Economics Project Final Version

8/14/2019 Economics Project Final Version

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Why Pakistan Isnt a Failed StateBusiness Economics

To Be Submitted: Miss Sayyeda Hameeda

Batool

By: Jigars GroupSayyed Mubashir-Ul-Hassan

Muhammad Khuram ShahzadMuhammad Ali Ikhlaq

Hafiz Najam SaqibUsman GhaniQaisar Abbas

COMSATS Institute of Information Technology


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Acknowledgements

With the name of Allah the most merciful and kind full. First of all thanks to

Allah almighty for all his kindness. Allah made this work possible for us that we were

able to finish our work in time. We pray to Allah that Oh Allah please help us in our

life and please be kind to us, our institute and country.

After that we are thankful to our honorable teacher Madam Sayyeda Hameeda

Batool for her hard work that she does for us. Under her kind leadership ,we feel our

self very comfortable and we always see towards her whenever we feel any problem.

During this work her guidance made our work easier and better. During the

preparation of the report many things were happening inside the country, Mr.

President left his powers as chief in charge of Armed forces as suicide attacks were

making the work more difficult. Media was making noise on N.R.O and silence of

Mian Nawaz Sharif (PML-N) prevailed. But we continued our work. It is most

important to mention here that nothing can finish our love with our home, Pakistan.

So we thank Pakistan, while we are living on its land and we are using its resources

and enjoying the independence. (ALLAH HU AKBAR)

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Table of Contents

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Topic Page #---------------------------------------------------------------------------------

Introduction to Assignment 4

Preamble 4

What is a failed state? 5

Islamic Republic of Pakistan 5

Economic Review of Pakistan 9

Why Afghanistan? 16

Economic review of Afghanistan 16

US Debts and deficit 17

Why Pakistan is not a failed state? 17

Why it was declared as failed? 20

Executive Summary 21

Best Wishes/References 23

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Introduction to Project:

The pages in your hands are a project of Business Economics of MBA firstsemester and the hard work is done by Jigars group. We have tried to use arational approach instead of patriotism or extremism. Our topic is a commonlyasked question of the day. We all love Pakistan but we do not live in the fools

paradise that we are talking only what is best in Pakistan. Our effort was donehonestly and till the end we have tried to not insert our Personal emotions in thediscussion.

The topic can be discussed by many ways. For example the politicalsituation of Pakistan, the social system of Pakistan, the culture of Pakistan and somany things are there to be discussed. But our work is concerned specially witheconomic situation. Most of the discussion consists of economic debate. May beyou will find some data that looks against some country but we are only arguingon the base of realities or what a common eye see.

Pakistan is a fail state is being a commonly spoken sentence today butwe do not accept it. Why? The answer of this why is our assignment. We areputting some realities in front of you. And you will select the answer of Yes or NO.

Yes Pakistan is a fail state. Or No Pakistan is not a fail state. We are patriots but inthe discussion it is better to use and talk on the real reports instead of beingangry with any one else and not accepting the reality.

Preamble:

Lets start from an example to see the real face of Pakistan.

Four men, of different nationalities (Arabic, Englishman, Russian, Turkish)landed at Karachi International airport. They come out and sit in a car and decidea journey throughout Pakistan. There trip starts from Karachi. They visit someimportant areas of Karachi then by Indus highway; from city to city they reachIslamabad. They will surly find many beautiful cultures and different people. Nowfrom Islamabad they go to Gilgit by karakuram highway. They come back and goto Muzzaffarabad and then by Muree road they come back to Islamabad. Theyvisit Rawalpindi and Texila then they go in sindh for Mohinjodaro, now they cometo Lahore the cultural hub of Punjab.

What the group finds. Peace loving peaceful nation Kind people Very beautiful cultures with full of colors and life All markets in working condition 4 different seasons From deserts to Chikory (K- 2) all types of geographical area And many more

I am 100% sure that throughout the country the group will find no hurdlein journey. No problem or tension of terrorism will they face. A person still (at thetime being now) can go any where in Pakistan except some areas of FATA andsome areas of Balochistan (only some Brahvi speaking area). He might find everything very well.

Now the same group decided to go to Kabul (Peshawar to Kabul or Quettato Kabul) and from Kabul to Qandhar. Can you believe what will happen? On allthe main roads of Afghanistan Taliban set there barriers and they check each andevery vehicle and it is common there. You cannot continue your journey therewithout any vehicle of NATO army.

It is real that a Pakistani ambassador was kidnapped while he was goingfrom Peshawar to Kabul.

A report of Aljazeera after the day of Afghanistan election showed that howTaliban stopped every vehicle and checked the people (thumb) that weather they

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had taken part in election or not and this was happening only 4 miles away fromKabul city (capital city).

Why we are comparing Pakistan from Afghanistan. Basically our purpose isto show you the real fail state and the difference between Pakistan andAfghanistan. Now isnt it to unbelievable that the situation in many areas of Indiais not different from Afghanistan like the southern part of India where Tamilmovement for liberation is very powerful. In Kashmir Indian army behaves notdifferent than terrorists. So if you say that Pakistan is a fail state then you have todeclare India also (according to the definition of fail state India has more failureoptions).

Actually it is commonly asked question. Is Pakistan a fail state? The topicgot fame when John carry said in an interview (while his campaign) that Pakistanwas a fail state. The Crisis States Research Centre declared Pakistan a fail state in2005 and onward and in 2006 Pakistan and Afghanistan were almost equal (toofunny) in their failure. But that is why we are comparing Pakistan and Afghanistan.

