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Executive summary
of The economy of
Pakistan and international trade
Money
is a major element of every economy because without this no country or sector
can run. It works like the blood that moves in the whole body of the economy
according to requirement and without this, no body part can move or perform its
functions. Therefore, Pakistan's economy also needs proper money and the circulations
of money are very much important because for business and trading the proper
movement of money is very much important. Different institutions also play a
very important role in this regard. Government policies like monetary or money
supply and many others play their role in this regard. Then it is also
important how the financial markets deal with aggregate competition and
comparative advantages according to resource allocation.
The
domestic economy has to develop according to the latest monetary terms and
manage the level of the economy to deal at the international level. After the
domestic level, the business of the country has to move towards the
international trading, proper capital, and money market utilization helpful in
determining the foreign markets. Then explain the economy of Pakistan with
complete details and mention what sort of policies and procedures are implemented
in Pakistan to doing business at national and international level. Also,
determine all those policies that are helpful in trade policies and show its all-pros
and cons. Then the whole idea going to summarize according to international
trading and Pakistan's economic condition and explain how much the
international trading policy helpful in stabilizing the economy of Pakistan
according to new policies and strategies.
Table of content:
Executive
summary……………………………………………………………………………2
Background
of financial markets…...4
Capital
allocation within the domestic economy………………………………………………….5
Capital
allocation within the international market…...6
Evaluation
of Pakistan’s economy
Evaluation
of challenges that country face due to trade policies and industrialization
Conclusion
Recommendations
Background of financial markets of The economy of Pakistan and international trade:
Money
is the most important factor of the economy because no system, organization or
process can run without the involvement of money. It is just like blood in the
economy. Many different institutions are held in the countries that operate the
circulation of money and also utilize the money is a productive way. Banks,
capital markets and money markets and many others also operate the movement of
money within the society and work effectively to make the economy strong and
manageable.
Banks
play a very important role in the development of economics. Banks responsibility
collects the savings from different persons and gives them those people who
utilize the money in manufacturing of business. In commerce, banks loans
facilitate the business and help them to run their business operations. To meet
the business requirements, different business and manufacturers utilize the
money and borrow from banks. Therefore, the saving of another person may
utilize for the development of others and create new capital in the growth
process of the country.
Capital
markets are those that bring seller and buyer together in the economic markets.
Forex trading, bonds, and stock dealing at global level occur with the help of
capital markets. It gives more focus on long-term goals. At local and central
government, borrowing of state, long term and medium-term and fixed and working
liquidity and investment also run its operations within the financial industry.
It deals with bonds of government, shares, securities, debentures of
corporations and many others. The capital market includes mechanism and complex
institutions with medium and long term funds collectively and provides the
funds to the government, individuals and businesses.
Money
markets also play an important role in the development of the economy. It provides
different facilities to adjust the liquidity for the financial and non-financial
institutions, banks and corporations according to investor point of view. Important
function of the money market include it provide assistance in formation of
capital, helps in implementation of policies related to monetary, it also
assists to industry and trade by providing sufficient funds, it promotes the
growth and development of the economy and also maintain a level of equilibrium
in the supply and demand of money for the short period. When the economy deal
at the international level, then it has to manage the exchange rate mechanism,
money supply, inflation and interest rate according to business strategies. In
doing to the business at the national and international level, the money plays
a very important role and without the involvement of money, no business or
transaction can run. In Pakistan, the state bank of Pakistan is the major institute
that offers high-quality monetary services in all over the country and
determines the movement of money in all the country through different banks and
institutions.
Capital allocation
within the domestic economy of
The economy of Pakistan and international trade
Capital
means how much the money is going to utilize for the business and manufacturing
purpose to make the economy smooth and strong. The economy includes different
factors that affect the economy and present the level of the economy. The
economy consists of two different levels like macroeconomics and
microeconomics. Microeconomics gives more attention to the consumers and
decisions of firms. Microeconomics determines the change of human behaviour in
the level of price and what the level of the price set at the specific level of
demand. How the goods are valued differently by using the microeconomics and
response about the financial decisions, and trading set up of the business
level.
