The Balance-of-Payments Problem and Resource Allocation in Pakistan—A linear Programming Approach .

Syed Nawab Haider Naqvi

Abstract


The purpose of this study is to examine Pakistan's
foreign-trade problems and policies in the context of the wider question
of a rational allocation of domestic resources. It will be argued that
measures taken in Pakistan to regulate the flow of imports and exports
have led to a pattern of resource allocation which may aggravate the
balance-of-payments problem. The difficulty is mainly attributable to
the fact that foreign economic policies and policy measures taken to
regulate the domestic economy have often been at cross-purposes. For
instance, whereas the domestic .investment policy has aimed at promoting
the most economical use of scarce investment resources, the licensing
system has provided strong incentive for a wasteful use of these
resources by encouraging import substitution even where the country may
have a long-run comparative disadvantage. While domestic policy has
aimed at raising the marginal rate of savings, the policy of protecting
consumption goods, particularly the nonessential ones, has tended to
liberalize consumption.

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DOI: https://doi.org/10.30541/v3i3pp.349-370

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