Before going onwards lets check what is a failed state?

What is a Failed State?The term failed state is often used by political commentators and journalists to

describe a state perceived as having failed at some of the basic conditions andresponsibilities of a sovereign government. In order to make this definition moreprecise, the following attributes, proposed by the Fund for Peace, are often usedto characterize a failed state:

Loss of physical control of its territory, or of the monopoly on thelegitimate use of physical force therein,

Erosion of legitimate authority to make collective decisions, An inability to provide reasonable public services, and An inability to interact with other states as a full member of the

international community

Common characteristics of a failing state include a central government soweak or ineffective that it has

Little practical control over much of its territory Non-provision of public services Widespread corruption and criminality Refugees and involuntary movement of populations And sharp economic decline.

Now after the definition of fail state lets take a brief introduction of Pakistanbefore starting our debate.

Islamic Republic of PakistanMotto:Unity, Discipline and Faith"

Pakistan is a country in South Asia. It occupies a crossroads between SouthAsia, Central Asia and the Middle East.

The region forming modern Pakistan was at the heart of the ancient IndusValley Civilization and then later was the recipient of Vedic, Persian, Turco-Mongol, Indo-Greek and Islamic cultures.

In addition to the Indian independence movement which demanded anindependent India, the Pakistan Movement (led by Muhammad Ali Jinnah of theMuslim League), which also sought an independent India, sought an independent

state for the majority Muslim populations of the eastern and western regions ofBritish India. The British granted independence and also the creation of theMuslim majority state of Pakistan that comprised the provinces of Sindh, North-

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West Frontier Province, West Punjab, Balochistan and East Bengal. With theadoption of its constitution in 1956, Pakistan became an Islamic republic.

It is the sixth most populous country in the world and has the secondlargest Muslim population in the world after Indonesia. It is the world's onlyMuslim-majority nuclear state. Pakistan is a member of the Commonwealth ofNations, Next Eleven economies and the D8.

ReligionsPakistan is the second-most populous Muslim-majority country and also

has the second-largest Shi'a population in the world. About 95% of the Pakistanisare Muslim, of which nearly 75% are Sunni and 20% are Shi'a. The two groups ofMuslims usually coexist peacefully.

The religious breakdown of the country is as follows:1. Islam 173,000,000 (96%)2. Hinduism 3,200,000 (1.85%)3. Christianity 2,800,000 (1.6%)

4. Sikhs around 20,000 (0.001%)5. The remaining are Parsis, Ahmadis, Buddhists, Jews, Bah's, and Animists(mainly the Kalasha of Chitral

Military

The armed forces of Pakistan are an all-volunteer force and are the sixthlargest in the world. The three main services are the Army, Navy and the AirForce, supported by a number of paramilitary forces, which carry out internalsecurity roles and border patrols. The National Command Authority is responsibledevelopment control of all strategic nuclear forces and organizations.

The Pakistan military first saw combat in the First Kashmir War, gainingcontrol of what is now Azad Kashmir. India imposed wars over Pakistan in 1965

and in 1971. During the Soviet-Afghan war, Pakistan shot down several intrudingpro-Soviet Afghan aircraft and provided covert support to the Afghan mujahideenthrough the Inter-Services Intelligence agency. In 1999, Pakistan was involved inthe Kargil conflict with India.

The Pakistani armed forces were the largest contributor to United Nationspeacekeeping efforts, with more than 10,000 personnel deployed in 2007 and arecurrently the largest contributor. In the past, Pakistani personnel havevolunteered to serve alongside Arab forces in conflicts with Israel.

Pakistan's military employs armaments that include atomic weapons,mobile vehicle ballistic missile systems laser communication systems, armoredcars and tanks, and multi-role fighter/bomber jets.

Geography and climate

Pakistan covers 340,403 square miles (881,640 km2), approximatelyequaling the combined land areas of France and the United Kingdom. Apart fromthe 1,046-kilometre (650 mi) Arabian Sea coastline, Pakistan's land borders total6,774 kilometers2,430 kilometers (1,509 mi) with Afghanistan to the northwest,523 kilometers (325 mi) with China to the northeast, 2,912 kilometers (1,809 mi)with India to the east and 909 kilometers (565 mi) with Iran to the southwest.

The northern and western highlands of Pakistan contain the toweringKarakoram and Pamir mountain ranges, which incorporate some of the world'shighest peaks, including K2 (28,250 ft; 8,611 m) and Nanga Parbat (26,660 ft;8,126 m). The Balochistan Plateau lies to the west, and the Thar Desert and an

expanse of alluvial plains, the Punjab and Sindh, lie to the east. The 1,000-mile-long (1,609-km) Indus River and its tributaries flow through the country from theKashmir region to the Arabian Sea.

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Pakistan has four seasons: a cool, dry winter from December throughFebruary; a hot, dry spring from March through May; the summer rainy season, orsouthwest monsoon period, from June through September; and the retreatingmonsoon period of October and November.

Flora and fauna

The national animal of Pakistan is the Markhor and the national bird is theChukar, also known as Chakhoor in Urdu. The wide variety of landscapes andclimates in Pakistan allows for a wide variety of wild animals and birds. Theforests range from coniferous alpine and subalpine trees such as spruce, pine,and deodar cedar in the northern mountains to deciduous trees such as themulberry-type Shisham in the Sulaiman range in the south. The western hills have juniper and tamarisk as well as coarse grasses and scrub plants. Along thesouthern coast are mangrove forests, which form much of the coastal wetlands.

