Pakistan Institute of Development Economics



Pakistan’s Export Possibilities

The recent uncertainties about aid flows have underscored the need for achieving an early independence from foreign aid. The Perspective Plan (1,965-85) had envisaged the termination of Pakistan’s dependence on foreign aid by 1985. However, in the context of West Pakistan alone the time horizon can now be advanced by several years with considerable confidence in its economy to pull the trick. The difficulties of achieving independence from foreign aid can be seen by reference to the fact that aid flows make it possible for the policy-maker to pursue such ostensibly incompatible objectives as a balance in international payments (i.e., foreign aid finances the balance of payments), higher rates of economic growth (Lei, it pulls up domestic saving and investment levels), a high level of employment (i.e., it keeps the industries working at a fuller capacity than would otherwise be the case), and a reasonably stable price level (i.e., it lets a higher level of imports than would otherwise be possible). Without aid, then a simultaneous attainment of all these objectives at the former higher levels together with the balance in foreign payments may become well-nigh impossible. Choices are, therefore, inevitable not for definite places in the hierarchy of values, but rather for occasional “trade-offs”. That is to say, we will have to” choose how much to sacrifice for the attainment of one goal for the sake of somewhat better realization of another.

Syed Nawab Haider Naqvi

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