GDP growth is the most widely used measure of economic performance. GDP is the market value of all the goods and services which a country produces in a specific time period.
GDP is commonly used as an indicator of the economic health of a country, as well as to gauge a country's standard of living. We will here evaluate the decade wise GDP growth rates that Pakistan has achieved in its economic history.
Historically the most distinct and salient feature of the sixties was that economic growth firmly based on the initiatives of the private sector and generally sound economic management. Whereas during the period of seventies economic management shifted towards nationalization and increased role for the public sector. The period of eighties was of liberalization, deregulation and privatization etc. and during the same period Pakistan also was undergoing structural reforms and stabilization measures. Thus until the decade of 1980‟s Pakistan‟s economic performance was characterized by a high rate of growth (GDP), averaging close to 6 percent and it was considered as the most developed country of South Asia. These impressive growth rates were largely based on external capital inflows in the economy. It was not so in 1990s and the economic performance of Pakistan measured in terms of GDP and sector wise growth was the lowest among the SAARC countries and the sharp decline in capital inflows affected the growth rate. The economic performance during the 1990s deteriorated and failure to contain fiscal and current account deficit led to extraordinary and unsustainable levels of public debt. Besides that other macro-economic indicators also worsened including stagnant tax to GDP ratio, double digit inflation, low levels of investment deteriorating infra-structure, poor social sector indicators and poor governance of institutions etc.
Fifties and Sixties
The economy of Pakistan which started with small support could not perform well in 1950s. The 1950s were the initial years of creation of Pakistan in which the difficulties arising from the result of the partition and the setting up of a new nation-state worried the decision makers. The division of the sub-continent‟s economy as a whole to parts and inheritance of poor human and financial resource grants fails in laying solid foundation of the economy in this period. A crisis mode prevailed throughout the decade. After near-failure of agriculture in the 1950s, the „Green Revolution‟ technology was introduced during the 1960s on a large scale. Industrial production was increased by import-substitution policies, encouraging private investment in this sector. The physical capital stock growth rate was 13.1 Per cent per year and levels of schooling improved meaningfully due to advances in basic education that resulted in an average human capital growth of 11.6 per cent per year as well as higher GDP growth in that period.
The Seventies and the Non Plan Period (1971-77)
Political disturbance which had started in late 1960s ended with the crises of 1971 and consequent separation of the former East Pakistan. The new government took over during deteriorating economic growth and the country was faced with the challenges of rehabilitation of war devastated economy, high rate of inflation and stagnant agriculture and industrial sector. The decade of 1970s saw the break-up of the country after a civil war, the nationalization of industries, finance and education, flooding, a sharp hike in petroleum prices and recession in world market. The winding up of private sector initiative and entrepreneurship and the control over all key decision variables by the Government were a major setback to the economy causing huge uncertainty and loss of investor confidence.