THE PAKISTAN DEVELOPMENT REVIEW
A Study of Investment Behaviour in Pakistan, 1962-70
The purpose of this paper is to test how far investment by individual firms was related to profits and to sales in Pakistan in the sixties, and to explore in particular how the relationship differed between the first and second halves of the decade. These periods correspond roughly to the Second FivelYear Plan (1960/61 to 1964/65) and the Third Five Year Plan (1965/66 to 1969-70). Between these two periods, ‘boom’ gave way to ‘stagnation’ and the availability of loans to firms on favourable terms shrank considerably. These loans had an important influence on the financing of investment and the behaviour of firms in Pakistan, where the institutional framework was very different from that of a market economy of the advanced industrial countries in the West.