𝐶𝑂𝑀𝑆𝐴𝑇𝑆 𝑈𝑁𝐼𝑉𝐸𝑅𝑆𝐼𝑇𝑌 𝐼𝑆𝐿𝐴𝑀𝐴𝐵𝐴𝐷

𝐴𝐵𝐵𝑂𝑇𝑇𝐴𝐵𝐴𝐷 𝐶𝐴𝑀𝑃𝑈𝑆

ASSIGNMENT NUMBER: Semester PROJECT 1

REGISTERATION NUMER: FA18-BSE-008

SUBMITTED BY: SHUJA KALEEM

SUBMITTED TO: SIR NASRULLAH KHAN

DUE DATE OF SUBMITION: 14/06/2019

INTRODUCTION:
One of the biggest challenge to industry of Pakistan is Security issue. Security has always been a
threat to industrial sector of Pakistan. As we all know that Pakistan has started from a very weak
industrial base and the current situation is also not that very good. At the time of partition of
Pakistan in 1947 there had been a negligible industrial base. Out of 955 total industrial bases
Pakistan only got 34 of them, while the rest of them were held in India. Such a minute industrial
bases were not enough for the newly born state to face the industrialize world. With the passage
of time Pakistan utilized all its resources domestic as well as external from rapid development of
manufacturing sector. Due to the wars which held in 1948,1965 and 1998 causes a great loss of
economy of Pakistan and it also adversely affect the industrial sector of Pakistan. I will highlight
the main events which are related to the security issues in the history of Pakistan which has
disturbed the industrial sector of Pakistan.

CONSEQUENCES OF KASHMIR WAR:

The Indo-Pakistani war of 1947-1948, sometimes known as the first Kashmir war was fought
between Pakistan and India over the princely state of Jammu and Kashmir from 1947-1948. It
was the first of four Indo-Pakistan war fought between the newly independent nations. After
getting independence Pakistan had very weak economy and war of 1947-1948 after few months
destroyed the already fragile economy of Pakistan. Pakistan almost got the 200 million out of 40-
50% of that share was consumed in war and there was not enough money to be invested in
industrial sector of Pakistan. In 1947 it was suggested in the industrial conference of Pakistan to
establish industries, which consumes locally produces raw materials like jute, cotton, hide and
skin but unfortunately Pakistan failed to achieve that target due to the war after few months of
independence. Offices were being treated in a tent which were less efficient and most of the
people also did not want to invest in Pakistan because Pakistan was underdeveloped and there
were lots of security threats. Security issues were the biggest problem in industrial progress of
Pakistan. The contribution of industrial sector of Pakistan was only 6.9% to gross domestic
product in 1950.

PROGRESS OF INDUSTRIAL SECTOR FROM 1950-1963:

Due to no war during the time duration of 1950-1963 it was known as the peace time for the
newly born state. During this time period Pakistan was able to made a lot of progress in the
industrial sector. In 1952 government took the initiative and established the Pakistan industrial
development corporation to invest in those industries which require heavy industry investment.
The major investment of this corporation in industry of manufacturing paper and paper boards,
cements, fertilizers, sui Karachi gas line the government also set an industrial finance
corporation and an industrial investment and credit corporation. The production capacity of the
already existing units like fertilizers and paper was considerably expanded. The reduction of the
export duties and the introduction of the export bonus scheme in 1958 increased the export of the
manufactured good. There was all round development of industries particularly in agricultural
processing food products and textiles. Moreover, in 1955-1956 to create skilled human labor for
the rapid industrial growth a Swedish Pak institute of technology was established Pakistan
industrial technical assistance center (PITAC) was also established I 1957in collaboration with
USAID. The industrial policy of 1959 assured that the maximum scope would be given to private
enterprises. The share of industrial sector of gross domestic product rose from 9.7% in 1954-
1955 to 11.9% in 1959-1960. There was a shift in establishment of consumer goods industries to
heavy industries such as machine tools, petro chemical, electrical and iron and steel. The
industrial performance in term of growth, export and productivity increased during second five-
year plan period.

STRESS ON INDUSTRIAL SECTOR DUE TO OPERATIONAL GIBRAL TAR:

After a great progress in industrial of Pakistan during time period between 1950-1963 another
jerk was given to industrial of Pakistan in 1964. The Gibraltar operation was started by general
Musa although Pakistan got succeed and won territories of India but a lot of money was
consumed in that operation and less money was invested in industrial sector of Pakistan the share
of industrial sector to GDP also decreased in that year.

INDUSTRIAL DAMAGE DUE TO 1965 WAR:

Another jerk was given to Pakistan in 1965. In this year the great second war was fought
between Pakistan and India which result in loss of life as well as our economy was adversely
affected due to this war. Contribution of industrial sector to our GDP was very much high from
1955-1964 but as a war a great war was fought between India and Pakistan. Economy of
Pakistan was flourishing during the time period of 1955-1964but suddenly got disturbed due to
military war and operations. Which thus confirms that the security issues are a great problem of
economy of Pakistan and it suffered a lot during the wars. The war held in 1965 have proved to
be very costly for our economy. It was mainly a post 1965 war related socio economic and
political crisis that had led to the 1971 war which further aggravated the economic environs
forcing the residual Pakistan to suffer economic issue for the next five years.

LOSS OF INDUSTRIES DUE TO 1971 WAR:

After five years of 1965 the third war was fought between India and Pakistan that did a great loss
to the economy of Pakistan. As economy of Pakistan was flourished before 1965 war but during
period of next ten years the share of industrial sector GDP got decreased. The industrial
performance in term of growth and production was disappointed from 1971-1977. There were
various reasons for the poor performance of the manufacturing sector. One wing of the country
east Pakistan was forcibly separated the country had to fight a war with India in 1970. The
suspension of foreign aid loss of indigenous market east Pakistan falls in export devaluation to
the extent of 131% nationalization of industries labor unrest, unfavorable investments climate,
floods causes a fall in the output of large scale industries. The annual growth rate fell to 2.8% in
the industrial sector in this period from July 1947 to 1977 the government initiated a large
number of measures to revise the economy cotton grinning, rise husking, and flour milling were
denationalized. The private sector was encouraged to invest in large scale industries. The annual
growth rate in manufacturing sector was 8.2% in the 1971’s. the growth of large scale
manufacturing slowed down to an average of 4.7% in the first half and further to 2.5% in the
second half of the 1970. The oil price shock of the 1970’s as well as droughts, flood and the with
drawl of the of external assistance did not help the situation. The growth rate in the 1970 fell to
3.7% per annum form the 6% recorded in the 19606’s worst of all the main plank on which the
Bhutto government came to power social justice proved to be extremely weak. Income
inequalities rose compared to the previous period while inflation accelerated average 16%
between 1971-1977, there by hurting the poor.

COST OF KARGIL WAR 1999 IN SHAPE OF INDUSTRIES:

The Kargil war, also known conflicts was an armed conflict between India and Pakistan that took
place between May and July 1999 in the Kargil district of Kashmir and elsewhere along LOC
kargil war also effect the economy of Pakistan and share of industrial sector to gdp of Pakistan
was also decreased as war between two countries disturb both countries and put them 5 years
back. The gdp growth rate declare to 54 percent while the agriculture sector recorded higher
output growth of the manufacturing sector was low. The investment ratio fell to 13.9 percent
during 1998 and 1999 as foreign saving, which formerly bridged the gap between national saving
and investment dried up in May 1998. The president of fiscal above 7 percent of gdp and
external deflects 4 to 5 percent led to the accumulations of large level of domestic and external
debts throughout the decade.