The
dynamic supply and demand of the goods and services occur according to costs
and efficiency and determine how much labor is allocate and divided according
to strategy, risk and uncertainty. Macroeconomic explain the economy at
national and international level. It gives more focus on country-level studies
according to a different level and factors that include business cycle, gross
domestic product, growth of total production, level of inflation and interest
rates, unemployment rates, government fiscal and monetary policy and foreign
trade with the depression, recession, booms and expansions. In the study of
economic, different studies also determine according to economic condition and
its circumstances.
Comparative advantages related to
economic condition means that with the principle of comparative advantages the
output would be increased according to their specialty according to their
producing goods or services. By allocating the scarce resources, the country
can produce special products and services and get the comparative cost
advantages according to current requirement and market condition. Country can
obtain absolute or comparative advantages, which means that absolute advantage
means more cost-efficient and productive and comparative means that one country
is more productive or cost-efficient as compared to another country. It explains how much the country utilizes its
complete resources and generate the product with high quality and
cost-effective. It depends on strategies and policies that the country utilizes
in developing the production and providing services.
Aggregate competition means that how
much the economy can overcome the demand of the people in the market. That
demand affects the condition of the economy and determines how much the country
can produce the products according to market demand. In the given resources,
how much the country can produce the product according to demand and is the
country utilize its all resources in proper manner and usage in the production
process. The capital allocation at the domestic level explains how much the
country has demand and how much it has resources to cover that demand and what
strategies are utilized to manage the resources.
Capital allocation
within the international market of The economy of Pakistan and international trade
Capital allocation at international
level is considered very important when international trade is started. When
one country is starting, its business is some other country then all the issues
related to business must be handled in a foreign country. Proper allocation of
resources and proper utilization of all the resources are very important to
understand and also explain that what is the monetary effect appear in the
business when the international trading or business is started. The access to
the international market makes the economy of the country very active and its
policies and procedures also working a lot to get its position in the
international market. The business has to understand the international police
of doing business and understand the taxation system with all the monetary
systems. This is not an easy task to do the work according to international
market demand. The country has to maintain its level of production at the upper
level and helpful in determining that what is the exchange rate policies and
currency valuation policies are utilized in the foreign country.
The inflation rate and interest rate
is also different in every country. These rates specify the government that
determines according to economic and market condition and also determine what
is the requirement of the country about foreign products. When inflation occurs
all the prices of all the related products going to increase that creates the
level of expenses high as compare to a previous time. Due to inflation, the
whole economy is affected and they have to pay high rates against every item.
Due to inflation, many factors affected like government bond yield, corporate
bonds, mortgage, borrowing money, cost of doing business and cost of living in
the country.
When the country is facing problems
in developing its economy then the government implement intervenes in the
markets to handle the inefficiencies most effectively. When the resources are
not perfectly allocated and utilize according to actual requirement and never
produce the required results then the government implement different strategies
and methods to handle these issues and inequalities. Government implements four
different objectives to handle these issues and they intervene in the market. It
includes maximizing social welfare, macroeconomics factors, socio-economic
factors and others.
Maximizing social welfare means that
some companies utilize the monopolistic power, limiting the development
infrastructure and raising the entry costs. It implements diminished resources,
minimize trade and stiffed innovation in the production sector. In macro-economic
factors, the government try to minimize the effect of natural events like
inflation and recession due to the natural business cycle, government minimize
these effects through subsidies and manipulation of the supply of money. In
socio-economic factors, the government intervene the market by promoting the
fairness of general economics. Through taxation and welfare programs, the
government overcome the issue of business sectors. Through national unity and advancement,
the government intervene in the market and provide a better way to stable the
business condition.
Evaluation of
Pakistan’s economy
To address the twin deficit took
effect; the gross domestic product growth of Pakistan slows as economic
policies. Due to stabilization measures are undertaken for the countries
working and for the better development of the industry. Capital designation at
a worldwide level is considered significant when the universal exchange is
started. At the point when the one nation starts, its business is some other
nation than every one of the issues identified with business must deal with in
the outside nation. Legitimate designation of assets and appropriate use of the
considerable number of assets are imperative to comprehend and clarify that
what is the money related impact show up in the business when the universal
exchanging or business is begun.