In the south, there are crocodiles in the murky waters at the mouth of theIndus River whilst on the banks of the river; there are boars, deer, porcupines, andsmall rodents. In the sandy scrublands of central Pakistan are found jackals,hyenas, wild cats, panthers, and leopards while the clear blue skies abound withhawks, falcons, and eagles. In the southwestern deserts are rare Asiatic cheetahs.In the northern mountains are a variety of endangered animals including MarcoPolo sheep, Urial sheep, Markhor and Ibex goats, black and brown Himalayanbears, and the rare Snow Leopard. During August 2006, Pakistan donated anorphaned snow leopard cub called Leo to USA. Another rare species is the blindIndus River Dolphin of which there are believed to be about 1,100 remaining,protected at the Indus River Dolphin Reserve in Sindh.

EconomyDespite being a very poor country in 1947, Pakistan's economic growth

rate was better than the global average during the subsequent four decades, butimprudent policies led to a slowdown in the late 1990s.Recently, wide-rangingeconomic reforms have resulted in a stronger economic outlook and acceleratedgrowth especially in the manufacturing and financial services sectors. Since the1990s, there has been great improvement in the foreign exchange position andrapid growth in hard currency reserves. The 2005 estimate of foreign debt wasclose to US$40 billion. However, this has decreased in recent years withassistance from the International Monetary Fund and significant debt-relief fromthe United States. Pakistan's gross domestic product, as measured by purchasingpower parity, is estimated to be US$475.4 billion while its per capita incomestands at $2,942. GDP growth was steady during the mid 2000s at a rate of 7%;however, slowed down during the Economic crisis of 2008 to 4.7%.Pakistan's GDPis US$167 billions, which makes it the 48th-largest economy in the world or 27thlargest by purchasing power adjusted exchange rates. Today, Pakistan isregarded as to having the second largest economy in South Asia.

Some important industries of Pakistan are telecommunications, real estate,energy, apparel and textiles (accounting for nearly 60% of exports), foodprocessing, chemicals manufacture, and the iron and steel industries. Pakistan'sexports in 2008 amounted to $20.62 billion (USD). Pakistan is a rapidly developingcountry.

Society and culture

Pakistani society is largely hierarchical, with high regard for traditionalIslamic values, although urban families have grown into a nuclear family systembecause of the socio-economic constraints imposed by the traditional joint family

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sports. Pakistan also has several mountain peaks of height over 7,000 meters(22,970 ft), which attract adventurers and mountaineers from around the world,especially to K2. [130] Starting in April to September, domestic and internationaltourists visit these areas helping tourism become a source of income for the localpeople. Majority of the tourists are from other Asian countries.

In Blochistan there are many Caves for cavers and tourists to visit speciallythe Juniper Shaft Cave, the Murghagull Gharra cave, Mughall saa cave, andnaturally decorated cave, Pakistan is member country to UIS (Union ofInternational Speleology).

The northern parts of Pakistan are the site of several historical fortresses,towers and other architecture. Including the Hunza and Chitral valleys, the latterbeing home to the Kalash, a small pre-Islamic Animist community. Punjab is alsothe site of Alexander's battle on the Jhelum River. The historic city of Lahore isconsidered Pakistan's cultural centre and has many examples of Mughalarchitecture such as the Badshahi Masjid, Shalimar Gardens, Tomb of Jahangirand the Lahore Fort. The Pakistan Tourism Development Corporation (PTDC) alsohelps promote tourism in the country. However, tourism is still limited because ofthe lack of proper infrastructure and the worsening security situation in the

country. The recent militancy in Pakistan's scenic sites, including Swat and NWFP,has given a massive blow to the tourism industry. Much of the trouble is alsobeing blamed on: the frail travel network, tourism regulatory framework, lowprioritization of the tourism industry by the government, low effectiveness ofmarketing and a constricted tourism perception. Furthermore 500,000 touristshave visited Pakistan before global economic recession.

Sports

The official and national sport of Pakistan is field hockey, although cricketis more popular. The national cricket team has won the Cricket World Cup once (in1992), were runners-up once (in 1999), and co-hosted the games twice (in 1987and 1996). Pakistan were runners-up in the inaugural 2007 ICC World Twenty20

held in South Africa and are the champions of 2009 ICC World Twenty20 held inEngland. Squash is another sport that Pakistanis have excelled in, with successfulworld-class squash players such as Jahangir Khan and Jansher Khan winning theWorld Open several times during their careers.

At an international level, Pakistan has competed many times at theSummer Olympics in field hockey, boxing, athletics, swimming, and shooting.Pakistan's medal tally remains at 10 medals (3 gold, 3 silver and 4 bronze) whileat the Commonwealth Games and Asian Games it stands at 61 medals and 182medals respectively. Hockey is the sport in which Pakistan has been mostsuccessful at the Olympics, with three gold medals in (1960, 1968, and 1984).Pakistan has also won the Hockey World Cup a record four times (1971, 1978,1982, 1994). The Motor sport Association of Pakistan is a member of the

Fdration Internationale de l'Automobile. In Caving adventure sports Pakistan ismember country to UIS (Union of International Speleology) The Freedom Rally is ayearly off-road race, which takes place during the Independence celebrations.Pakistan also qualified for the Golf World Cup for the first time in 2009.

