Development Economics

Presented By: Danish javed (006) Qasim Ali khan (004)Presented To: Mam Nadia

IntroductionThe economy has considerably lost

significant growth momentum during last three years as the economic growth averaged just 2.6 percent as against 5.3 percent in the preceding eight years. There are many reasons for deceleration of growth momentum like massive terms of trade shock of 2008, global financial crisis, and intensification of war on terror, security hazards and high profile killings.

Current Situation Global Development The world

economy is moving from crisis and it recovers slowly. The growth powerhouse is shifting more towards emerging economies rather than developed economies. The World Economic Outlook estimates that global GDP, after expanding by 5.0 percent in 2010, will slow to 4.4 percent in 2011, before it reaches 4.5 percent in 2012.

Current Situation (continued…..) Commodity producing sector (CPS) The Commodity

Producing Sector (CPS) has performed below par during the last two decades mainly due to slow down in the growth of agricultural sector. Its share in the GDP has declined from 49.3 percent in 1999-2000 to 46.7 percent. In industrial sector, the massive negative contribution from electricity and gas distribution sector to the GDP growth is neutralized by positive contributions from manufacturing sector.

Current Situation (continued…..) Agriculture The share of agriculture in

GDP gradually shrink to 20.9 percent in 2010-11 from 25.9 percent of GDP in 1999-2000. . The agriculture sector remained the dominant sector with its job absorption ability and it still absorbs 44 percent of the country’s labor force. It gives a kick-start to aggregate demand for industrial goods and services as well.

Current Situation (continued…..) Manufacturing The manufacturing

sector has been hardly hit by international and domestic factors. Law and order societies, loss in working hours, this sector is fallen down and caused a slow down in output.

Current Situation (continued…..) Mining and Quarrying This sector is

witnessed by the second lowest growth and grew by 0.4 percent in 2010-11 as compared to 2.2 percent growth last year and a target of 2.1 percent. the percentage of crude oil , natural gas and coal is 0.7%, 1.1% and 10.6% respectively.

Current Situation (continued…..) Services Sector The services sector has

emerged as the main driver of economic growth in recent years. In Pakistan the services sector has risen to 53.3 percent in 2010-11 which is highest share in last two decades. The services sector grew by 4.1 percent against the target of 4.7 percent and actual outcome of 2.9 percent.

Current Situation (continued…..) Contribution to economic growth Pakistan’s

economic growth like many other developing countries is historically characterized as consumption-led growth. The consumption remained the major driver of growth as it accounts for 85 percent share in overall GDP and with real growth of 7 percent in private consumption and 7.5 percent in government consumption in 2010-2011.

Current Situation (continued…..) Composition of the GDP The share of

CPS in GDP is almost 62% and it is decline to 46.7% from 1970 to 2011. this is due to equal rise in share of services sector. In 1970 agriculture sector accounted percent of GDP but it is fall to 20.9 percent in 2010-11. while the share of the manufacturing sector has increased by 4 percentage points in the same period.

Current Situation (continued…..) Per capita income Per capita income

grew by 0.7 percent in 2010-11 as compared to 2.9 percent growth last year. This reflects the impact of slower economic growth. The per capita income in nominal terms grew by 19.9 percent.

Current Situation (continued…..) Investment and saving The total

investment has declined from 22.5 percent of GDP in 2006-07 to 13.4 percent of GDP in 2010-11. Fixed investment has decreased to 18.1 percent of GDP from 20.4 percent last year.

Role In EconomyGrowth and Investment are

Interdependent.Investment Plays a Vital Role.Developed Nations are Independent.Industrial and Agricultural Output.Value of Money. Standard of Living.

PROBLEMSSocioeconomic problems:-

Poverty is a continued problem.High Illiteracy rate. Poor Healthcare Facilities.Widespread Child Labor.Increasing Unemployment Rate.Corruption in Government.

PROBLEMS ( continued . . . .)

Lack of Organizational Abilities:-

Poor Management.Lack of Resource Allocation. Lack of Precautionary Measures. Instability in Government and Political

Structure.Inefficient Law and Order.

PROBLEMS ( continued . . . .)

Agriculture:-Salinity and Fertility of Soil.Lack of Research and Development.Lack of New Technology.Lack of Facilities.Small farmers are increasing in our

country.

PROBLEMS ( continued . . . .)

Manufacturing Sector:-Inadequate Investment.Power Shortage.High Production Cost.High Competition.

PROBLEMS ( continued . . . .)

Energy Crisis:-Shortage of Natural Gas, Fuel and

Electricity.Prices are rising.Increase in Poverty and Unemployment

Rate.High Alternative Costs.

SOLUTIONSRole of Government :-Proper Management.Eliminate Corruption.Focus on Basic Needs.Investment in Productivity.Attention on Precautionary Measures.Protection to All.

SOLUTIONS (continued . . . .)

Agricultural Growth:-Abolishing the Feudalism.Providing certain Incentives .Facilitating the Farmers.Proper Irrigation System. Promoting the R&D departments.

SOLUTIONS (continued . . . .)

Industries and Power Crises:-

Investment is needed.Expensive import-based, oil-run power

generation is not the answer.Government Actions.Control on Prices.Wind Energy.

ANY QUESTION?