ECONOMICS OF PAKISTAN NOTES B.COM PART 1(PUNJAB UNIVERSITY LAHORE)
Q #1 Define the developing country. Discuss the characteristics of developing economy like
OR
What is meant by developing economy? what are features of a developing economy?
OR
Besides poverty less developed countries share many traits. Discuss.
OR
Discuss the salient features of economy of
OR
What are the main economic obstacles in the way of economic development of
OR
Discuss the major factors which hamper in
OR
How would you differentiate b/w a developed and under developed country/economy? What is the main obstacle in the rapid economic development?
OR
Pakistan is a still a developing country, what are its main causes?
OR
What are the causes of low per capita income in
Answer:
Introduction;
On the globe of the world there a number of countries which are developed and underdeveloped. This is because of economics environment of that country. Underdevelopment refers to a situation where countries in not making full use of its potential resources.
Definition:
In order to know that what is underdeveloped or what is developing country we have to watch the different views of economists.
- According to prof NUKSE;
The country which has less capital as compared to its resources and population is called developing country.
- According to Prof. ELIS:
The country where the people are under developed and on the other hand resources are under utilized is called developing country.
- According to UNO.
“The country which has low per capita income as compared to Canada, America, Britain etc, is called under developed country.
- According to
“A country is said to be underdeveloped which is characterized by the co existence in greater or less degree of unutilized or underutilized man power on the one hand and unexploited natural resources on the other
CHARACCTERICS OF UNDERDEVELOPED COUNTRY
OR
CAUSES OF LOW PER CAPITA INCOME
OR
CAUSES OF LOW STANDRED OF LIVING
OR
CAUSES OF UNDER DEVELOPMENT.
- Agricultural Backwardness:
Most of the underdeveloped countries like
- G.D.P 23.3%
- EMPLOTMENT 42.1%
- FOREIGN EXCHANGE 70.9%
- GROWTH RATE 2.6%
- CONTRIBUTION TO EMPLYOMRNT 42.1%
- Burden of debts:
OUTSTANDING DEBTS OF
EXTERNAL DEBT $35.8 billion
DEBT SERVICE PAYMENT $4059million
3 Brain Drain
There is out flowing of the best and brightest student from developing countries to developing countries to developed countries. These talented persons mostly remain in search of better jobs in foreign countries.
4 Deficiency of capital
Deficiency of capital is another reason of underdevelopment. Developing countries have limited capital to finance consumer and production activities.
5 Dependence on imports;
Most of the developing countries are depending on the import of finished goods
6 Dualistic economy:
Dualism regards to economic and social division in the economy. In and around of the city there are markets which are very modern and sophisticated but on the other hand some areas are very backward.
7 Demographic Features:
Another feature of developing countries is they have a high rate of population declining death rate. How ever the no. of effective population is not increasing so the country is underdeveloped.
8 Depends on Imports The economy of LDC depends mainly on one sector. The other sector of the economy remains under-developed In Pakistan 45% of national income come from agricultural sector
9 Economic backwardness:
10 Frequent changing fiscal policy:
Fiscal policy is mainly concerned with the development of a country but in underdeveloped countries there is frequent change in fiscal policy which disturbs the whole economy.
11 General Poverty
The most important feature of underdeveloped country is its poverty. The 70% population of
12 Health
Health is Wealth healthy people of nation give birth to brilliant human capital. However in developing countries people have bad health. Which is causing poor capital?
13 Influenced of feudal Lords.
In
14 Industrial Backwardness:
LDC are underdeveloped because of industrial backwardness as the industries require capital skill etc, but developing countries have always a shortage of these required thing.
15 Inflation:
The rate of inflation is very high in all the less developed countries, which is effectively very badly on the economy. In
16 Import of finished Good.
Underdeveloped countries import the finished good such as machinery etc which has badly effect on balance of payment.
17 Imperfection Market.
In the developing countries the market is imperfect. Different prices exist in different market which reflects market imperfection.
18 Low per capita.
The real capita income in developing countries is low due to low national income and high growth of population.
19 Lack of Technology:
In developing countries like
20 Population pressure:
In underdeveloped countries the rate of growth of population is very high. In
Population of
Population 161.794 million
Growth Rate 2.7% per annum
Q no 2: Define Economic development? What are pre-requisites of economic development?
We know that economic development has been clearly defined by
Meier & Baldwin
Definition: “economic development is a process where real National income of a country increases over a long Period of time”.
Figures with reference to
Total budget expenditure =Rs 698 b
Total development expenditure =Rs 130b
As for as factors of economic development are concerned by factors we mean,
“All the elements which provide base for the development of a country”
Economic development depends upon a number of factors; we can divide these under two heads i.e.
1: Economic factors
2: Non economic factors
1: Economic factors:
1: Natural resources
2: Capital formation
3: Labor
4: Power
5: Transport & communication
6: Human capital
2: Non economic factors:
1: Social factors
2: Political factors
3: Administrative factors
Now we discuss these in detail.
Economic factors:
1: Natural resources;
Natural resources we mean resources gifted by nature related with land. These include all the resources above and below the surface of land. These can be described as Soil, Sea,
2: Capital formation;
Capital is that wealth which is used to produce further wealth. Capital formation means increase in the stock of capital. It is of key importance for the development. Capital formation depends upon
1: saving
2: Capital market : 3: Investment
This means if more saving is available to the banks they will give more credit to producers the as a result investment will increase and production will increase as will. In case of ‘LDC’s savings are low, Capital market is not developed and investment is also low.
Saving rate in
Investment required = 20%_22% of I.N.
3: Labor;
Labors force is also a factor for economic development. Most of the ‘LDC’s are labors rich because of high growth rate of population and unemployment.
Growth rate of population in
In ‘LDC’s labor is heterogeneous that means laborers differ in skills and hands this labors force is not exploiting the resources.
4: Power;
Power means energy required for production. Power resources are essential for development. There are types of resources;
1: Traditional Resources.
2: Modern Resources.
Example of animal’s power and wood can describe traditional resources. Example of modern resources is
oil, gas, coal, electricity, solar and nuclear power. Improved power resources have following advantages.
· Increase in production.
· Decrease in cost.
· Better quality.
· Decrease in wastage during production.
5: Transport and Communication;
Transport sector means, “Traffic through rail, roads, seas and air”. Communication sector means, “Postal service, telephone service, T.V., radio, internet and e-mail”. Developed transport and communication sector play a key role in economic development. Its advantages are;
· Easy mobility of labors
· Easy access to market
· More foreign investment
· Better defense of country
· Better spread of educational facilities
6: Human Capital;
Human capital means, “Skilled and educated labor force”. Human capital exploits the resources of a country in a better way.
According to “Gallbraith”,
“We get large part of industrial growth not from more capital but from improvement by improved man”.
Human capital is necessary for industrial development and economic development of a country i.e.
2.5 billion Or 1.6% of budget
Non economic factors:
Some economists have given more importance to factors other than economic factors. According to “Nurkse”
“Economic development has much to do with human endorsements, social attitudes political, conditions and historical accidents”. Now we discuss these factors in detail.
1: Social and Cultural factors;
Social attitudes and traditional values influence the economic development of a country. If in a country people are hardworking, ready to accept changes and traditions do not lead to wastage of resources, it is easier to develop. In ‘LDC’s social attitudes and traditions are not suitable for economic development. Following are the problems of ‘LDC’s regarding society.
- Joint family system (Reason for low labors)
- Caste system (Reason for low living standard)
- Unhealthy expenditure on tradition and ceremonies.
- Social system does not allow women to work.
2: Political factors;
Economists are of the view,
“Political stability is must for economic stability”.
If there is a stable political system, the government can run its policies smoothly and it is easier to develop. But in ‘LDC’s there is political instability. This has negative effects on the economy. Due to political instability, there is decrease in investment because local and foreign investors stop investing.
Stable political system has following advantages;
- Increase in local investment.
- Increase in foreign investment.
