The Pakistani Economy
Pakistan is one of the poorest countries in the world with many of its citizens living in poverty. This makes it difficult for the inhabitants of Pakistan to get a good healthcare policy. The main problem with the Pakistani economy is the instability of the government. With constant changes in government and their policies it has been very difficult to either attract foreign investment or for the economy to grow internally. The country has made some changes to help the economy grow in recent years the growth has been strong. Unfortunately the growth has been accompanied by very high levels of inflation. This has left most Pakistanis worse off than before.
The main source of income for Pakistan is textiles; it is really their only major export. The country produces little else and has few resources to speak of. Unfortunately having only one major export puts the country in a position where they are very susceptible to changes in demand or price for textiles. If world demand decreases or if another country emerges as a competitor the damage to the Pakistani economy will be serious. Recognizing the problem the Pakistani government has started to make a serious effort to diversify the economy. Unfortunately it has been slow going and it will take a long time for the country to be able to get most people out of poverty.
There are many challenges facing Pakistan as it attempts to diversify its economy. The biggest is the lack of foreign investment. Due to the instability in the country very few companies are willing to invest in Pakistan. That makes it very difficult to do things like setting up factories for western companies which is what most developing nations do. There are also serious issues with infrastructure, especially with getting enough electricity to meet the needs of industry. The poor education system has also left Pakistan with a work force that lacks the skills necessary for development.
Right now Pakistan relies heavily on foreign aid as a means of keeping its economy going. In fact the two largest sources of income are foreign aid and remittances from Pakistanis working abroad. This is not going to help the economy to grow as chances are that if anything foreign aid will decrease in the future. If the country is going to get its problems sorted out it is going to take a serious effort on the part of the government.
Unfortunately Pakistan’s economic problems extend beyond its lack of development. Due to the poor decisions of the government the value of the currency has been depreciating dramatically in recent years. This has made the countries financial troubles even worse. The main result has been the massive inflation. This is another issue that Pakistan is going to have to address. It won’t be easy to solve this problem given that they rely so heavily on foreign aid and that they need to import so much of their raw materials. This leaves them with a very poor balance of trade and serious currency problems.
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