Now when we know much more about Pakistan then lets take a look ofPakistans economic situation, which is helpful to us, as we have mentionedearlier in introduction.

Economic Situation of Pakistan

Wars change the world economic stability. And Pakistan at the time beingnow is facing a war against terrorism but how much the war has disturbed itseconomy. First check it and then compare it with America, which is anothercountry, involved in the war. War is not at the American land, it is Pakistan but

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when you will compare both you will find that Pakistan is better then Americawhich is facing war in its own territory but not loosing its economic stability.

Review of Economic Situation(July-March 2008-09)

We will not go in-detail but we are going to present some charts and graphs whichshows the picture in better way.

Agriculture

Kharif crops sugarcane and maize fell short of the target and depictednegative growth of 18.5 percent and 7.5 percent in 2008-09. However, other twomajor crops cotton and rice have registered positive growth of 7.3 percent and13.5 percent, respectively. The combined weight of sugarcane and maize inoverall agriculture is 6.2 percent while that of cotton and rice is 13.0 percent.

The Rabi season started with estimated water shortages of 31.6 percent,however, widespread rainfall during December 2008 to February 2009 in mostparts of the country has positive impact on the outlook for the Rabi crop. Wheat

with its 12.7 percent weight in overall agriculture is estimated to post 7.8 percentgrowth over the last year. The area under cultivation of wheat crop has surpassedthe target of 8.6 million hectares by 5 percent. The provincial governments andPASSCO has made arrangements for highest ever quantum of procurement at 6.5million tons of wheat, which is far higher than 3.9 million tons procured last year.

Manufacturing Sector

Large-scale manufacturing depicted negative growth of 5.73% during July-February 2008-09 as against 5.27% positive growth in the comparable period oflast year.

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Services Sector

Services sector has exhibited resilience to fluctuations in the economicactivity. The FDI inflows in the telecommunications, financial businesses andpersonal services have reached a level of saturation in the first nine months (July-March) of the current fiscal year. There are enough anecdotal evidence thatfinancial sector is set to provide substantial growth. Similarly, improved prospectsin transportation & storage sub-sectors on the back of relatively better productionin major crops, strong contribution by finance and insurance sector andaugmented administrative and defense related spending will provide support toadequate level of growth in the services sector.

Inflation

As inflationary pressures across the globe continue to dissipate, sparkingdeflationary concerns in even some countries like Thailand and India, whichshared pain of galloping inflation with Pakistan, a few months ago, Pakistan stillfaces high double-digit inflation. Although all the price indices like the CPIincluding core inflation, WPI and SPI show a downward trend in recent months, thedecline has been subject to stiff downward rigidity. The month on month increasein food and nonfood inflation in the months of February and March has beenespecially disappointing. The role of sugar and wheat has to play its role ininflationary environment in Pakistan which could play crucial role in determinationof inflation in the final quarter of this fiscal year (April-June 2009). The dirty workof extra-market forces kept fruits of falling inflation away from Pakistansconsumers.

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Regional Comparisons of Inflation

A regional comparison of inflation in Table-5 reveals rigidity of inflation inPakistan in comparison to other regional players. Barring Iran, all the countrieslisted in Table-5 have shown notable deceleration in their inflation rates from July2008 to March 2009. India, which measures its inflation by the weekly measuredWPI, is at historic lows whereas Thailand has seen deflation during March 2009from a high of 9.2 percent in July 2008. Other countries like Philippines, Vietnam,and Sri Lanka witnessed substantial deceleration in inflation since December2008.

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Monetary Policy

The SBP has kept its tight monetary policy stance in the period July 01,

2008-April 20, and 2009. The policy rate was adjusted upward in November 2008to shave-off some aggregate demand from the economy and kept constant inJanuary 2009. However, noticing visible signs of demand compression enabled theSBP to reduce 100 basis points on April 20, 2009. During July 01, 2008-April 18,2009, money supply (M2) expanded by 1.6 percent against the target ofexpansion of 8.0 percent for the year and last year expansion of 8.1 percent inthe comparable period of last year. The reserve money witnessed contraction of2.2 percent in this period as against expansion of 10.3 percent in the comparableperiod of last year.

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Fiscal Policy

The government has decided in the economic stabilization program toadhere to the fiscal deficit target reverently and during the first nine months (July-March) the fiscal deficit hovered around 3.1 percent of the projected GDP for2008-09, which is consistent with annual fiscal deficit target of 4.3 percent. Thefiscal improvement in the first nine months (July-March 2008-09) has largelybased on reduction of oil subsidies and a cut in development spending. Allmeaningful efforts to expand revenues particularly by broadening the tax basewill only work in the medium-term

Tax Revenue collected by the Federal Board of Revenue (FBR) stood at Rs-813.6 billion (net) during the first nine months (July-March) of the current fiscalyear (2008-09) as compared to Rs. 679.9 billion in July-March, 2007-08 postinga healthy increase of 19.7%. Direct taxes, which accounts for 37.6 percent of totaltax collection of the FBR have registered a growth of 18.9%. Indirect taxes, on theother hand, exhibited a growth of 20.2 percent. Within indirect taxes, sales tax,which accounts for roughly 63.6 percent of indirect taxes and 40.1 percent of totaltaxes, grew by 24.3 percent (Rs. 321.5 billion). The custom duty collection is upby 3.4 percent and the collection of federal excise duty (FED) has recorded a noteworthy increase of 30.4 percent (collected Rs. 80.6 10 Review of EconomicSituation JulMarch 200809 billion) during the period under review [See Table-7].The collection of import related taxes grew by 4.6 percent whereas; taxes ondomestic production grew by 28.1 percent. Given these developments, the taxrevenue target of Rs.1250 billion seems Herculean task without correctivemeasures being taken in the last quarter.