- Increase in capital formation.
- Increase in production.
- Increase in industrialization.
3: Administrative factors;
Administration of a country means the people who are running the government machinery and different government departments. If a country has loyal and honest administration, it helps a lot to attain development. But in case of ‘LDC’s the administration is most of the time very weak, inefficient and corrupt. Such administration does not allow a country to develop.
A good administration has following advantages,
- Smooth implementation of government policies.
- No loss of government resources in corruption.
- Increase in faith on government departments.
Conclusion;
We have described economic and non-economic factors of economic development in detail. We conclude that a country can develop when both types of factors are available to it. Only economic factors are not sufficient for development.
Q no 3; Define economic development? Give different methods for the measurement of economic development?
Many economists have defined economic development but most comprehensive definition has been given by;
‘Meier and Baldwin’
“Economic development is a process where real national income of a country increase over a long period of time”
We adopt different methods for the measurement of economic development, these are
1: National income approach.
2: Per capita income approach.
3: Physical quality of life index.
4: Human welfare approach.
5: Social welfare approach.
Now we discuss these in detail;
1: National income approach;
We know that national income of a country can be calculated by difference methods like,
I: National income at market price.
II: National income at factor cost.
III: Expenditure approach.
“Simuelson” has defined national income as;
“The total output of a nation in a one year”
General Definition;
“It is market value of all final goods and services Produced in a country during one year”
If the national income of a country increases, it indicates economic development.
Problems in Measurements;
1: Problem in measuring national income.
2: Not accurate statistics.
3: Problems in valuation of goods.
2: Per capita income;
This approach to judge development level has been used by economists like; (Jacobs, Williamson and Lewis).
According to “Lewis”
“Per capita income means output per head of population”
Mathematically, we can put it as, P.C.I = N.I/POPULATION.
This approach has been is a better indicator for economic development because it considers both increase in national income and increase in population.
an put it as,
Per capita income (
Problems in Measurement;
I: This is purely a quantitative analysis. II: According to “Kuznet” this approach ignores distribution of income in the country. III: Accurate data is not available regarding N.I. of population.
IV: Sometime high per capita fails to describe development
V: If N.I. increases and population also increases then, according to P.C.I. approach there is no development
3: Physical quality life index;
This approach has been introduced by “Development Economist” According to this approach economic development Is measured by two factors:
I: Reduction in poverty.
II: Satisfaction of basic human needs.
These basic human needs are described as food, clothing, housing, health, education and justice etc. If these needs are being provided to the people that means, Development is taking place. It checks that “Quality of life” is improved or not.
4: Human development index;
This approach was introduced by “United Nation Development Organization” in 1990. According to this approach development will be judged by the following;
1: Healthy and long life.
2: Education.
3: Decent living standard.
4: Political freedom.
5: Human rights.
6: Self respect.
5: Social welfare approach:
Human welfare of whole world is considered also as a measure economic development. The term whole world means a country contributes to social welfare of other countries.
Conclusion:
If the above facilities are available to the people in the economy, that show the country is developing. In the absence of above facilities, we cannot call a country “Developed”.
Q # 4: What are the Obstacles/hurdles/constraints/problems of economic development?
Economic development;
“According to Meier and Baldwin”
“Economic development is a process where real national income of a country increases
over a long period of time”
But a certain factors which do not allow a country to develop, These are known as obstacles to economic development.
Following are different types of obstacles:
1: Economic obstacles;
These can be following types:
i: Alien rule:
Most of the ‘LDC’s have been under the foreign domination. The ruling countries have exploited the resources of these countries. No industrialization has taken place In case of
ii: Low saving:
For the development purpose we require about 20_25 percent of savings of national income. But in case of ‘LDC’ savings have remained below 15 percent of national income. In
iii: Low capital formation:
Economic development also required fast rate of capital formation. We know that capital formation depend upon savings. In ‘LDC’s savings are low, as a result there is low capital formation. Same is the case in
iv: Vicious circle of poverty:
Vicious circle indicates a set of problems which does not allow a country to develop. Vicious circle has following problem which appear step by step;
- Low saving
- Low investment
- Low capital formation
- Low productivity
The vicious circle does not allow a country to develop.
v: Agricultural economy:
Most of ‘LDC’ are agricultural countries, have agricultural the main sector. These economics are facing the problem that production is not increasing rapidly but population is growing rapidly. As a result income of the formers is decreasing. This is proving to be an obstacle for development.
Vi: High growth of population:
Another obstacle is high growth of population In ‘LDC’s. Due to high Growth rate of population & Low national income following problems are beings Faced;
- Low per-capita income
- Inflation
- Unemployment
In
Vii: Lack of human capital:
Human capital means skilled and educated Labor force, it is a basic requirement for development. But in case of ‘LDC’ most of the labor force is unskilled. This is not allowing ‘LDC’s to develop.
Viii: Deficit in balance of payment:
(Low foreign exchange)
Most of the time ‘LDC’s are having deficit In balance of payments this refers to the situation, Where;
Imports > Exports
10b > 9.2b
Deficit = 0.8b
This situation causes lack of foreign exchange and does not allow a country to develop.
Ix: Market imperfection:
Development requires perfection in markets but in case of ‘LDC’ economy is suffering from markets Imperfections. Market imperfection is;
- Low mobility of factors of production.
- Social structure’s rigidity.
- Ignorance of consumers and producer.
This condition cause wastage of resources and these do not allow a country to develop.
X: Capital flight;
Capital flight means that capital is going out Side a country. In ‘LDC’s conditions are not suitable For producers. As a result these producers are investing their capital in others countries. This is proving to be huge obstacle.
Xi: Industrial backwardness;
Most of ‘LDC’ are having a backward industrial sector. Economic development requires strong industrial sector. Weak industrial sector is causing High imports and low exports, and province an obstacle.
Xii: Capital market;
Every county requires a strong and develop capital market for economic development. Capital market mobilizes the savings of the country. But in ‘LDC’s capital market is not developed.
Xiii: Weak infrastructure;
Infrastructure facilities are required to push the development of a country.This requires developed energy, transport and communication sectors. But in ‘LDC’s are suffering from poor infrastructure facilities.
Xiv: Burden of loans;
‘LDC’ require aids and loans from different countries because local resources are not sufficient. But burden of loans is increasing every year. This Is proving a big hurdle for development . Total Debt (pak) =Rs 37 billion
2: Non economic obstacle;
I: Social obstacle & cultural obstacle;
The social system of most of the ‘LDC’s is not suitable for development. Same is the case in
a: Low literacy;
Literacy rate is low in most of ‘LDC’s. In
b: Population pressure;
In ‘LDC’s population is growing at rapid pace. In
c: Conservativeness;
In ‘LDC’s people are not ready to change their life style. They are not ready to accept changes in technology and techniques of production in different sectors. This is also proving to be an obstacle.
d: Wastages to resources;
. The available resources are not being utilized in a proper way in‘LDC’s. There is wastage of resources on marriage, births and deaths. Same is happening in
II: Administrative obstacle;
These are of following types.
a: Corruption;
For economic development every country requires honest administration but most of ‘LDC’s are having corrupt administration. Corruption in from of money authority and moral values etc
b: Favoritism;
There is trend of favoritism in administration. Administration gives advantages to certain juniors who praise their seniors.
c: Use of authority;
Administration has been given a lot of authority but there authorities are not been utilized in a proper way.
d: Wastage of time;
The administration in ‘LDC’s work very slowly every plan or project moves in many offices and departments before getting approved.
III: Political obstacle;
These obstacles refer to the government.
a: Rapid change in government;
We know that political stability is must for economic development but in ‘LDC’s government change rapidly.
b: Political decision;
Political decisions should be taken for the people but in case of ‘LDC’s or
.
“Conclusion”
There are a number of obstacles in the way of ‘LDC’s but these can be
removed through sound planning. Equal concentration must be given
to remove the economic and non economic obstacles.
