Open AccessDomestic Resources and Fiscal Policy in Pakistan's Second and Third Plans
Author(s) -
S. R. Lewis
Publication year - 1965
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/v5i3pp.461-495
Subject(s) - economics , government (linguistics) , enthusiasm , investment (military) , fiscal policy , economic policy , macroeconomics , public economics , political science , politics , linguistics , law , psychology , social psychology , philosophy
Pakistan is now widely regarded as a successful case ofmovement toward self-sustaining economic growth. If one lets it becomeknown that he has spent some time in Pakistan, other economistsimmediately want to know: What happened? What were the "real" causes? Isthe success a mirage? How long will it last? An attitude of enthusiasmis a sharp contrast to the air of pessimism that prevailed as recentlyas two years ago. The notes here are not an attempt to establish whathas happened to Pakistan's economy, or why it happened now and not fiveyears ago. The aim is much more modest, but may have some bearing on thelarger question. My primary interest is in examining certain aspects ofgovernment policy in general and fiscal policy in particular, excludingpolicy on government expenditures. I shall not be concerned with Planallocations and government outlays. In the macroeconomic framework ofPakistan's plans, present investment is the only determinant of futureoutput. The problem of "mobilizing" resources is one of finding offsetsto investment expenditure from either domestic or foreign sources. TheThird Plan states [16, p. 20] that "the main task in the PerspectivePlan will be to institutionalise the growth process and to finance itincreasingly from domestic resources." The "domestic resources" withwhich the Plan is primarily concerned are domestic saving (to offsetinvestment) and exports (to pay for imports). A related variable nottreated in the discussion of the Perspective Plan is taxation, which isnecessary to offset government expenditure on current and capitalaccount. In order to reduce and eventually eliminate foreign assistance,while maintaining or increasing the proportion of income invested,domestic saving must increase more rapidly than investment, taxationmust increase more rapidly th?a government current and capitalexpenditures, and exports must increase mote rapidly than imports, sinceforeign assistance now offsets a large proportion of investment,government expenditure, and imports.