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External Sector

The external sector has shown definite sign of improvement. The currentand trade account balance has improved but there is some slippages on account

of current transfers. However, buoyancy in remittances is more than offset bysubstantial declining trend in inflows through exchange companies. There is asubstantial decline of around $2 billion in services trade deficit during the firstnine months of the current fiscal year because of tapering off in the demandpressures on the one hand and lower freight and insurance payments on theother. However, the income account deficit widened by almost half a billion dollarmainly owing to lower income receipts while payments remained more or lessstagnant around $4 billion. The financial account witnessed slackening of capitalinflows by staggering $2.5 billion mainly on account of lower FDI inflows, higherportfolio outflows, lower disbursements of loan and higher amortization payments. The worsening of external account in the period of July-October 2008-09 iscompensated by substantial improvement in the external account in the periodNovember-March 2008-09. The hemorrhage to the foreign exchange reserves

have been arrested in the later period and around $3 billion are added to the SBPreserves in spite of $500 million Eurobond payment in February 2009.Notwithstanding, improvement in the external sector outlook remains hostage toexpected inflows in the last quarter.

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Why Afghanistan?

All this economical report of Pakistan shows how the country is surviving inthe time of global financial crises against terrorism. Now it is too funny butimportant to see the economic situation of Afghanistan which is another failedstate in the area. Pakistan is at No. 9 and Afghanistan at No. 7 so according toreport not for from each other. Why Afghanistan, because the world uses the termAf-pak. Most of the people (because of Jewish media) in the world think thatPakistan and Afghanistan are not different from each others. And their economicsituation is same. Another reason is, we want to show that how a real fail statesuffers in the world. That is why here is a paragraph about Afghanistan economicsituation.

The Economic situation of Afghanistan

As of 2002, Afghanistan does not have a viable economic system. Thetraditional economy, which was based mainly on subsistence agriculture andanimal husbandry and which usually provided enough food for the Afghanpopulation plus a surplus for trade, was essentially destroyed beginning in 1979with the Soviet invasion and war, which lasted until 1989. The economy sufferedfurther during the civil unrest of the first half of the 1990s and then recovered insome regions during Taliban rule from 1995 to 2001. The U.S.-led invasion of20012002 damaged much of what was left of the economy and infrastructure,and the World Bank concluded that Afghanistan had become the poorest nation inthe world. The situation was made worse by a drought that began in 1999 andlimited crop production and livestock herding. It is also important to note thatstatistics regarding the Afghanistan economy for the last twenty or so years areuntrustworthy.

The traditional economy is based on a mix of farming (Drugs, wheat,barley, corn, and fruits are the main crops) and herding (mainly sheep and goats

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and also cattle, camels, donkeys, and horses). Farming and herding are limited bythe rough terrain and dry climate, and agriculture typically requires irrigation.

Farming and herding are done mainly to support the family. Village-levelweaving, blacksmithing, goldsmith and cottage industries such as carpet weavingsupport these major subsistence activities. From 1979 on, millions of Afghans fledto Pakistan and other nations, and remittances they sent to relatives back homeprovided another source of revenue.

The ten-year war with the Soviets destroyed many roads and irrigationsystems and government programs and services, rendered land useless becauseof land mines, and caused several million to flee. The civil war following the Sovietwithdrawal caused additional damage, and it was not until the Taliban tookcontrol and eventually ruled 90 percent of the nation that the economy began torecover. Especially in the south and east, farming and herding improved to alimited extent, trade with Pakistan increased, and natural resources such astimber, precious stones, and marble and granite were harvested and traded.Opium farming also expanded rapidly, and Afghanistan became the largestsupplier of illicit opium until the Taliban banned opium production in July 2000.Opium production continued, however, in the north, where it was an important

source of income for the Northern Alliance, the major rival of the Taliban. Thedrought that began in 1999 and continued into 2002 undid the agricultural andherding gains and made a significant portion of the population dependent oninternational aid for food, shelter, and health care.

The year 2002 marked the beginning of a large-scale international effort torebuild the Afghanistan economy and infrastructure through billions of dollars offinancial, material, and managerial support. The first major event was the TokyoConference on 2122 January, convened to address the problems of Afghanistan'sdevastated economy.

After seeing the Afghanistans economic situation, lets have a look on asuccessful countrys debt and deficit and it is USA, a country whose presidential

candidate said, Pakistan a failed state.

US Debt and Deficit

Logically, the deficit is equal to annual increase in the debt. However,there is certain spending (supplemental appropriations and the surplus taxreceipts in the Social Security program) that add to the debt but are excludedfrom the deficit. During 2008 the budget deficit was $455 billion but the nationaldebt increased by $1 trillion, the first time it has done so in a single year. Thetotal debt has increased over $500 billion each year since FY 2003, consideringboth budgeted and non-budgeted spending.