Q no 5: Define technology and economic development? Role of technology in economic development?
Answer: Economic development depends upon a number of factors. Technology is an important factor for the development of a country.
We define technology as;
“Technology is a knowledge or techniques to facilitate the production of goods and services when we compare develop countries with ‘LDC’s we see that developed world is using latest technology but in case of’ LDC’s technology level is low. In
Budget share for technology (In
Technology comes in to a country by two ways i.e.
_ Innovations.
_ Inventions.
1: Innovations;
Innovation means a country uses a technology which is already being used somewhere else.
2: Inventions;
Inventions means a country introduced its own technology through research.
‘Capital is required for the development of a country but a country
Develops rapidly when it uses capital to use new technology’.
“Role of technology in economic development”
(Importance of technology)
(Impact of technology)
Technology is important due to following reasons.
1: Increase in labor productivity;
With the use of technology the productivity of labor increases. If we take the example of agriculture sector we see a farmer can work more then ten farmers with the help of tractor.
2: Increase in production;
As labor productivity increases the production level of a country also increases. This causes
increase in the national income of a country.
3: Increase in human capital
Human capital means skilled and educated labor forced. When we increase the use of technology the skills in labor also increase, it leads to human
capital formation.
4: To overcome vicious circle of poverty;
We have disused that with the use of technology income of a country increases. Due to increase in income, savings increases, demand increases and as A result investment and capital formation also increase, it helps to break the vicious Circle.
5: Less wastage of inputs;
Technology helps in removing wastage of inputs in production. It is possible to have more outputs with same inputs in presence of technology. Here we can take the example of flour mill.
6: Better quality;
When we use technology or machines it causes a big improvement in the quality of the products. If we take the example of textile industry it shows that quality of machine made cloth is better then the hand made.
7: Better living standard;
We judge the living standard by per-capita income and facilities to enjoy life. By the use of technology, national income and per-capita income increases, this leads to better living standard.
8: Economic scale;
Economic scale means that advantages that are attached with high production level. As we know with the use of technology production increases, this causes decrease
in cost. As a result the profits of producers increase.
9: Rapid increase in supply;
According to ‘Keynes’ rapid increase in supply is possible with the help of technology. If demand of a commodity increases, it is possible to match the demand with the help of technology. It removes the danger of inflation.
10: Specialization;
According to ‘Gallbraith’ as the use of technology increases in a society the specialization also increases. This result in increase of national income and per-capita income.
11: More international trade;
The basis of international trade is “ a country exchange its excess on Production with the excess production of another country” so technology production and international trade also increases.
“Conclusion”
Although technology is important for the development but in case of ‘LDC’s the use of technology can bring unemployment. So ‘LDC’s should not follow the developed world blindly but they should be careful in the use of technology
Q no 6: Discuss the importance of agriculture sector in economic development?
Answer: agriculture is the sector that’s depends on nature. Economists are of the view that in agriculture sector the role of nature is more important but in case of industry role of capital is more important.
Growth rate of agriculture in;
(2000_2001)= -ve 2.5%
Importance:
i: Food Availability;
A developed agriculture sector provides food for the population. When a country
is producing food for its population, there is no need to import food items. The sources foreign
exchange which can be used for development.
ii: More Industries;
Agriculture sectors development provides base for industrial sector to develop.
If production of agriculture sector is high it provides raw material for industries. For example,
textile, sugar and flour mills.
iii: Labor Availability;
Agriculture sector also provides labor force for industrial sector. In
Iv: National Income Contribution;
We know that national income is calculated by combining the incomes of all Sectors.
If a country has developed agriculture sector, there will be increase in national income.
Share of agriculture in GDP of;
V: Increase In Exports;
Exports of a country comes from the surplus production with the increase in
Agriculture production exports also increase. This provides foreign exchange earnings.
Share of agriculture in exports;
Vi : Reduction In Imports;
A country imports those goods which are not being produced with in a country. As
agriculture production increases, the imports decrease. So agriculture provides foreign exchange
savings as well.
Vii: Solution To Inflation;
We know that in case of inflation demand is greater then supply and prices go Up;
D > S = P (increases)
In
Viii: Employment;
A developed agriculture sector provides employment to the labor force. In
72% of population is engaged with agriculture sector.
ix: Better Living Standard;
From above discussion it is clear that developed agriculture sector provides jobs to the people and per-capita income also increases. So living standard of the people improves.
x: More Saving;
We are aware that a developed agriculture sector increases per-capita income. So savings also increases.
xi: More Investment;
From previous point it is clear that agriculture development raises income and savings.
So investment also increases.
xii: Overcome Vicious Circle;
Agriculture sector can help a country to overcome vicious circle. Huge agriculture
Production raises saving, investment and national income.
“Conclusion”
It can be concluded that increased agriculture production is essential for development
Because it provides base for industrialization, more exports and reducing imports.
Q # 7 What are the causes of indebtness in agriculture sector?
Or
Why agriculture sector needs credit
Following are the causes of agricultural indebtness:
INTRODUCTION:
Agri sector required 7b$ out of total 237$debts.
Payment of Past Loans:
In
Population Pressure:
In
Population >resources
To provide basic needs to population, there is need for credit per growth rate 2.2%which the population is 16.9 crors.
UNCERTANITY:
We know that agriculture sector depend upon nature for production. Production depends upon weather condition. When conditions are not suitable, farmer needs credit to meet their needs. Nature threats and breaks out of war, diseases also is the cause in which farmer advances.
Non- Production Expenditure: (High Consumption)
In rural areas of
Litigation:
In agriculture sector of
For Basic Input:
Farmer of Pakistan has insufficient resources even for the purchase of seeds and fertilizers and pesticides. They need short term credits to purchase basic inputs.
Payment of Land Resources:
Land revenue is the tax on agricultural land. We know that farmers of
Payment of Water Tax:
Water rates are the charges paid against the use of water for the irrigation on agricultural land. For the payment of water rates, farmers required credits. Name of water tax is “Mamla” the farmer paid tax after months
Purchase of Technology:
We know that huge amount of credit is needed to purchase technology. Technology is the investment which required credit the most. Argi sector in
Construction of Storage:
In
For Marketing:
Marketing is the flow of goods from producers to customer. Farmers of
Social Transformation:
People from rural area migrate to urban area in search of glamorous and good life. But they meet failure.
CONCLUSION:
Perhaps there are many other causes of agri-indebtness. But the earlier diesis causes are most important one. Govt should solve all these problems, so that the burden of indebt ness could be reduced.
Q: 8 Define Agriculture Marketing discuss its Problems & Solution “AGRICULTURAL MARKETING”
“Agriculture marketing includes all activities that direct the flow of agriculture production from production to consumer.”
Qualities of Good Marketing:
1) Availability of goods at proper time and place
2) No exploitation of consumers
3) No exploitation of Producers
Problems of Marketing:
Lack of Organized Markets:
There is lack of organized markets in
Chain of Mediators:
Mediators are the people who create link between consumer and producers. There are the people who get maximum benefit from the market. These people pay low prices to farmers and charge higher prices from consumers. So mediation exploits both
consumer and producer.
Underdeveloped Transport & Communication:
We know that transport and communication sector is underdeveloped in
No Grading:
Grading of production with reference to quality ensures better price and earning in the market. In
and foreign markets.
Insufficient Storage:
In
Not Proper Weight:
In agriculture markets weights used are not proper. There are two types of weight used in the markets higher weight is used while purchase from farmers. Lower weight is used. While the sale to consumers. Both consumers and produces are exploited.
Lack of Credit:
Agriculture gets 9% of total credit, this result in less credit for marketing. So farmers face problem in reaching the market. This causes reduction in profit and earning of farmers.
Inefficient Govt policies:
Govt policies regarding marketing facilities for agriculture sector ate not sufficient. Govt has formed “Agriculture Marketing& Storage Limited” (AMLS) for proper storage and marketing but this is not working properly to get good results.