The entrance of the global market
makes the economy of the nation extremely dynamic and its arrangements and
strategies likewise working a great deal to get its situation in the universal
market. The business needs to comprehend the global polices of working together
and comprehend the tax collection framework with all the money related
frameworks. This is not a simple undertaking to take the necessary steps as per
the universal market request. The nation needs to keep up its degree of
creation at the upper level and supportive in verifying that what is the
swapping scale approaches and money valuation arrangements are used in the
outside nation.
The swelling rate and loan fee is
additionally extraordinary in each nation. These rates indicate the legislature
that decides as per monetary and economic situation and verifies that what the
necessity of the nation about remote items is. At the point when the expansion
happens every one of the costs of all the related items going to expand that
make the degree of costs high in contrast with past time. Because of expansion,
the entire economy influences and it needs to pay high rates against each
thing. Because of swelling, numerous variables affected like government
security yield, corporate securities, contract, getting cash, cost of working
together and the average cost for basic items in the nation.
At the point when the nation is
confronting issues in building up its economy then the administration execute
mediates in the business sectors to deal with the wasteful aspects in the best
manner. At the point when the assets are not splendidly designate and use as
indicated by real prerequisite and never produce the necessary outcomes then
the administration executes various procedures and strategies to deal with
these issues and imbalances. Government actualizes four unique destinations to
deal with these issues and they intercede in the market. It incorporates
boosting social welfare, macroeconomics factors, financial elements and others.
Boosting social welfare implies that
a few organizations use the monopolistic power, restricting the advancement
foundation and raising the section costs. It actualizes lessened assets, limits
exchange and stiffed development in the creation area. In full-scale monetary
elements, the government attempt to limit the impact of characteristic
occasions like swelling and downturn because of the common business cycle,
government limit these impacts through endowments and control of the supply of
cash. In financial components, the administration mediates the market by advance
the reasonableness of general financial matters. Through tax collection and
welfare programs, the administration conquers the issue of business areas.
Through national solidarity and progression, the administration mediates the
market and give a better approach to stable the business condition.
The dynamic organic market of the
products and enterprises happen as per expenses and proficiency and verify how
much work is dispense and partitioned by methodology, hazard and vulnerability.
Macroeconomic clarify the economy at national and worldwide level. It gives
more spotlight on nation-level examinations as per distinctive level and
factors that incorporate business cycle, GDP, development of absolute creation,
level of swelling and loan fees, joblessness rates, government financial and
fiscal approach and outside exchange with the downturn, downturn, blasts and
extensions. In the investigation of financial, various examinations likewise
decide as per monetary condition and its conditions.
Similar focal points identified with financial condition implies that with the standard of relatively favorable circumstances the yield would be increment as indicated by their strength as per their creating products or administrations. By dispensing the rare assets, the nation can deliver unique items and benefits and get similar cost points of interest as indicated by current prerequisite and economic situation. A nation can get supreme or relative points of interest, which implies that outright favorable position implies more cost proficient, and beneficial and near implies that one nation is increasingly gainful or cost-effective as a contrast with other nation. It clarifies how much the nation uses its total assets, create the item with high calibre, and financially savvy. It relies upon procedures and arrangements that the nation uses in building up the generation and giving administrations.
this is the interest rate of Pakistan.
Current debt of
Pakistan: As of March 2019, public debt of Pakistan
is estimated to be about ₨ 35.094 trillion which is 91.2 percent
of gross
domestic product (GDP) of
Pakistan. About ₨ 18.17 trillion is owed by the government
to domestic creditors, and about ₨ 1.378 trillion is owed by
Public Sector Enterprises (PSEs).
Similarly, as of March 2019, external debt of Pakistan is
now around US$105 billion. Pakistan owes US$11.3 billion to Paris Club, US$27 billion to multilateral
donors, US$5.765 billion to International
Monetary Fund,
and US$12 billion to international bonds such as Eurobond, and sukuk About
fifth of the external debt which is estimated around US$19 billion is
owed to China due to Corridor. But still Hope to have an
economic boom in coming years.