Roughly estimated debt of USA is 57 trillion dollars, biggest in the historyof mankind, and going upward. Again if we check the effects of war againstterrorism on US and then compare it with Pakistan, you will find Pakistan in morerelax able position. America is facing economic crises. 2% of its budget is beingspent on bail out. It has world biggest defense budget seven times more than itsclosest competitor, china. No one says that it is a fail state according to its deficit.No one ever spoke about its own atomic and hydrogen bombs (we will discuss itlater) but the question is Pakistan a failed state????

Now let us discuss all the reasons one by one that why Pakistan is not afailed state. And why media is discussing this topic again and again.

Why Pakistan is not a failed state?

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First we think so that the right way is to check the criteria of a failed state(given above) and then put the Pakistan against this.

Major Reasons

1. Does Pakistan have no control over its territory? Let us see with anexample,

According to Washington post October 28, Afghanistan should learn alesson from Pakistan. But we think so there is a mistake. Afghanistangovernment is nothing without America. Pakistan faced a little challenge inswat, but how they recover their area only in one month. In Afghanistan,America is trying to its best, but it is still in vein. (Report of Aljazeera,given above) so if America wants stability in Afghanistan then it shouldlearn a lesson from Pakistan how to control Taliban or any other terrorist.BBC said that Pakistani army recovered 90% of Waziristan in only 2 weeks.These were only two areas where Pakistan was facing little problem. At thetime being now Pakistan has its full control over its all-geographical area. Itis better than India where Tamil area is considered dangerous for everyoutsider.

2. Is Pakistani government is not eligible for taking a decision.Pakistan has a democratically selected government, having the worldhighest number of women legislature members. There are two majorpolitical parties. And government is fully free for its collective decisions.Government is doing its works with full authority. They are making newrules and regulations. Latest examples are the rental power projects,acceptance of carry logger bill. Now very soon president will change thearmy chief, the old one has finished his job time and going to be retire.Pakistani government is a real powerful government. Pakistani governmentcan do what it wants to do. They can make collective decisions without anyguidance of external factor.

3. Does the government is not providing the public services?The government of Pakistan is famous for its subsidies. The government

often bears loss to itself for the public service. For example, the latest freejudiciary is a danger for government also but government is still helping judiciary towards it independence. What about latest rental powerprojects? So it looks like foolish when some one says that Pakistanigovernment is not doing any thing for public services. The Punjab andN.W.F provinces have recently made the increments to the pay of police?Why?

4. Does the Pakistan not act as a full member of international community?It will be a white lie if someone says so. Pakistan is one of the world mostfamous countries according to its importance in international community.It is considered as the country, which is leader of all Muslim country. It isthe founder of OIC. It is the biggest contributor of UN peace force withmore then 10000 men. It helped the world to get rid of Russian rule in

1980s and now facing the war against terrorism, which is (in real) the warof whole world. It is the full member of UN and all its tributaries, OIC,Common Wealth, SAARC any many more international organizations.

These were the basic criteria rules for a failed state and Pakistan is surely not.Now take another view, which says a country having sharp economic decline isalso a failed state. This term is often spoken be TV. Commentators. We acceptthat Pakistans economic situation is not as good as it should be. But it is still notso bad to be declared as a fail state.

Economic Factors

Pakistans external debts are only $38800 million compare to UShaving $13773000 million external debts. In the list of External debts,Pakistan is at number 52. (Not too bad)

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By October 2007, Pakistan raised back its Foreign Reserves to ahandsome $16.4 billion. Exceptional policies kept Pakistan's trade deficitcontrolled at $13 billion, exports boomed to $18 billion, revenuegeneration increased to become $13 billion and attracted foreigninvestment of $8.4 billion. Recently IMF has granted 6 billion and US has announced 1.5 billion

US dollars per year for Pakistan, which will surely change the economicsituation. Will you give your money to a person who is not, in the conditionof returning it with profit? No. They gave us money because they weresure that we could give them back. Ah! What a fail state?? In Pakistan 3 stock markets are working, and the 100 stock indexesreaches at 13000 points occasionally and 10000 points normally, which ina failed state, can never be considered. Pakistan has a very good economic system instead of Afghanistanwhere no economic system is visible. Our workers remittance in year 2008 is 450 million US$. Isnt it agood sign of success? Our manpower is the best and we have the bestminds of the world.

If we talk only about wheat, we produced 23 million tons of wheatlast time. Pakistan is still one of the world most milk, wheat, meat, rice,cotton, potato and onion producing countries. Pakistani government collected 813 billion rupees of tax in the lastfiscal year. What a failed state having enough tax. Can a governmentwithout powers can collect this tax. Inflation is a global issue of the day. It is not only Pakistansproblem. But Pakistan has still better condition then Iran, a neighborcountry, which was not declared a fail state. The new democraticgovernment has tried to control the situation. That is why they havecontrolled it at one point. Pakistans leather and cotton products are famous all over theworld. So textile and sports goods are the main exports. Adidas, Slazenger

are two types of international brands. Other exports include leatherproducts, food items (fruits, rice etc.) weapons (guns and tanks etc.)medical equipment and many more.

