The Allocative Biases of Pakistan's; Commercial Policy: 1953 to 1963

Syed Nawab Haider Naqvi


The purpose of this paper is to examine the allocative biases
of Pakistan's commercial policy, with a view to determining its
influence on the composition of domestic investment in the private
sector. Although because of the complexity of factors influencing
investment deciĀ¬sions it is well-nigh impossible to isolate the role of
commercial policy in shaping the composition of domestic investment, yet
a study of its allocative biases perse can shed considerable light on
the nature of this role. This is so because the import component of
various investment projects is high in Pakistan and private-sector
imports are, in turn, regulated by commercial policy. The discussion in
this paper is divided into four sections. The first section is devoted
to certain preliminary matters regarding commercial policy in Pakistan.
The second and third sections focus on the allocative biases of
import-licensing and export-promotion policies; while the fourth section
concludes the previous discussion. It may be noted at the very outset
that commercial policy regulates only private-sector imports which are
about 75 per cent of the total imports. Imports on government account
are regulated by separate arrangements.

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