This study examines why a perverse kind of industrialisation
developed in Pakistan. Following independence, the Pakistan government
embarked on industrialisation proclaimed as a short-cut to eradicate
poverty and reduce unemployment. But after four decades, it is still
considered among the poorest countries '. of the world, with per capita
annual income of only $375. The share of manufacturing sector in the GDP
grew from a nominal base in 1947 to 19.7 percent in 1990, but it did·
not help raise the standard of living. Pakistan's economy grew
eight-fold I during this period whereas some other developing countries
grew many times tenfold.2 Adopting a historical perspective reveals a
perverse kind of industrialisation in Pakistan, which inhibits its
ability to eradicate poverty [Sixth Five-year Plan 1983-88 (1982)]. By a
perverse kind of industrialisation, I mean a degenerate system of
industrial development which, instead of helping the national economy to
expand and grow retards its process . .It implies selective industrial
investment which is more capitalintensive, remains import-dependent,
ignores forward and backward linkages, ensures the dominance of larger
oligopolists firms, produces lUXUry goods, does not help increase
productivity, and is located in a few urban centres. This level of
industry creates relatively few jobs, depends on imported materials and
instead of increasing value-added at home, and puts extra pressure on.
foreign exchange reserves which the economy must meet by exporting
primary goods. The absence of forward and backward linkages restricts
opportunities for industrial expansion and larger firms relying on .
foreign technology employ relatively few workers; and they produce
lUXUry goods for higher income brackets, all of which does not benefit
the masses. Such perverse characteristics of industrialisation
contribute little to the eradication of poverty [Lawrence
(1974)].
Role of Institutions in the Industrial Development of
Pakistan
