This document discusses the causes of industrial backwardness in Pakistan. It identifies several key factors hindering industrial development, including a lack of capital, energy crises, a small domestic market, insufficient credit facilities, outdated technology, lack of industrial research, poor infrastructure, shortages of skilled workers, currency devaluation, low quality labor, and political instability. The government has taken some steps to promote industry such as establishing development banks and corporations, offering tax incentives, and protecting domestic industries, but Pakistan's industrial sector still only contributes around 18.5% to GDP.

2. Causes of Industrial
Backwardness in Pakistan
Presenters
Mr. Zafar Iqbal Roll No. 259
Mr. Abdul Jabbar Sheikh Roll No. 260
Mr. Mujtaba Raheem Roll No. 253
Mr. Said Rasool Roll No. 281
Mr. Syed Taimoor Alam Roll No. 299
Hafiz Yasir Ummar Roll No. 300

3. Industry
In Economics Terms:
The organized economic activity concerned with
manufacture, extraction and processing of raw materials, or
construction.
In Business / Commerce Terms:
A branch of commercial enterprise concerned with the
output of a specified product or service the steel industry.
Extraction industry Construction Industry Steel Industry

4. Industrial Development in Pakistan
Industrialization plays a vital role in the economic
development of an underdeveloped country.
Pakistan being a developing country also wants to
achieve higher standard of living for its masses. It has,
therefore, embarked upon various programmers of
industrialization.
The policies of privatization, deregulation and
liberalization of the economy are being pursued.

5. Industrial Backwardness
At the time of partition Pakistan got only 34 units out
of 928 registered units. The government of Pakistan
since 1947 is trying hard to develop industries and
infrastructure facilities for the growth of industrial
sector, yet it has not achieved success to the desired
extent.
In the last over three decades, the contribution of
industrial sector to GDP is only 18.5% which by any
standard is not satisfactory .
Agro Based Industry

6. Causes
• Lack of Capital
• Energy Crisis
• Size of Market
• Lack of Credit Facilities
• Modern Technology
• Lack of Industrial Research
• Inadequate Transport Facilities
• Shortage of Specialists
• Decrease in External Value of Currency
• Poor Quality of Industrial Labor
• Political Instability

7. Lack of Capital
Lack of capital is a major hurdle in the way of
industrialization of heavy industries in Pakistan.
The amount of capital required in industries like
chemical, automobile, iron, steel, textile, sugar,
paper board and paper, is huge, Pakistan
Industrial Development Corporation (Pidc) And
Pakistan Industrial And Credit Corporation
(Picic) part of the required capital. Sufficient
amount of capital is not available for investment
from domestic sources.

8. Energy Crisis
Load shedding has resulted in frequent breakdowns
of electricity in the country. This is obstructing the
industrial production and thus the expansion of
industries is not taking place.
Moreover, there has not been any long term energy
policy in the country due to economic and political
instability. The shout term measures therefore have
not led to the expansion of industries in Pakistan.
Gas Crisis
Electricity generation
and inadequate steps
Results in Shutting
down of industries

9. Size of The Market
The size of market in Pakistan is very small; therefore, it
is an obstacle in the expansion and growth of industrial
sector. Poverty of the people, supply of bad quality
product, limited demand for goods, market, transport, and
communication facilities, high production costs etc, are
the major factors which limit the extent of market. Unless
multinational enterprises are invited to make investment in
export oriented and import substitution industries, the size
of market for industrial goods cannot be extended.
Need to expand
size of Market

10. Lack of Credit Facilities
Prior to nationalization of banks, the banks were in the
hands of few families who were also holding large scale
industries. Major share of loans was going in these hands;
they were receiving loans at lower rate of interest. These
loans were frequently used for unproductive purposes while
small businessmen and qualified entrepreneurs could not
enjoy credit facility although after nationalization there was
a change in this behavior yet credit facilities were being
provided on political basis for the last 20 years. The
previous and the present governments have however,
changed the policy and banks are being privatized now.

11. Modern Technology
In the modern time a country without modern technology
cannot develop industrially. The basic secret of industrially
developed countries at present is the modern technology. J
Especially Japan at present is on top of the list of
industrially developed countries because of technology but
in Pakistan the literacy rate is low. There is little research
work, level of technical know-how is low, technical training
has not been given proper place; there is a shortage of
foreign exchange to import modern technology.

12. Lack of Industrial Research
Lack of industrial research is also a problem which is
responsible for high production cost. Industrial
research discovers new technique of production and
introduces new varieties of product. Due to lack of
industrial research, improvement in the production
technique has not been made possible and as such
production cost continues to be high.
Remedy lies in the establishment of more laboratories
in the country for industrial research in the
production technique and new varieties of products.

13. Inadequate Transport Facilities
Swift and developed means of transport are necessary
for lab our mobility and for raw materials from
production areas to factories and to supply finished
products from factories to markets. But means of
transport and communications are not developed. Due
industrialists are not properly aware of the market
situation. Fast information technology is now solving
this problem for the educated industrialists.

14. Shortage of Specialists
Industrial sector requires specialized staff e.g.
qualified organizers, engineers, mechanics,
accountants, marketing managers marketing
surveyors, sale and purchase managers, but they are
short in Pakistan. Due to lack of facilities and
financial hardships, they prefer to work in developed
countries. Skilled workers and professionals are
needed badly to get rid of industrial slow down.

15. Decrease in External Value of Currency
Being a developing country Pakistan has to
import industrial – plants and machinery from
abroad but the import of machinery, raw material
and spare parts is becoming expensive due to
decrease in the external value of currency.
Pakistan devalued currency in 1955 and in 1972
and then delinked rupee from dollar in 19981.
The external value decreased by six times which
has made it difficult to import.

16. Poor Quality of Industrial Labor
The industrial lab our in Pakistan like other workers is mostly
conscious of its rights but not of duties. It may not be inferred
that the lab our is inherently incapable and inefficient in the
performance of duties. The fact, however, is that they are not
properly trained. The spirit of work is not included in them.
The political parties patronize them to meet their own ends.
The spirit of Japanese workers, love for work , love for the
country , should be inculcated not only in the industrial lab
our but also in all the Pakistanis . The change in the attitude
towards work will increase production and the country will
attain rapid rate of economic growth in a short period of time.

17. Political Instability
The political instability, lack of proper planning,
heavy taxes etc are also responsible for the lagging
behind of manufacturing sector. Since partition, the
political system of Pakistan has remained unstable.
Frequent changes in the government have been
taking place until now. There were only two long
period governments were run by military men,
while in this age of democracy all over the world,
people do not like martial law because investors
remain hesitant in making investment in the
industrial sector.

18. STEPS TAKEN BY THE GOVERNMENT OF
PAKISTAN
• Pakistan Industrial Development Corporation (P.I.D.C)
• Industrial Development Bank of Pakistan (I.D.B.P)
• Pakistan Industrial Credit and Investment Corporation
• Industrial Research and Training
• Protectionist Policy
• Tax Concession
• Encouragement to Private Enterprises
• Export Processing Zone
• Attracting Foreign Capital
• National Development Corporation Finance