Collection of Farm Products: In some developed countries, govt collects production from farm houses and sells it in the market to ensure good price for farmers. But in
policy is not available.
“AGRICULTURAL MARKETING”
Solution of Problems
Steps by Govt of
Govt of Pakistan has taken following steps to solve the problems of agriculture marketing.
Establishing PASSCO:
ESTABLISHING AMSL:
Agriculture marketing and storage limited (AMSL) was formed in 1981. This department is providing storage and marketing facilities for agriculture sector.
AGRICULTURE PRICE COMMISION (A.P.COM)
Agriculture price commission is working to assure suitable price for agriculture production by examining cost. This department also implements price support policy.
ORGANIZATION OF MARKETS:
There must be organized markets for agriculture sector. In the presence of organized markets their would be no exploitation of producers and consumers.
CHECK ON MEDIATORS:
Mediator exploit the market must strongly. Government should design checks to control the mediators, with low exploitation of farmer they can earn more.
DEVELOP TRANSPORT & COMMUNICATION:
A developed transport and communication sector always ensures the availability of agriculture production in the market. With the improvement of transport
and communication cost of production for farmer decreases.
GRADING:
There must be grading of production in public and private sector. This ensures a higher price in foreign and local markets .This increases the income level of Farmers.
MORE STORAGE:
Storage is the first step of marketing. with improved storage facilities we can stop the was take of production .this also contributes in raising the income of
farmers.
PROPER WEIGHTS:
There must be govt checks to stop the use of lower and higher weights in agriculture markets. This can reduce the exploitation of farmer and consumer.
MORE CREDITS:
Share of agriculture must be raised in total credit by the favorable govt and central bank policies. This will ensure more credit for marketing.
EFFICIENT GOVT DEPARMENTS:
Govt has setup department for the improvement of marketing but their efficiencies must be raised through efficient management and removal of corruption. This can also improve marketing facilities.
COLLECTION OF PRODUCTS: Like developed countries, govt should provide transport facilities to farmers for marketing. This ensures good price and higher income level for farmer.
Q # 9: What is Agriculture Credit? What are the Types of Agri Credit & what are the sources of Agri Credit?
Agriculture credit means all those loans which are available for the increase in the productivity of agriculture sector. Sometime, we confuse agriculture credit with rural credit, but these terms are different.
AGRICULTURE CREDIT:
“Means all the credit for the improvement in the productivity of agriculture sector”.
RURAL CREDIT:
“Means all the credit available for the overall development of rural areas”.
TOTAL RURAL CREDIT:
In
Total agriculture credit (2000-2001) → Rs. 1.4 billion
Distribution of credit in
Anyone different sectors are as follow;
Share of agriculture → 9% of total credit
Share of Industry → 45% of total credit
Share of Business → 31 % of total credit.
These figures show that agriculture has been given less importance.
TYPES OF AGRICULTURE CREDITS:
Short-Term Credit:
This type of credit is provided for the duration of 1 year or less. These loans are provided to meet the current needs like purchase of fertilizers, seeds and pesticides. Repayment of such credit is after 1 year.
Medium- Term Credit:
Medium- Term Credit is provided for the duration of 1 year to 5 year. This credit is provided to purchase cattle and implement. The repayment of such credit is in installments of 6 months or 1 year.
Long- Term Credit:
This credit is provided for 5 year or more. These loans are mainly provided for the adoption of technology. In repayment is in installments long – term credit is of two types.
PRODUCTIVE CREDIT:
This is the credit use to increase the productivity of agriculture. In
UNPRODUCTIVE CREDIT:
This is the credit used for consumption not for the production. In
SOURCES OF CREDIT FOR AGRICULTURE IN
- INSTITUTIONAL CREDIT
- NON INSTITUTINAL CREDIT
INSTITUTIONAL CREDIT:
This is the credit available from institution to person. It has following types.
ADBP:
ADPB was formed in 1961 by the merger of agri development bank and long-term credit societies. Aim of ADPB is to provide credit to small farmers.
Commercial Banks:
Commercial bank in
Cooperative Credit:
Cooperative credit is formed when few people combine their capitals for productive purposes and welfare but this is not successful in
Taccavi Loans:
These loans are provided in emergencies like floods, earthquake etc. These are provided by providential govt.
NON- INSTITUTIOANAL CREDIT: This type of credit is available from person to person. Availability of such is variable and rate of interest is very high.
Q#:9(a) Define Agriculture Price policy and discuss its objectives?
Agriculture price policy is the policy adopted by the Govt. for the determination of prices of agriculture inputs and output. We explain this policy by following structure
Agriculture price policy
 |
Prices of Input Price of Output
Agriculture price policy is followed to benefit the farmers.
Prices of inputs:
Under this policy Govt. determines the prices of agriculture inputs like seeds, fertilizers, pesticides and technology in the favor of farmers. Govt. provides subsidies and reduces import duties to lower the prices of agri inputs.
Prices of output:
Government also gives the prices of agri output. Sometimes agriculture production increase. This causes a decline in the price. Now Govt. adopts agriculture price support policy. Here Govt. fixes the prices greater than cost of production, to provide profit.
Objectives of Agriculture price policy
More production:
Agriculture price policy provides incentives to the farmers to increase production. When inputs are cheaper and output has good price, it increases the production of Agriculture.
High income:
As we know that Agriculture price policy ensures good prices of Agriculture production, as a result increases the prices and finally farmers income increases.
Removing uncertainty:
Agriculture sector always faces uncertainty because production depends upon nature and prices are not stable. Agriculture price policy removes uncertainty.
Price stability:
Agriculture price policy is helpful in achieving price stability. There is no danger of inflation and deflation. This also brings about stability in farmers income
Industrialization:
Industrialization can also be done through agriculture price policy. By the adoption of the policy production increases and availability of raw material also improves. This provides base for industries.
Better distribution of income:
In
More exports:
It is clear that Agriculture price policy gives boost to exports. Under this policy production increases as a result exports increases and country earns foreign exchange.
Reducing imports:
This policy is helpful in reducing imports. Agriculture price policy improves production as a result imports decreases. Now country saves foreign exchange.
More technology:
With Agriculture price policy use of technology also increases. Govt. reduces import duties on technology and provides incentives. Now farmers can use more technology. He make better use of fertilizer, pesticides and machinery.
Improved standard of living:
Agriculture price policy helps in increase in farmer income due to which the basic needs will be satisfied and he will have shelter, variety of food and variety of cloths.
Availability of basic inputs:
Through Agriculture price policy farmers can use basic inputs. Now farmer can use fertilizers pesticides and better seeds. This causes a boost to production.
Storage and marketing:
This policy indirectly helps farmer to avail storage and marketing facilities. By the introduction of Agriculture price policy farmers income increases, now farmers can attain better storage and marketing facilities.
Conclusion:
Agriculture price policy designed by the Govt. Govt. should always be programmatic enough to remove the problems or hurdles in agriculture sector. A week Agriculture price policy cannot brings prosperity in a country.
Q # 10 Discuss the land reforms?
Land reforms are the steps taken for the welfare and the improvement of productivity of agriculture sector. Land reforms are mainly concerned with two types of steps;
1) Changing the ownership of land for more productivity.
2) Improving the tenant – owner relationship.
We can explain land reforms by following structure;
Land Reforms
Change in Ownership Owner-tenant Relationship
│ │
Ownership Reforms Better Distribution of Income
Settlement Reforms
Ownership Reforms
│
Converting land in economic holding
In land reform, govt tries to bring land into economic holding where production is
Easy to manage and technology can be used for good results.
Land Reforms in
1959, 1972, 1976
Types of Land Reforms
Settlement Reforms:
In LDC’s govt have insufficient resources; it distributes its own land between farmers to increase productivity.
Ownership Reforms:
Here govt convert land reforms into economic holding to use land in best
Possible way.
Tenant Reforms:
These are introduced to reduce to reduce the gap between owners and farmers income, to have equal distribution of income.
