Pakistan, ever since its independence, has largely been an agrarian economy, surviving on primary products. It forms a major part of its export. In a historical sense, ever since its inception in 1947, Pakistan has produced a reasonable economic performance over the seventy years of its existence, despite ups and downs and especially considering the fact that the country has been involved in three major wars with its neighbor India, in 1965, in 1971 and in 1999. Political, social, and religious tensions have played a key role in the country’s economic performance, largely in a negative context. In 1947, agriculture accounted for 53% of the total GDP and today it counts for 21% of the total GDP, showing that, despite the recent changes to transition towards a technologically-inclined industrial economy, Pakistan still very much remains an agrarian economy.
Economic History in the 20th Century:
If we were to look at the history of Pakistan;’s economic performance, the uncertainty of the 1950s gave way to perhaps the most successful economic phase in Pakistan’s history. General Ayub Khan initiated the Green Revolution, which led to a decade of economic prosperity, three times more than India at that time. However, this came at a price since most of this development was limited to the province of Punjab. Pakistan’s breadbasket and urban Sindh, with Karachi serving as the capital city back.
Mass nationalization schemes and liberal economic policies were major themes during the 1970s under the Bhutto regime. This, coupled with key political events such as the separation of East Pakistan. Moreover, the launch of Pakistan’s nuclear program under the auspices of Dr. Abdul Qadeer Khan dealt the Pakistani economy a major blow. Global events such as the 1973 OPEC oil price shocks also added to Pakistan’s economic struggles.
Extensive US aid to Pakistan, under Zia n the 1980s, saw a rise in economic and industrial growth. Overnight, Pakistan was thrust into the global spotlight of the Cold War as the USA’s most allied ally to combat the Soviets in Afghanistan. This meant that the USA was willing to go to extensive lengths to boost the Pakistani economy.
The 1990’s period was known as the “musical chairs” period. In the 1990s, a number of political transitions, as well as a power struggle between Nawaz Sharif and Benazir Bhutto, saw economics being neglected and taking a back seat.
Economic History in the 21st Century:
The Musharraf era saw a few areas become important to economic policy. These included exchange rate management of the rupee against the dollar, usually maintained artificially. The baking sector underwent a mass makeover, affecting interest rates while capital goods became a priority. Pakistani per capita income rose to $1000 by 2007 due to increased foreign remittances.
The Zardari years began right during the 2008 global recession, leading to an economic struggle. Coupled with key political events such as the Bin Laden killing in 2011 and the Raymond Davis case, harmed Pakistan by damaging its international reputation. The economy suffered as exports dried up.
The Nawaz Sharif government saw policies and practices in favor of elite industrialists and businessmen, with a strong focus on infrastructure development. The development includes roads and bridges, also concentrated in Punjab, leaving the economy heavily detached from the rest of the provinces.
Pakistan Economy Current Status:
In the current scenario, Pakistan’s economy continues to struggle under the PTI government, with the massive devaluation of the rupee. This has led to desperate steps such as the $6bn bailout package by Saudi Arabia, under Muhammad bin Salman. However, CPEC remains a beacon of hope for long-term economic prosperity.