Open AccessExternal Shocks and Domestic Adjustment in Pakistan 1970-1990
Author(s) -
Khwaja Sarmad
Publication year - 1992
Publication title -
pakistan development review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.154
H-Index - 26
ISSN - 0030-9729
DOI - 10.30541/v31i4iipp.857-869
Subject(s) - economics , external debt , current account , liberian dollar , balance of payments , debt , capital (architecture) , value (mathematics) , balance of trade , monetary economics , terms of trade , depreciation (economics) , international economics , exchange rate , demographic economics , capital formation , macroeconomics , human capital , financial capital , economic growth , archaeology , finance , machine learning , computer science , history
A large current account deficit and an escalating externaldebt burden have been the characteristic features of Pakistan's economicperformance during the decades of the seventies and eighties. The poorperformance stemmed largely from the severity of the external shocks -large changes in external variables caused by sharp swings in thebehaviour of international goods and capital markets - and thedifficulty in adjusting to a worsening external scenario.· Someperspective of the magnitude of the shocks that Pakistan's economy hadto suffer may be obtained from the following: the dollar denominatedunit value of imports increased by 23 percent in 1973, by 72 percent in1974 and by another 13 percent in 1975. Import unit value rose again, onan average, by 17 percent during 1979-1981; remittances increaseddramatically during the second half ofthe seventies amounting to as muchas the total value of exports during 1978-1986; debt service paymentshave risen sharply since 1982 averaging over 40 percent of exports;capital flows have declined to around 35 percent of exports afterreaching a peak level in 1975-1976; economic growth in trade partnercountries has slowed to around 3 percent per annum during 1982-1987after a long period of fast expansion.1