OBEJECTIVES or ADVANTAGES:
Removing Monopolies:
Through land reforms govt remove monopolies and create competition among farms. This state of competition improves the wages of cultivations.
Better Distribution of Income:
When a govt applies tanent reforms, the share of tanent increase in income and share of owner decrease in income. This helps to bring equality among owner and the tanent income.
Reducing Exploitation:
Generally, it is seen that landlords exploit tanents by giving them low wages. Tanent reforms give a boost to income of tanents and reduce exploitation.
More Technology:
When land reforms are implemented, the land is converted into economic holdings. Now it will be easier to use the technology.
Increase in Production:
As a result of land reforms we use land in best possible way. It is
also easier to use technology. So the production of technology increases.
Improving Farmer Income:
Land reforms ensure high production level; this provides handsome
income for the farmers. Now farmer living standard also improves.
More Govt Revenue:
We know that land reforms implementation production increases now income level in agriculture sector also increases. Now govt can get more tax and as a result revenue of govt also increases.
Social Benefit:-
Land reforms also bring social benefits as
1) Better Living
2) More Literacy
3) Agriculture Development
Political Benefit:-
Every country enjoys some benefits from land reforms. Such as
1) No Disturbance
2) No Civil War
3) Economic Stability
Q # 11:Discuss the problems of agriculture sector:
In agriculture sector production in dependent on natural factors. Economists are of the
view that in agriculture sector role of nature is more important but in industrial sector role
Of capital is more important.
Introduction of agriculture sector of
Growth rate of agriculture → 5.5% (1999-2000)
2.5% (2000-2001)
Share of agriculture in GDP → 25.9%
Population working with agri→ 75%
PROBLEMS:
1) Non-Economic Holding:
In
Small holding are said to be non-economic holdings, here we cannot use technology. In
2) Water Logging and Salinity: (1.7 acres destroy)
Water logging is the situation where water rises to the root of the plant. In salinity, salts appear on the surface of the land. These problems waste land and cultivation is not possible. In
3) Lack of Irrigation:
In
have been setup by government. Existing canal system in
Water is not available at end points of canals. This is decreasing production.
4) Availability of Inputs:
Farmers of
Fertilizers:
Our farmers have low income, and they are not using sufficient fertilizers.
Pesticides:
Pesticides are also insufficient due to low income of the farmers.
Seeds:
In
and production is low.
5) Low Credit:
Agriculture is not getting sufficient credit. In
6) Low Technology:
In agriculture sector technology level is low. Farmer cannot get technology due to lack credit, non-economic holdings and low literacy. On the other hand govt is giving only 1.72% of budget for technology.
7) Defective Marketing:
Agriculture markets in
8) Less Govt Support: 1.40b Rs.→ Budget
At present in
9) Lack of Research:
Government of
10) Absentee Landlordism:
1) increase in court proceedings
2) Decrease production
3) Dishonesty
It is the situation where landlords are not present on their land but they live in big cities.
In their absence proper cultivation of land is not possible, so production decreases.
11) Poor Landlord Tanent Relationship:
There is poor relationship between landlords and tanent. Landlords try to exploit
tanents and tanents do not work hard. This causes decline production.
12) High Rate of Population:
2.24 increasing rate
140.7 million (Pop)
(280000) children
CONCLUSION:
To give a boost to agriculture sector we have to remove above mentioned problems and government should help the farmers to increase production.
Q # 12: DISCUSS THE INDUSTRY & IMPORTANCE OF INDUSTRY?
Industry is the sector where we manufacture goods. In this sector production depends more on capital and man. We can observe this sector in
Growth Rate → 1.6 % (1999-2000)
Share in N.I → 18%
Share in employment→ around 8%
History of industry in
Growth Rate (1950-1960’s) → 7.8%
Growth Rate (1970’s) → 2.8%
Growth Rate (1980’s) →8.2%
Growth Rate (1990’s) → 4.5%
Growth Rate (1996-99) → 2.5%
Industrial sector of a country depends upon two factors:
1) Capital
2) Political Stability
Both conditions are necessary to develop a country’s industrial sector.
Now we discuss different points to prove the importance of industrial sector in the development of the country.
IMPORTANCE:
Increase in N.I:
When industrial sector of a country develops, it shows that production is increasing. So this shows with increase in industries, the N.I also increases
Increase in Employment:
Due to development in industrial sector, the job opportunities for people increases. This causes an increase in employment and decrease in employment.
Better Living Standard:
As industry of a country progresses, people get more jobs. As a result their income also increases, and their living standard also improves.
Increasing Production Rapidly:
Keynes is of the view that in industrial sector it is easier to avoid inflation. As demand in the market increases, we can increase in the production due to technology. We use more raw material and laborer.
MORE EXPORTS:
With the development of industrial sector the production increases. Now after meeting our needs all can export industrial goods. This will raise foreign exchange earning of a country.
LESS IMPORT:
Due to industrialization, the imports of a country are reduced. This leads to foreign exchange saving. Now we can use this for the development.
MORE TECHNOLOGY:
There is positive relationship between technology land and industrialization. As industry develops, the technology also increases.
HUMAN CAPITAL:
It means skilled and educated labor. With the progress in industry, we use more technology. Now people get technical farming and human capital increases.
MORE SAVING:
Industrialization in a country creates more jobs. This raises income level of the country, now with increase in income saving will also be increasing.
MORE INVESTMENTS:
Investment in a country mainly depends on savings. Industrialization raises income of the country. As a result saving and investment go up.
TO
We know that vicious circle is a set of inter-related problems existing in developing countries. A developed industry rises saving investment and production. This helps us to break vicious circle.
SOCIAL BENEFITS:
A developed industrial sector provides following benefits to the society;
1) Better Living
2) More Literacy
POLITICAL BENEFIT:
Progress in industry provides following benefits to the political system.
1) Political Stability
2) More Government Revenue
CONCLUSION:
For development industry in
Q # 13: DISCUSS THE INDUSTRY & PROBLEM OF INDUSTRIAL SECTOR?
Industry is the sector where we manufacture goods. An introduction of industry of
Growth Rate → 1.6%
Share in N.I→ 18%
Share in Employment→ 8%
Previous Growth Rate:
1950 & 1960 → 7.8%
1970→ 2.8%
1980→ 8.2%
1990-1995→ 4.5%
1996-1999→ 2.5 %
ROBLEMS:
Low Savings:
In
This is causing low industrialization.
Lack of Credit:
In
Lack of Foreign Exchange:
In
Import> export
Due to lack of foreign exchange, we cannot purchase sufficient industrial technology, and as a result there is low industrialization.
Political Stability:
Political stability is necessary for industrialization. In
Low Local Investment:
In
Low Foreign Investment:
If we see the analyses of
Low Human Capital:
Human capital is skilled and educated labour. In
Brain Drain:
It is the situation where educated and skilled people of a country start going abroad for better rewards. This is happening in
Lack of Raw Material:
In
Inefficient Management:
In
Due to low technical knowledge, they suffer loss and production of industrial sector is adversely effected.
CONCLUSION:
For the solution of such problems’ we required strong economic planning and continuation of government policies for long time.
Q # 14: What are the causes of industrial backwardness in
Introduction;
The causes of industrial backwardness in
“Causes of Industrial Backwardness”
There are many causes for industrial backwardness in our country which can be divided as follow;
a: Historical causes.
b: Economic causes.
c: Political causes.
d: Social geographical causes.
A: Historical causes;
A backward historical background is a major cause of industrial backwardness. Following are the main historical causes of industrial backwardness.
1: For away industries;
The few industries which were set-up in
2: Industrial share;
At the time of partition, out of 921 industries only 34 come in area of
3: Export of raw material;
It was the policy of British rulers to exports the raw material to
4: British policy;
During the period of British rule no attention was paid to the development of industry. They utilized the natural resources of this area for their own benefits.
5: Backwardness of Muslim area;
The area with the majority of Muslims was kept backward deliberately in favour of Hindus.