Unemployment rate in Pakistan is
given in the following graph:
Pakistan scored 33 points out of 100 on the 2018 Corruption Perceptions Index reported by Transparency International. Corruption Index in Pakistan averaged 25.08 Points from 1995 until 2018, reaching an all time high of 33 Points in 2018 and a record low of 10 Points in 1996.
Total challenge implies that how
much the economy can conquer the interest of the individuals in the market.
That request impact the state of the economy and establish how much the nation
can create the items as indicated by advertising request. In the given assets,
how much the nation can deliver the item as indicated by request and is the
nation use its everything assets inappropriate way and use in the generation
procedure. The capital assignment at the household level clarifies that how
much the nation has request and the amount it has assets to cover that request
and what procedures are used to deal with the assets.
Recommendation
of The economy of
Pakistan and international trade:
After the
current discussion of the economy, we suggest to follow most effective
strategies and rules that properly implement in the country according to its
economic condition and business stability. There are lots of efforts required
to maintain the level of economy according to international level. The
financial stability is the major factor in the development of economy . if the
money properly circulate in all the areas according to industry and business
requirement and all the operations and functions can be manage according to
market requirement then it is going to be easy to settle the economic issues
and the market conditions also move in better direction. Different factors like
interest rate, exchange rate, import rate, export rate, unemployment rate and
money supply and many others also manage the circulation of money in the
economy and also manage all the transactions according to economic condition.
The economy of Pakistan is also
managed in better way and it would be more better if its economic condition
move in accurate direction. The economic condition and its industries have to play
a major role in the development of Pakistan and also establish a higher level
of economic condition for making the Pakistan country as international level
and its market is going to be the one of the best market in the world that
offer moist economical and manage all the business in most effective way.
Conclusion
of The economy of
Pakistan and international trade:
At the end of our complete
discussion, we can conclude that money is major part of every economy , because
without the involvement of money no any activity or task can be occur and every
business need money to run its all operations of all levels. There are many
factors that affect the economy of the country like interest rate, exchange
rate, import and export and many other because they all have different impact
on the business and industries and their response effect the economy in both
directions according to their results. The business at national and
international level can be run according to market condition and financial
requirements that a business has to make its production and make the supply of
goods smooth to generate more revenue.
Pakistan
is also face many economical issue to make its economic condition more stable
and its business and industry sector also handle many financial and economical
issues for making its business at national and international level. It depend
on the strategies and circulation of money that how Pakistan can manage its all
financial needs and also manage all the functions smoothly according to
international market standards.
References of The economy of Pakistan and international trade
Advert, P., 2017. Functions of Capital Markets –
Why Capital Markets Matter?. [Online]
Available at: https://eaglesinvestors.com/news/capital-markets-functions/
Courses.lumenlearning.com, 2019. Government
Intervention and Disequilibrium. [Online]
Available at: https://courses.lumenlearning.com/boundless-economics/chapter/government-intervention-and-disequilibrium/
Courses.lumenlearning.com, 2019. International
Trade Barriers. [Online]
Available at: https://courses.lumenlearning.com/boundless-management/chapter/international-trade-barriers/
Economicsonline.co.uk, 2018. Comparative advantage.
[Online]
Available at: https://www.economicsonline.co.uk/Global_economics/Comparative_advantage.html
Economicsonline.co.uk, 2019. Economic systems. [Online]
Available at: https://www.economicsonline.co.uk/Competitive_markets/Economic_systems.html
SBP.Org, 2018. 4 Aggregate Demand. [Online]
Available at: http://www.sbp.org.pk/reports/annual/arFY11/Aggregate_Demand.pdf
S, N., 2019. Role of Banks in the Economic
Development of a Country. [Online]
Available at: http://www.economicsdiscussion.net/banking/role-of-banks-in-the-economic-development-of-a-country/26094
Theigc.org, 2018. Discussion on Economic Policy and
Reform in Pakistan. [Online]
Available at: https://www.theigc.org/news-item/discussion-on-economic-policy-and-reform-in-pakistan/
Worldbank.org, 2019. The World Bank In Pakistan. [Online]
Available at: https://www.worldbank.org/en/country/pakistan/overview
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