Overall, Pakistan is the world 27th largest economy in term ofpurchasing power and 48th in terms of dollars with almost $185 billion ofGDP. In the year 2009 foreign investment was $4 billion, which can beconsidered best at the time of uncertainty and war. Total power generation capacity of the country is near about 18000MW. It will be better very soon. Many projects are under construction,which will make the country more colorful. Pakistan is very large countrybut almost its every village enjoys electricity compare to its neighbors,

which do not provide light in villages (India, Afghanistan and Sri Lankaetc.) That is why its consumption is large. Pakistan owns the world biggest coal reserves, gas reserves andgood oil reserves. Precious stones of Pakistan are famous for there colorsand they are another good export of Pakistan. Pakistan has world mostbeautiful places as a Swiss tourist exclaimed to visit. So it is anothersource of income. The World Bank (WB) and International Finance Corporationsflagship report Ease of Doing Business 2010 ranked Pakistan 85 among181 countries around the globe. Pakistan comes highest in South Asia butalso ranks higher than China, Russia and India, which is at 133.

Instead of all above economical things we still have some more, which prove usthe best not the worse or fail, these are our characteristics.

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Non-Economic Characteristics

Pakistan has one of the world best armed forces with best arms andprofessional approach. We can defend ourselves very well, and we haveproved it at many times.

We are the 7

th

atomic power of the world and our missile technology isbetter then most of our neighbors. Our media is free from any pressure. And the government even cannot

consider pressurizing it. The European media even cannot consider of suchliberation, which our media has.

We have every type of geographical land and season in side the country. We have the best cultures of the world. The people of Pakistan love music,

and Pakistan has produced many international singers. There are almost 140 universities, more than 40 medical colleges,

hundreds of graduation institutes and thousands of school. They areproducing thousands of doctors, engineers, scholars etc. every year. Dr.Abdulsalam (one of the Pakistani scholar) won the Nobel Prize.

Pakistan has elected democratic government with highest number of

women legislatures in the world. Our crime rate is very low then successful nations like America and

Russia. They teach us the lesson of human rights but we think theyshould learn from us that how to stop crimes in the country. For example,the ratio of rape, in the developed nations is very high like US on the top.

Pakistan ruled over the squash court for a long time. Pakistan has world #5cricket team. Pakistani boy Aisam-Ul_Haq Qureshi has recently defeatedRoger Federer (world #1) player in doubles of tennis. Pakistan also hashighly ranked in many other games like hockey, boxing, snooker etc.

Pakistan owes very big damns, world second largest irrigation system,three large rivers and still there is space to improve its canals and rivers.

There are 12 international air ports and estimated 139 airfields in the

country. Many international and national airlines are currently operating inthe country.

Pakistan has very good network of roads and railways. Including manyMotorways, shahrah-e-Resham (Islamabad to Beijing), Karakoram highway,Indus highway and many more.

We can write more and more about the country but the time and space do notallow us to do so. After the study of above line, only a fool can say that it is a failstate. Now at the end we would like to give some reasons why it was declared afail state.

Why it was declared a failed state

There are many reasons, which we can find easily. If you go to Europe andAmerica, you will find that their media creates hatred for Muslims and especiallyfor Pakistan. The case of Denmark is not far from us. The parents in most of theEuropean countries allow their children to join any religion except Islam. (What agood effort to highlight Islam) They say that they are civilized but they are stilllike animals. It is not our anger but it is truth. See the list of countries where rapeis done. See the list of countries where murder rate is high. See the list ofcountries where people leave their old parents for there happiness. Westernmedia highlights our cases but closes its eyes from its own area. Actually this wasthe time of media war and we were loosing before our media entered at thestage. We know that they have nothing but some industrial progress but still theyare not happy from us. There own condition is worse. When a society or countryfails? In fact, when human rights are forgotten and all the people hate each other,

the brotherhood of a nation ends. The crime rate goes high and the system fails. Their own system is not going successful. Then why are they making noiseagainst us?

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This is the time of great game. The war against terror or war for oil is on itsway and we are the biggest affectee of it. The western powers do not like ouratom bomb. So their media is making noise of our failure. So that the world canallow them to enter in the country and high jack our assets, but with their fullefforts they are still not successful, and they will not be in coming future.

Another reason is that we are considered as the power of region but thewest likes India and they want that India should be the leader of area. They wantto see us as a failed state so that Indians can dominate the region. Indian factorin western media is very powerful and you cannot close your eyes from this.

Not a problem with what the literacy level is in the country, the peoplewould hate Islam because Jews own most of the international media, Famous fortheir extremism. It is not the problem of economies but it is a reality that Jews arethe enemies of Islam. Again it is not anger but you can study the history of Israeland the wars between Hammas and Israel. Pakistan and Islam are like mother andson. Failure of Pakistan will be considered as the failure of Islam (see the historyhow Pakistan came into being) so their best efforts are here to make this countryfail.

Unluckily our neighbor India also wants to see us as a failed state. This istheir biggest wish from the day of their independence, now such comments are tomake themselves happy and nothing else.

Another major cause is, when you declare a country, a fail state the peoplereally think that it is a fail state. This makes the situation even worse because theinvestors do not like to invest their money in a failed state. Then the country getseventually failed. The example is the list of 2009 in which Afghanistan is at abetter point than Pakistan. They know that they need investments there sodeclare it a good state so the investors can come.

With Best Wishes

At the end we wish Pakistan a happy and developed country. O God, saveour Pakistan from the enemies. Please help us in taking the country at goodposition. No one is with us in the world except Allah; our all prayers are for thewell being of Pakistan. May Allah bless this Nation (Ameen)

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Executive Summery:

The debate we are listening everywhere in the international media isPakistan is not a fail State. The topic got fame during the election of presidencyin US when Mc Cain said that it is a fail state. The article we have made startswith the introduction to assignment and continue with many headings. Lets checkthem one by one.

