A Development Model and Foreign Aid Requirements in Pakistan

Ghulam Ali


In the transitional period of development, absorptive capacity
is not a binding constraint to development for long. As attempts to
increase invest¬ment are made in a bid to achieve the desired growth
rate, savings fall short of funds required for the purpose. In the
initial period of development, the under¬developed countries like
Pakistan generally face the emergence of a gap [6a] between investment
and savings which we will refer to as the resources gap. If domestic
resources are sufficient to generate required savings, there may be
another limit to the investment of these resources due to lack of
complementary inputs, in which their own production Capacity is limited,
and their traditional exports are not, in general, sufficient to finance
the imports of capital goods and other complementary inputs in
accordance with the needs of the economy. Therefore, there emerges
another gap termed as the trade gap.

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DOI: https://doi.org/10.30541/v16i3pp.229-261


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