Pakistan is one of the poorest countries in the world, with many of its citizens living below the poverty line. It is an agro based country thus the revenue that is earned through agriculture is not enough to support the rapidly growing population. In the mids of the 1980’s Pakistan was facing a staggering economy due to the energy crisis all around the world. The main crisis that Pakistan is facing is due to the instability of the government. Largely Pakistan is divided between two Parties Pakistan People’s Party (PPP) and Pakistan Muslim League Nawaz Party (PMLN), the first party supports social democracy whereas the later supports conservatism. Changes in the policies from one tenure to other often results into instability of the economy thus making it difficult to attract foreign investments. With so much inconsistency in the policies it is not possible for the economy to grow internally and therefore the state is left with no choice but to take help from the developed countries.
The country is facing a number of challenges in order to diversify its economy. The pivotal one is the lack of foreign investment in the country. Due to the instability and the law and order situation in the country a very few number of firms are eager to invest in Pakistan. Secondly infrastructure facilities are not up to the standards; specifically it does not produce enough electricity to meet the needs of the industry. The poor education system within Pakistan also has resulted into economy having workforce that lacks necessary skills for development. The most important issue is the change in the system from privatization to state held departments and vice versa. Too many rapid changes in the system not only results into downfall of the indust...
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...to devalue the currency in exchange of $10billion loan instalment. Thing which we don’t understand is that if $10billion instalment was to be given to Pakistan then why we were forced to buy dollars by IMF. Pakistan has to accept all those tough reforms because Pakistan was in high fiscal trouble at that time. These tough reforms provide Pakistan with loans but they end up making Pakistan more and more dependent on IMF. This clearly shows that how dependant Pakistan is on IMF.
Basically it won’t be wrong to say that whoever goes to IMF for a loan becomes a puppet of IMF. Similarly Pakistan is not only dependant on IMF but right now it is the puppet of IMF. IMF introduces which ever reform Pakistan has to accept them. All strings of Pakistan right now are in the hand of IMF and Pakistan is entirely dependent on IMF. And this dependence is a permanent phenomenon.
These international economic institutions should possess substantial transparency considering their policies directly affect the public. Instead, the IMF and similar institutions have no accountability to the public of which it is supposed to serve. Through lack of transparency, countries with major influence in the IMF such as the U.S. can indirectly impose its own investment agenda upon the country in crisis. If actions of the IMF were directed through a democratic process, more logical and productive policies would develop. If the IMF promotes transparency through the policies it imposes on developing countries, it should set an example through its own governance.
supply the very things intended for defense when they know they will be used to destroy their other friend who is helping them defend against China. It is also interesting to note that the who relationship is rather fishy as “President Richard Nixon bent U.S. law to authorize military aid even as American officials understood that Pakistan was committing genocide against ethnic Bengalis in East Pakistan.” (An Unworthy Ally) Again the U.S. is basically hiring Pakistan to keep peace. This however has not been the case at the heart of the matter.
The Mexican Peso Crisis can be traced to the decision of then president Zedillo’s decision to reverse the government’s then policy that imposes tight controls on the Mexican Peso. This decision is considered by critics as an important factor that led to the Mexican Peso Crisis (Mathur, 17). It is important to note that the lifting of the tight controls on the Mexican Peso was intended to make some adjustments that would intentionally devaluate the Mexican Peso. However, the aim for the devaluation was just gradually in order to make the country competitive in the international business environment (Bhagwati, 8). The main factor that made the decision contribute to the Mexican Peso Crisis was that it was not properly handled as was necessary. The handling of the lifting of the currency controls was not effective at the political level or political aspect, such that the Mexican Peso experienced drastic and continued devaluation, which was opposite to the planned gradual and small devaluation of the currency. The result of the drastic decline of the Mexican Peso eventually resulted in the crisis (Mathur, 17).
In Pakistan, people are stricken with poverty, the economy is unstable, and there are no opportunities to fulfill one’s goals. The U.S. economy is abundant and ripe with jobs. The only attribute is that one has to go out and want a job. Pakistan is more of a follower than a leader. It essentially adopts America’s ideals, but does not attain them. The poverty and unemployment rates are increasing daily. In many cases, one person works in the family and rest of the individuals sit back and play cricket or watch movies all day long. There is no hope of becoming a self-made person. The system is backwards and I think it requires a change. In contrast, living in Ameri...