B: Economic causes;
Following are the some of economic causes of industrial backwardness.
1: Increase in taxes;
The heavy duties have been imposed on the industrial production. Heavy transfer of technology is slow, speed of development is also slow.
2: No local technology;
There is no local technology in
3: Lack of minerals resources;
There is a lack of mineral resources like coal, iron and petroleum in
4: Lack of industrial research;
Due to lack of industrial search, improvement in production techniques has not been made which has increased the cost of production.
5: Lack of transport facility;
The progressive means of communication and transport are necessary for developing industries
But in
C: Political causes:
Following are some of political causes which are obstructing in the way of industrial development.
1: Unstable political system;
The political instability is also responsible for legging behind of manufacturing sector.
2:
People of
3: Fear of nationalization;
Due to the fear of nationalization of industries, people feel hesitation in this sector and keep their own capital safe.
4: Wars with
The two big wars of 1965 and 1971 with
D: Social and geographical causes;
The social and geographical causes are discussed as follows:
1: climate and weather;
The climate of
2: Expenses on traditional ceremonies;
In our country, people spend a large part of their incomes on traditional ceremonies which result in low rate of savings which is 1902 percent. Due to low saving, the level of investment in industrial sector remains low.
3: Attitude of people;
People in
is favorable which discourage our industrial sector.
4: lack of education;
Lack of education also creates many problems in the way of industrial development. Uneducated capitalists do not know the people industry to invest. According to a survey, the literacy rate in
“Conclusion”
“From the above discussion we can conclude that above are the factors which influence the
industrial sector in
Q # 15 : what are the advantages of cottage and small scale industry?
Introduction:
Cottage and small scale industry forms an important part of the manufacturing sector. It has great Significance for a developing country like
Definition;
We can define cottage and small-scale industry in the following words:
Cottage industry;
The industry run in the home of an artisan with the help of his family members by using simple implements and tools is called cottage industry.
Small Scale Industry;
The industry which employees does not exceed 40 or value of its Fixed asserts does not exceeds Rs.2 million is called a small scale industry.
Importance / Advantages/ Role in Economic development;
The importance of these industries’s can be explained as follows:
1: Accommodate Population;
Agriculture and large-scale industries are not enough to accommodate the increasing population of
2: Increase in income of farmers;
In
3:saving in foreign exchange;
For the establishment of small scale industries, foreign exchange has not to be spent huge quantity on the imports of machinery and raw material. So foreign exchange is saved.
4: balance growth;
As small scale industries can be developed in all areas of the country, so the balance growth of industries will cause a reduction in the regional disparity of income and wealth at all levels.
5: Rate of employment;
The employment in urban areas is 11.78m and the employment in rural areas is 27.63m. in these kind of industries, the women and children also take part. It increases rate of employment contributes 80 percent of industrial labor.
6:better living standard;
Small scale industries increase the income of rural and urban people. So living standard of people improved.
7: Reduction in rural migration;
If small scale industries are established in rural areas then it reduces the migration of rural people to urban areas.
8: Use of wasted material;
Small scale industries some time use waste of large scale industries as raw material and increase national output.
9: Extrusion of market;
The production of goods on small scale with a comparatively cheaper cost enlargers the home market, increases the national income of the country and gives a sense of pride to the people.
10: Part time employment;
In rural areas, people remain free for a long time after completing their farm activities. These industries are helpful to increase their income
11: Promote skill;
The industries promote skills, carpets, woodworks, garments etc all these industries need technical know how. So these industries provide trained and skill.
12:low cost;
In cottage industries, all the members of the family can take part, so cost can be minimized to great extent.
13: Quick yielding;
The small-scale industries are quick yielding. The time spent between execution of the investment project and the production of goods is quite short.
14: Reduction in unequal distribution of wealth;
The expansion of small-scale industries is very helpful in making an equitable distribution of wealth. It also reduces the income gap between the rich and poor.
15: Little capital;
For the establishment of small-scale industries a little capital is required. In our country, the capital is scarce. So the production can be easily increased by establishing these industries.
16: No class war;
There is no class war between capitalist class and labor class in small-scale industries because the gap between the owner and the employee is not right.
17: Individual taste;
The individual taste is not considered in large-scale industries. On the other hand in small scale Industries goods are produces according the taste of individual.
18: Technical knowledge;
Technical knowledge is enhanced with the establishment of small-scale industry. This technical know Knowledge is necessary requirement for the large scale industry.
Q # 16: what is vicious circle of poverty? How it can be broken?
OR
“A Country is poor because it is poor,” Discuss?
The most common characteristic of LCD’s is vicious circle of poverty. Vicious circle refers to the economic backwardness. According to “Nurkse,”
“Less develop countries remain poor due to certain obstacle; These obstacle react upon one another in such a way that they form a vicious circles, which keeps a country At; low level of development.”
This definition means that LCD’s trapped in a set of inter-related problem, which do not
allow them to develop. Sometime vicious circle of poverty is stated as
“A country is poor because it is poor.”
This statement means that a country has low income because it is poor in generating
savings, as a result it is poor in capital formation and finally it is poor output. This is poor
use of resources in LCD’s. We draw vicious circle at demand side and supplying side.
Demand Side of Vicious Circle:
Demand side is also said to be consumer side. Vicious circle on demand side has following steps;
Ø Low Income
Ø Low Demand
Ø Low investment
Ø Low Capital formation
Ø Low Production
And we again move to low income
Now we draw the vicious circle
Low income
Low production Low demand
 | |||
 | |||
Low capital form Low investment
Supply Side of Vicious Circle:
Supply side of vicious circle is also knows as producer side. Here vicious circle has following steps:-
- Low Income (poverty)
- Low Savings (Low Consumption)
- Low investment
- Low Capital formation
- Low Production
-
Now we draw the vicious circle on Supply side:
Low income
Low production Low saving
| |||
| |||
Low capital form Low investment
Now we have discussed vicious circle, but how can LCD’s get rid of this circle? Following point s can be helpful in breaking vicious circle of poverty.
How to break Vicious Circle of poverty?
We can break vicious circle with the help of following measures. We can adopt these measures even in
Increase in Savings:
The most important factor to break the vicious circle is to raise the savings. Government and central bank should introduce attractive saving scheme to increase savings.
Use of Technology:
There should be use of technology in different sectors. This will raise production and national income.
Efficient Use of Resources:
All the financial and natural resources of a country should be utilized in a proper way and there should be no wastage of resources.
Removing Unemployment:
Government should introduce new employment schemes and use economic planning to remove the unemployment. This will raise income of the country.
Increase in Human Capital:
There should be planning to increase skilled and educated labour force, because skilled labour uses the resources of country in a better way.
Reducing Population Growth:
Growth of population is high in LCD’s. This should be reduced; this will help increasing savings in the society.
Use of Foreign Capital:
There is a gap between savings and investments in LCD’s. Saving rate is around 13%-145 but investment required to develop is around 20%-25%. Foreign capital can fill this gap. This will raise capital formation.
Balanced Growth:
According to “Nurkse” LCD’s required growth of the entire sector equally. This is helpful in raising income and investment.
Increase in Investment by Government Incentives:
A stable government can raise investment by providing basic facilities of infrastructure and good law and order situation. These facilities improve local and foreign investment.
Banking System:
A developed banking sector can help in overcoming this vicious circle. Developed banking system provides more savings for investment. This provides help to break the circle.
CONCLUSION:
We can break the vicious circle with the help of mentioned measures.
Q # 17: Discus the (BOP) & (BOT) concept. Distinguish between both of them?
These two terms are always useful to analyze a country at international level. We can
depend both the term as follow:
BOT:
It is the record or account of the country imports and exports of all visible items during the period of 1 year.
BOP:
It is the record or account of the country imports and exports of all transaction during the period of 1 year.
Above terms show that BOP is a wider term then the BOT. Pakistan is facing deficit in BOP.
