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Keys macro economic growth

By Dr. S.M. ALAM
July 23 - 29 , 2001

The success or failure of any country over the next two decades hinges on economic growth. It is assumed that by the next generation, some countries are likely to have being improved substantially their standard of living, and their quality of life and some becoming a little richer. The economic development of a country generally depends on the development of agriculture, industry, health, education, social reforms, zeal and enthusiasm of the population in economic development. Honesty, hard work, investment of foreign moneys also plays a pivotal role in the economic uplift of a country. The economic growth can be measured and defined in various ways. One of the most commons, is the rate at which aggregate production and spending i.e. the gross national product (GNP) or the gross domestic product (GDP) growth grows. Alternatively, the rate of growth of per capita GNP or GDP is used because of its closer proximity to the growth of living standards and economic welfare. The recognition of growth is measured as a natural part of economic history of a nation is fairly new, dating more or less from the Industrial Revolution. The economical growth of a country is related with per capita income. This causes the rise in living standards of the people.

The increase in economic growth are due to improvement in GNP, GDP, exports of the surplus commodities and these factors will simultaneously improve the reserves of the gold in the treasury of the individual government of a country. The commodities produced in the country in surplus and when the excess products are exported, the ultimate benefit is to be increase in the GDP growth and in per capita GNP. The GDP is the value of all goods and services produced in a year, whereas the GNP is GDP plus payments from abroad from investment, and labour, minus similar payments to foreigners. The real GDP registered a decline growth of 4.5% in 1999-2000, against a growth of 5.3% in the year 1998-99. The rate of inflation in terms of consumer price index (CPI) increased to 5.1% in 2000 as compared to 3.4% in the year 1999. Life expectancy is the number of years a new born infant will live if patterns of mortality prevailing at the time of its birth were to stay throughout its life.

In the today's world, the freedom and sovereignty of a country depends on its economy. That is why, the International Financial Institutions, which are functioning under the patronage of Anti-Muslims people of developed and industrialised countries at the very outset entangle a county in financial problems and then compel it to fulfil their own demands. In order to achieve their ends, render the Muslim countries financially weak and create among the people an atmosphere of restlessness and distrust in their governments, these financial institutions carryout propaganda through world media. As a result not to speak of foreign investment, local people begin to transfer their savings to the foreign countries. According to a survey, during the last three months, about 3 billion dollars were siphoned out of Pakistan. Now, the number of the poor exceed 40 million and the unemployed exceeded to 8 million. Due to drainage of country's money to foreign countries, has reenacted in increased dearness, poverty, distrust and frustration. The tendency of transferring the state wealth to foreign countries has created an atmosphere of distrust and frustration among the local industrialists and investors, resultanty, the local industry is shrinking day by day and unemployment is on the rise, giving birth to many immoral crimes.

The major scenario in the economic development, is also the export factor. Whereas, the shortage of commodities for the population of a country's needs is benefited by import. This import phenomenon generally has a negative effect on the real economic growth of a country. In this context, the exports and imports scenario of Pakistan is as: The major exports of Pakistan are in million US dollar for the year 1998-99, fish and fish preparations (120), rice (522), raw wool (2.7), raw cotton (2.3), leather (173), cotton farn (931), cotton cloth (1088), petroleum and petroleum products (48), synthetic textile (396), guar and guar products (33), ready made garments (652), drugs and chemicals (48), surgical instruments (112), carpets and carpeting rugs (190), sport goods (257), and other exports (3143) and thus the total earning is 7,718 million dollars. Due to shortage of different commodities, the country is bound to import necessary items to fulfil the population requirements. Therefore, the import items of the country are as in million US dollar edible oil (814), sugar (3.1), tea (223), wheat unmilled (407), fertilizer (265), machinery (1782), road motor vehicles (290), petroleum and petroleum product (1458), synthetic and artificial silk yarn (44), insecticides (109), drugs and medicines (256), iron and steel (287), rubber crude (39), paper and paper board and manuf (110), and other imports (9,287). It was noted that expenditure on imports are greater than exports items.

We will have to increase our exports upto 25 to 30 per cent a year to come upto the level of exports of other countries in the region. Some of the nearing countries, whose exports income are mentioned in the table for example are as Malaysia 70 billion US dollars, should encourage non-traditional products particularly those produced by the small and medium size industries. In India for example, the small and medium size industries contribute 60% of the current Indian exports of 30 billion US dollars. The quality of exports goods, delivery schedule and after sale service of their products should be firm commitments of our exporters. For revival of economy, export growth is the key factor. This needs the improvement in the production of exportable items. National economy revolves around cotton and textile. The textile is the only sector, which earns around 5 billion dollars a year. There is a need to improve the export scenario by producing the items of good qualities. In order to reduce trade gap, there is a need to minimize imports and increase exports. The fall in Pakistan's exports is attributed to the high cost of inputs, like imported materials, fuel, electricity, credit, transportation and devaluation of local currency.