The IMF plays a pivotal role in the international economy system. As its initial goal about reconstructs world’s international payment system, such as contributes to surveillance of the global economy, to stabilize exchange rates, to lend money to help countries to resolve emergency situation but with certain conditions and should pay back in a short time. The IMF has done a large number of things to help the world economy, not only in the western countries, but in many developing countries as well.
...price and devaluation of the domestic currency to bring it back to A from A’ the country has to sell off its Foreign assets.
According to Cuddington( 1989, pp32), the policies would effected include external borrowing strategy, exchange rate management, trade orientation and aggregate demand policies. This essay would explain two key policies.
the effect that the work of the IMF and the World Bank have had on the
This is possibly because both institutions use a one size fits all approach when aiding countries rather than gaining a deep understanding of each country they are involved in and catering their approach as a result. In this paper I will examine the practices of the IMF and World Bank in developing nations that have led to failure and the effects the policies have had on these countries. The IMF was created at the end of WWII in order to create a framework for global economic cooperation without creating a second Great Depression. Since its creation, it has evolved to tackle a variety of economic issues. The goal of the IMF is to help the governments of member countries “take advantage of the opportunities- and manage the challenges- posed by globalization and economic development more generally.”
Since Singapore gained sovereignty in 1965 from Malaysia, its politics has been dominated by the People Action Party. Under the leadership of People Action Party, Singapore has a “distinct political culture: authoritarian, pragmatic, rational and legalistic.” Economic growth and political stability were maintained by the People Action Party’s guidance. Thus, Singapore is corruption- free government where power is gained through skill and performance that attracted investments from other countries (“Introduction to Singapore’s political system”, 2011). Singapore scored the point of 1.33 in the 2009 World Bank’s governance indicators for the factor political stability. The government also opens a number of sectors such as financial services o, telecommunications, power generation, and retail to increase competition and foreign firms (eStandardsForum, February 2010).
The Philippines has long been a country with a struggling economy. Ever since World War II, they have struggled to have a steady government and labor system. Independence did not bring any social changes to the country. The hacienda system still persists in the country, where large estates are farmed by sharecroppers. More the half the population are peasants and 20 percent of the population owns 60 percent of the land. Although the sharecropper is supposed to receive half of the harvest, most of the peasant's actual income goes to paying off debts to the landowner. Poverty and conflict strained the industrial growth of the country with many Presidents trying to fix the problems, but failing to do so. Factors that have faced the country are there is almost 9 percent unemployment, and the country suffers from the consequences of a balance of trade deficit. With the resources that the Philippines have, they are capable of pulling themselves out of the economical hole they are in and being up to par with their successful neighboring countries.
Moreover, China is the best example for how important is the government’s role in nations economy. Chinese government have created national team to focus on specific sectors such as electronics and automobile. (Sutherland,2003). As a result of this strategy, China became the biggest automobile manufacturer in the world by the end of 2012. Also, Chinese government is very successful to control financial markets and it owns 3 of top 10 banks in the world. On the other hand, in another growing state, India, government is applying different strategy rather than Chinese government that is based over encouraging foreign direct investments into the state by lowering tariffs. Eventually India has joined the top ten automobile manufacturers in the world and net profit of the companies has slightly increased by the end of this process (Sardy and Fetscherin, 2009)
Agricultural sector is the major contributor in the GDP of Pakistan. It contributes around 20.9% to the country’s GDP and provides employment to around 67% of the people to the rural population. Our agriculture sector supplies raw material to the industrial sector especially the textiles industries, the largest industrial sub-sector of the economy. In this perspective, any shift in the agricultural income can affect the economy as well as the rural population of the country.
Pakistan can be categorized as the “Agricultural Society”. Industrial sector is also working in Pakistan but it’s not fully developed as that of other countries including the America etc.
Pakistan is facing energy crises due to increase in demand, a poor management and lack of investment in our energy resources. Our energy needs depends upon oil and gas. We have to import about 30% energy in the form of crude oil, coal, LPG etc. [5]