Key Issue In Pakistan Industry

Key Issues in Industry in Pakistan

The previous two chapters have given a chronological account

of developments in the industrial sector in Pakistan, showing

how perspectives of different regimes have influenced

industrial and economic growth. This chapter looks at

contemporary issues in the industrial sector, including

privatization, the textile sector and a host of others. Many

of the issues in the industrial sector today have their roots

in policies adopted many years ago; so much so, that some

analysts and experts blame the problems of today on key

decisions of yesteryear.

8.1 Numbers and Trends in

Industry

The phenomenal growth rate experienced in the industrial

sector in Pakistan in the early 1950s took place, from an

almost non-existent base, where the growth rate of the

industrial sector was doubling itself every few years. The

extraordinary growth rates of over 20 per cent between

1950 and 1955 in large-scale manufacturing were achieved

primarily because very little existed to start with and, hence,

any investment and production, no matter how little, would

register impressive gains. Only in the early 1960s did largescale

manufacturing come close to the extraordinary period of

the early and mid-1950s. Nevertheless, overall manufacturing

did manage to produce a growth rate of close to 10 per cent

on average throughout the 1960s (Table 8.1), followed by

a substantial reduction in the 1970s, the reasons for which

were discussed in the previous chapters. The 1980s once again

saw a return to a very impressive annual average growth

in manufacturing of 8.21 per cent, a fact which received

much recognition by international agencies and independent

analysts and scholars (see Chapter 7).

A trend which is striking for its monotony is that exhibited

by the small-scale sector. The first few years, 1950 to 1962,

show a consistent trend of 2.3 per cent annual growth,

followed by a growth rate of 2.9 per cent over the next eight

years, with the Bhutto period registering an annual growth

rate of 7.3 per cent. From 1977 until recently, we witness a

consistent trend of 8.4 per cent; from the 1990s this trend

rate falls to another consistent 5.3 per cent. This trend seems

too consistent for it to be of any real substance. In fact, the

growth rate for the small-scale sector is not calculated, as it is

for the large-scale sector, and is merely imputed or assumed.

Every few years, a readjustment in the annual growth rate is

made to reflect a more realistic trend. However, as discussed

in section 8.2 the small-scale and informal sector is much

more dynamic and productive than the government's figures

show. Moreover, this estimate for the small-scale industrial

sector implies that, because the estimate is on the low side,

so too would be the figure for overall manufacturing, which

is based on both large- and small-scale industry. Furthermore,

we argue in the next section that not only is the smallscale

sector more dynamic on its own, but many activities

previously undertaken in the large-scale sector have shifted to

the small-scale sector - textiles in particular. The implications

of this are that, unless a correct annual estimate of the smallscale

sector