BOP Deficit (For 2002) → 0.8b $
BOP Deficit (last year) → 1.2b $
Expected Deficit (in 2001) → 4 to 5b $
Difference between BOP & BOT:
Now we discuss in detail the difference between BOP & BOT.
| Balance of Payment | Balance of Trade |
Definition
| BOP includes trading of goods and services | BOT includes goods only. |
No. of Accounts
| BOP has three accounts 1) Trade account 2) Remittance account 3) Capital account | BOT has one account 1) Trade account |
Measurement
| BOP has three accounts and it needs 3 treatments for measurement. | BOT has one account and it needs only 1 treatments for measurement |
CORRECTION:
| For correction in BOP we Need internal and external policies Trade Policy Foreign Policy | For correction in BOT we require only internal policy Trade Policy |
SCOPE:
| BOP Covers more issue so it is wider. | BOT covers limited issues so its scope is narrow. |
DEVALUATION EFFECT:
| Devaluation has negative effect on BOP because debt burden increases | Devaluation has positive effect on BOT because export increases and import decreases. |
PRACTICAL IMPORTANCE:
| BOP is wider term so it is more important. | BOT is narrow term so less important |
Q # 18:What are the Causes of Deficit in BOP. Measures to improve deficit?
(1) More Imports:
Import of Technology:
We are not producing technology at home so we have to pay huge amount of capital on import of technology.
Import of Luxuries:
We are importing cars and electronics from abroad. This is also the cause of high imports.
Import of Medicine:
All type of life saving drugs are imported in
(2) Less Exports:
DEPRESSION IN INTERNATIONAL MARKET:
The market available to
INDUSTRIAL BACKWARDNESS:
LOW ARGI; PRODUCTION:
In
POOR QUALITY:
Our products have injurious quality so exports are low.
EXPORT DUTIES:
In
HIGH PRICES:
Pakistani products have higher price in international market, it is reducing exports.
LOW REMITTANCES:
In
Gulf War:
After Gulf war Pakistani labour is coming back it is causing decrease in remittances.
Trend of Family Migration:
Present trend of family shifting abroad is reducing remittances.
INCREASE IN BURDEN OF DEBT:
Present debt is Rs. 3200 billions, it is because
Budget Deficit:
Pakistani govt is facing budget deficit, so debt is needed.
Low Savings:
Our saving rate is low, so we need debt for investment.
Lack of Resources:
Internal resources are low, so debt is needed.
Defense Needs:
We need debt to fulfill defense requirement.
POLITICAL INSTABILITY:
In
MEASURE TO IMPROVE DEFICIT:
How to Reduce Imports:
1) ↑ Import duties
2) ↓ Defense Expenditure
3) ↓ Import of Luxuries
4) ↑ Industrialization
5) ↑ Argi; production
6) Production of import substitutes
7) Use of local Technology
8) Restriction on Imports
How to increase Exports:
1) ↑Industrial production
2) ↑Argi production
3) Better Quality
4) ↓Export duty
5) Incentives by the Govt
6) Govt Foreign Policy
7) Devaluation
8) Searching New Market
STEPS BY THE GOVT OF
(To ↑ EXP: & To ↓ IMP)
1) Establishing Export Promotion Bureau (EPB)
2) ↑Import duties
3) ↓Export Duties
4) Incentives to exporters
5) Reducing defensive budget
What is agricultural mechanization? Discuss its advantages and disadvantages?
Agricultural mechanization in one of the packages of green revolution. It was introduced in
Definition:
“Mechanization of agriculture means use of modern machinery and technology in agriculture.”
Types of technology:
1. Mechanical Technology:
Like tractor, thrasher, bulldozers.
2.Hydrological Technology:
Tube-wells.
3. Chemical Technology:
Fertilizers and pesticides.
4. Biological Technology:
High yielding varieties seed.
Advantages of agricultural mechanization?
1. Adequate water supply:
Due to Mechanization, more tube wells are installed in the country. These tube wells together with canal system provide sufficient water for irrigation purpose in the country.
2. Double output:
It has been proved by research that by using high yielding varieties of seeds, fertilizers and other technology the output of crop always increase.
3. Vanguards for the industrial development:
Mechanization of agriculture is necessary for the development of some industries like agro-chemicals, agriculture-manufacturing concerns. If Mechanization is not adopted these industries will have to close.
4.Adds to farm-off employment:
Mechanization of agriculture also increases farm-off employment because due to Mechanization more and more industries of agriculture machinery, fertilizers and pesticides are established that provide more jobs.
5.No shortage of food:
Food shortage is very serious problem in our country. Due to process of Mechanization when high yielding varieties of seeds are used, the production of crop increases. Our problem of food can be solved if these types of seed are used.
6. Treats water-logging and salinity:
Water logging and salinity is another problem in
7. Plant disease:
Almost 15% of our every crop is wasted due to different plant disease. This wastage can be avoided if different pesticides are use in time. So plant disease can be controlled by chemical Mechanization.
8. Greater area under cultivation:
Most of our area is composed on mountains, hills, rough and barren land that is not suitable for cultivation. This area can be made suitable for cultivation by use of machinery like bulldozers.
9. Encourage multiple cropping:
Due to mechanization of agriculture, farmer can get more than one crop at one time, this is only possible with the use of quality seeds and more chemical fertilizers. In this process one major and one minor crop is cultivated at the same time.
10. Saving of time:
Because of maximum use of machinery in Pakistan, much time of farmers is saved for example when for ploughing land, animal power was used, it usually takes many hours but by using tractors this can be done in very short time.
11. Optimizes agriculture development:
By maximum use of machinery in agriculture sector, agriculture productivity is increased, more agro-based and agriculture machinery industry is established. More fertilizers and pesticides companies are established. All this leads to more agriculture development.
12. Farmer’s income increases:
Due to mechanization, the yield per acre increase, wastage of crop is controlled. Because of this factor, farmers earn more profit and their income increases and their living standard also increases.
Disadvantages of agriculture Mechanization
Mechanization of agriculture has also some disadvantages that are as under:
1. Displacement of labor:
By using of modern machinery and technology, most of agriculture labor becomes free. They are of no use in agriculture. This increases the problem of unemployment in country.
2. Inadequate power resources:
Our country has insufficient power resources that restrict maximum use of machinery in agriculture sector. Petrol and diesel are too much costly that farmers cannot afford. Electricity is also not available everywhere.
3.Small land holding:
In
4. Adds to problems of urbanization:
Due to use of machinery in agriculture sector, most of labor becomes free. They have no jobs in rural areas. They shift themselves to cities that increases problem in urban areas because there are already great burden of population.
5. deficiency of credit:
Sufficient credit is not available to farmers to purchase modern and new technology. Due to shortage of finance, farmers cannot adopt Mechanization.
6. Valuable for industry:
Farm Mechanization is more valuable for industry than agriculture sector because development of many industries is certain but production in agriculture may increase or not.
7. Adverse effect of technology:
According to one research, it has been observed that chemical technology means use of fertilizer and pesticides has adverse after-effects like it creates more plant diseases and human diseases.
8. No knowledge of use:
In
9. transfer of capital:
Due to Mechanization process, capital from other sectors like industry is transferred to agriculture for purchase of costly equipments. In this way other sectors suffer.
10. Adds to cost of cultivation:
In
11. Greater social disparity(difference):
Due to Mechanization of agriculture, rich farmers become richer and poor farmers become poorer. So the gap between rich and poor increases which leads to disturbance in society.
12. Encourage capital intensive techniques:
Mechanization of agriculture encourage those methods of cultivation that requires more capital but Pakistan has lack of capital and more of labor so labor intensive techniques should be used.
13. small income of farmers:
In
Conclusion:
Mechanization is a good technique to improve performance of agriculture sector in
Discuss the importance of capital formation / role of capital formation in economic development of developing countries.
Economic growth is associated with an increase in capital per head. Its importance can be discussed under following.
