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Updated on April 9, 2011


The causes of industrial backwardness in Pakistan are varied and complex. The Government of Pakistan since 1947 is trying to develop industries and infrastructure facilities for the growth of industrial sector, yet it has not achieved success to the desired extent. In the last over three decades. The main obstacles which have slowed and retarded industrial development in Pakistan are as follows:

Causes of Industrial Backwardness:

1. Controversial Industrial development strategies.

One of the major objectives in all the five year plans of Pakistan is to improve the balance of payments position by (1) increasing export and (2) production of import substitution goods in the country. The twin objectives of promoting export orientation and import substitution have not been achieved to the desired extent. The share of industrial raw material for consumer goods in the aggregate import instead of falling has risen. Similarly the percentage of capital goods in the total imports has increased.

The slow growth in industrial sector is mainly due to rapid changes in the industrial development strategies. The planners have not yet been able to solve the central issues such as.

(1) sartorial balance between agricultural and industrial sectors.

(2) balanced regional development.

(3) growth V/S welfare strategy.

(4) small scale V/S large scale.

(5) capital intensive V/S labour intensive.

(6) public sector V/S Private Sector.

(7) rural V/S urban.

(8) The policies of nationalization and denationalization of industries.

(9) the absence of clear demarcation of industries between public and private sectors has landed the industrial sector in deep seated recession

. The investment climate is at the lowest ebb. For revival and growth of industrial sector, the law and order situation has to be improved, the security of capital invested has to be assured and the degree of bureaucratic control has to be minimized and a clear cut policy chalked out for investment both for local foreign investors.

Thank God since 2001 due to improved macro economic environment, the private sector has gained confidence. Pakistan has registered an impressive growth of 18.2% in the large scale manufacturing sector in 2003-04, 15.6% in 2004-05 and 9% in 2005-06 and 8.5% in 2006-07.

2. Lack of capital.

The second major problem of industrialization in Pakistan is the lack of capital. In capital intensive industries like steel and iron, chemical, automobile etc. the amount of capital required per worker is quite high. In industries like textile, carpet, sugar paper board etc, huge amount of capital is required to establish and expand these industries.

3. Narrowness of market.

The narrowness of home and foreign markets for the manufactured goods is also a major obstacle in the expansion and growth of industrial sector in Pakistan. The low purchasing power of the people, the production of substandard goods, the higher cost of production limit the size of market at home. The advanced countries, due to poor quality of the manufactured goods of the developing countries, are reluctant to purchase their manufactured goods. Pakistan, in order to avail of the economics of large scale production and enlarging home markets should establish import substituting industries. The quality of the products should also be improved to the international level so that the market opportunities in developed world are explored, developed and captured.

4. Poor quality of Industrial Labour.

The industrial labour in Pakistan like other workers is mostly conscious of its rights but not of duties. It may not be inferred that the labour is inherently incapable and inefficient in the performance of duties. The fact, however, is that they are not properly trained. The spirit of work is not included in them. The political parties patronize them to meet their own ends. The spirit of Japanese workers, love for work, love for the country, should be inculcated not only in the industrial labour but also in all the Pakistanis. The change in the attitude towards work will increase production and the country will attain rapid rate of economic growth in a short period of time.

5. Lack of infrastructure facilities.

The infrastructure facilities for building up a sound industrial base are inadequate in Pakistan. The sources of power, thermal, solar, atomic etc, are insufficient to meet the industrial requirements of the country. The transport and communication facilities which are vital for the expansion of industry are costly and also do not fully meet the industrial and commercial requirements of the country.

6. Lack of technical know-how.

Another problem which is standing in the way of rapid industrialization of the country is the lack of skilled persons. The capital intensive industries need highly trained technical personnel. The country at present is deficient of them. The import of technicians from the advanced courtiers is not only costly but also against the interest of the country.

7. Promotes specialization.

Industrialization promotes specialization of labour. The division of work increases the marginal value product of labour. The income of worker in the industrial sector is therefore, higher than that of a worker in agricultural sector.

8. Rise in agricultural production.

Industrialization provides machinery like tractors, thrashers, harvesters, bulldozers, transport, aerial spray etc, to be used in the farm sector. The increased use of modern inputs has increased the yield of crops per hectare. The increase in the income of the farmers has given boost to economic development in the country.

9. Easy to control industrial activity.

The industrial activity compared to agricultural is easy to control. The industrial production can be expanded or cut down according to the price cost and demand of the product.

10. Large scope for technological progress.

Industrialization provides larger scope for on the job training and technological progress. The use of advanced technology increases the scale of production, reduces cost of production, improves quality of the product and helps in widening of the market.

11. Reduction in the rate of population growth.

Industrialization leads to migration of surplus labour from sector to the industries mostly situated in urban centers. In cities improved facilities of sanitation and health care are available. People through the adoption of family planning measures, reduce the rate of population growth.

12. Increased saving and investment.

Industrialization increases the income of the workers. It enhances their capacity to save. The voluntary saving, stimulate industrial growth and by cumulative effect lead to further expansion of industry.

13. Provision for defence.

If a country is industrialized, it can manufacture arms and ammunition necessary for the defence of the country. A nation which depends on other countries for the supply of ammunition will eventually suffer and may face defeat. The two wars with India should be an eye opener for Pakistan.

14. Lesser pressure on land.

The establishment and expansion of industries lessens the excessive pressure of labour force from the agriculture sector.

15. Development of markets.

With the development of industries, the market for raw materials and finished gods widens in the country.

16. Increase in the Government revenue.

Industrialization increases the supply of goods both for internal and external markets. The export of goods provides foreign exchange. The customs, excise duties and other taxes levied on the production of goods increase the revenue of the State. The income tax received from the industrialists adds to the revenue steam of the Government which eventually is spent for the welfare of the people as a whole.
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