2010

2011

GDP
growth
rate

6.18%

5.68%

1.60%

3.60%

4.14%

2.36%

(Source: world development indicators)

GROWTH RATES OF GDP PER CAPITA:

Gross Domestic Product (GDP) per capita is a useful aggregate measure of annual
income per person. Data shows that in 1960 GDP per capita was $80.73 which has
been taken to $1194.33 in 2011. Its a steady increase but the value of dollar has
been increased from Rs 24 (in 1990) to Rs 100.25 (in 2013), which are the alarming
figures for the economy of Pakistan.
AVERAGE TRENDS OF UNEMPLOYMENT:
Despite of increase in growth rate of output, trade and FDI, The unemployment rate
was on peak in 2002. In that year 7.8% of total labour force of Pakistan was
unemployed. However, the unemployment rate started to decrease in the coming
years and came to 5% during 2011. But it is still reaching the sky as compare to the
developed countries of European Union.

IMPACT OF WTO ON PAKISTAN:

Pakistan like any developing country rely on foreign aid on one end, and the
whatever is earned through exports in terms of foreign exchange, the major chunk is
paid back to the international lenders leaving little room and money for the drastic
economic growth cycle to be ignited. In addition, with the appreciation of dollar, or
devaluation of local currency the standard of living of an American may increase as
the Pakistani goods become cheaper from him or her, but for Pakistan this
devaluation hits directly the purchasing power of a common man burring into the
vicious cycle of poverty.
(In Billion $)

Year

2006

Goods
17.049
Exported

2007

2008

2009

2010

2011

18.188

21.213

18.347

21.469

26.294

The implications to adopt the free liberalization under WTO has many pros and cons
but until now there has been no comprehensive study to capitulate the total impact
in economic terms focusing overall and individual sectors of the economy in
particular. WTO demands open market access for foreign goods and services in the
local market without any discrimination by creation of tariff or non-tariff barriers.
Pakistan is also required to provide a Most Favoured Nation (MFN) status to all
trading partners who mean non-discriminatory treatment among the members
implying on any imports or exports origination from respective countries.

SOME IMPORTANT LESSONS:

Pakistans experience with economic liberalization has thrown up some important
lessons and criteria to judge whether or not such liberalization would lead to higher
economic growth. These can be summarized as follows:
1.All the components of globalization do not move in the same direction. While there
is free flow of information and capital, labour movement is restricted. Even in trade,
high tech products are traded freely, but simple manufactures like textile and leather
goods continue to be protected and agricultural trade is heavily distorted by huge
subsidies provided by the US, Europe and Japan ($490 billion in the year 2009). In
such an uneven playing field, countries like Pakistan, which are primarily dependent

on agricultural or textile exports, cannot benefit much from globalization. In fact,

successive devaluations lead to a progressive depreciation in export prices and
therefore lower exports.
2. Pakistanis have to learn that without education they cannot face the international
effects of globalization. Currently Pakistani government is spending just 2.37% of
GDP. It is a very low percentage as compare to other south Asian countries and
developed countries.
CONCLUSION:
There is need for a coordinated and collaborative effort among the South Asian
countries to expand trade in the region. Pakistan needs to diversify its exports base
and shift from primary agricultural products to more value added and industrial
products. Privatization will have to be placed at the top of the Government agenda.
Pakistan should increase exports not only to earn more foreign exchange but also to
join the world community in globalization. Similarly, direct foreign investment is
crucial for resource mobilization. It is therefore, strongly recommended that the
government of Pakistan must attract foreign direct investment by giving them
various incentives. Furthermore, financial depth is also playing crucial role in the
overall development of the country. It is important that we should strengthen our
financial sector for capital flow. Of course, political stability is crucial for economic
development of the country.

The end