- Increase in Employment:
Capital formation increases the opportunities of employment. In this way, it solves the problem of unemployment. Established of new industries, construction of roads and dams increase the chances for employment. The problem of disguised unemployment can be removed.
- Increase in Trade and commerce:
Market size increases and agriculture and industrial development activities trade and commerce activities in the country. Capital formation promotes chances to investment, transport, etc. Which accelerate the growth of economic development Size of market can be extended if there is a fast rate of capital formation in
- Import substitutes:
Making of import substitute not only restricts import but also improves the industry of the country. Increasing rate of capital formation provides industrial set up and instead of importing goods these can be locally manufactured.
- Self Reliant Economy:
Due to capital formation, a country minimizes the foreign assistance, aids and loans. Full utilization of resources strengthens the supply side.
- Full utilization of resources:
Optimum utilization mostly depends on the accumulation of capital in a county. Idle resources can be utilized with adequate amount of capital. Full utilization of resources strengthens the supply side.
- Technological Changes
New technologies are also introduced due to capital formation. Which minimizes cost and maximizes profit. These new technologies give large amount of production within a short span of time.
- Building up Infrastructure:
To build up infrastructure like, roads, power, communication system means of transportation, laws etc., has an important effect on capital formation.
- To improve the balance of payment:
Improvement in balance of payments is another important role in capital formation. Most of LDCs spend their income on the payment of imported goods. With the help of capital formation a country can produce goods to avoid imports.
- Economic welfare of a country:
Economic welfare of a country is also increased by the rate of capital formation in LDCs. Due to optimum utilization of available resources level of capacity of the nationals and they enjoy the maximum facilities of life. People consume a variety of commodities and their standard of living and economic welfare increases.
- Expansion of market:
Expansion of market is also a fruit of capital formation. By making investment in agriculture in agricultural and industrial sector, production of these sectors can be increased. This surplus production could be sold in new market to get maximum benefits.
Discuss the role/importance of transport and communication in the economic development of
Role of Transport and communication:
The role of transport and communication can be summed up under the following heads:
(a) Economics
(b)Political
© Social
(a) Economical Benefits:
- Stimulate Internal and External Trade:
Efficient transport and communication brings additional buyers and seller into contact with one another both at home and with the rest of world.
- Utilization of National Resources:
National resources can be utilized only by proper arrangements of transportation. The production and exports of the country can be increased with the help of transport and communication
- Specialization
If the means of transport and communication are well developed, it will lead to specialization in the field of agriculture production in rural and urban areas.
- Stabilization of prices:
Well developed means of transportation and communication are helpful in stabilizing general price level in their country.
- Extension of Market:
If the means of transportation are good, commodities can be sent to the each corner of the world, the increased demand of every type of commodity within the country and abroad results in the extension of markets.
- Decreases in Unemployment:
Cheap and quick means of transport remove the problem of distance; people can go to distant places in search of employment. This decreases unemployment.
- Sources of income:
Improved means of communications and transport provide a source of income to the government.
- Reduction in population:
Due to improved means of communications and transportation, here is no pressure of population on any city. People move to different areas of the country.
- Agriculture development:
Quick means of transport and communication help in providing the seeds and fertilizers to the formers in time. In this way, they can increase the production of agriculture sector.
- Industrial development:
If means of transportation and quick and fast then, we can import the machines and raw material from other countries for the industrial sector, we can also cheap transport system.
- Supply of natural resources:
Raw material can be easily supplied to factories on low cost through quick and cheap transport system.
- Use of Natural Resources:
Transport sector plays very important role in utilization of idle resources. The production of the country can be increased with the development of transport.
- Importance In Emergency:
If there is food shortage, floods and storms in the country, we can easily import the food from abroad trough quick means of transport and communication system.
- Advertisement of the products:
Producers introduce their products trough mass media and increase the size of the market for their products.
- Elimination of hunger:Through the means of transportation, food items are easily supplied to different parts of the worlds, where shortages take place.
(b) Political Advantages:
1. Defense of the country:
Developed means of transport and communication system enables a government to defend a country on sound footing. With the help of these means supply of troops can be regular and movements of troops can be watched.
2. Law and order:
Improved transport and communication system is very helpful to maintain law and order within the country.
© Social Advantages
1. Education expansion
Quick means of transport and communication help in provision of educational facilities at all levels. Students can also be educated with special programmes of radio and television.
2. Brotherhood:
When the people of different countries meet together, they develop the sense of unity and brotherhood.
3. Uniformity:
Developed means of transport and communication become a source to develop uniformity among the people of the same country. People from different region of the country can meet and understand ideas of each other.
4. Social welfare:
Quick means of transportation and communication help in increasing social welfare of the people by enabling them to get basic amenities of life.
5. Amusement facilities:
Developed transport and communication system provides the amusement facilities in the form of music, T.V, stage plays and features programmes broadcasted by radio and television.
Discuss the importance of
Importance of Railways:
Important mean of travel:
It is the important mean of traveling for passengers as well as goods transportation from the different areas of the country. It is also the cheapest means of transportation in
Means of agricultural and industrial transformation:
It is important because different sectors of the economy e.g. agriculture and industries are developed with the help of railways. Agricultural, products and agricultural raw material are transported from rural sector to markets like wise industrial raw material and manufactured goods are supplied to factories and markets respectively.
Transport for all necessities of life:
Almost all the necessities of life e.g petrol, wheat, rice & pulses are transported through railway to avoid shortage problem.
Transport for army movements:
It is an important source of transportation for army movements for exercises and plays vital role during emergencies like war.
Development of projects:
Material, machinery, iron, cement for development projects are supplied through railways.
Source of employment:
It is an important source of employment.
Source of national income:
It is playing an important role for the production of national income ambits disbursement
Problems of railways:
Late arrivals of trains:
The trains are generally late and passengers are facing problems.
Single track system:
Lack of accountability:
Like other organization of
Unhealthy union:
The unhealthy union activities have adversely affected the performance of this sector.
Old and shortage of locomotive (engine):
There is an acute shortage of locomotive and the rolling stock in possession of railways is old and outdated. It is estimated that more than 50% of machinery of railway is outdated and not feasible for traveling.
Burden of staff:
Railways organization is over staffed which is a financial burden and affects position of railways. In the past illegal appointments on political basis have been taken. Which increase the overall budget of this department?
Dishonesty:
Pilferage (stealing) of goods in transit has become a common feature. Due to dishonesty railway has to pay compensation in thousands.
Misuse of funds:
Corruption and misusage of funds have also affected the development projects
Lack of technical personals:
Although railway is over-staffed and some concocted (fake) specialists are earning huge amounts, yet there is a shortage of real technical personnel’s
Low wages:
The wages paid to workers are low. Majority of workers live from hand to mouth.
Inadequate facilities:
Inadequate facilities have been provided to passengers.
Shortage of funds:
There is a shortage of funds to increase the number of locomotives, to start development projects and to provide facilities to passengers.
Suggestion to improve the performance of
Privatization of railway:
There should be reorganization or privatization of railway to avoid heavy losses.
Double track system:
For easy and quick transportation, there should be double track system.
Efficient workers:
Efficient and hardworking employees should be selected because our present employees are generally inefficient as the selection is made on kinship basis.
High wages:
To attract technical personnel’s and qualified people high wages should be offered.
Better facilities:
Better facilities should be provided to the passengers as well as traders and pilferage of goods in transit should be controlled.
Strong administration:
There should be control on corruption, misusage of funds and leakage of revenue through procedure of accountability.
Economic Indicators for Pakistan 2010
GDP for Pakistan in year 2010 is PKR 6,019.77 Billion.
GDP Growth in year 2010 is 4.792 %.
Inflation in year 2010 is 11.73 %.
Unemployment Rate in year 2010 is 6.195 %.
Population in year 2010 is 166.578 Million .
Total Government Gross Debt (National Currency) for Pakistan in year 2010 is PKR 8,607.13 Billion.
Per capital income 810$
Saving rate 18.3%
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