Understanding Economy



The capital formation rate is lowering in Pakistan. Investors for the safe side send their money abroad.

Political stability is necessary for economic development. Political instability reduces the rate of economic development. If we study the history of Pakistan politics from 1947 to 1958, Pakistan remained under political disturbance. There were rapid changes in government. From 1958 to 1965 there was economic development and the second five-year plan was successful. There was again political disturbance from 19681970 and in 1971 East Pakistan was separated from West Pakistan. In 1972 there- was devaluation in currency by 131% and large scale industry and commercial banks were nationalize which discouraged the private investors. Again in 1977, there was a change of government. In 1981, Opposition started the movement for the revival of democracy and the country again came under political disturbance. There remained political stability from 1978 to 1982 and the GNP rate rose to 8.5% which was highest in Pakistan. Then in 1988, there was aga change of government. These rapid changes discouraged the rate of investment in the country. Each government discarded the previous government’s economic policies. The GDP growth rate declined to 2% during 2008-09 as compared to to5.8% during 2007-08.


Administrative obstacles may arise when:

i) Corrupt and dishonest personals may be the main cause of poor administration that turns into an obstacle. Corruption may be due to the absence of checks and balances in the exercise of power, lenient treatment, illiteracy, ignorance of higher-ups, etc.

(ii) Red-tapism or delays in making decisions and their implementation is also another form of administrative obstacle. The irrationally organized administrative system left various inbuilt elements in the overall system, which obstructs it from performing its function and duties effectively.

(ii) In LDCs mostly departments are interrupted by politicians that create various problems like recruitment without merit, wrong persons on different authorities etc interrupt their decisions. Due to these factors, the majority of the heads of different departments have no relevant experience, therefore, their technical decisions sometimes become incorrect.

(iv) There is a lack of interrelationship among various departments. The staff of the administrative department is not efficient. There is also a shortage of those persons who can make effective plans and made them in practice, which is essential for the effectiveness of development planning.

(V) The administrative expenditures are greater than their output in various departments, due to that reason the condition of the public sector is not satisfactory. In most cases, departments of the public sector are suffering from losses and their services are of low quality.

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