Introduction to Assignment:

In the introduction, we have explained that it is an economics article that iswhy we are using economic approach. It is common mistake that while talking onthe Title (fail state) people become angry and talk about patriotism and not aboutrealities.

Preamble:

This session explains the independence we are enjoying inside the country.

The situation in Afghanistan (which is a real fail state) is bad. Al Jazeera says thatAmerican army holds only capital or Qandhar a major city. All other country is inthe control of war lards and Taliban. And in India it is even worse (which isconsidered as a successful country), where you are not allowed to explore thecountry.

What is a fail State:

According to Fund for Peace (United Nations) the fail state has no orminimum control over it territory. The fail states management cant makecollective decision. The government does not provide public services and has norole in the world as full member of international community. It is also said that thecountry with sharp economic decline is also a fail state.

Islamic Republic of Pakistan:Now there is a brief introduction to Pakistan. Here you can find the details

of geographical position and importance of country, the religions and religiousindependence inside the country, the countrys climate and flora and fauna. Thesession also gives an introduction to Armed Forces. Sports, languages, literature,culture and tourism activities are the beauty of country. The session also explainsthe economic strength of country.

Economic Review of Pakistan:

This is the very important part of the report. It gives the brief description ofthe economic situation of Pakistan. The country cultivated (in million) 23.3 tons ofwheat, 52.1 tons of sugarcane, 12.1 tons of cotton, 6.5 tons of rice and 3.33 tonsof maize in 2008-2009. You can imagine the telecommunication industrys growth

in the last years. Core inflation was 17.8 points. And our neighbor Iran had 25.4 inthe last year. Exchange rate fluctuations were great in the last year but now thisis stable. Country has almost $12 billion foreign assets. KSE has normally reachesat 10000 points. Net tax collections during the last fiscal year were 813 billion Rs.during the worse days of war against terrorism foreign investment in the countryis $3800 million; our workers remittance was $5658.1 million.

Why Afghanistan:

Why we are comparing Afghanistan with Pakistan. Because of Af-Pak termof obama and the list of failed states in which Pakistan and Afghanistan are at 9thand 7th positions. Another reason is to show the world a real fail state.

Economic Situation of Afghanistan:

It is difficult to find any economic report from the country because there isno economic system in the country since many years. The opium cultivation, drug

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dealing and cattle rearing are the common sources of income. There isnt anycarpeted road inside the country.

U.S Debt and Deficit:

As the heading declares, the successful country USA has $57 trilliondebt, which is highest in the history of mankind. The budget deficit is increasingday by day with the ratio of $500 billion per year. The country is facing greatrecession during the war. Is the Pakistan also facing the problem at the samelevel while the war is inside the country?

Why Pakistan is not a Fail State:It consists of three sub titles.Major Reasons:

Here we have put the country in the criteria of fail state. Pakistan is the fullmember of international community and has a very great importance in theIslamic world. It is the founder of many international organizations and thegreatest contributor in the UN peace force with 10000 men. The country has anelected government, which is powerful in decision-making process. The wholecountry is in the control of government. And what about subsidies, which thegovernment provides of public? The government is fully committed for publicservices.

Economic Factors:

The country is at 52nd position in the list of countrys having largestexternal debts with $38800 million. How can you say it a fail state when itsforeign reserves are $12 billion, even there workers remittance is $5658.1 million,net foreign investment is $3800 million and tax collection is Rs. 813 billion. Allinternational banks are happily agreed to lend the money. The World Bank (WB)and International Finance Corporations flagship report Ease of Doing Business

2010 ranked Pakistan 85 among 181 countries around the globe. Pakistan comeshighest in South Asia but also ranks higher than China, Russia and India, which isat 133. The country has biggest coal reserves in the world and many otherreserves are waiting to be used like oil and gas, precious stones, iron etc. Pakistanpossesses many multinational companies like Adidas, Slazenger and nestle. Theagricultural production is marvelous. 24 million tons of wheat is an example ofthat.

Non-Economic Factors:

The world 7th atomic power, having the best armed forces is Pakistan.Every thing of country is beautiful, from the shores of Arabian Sea to the heightsof Chikory. We have every type of geographical land and very colorful cultures.We love peace and games and Pakistan has made many international players. Mr.

Isam-ul-Haq is the latest example who defeated Roger Feeder in the doubles.There are lot of motorways and carpeted roads inside the country and thousandsof schools and colleges. 140 universities are in progress and the country hashighest number of women legislature in the world.

Why We Were Declared a Fail State?

Our enemies want to see our country as a fail state. No investor likes toinvest in a fail state. It is a media war and international media is in the hands ofJews. They hate Pakistan and the history has proved it. Now when Pakistani mediais getting more and more power there media has less importance in side thecountry. Their mission is Make a noise as we have done the same before in Iraq.Then attack the fail state to control the Muslim bomb. Oh Allah, Please save thePakistan from its enemies.

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Format And Designs:

Hafiz Najam Ul Saqib 042Qaisar Abbas 175

Ideas Forwarded by:

Sayyed Mubashir-Ul-Hassan 136Usman Ghani 157

Research and Search:

Muhammad Khurram Shahzad 177Ali Ikhlaq

Reference:

Government of Pakistan State Bank of Pakistan Federal Board of Revenue Wikipedia, the Free Encyclopedia Council on Foreign Relations, America Daily Times

Google Links

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Documents

Economics Project Final Version